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''Recent trends and Outlook in African Agricultural Trade'' by O. Badiane, Director for Africa, IFPRI

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The International Food Policy Research Institute (IFPRI) and the Technical Centre for Agricultural and Rural Cooperation (CTA) co-organized an Infopoint Lunchtime conference on ''Recent trends and Outlook in African Agricultural Trade'' on 18/02/2019, from 12:30 to 14:00 at Rue de la Loi 43-45, Ground floor, Brussels.
More Info: bit.ly/2NgnsHG

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''Recent trends and Outlook in African Agricultural Trade'' by O. Badiane, Director for Africa, IFPRI

  1. 1. O. Badiane Director for Africa RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE
  2. 2. RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE Based on the first edition of the Africa Agriculture Trade Monitor
  3. 3. RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE Based on the first edition of the Africa Agriculture Trade Monitor OUTLINE  Growth Recovery and Trade by African Countries  Africa in Global Agricultural Markets: Trade Patterns and Performance  Trends, Potential and Outlook in Intra-African Agricultural Trade
  4. 4. RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE Based on the first edition of the Africa Agriculture Trade Monitor OUTLINE  Growth Recovery and Trade by African Countries  Africa in Global Agricultural Markets: Trade Patterns and Performance  Trends, Potential and Outlook in Intra-African Agricultural Trade
  5. 5. 400 500 600 700 800 900 1000 1100 1200 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 Per capita GDP (2005 constant $US, 27 SSA countries average) Actual and 2000s trend for the future 3.2% annual growth rate $700 $1,200 Source: Badiane et al (2015). The lost decades: sharp decline between 1975 and 1995 GROWTH RECOVERY AND TRADE BY AFRICAN COUNTRIES
  6. 6. AFRICA’S AGRICULTURAL TRADE BALANCE Rapid Increase in both exports and imports and widening Gap in 2000s Source: Badiane et al: Africa Agriculture Trade Monitor 2018 0 20 40 60 80 100 120 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Africa's trade flows, 1998–2016 (billion current USD) Exports Imports
  7. 7. ECONOMIC RECOVERY AND TRADE IMBALANCE 0 2 4 6 8 10 12 0 20 40 60 80 100 120 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Africa’s agricultural trade flows and GDP growth, 1998–2016 Exports Imports GDP growth Source: CEPII 2018 for trade data; World Bank 2018 for GDP data
  8. 8. ECONOMIC GROWTH AND DEMAND OUTLOOK  Most Countries Will Reach Middle Income Status In 2030  All Countries Will Reach Middle Income Status By 2050 Source: Sulser T. B. et al. 2015.
  9. 9. RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE Based on the first edition of the Africa Agriculture Trade Monitor OUTLINE  Growth Recovery and Trade by African Countries  Africa in Global Agricultural Markets: Trade Patterns and Performance  Trends, Potential and Outlook in Intra-African Agricultural Trade
  10. 10. AFRICA IN GLOBAL AGRICULTURAL MARKETS Africa’s share in global exports has recovered slightly but still below 1960s levels
  11. 11. LEADING AGRICULTURAL EXPORT COMMODITIES
  12. 12. TOP 10 AFRICAN AGRICULTURAL EXPORTS 1998 2013 Cumulative 57% Cumulative 43% Slightly less concentration
  13. 13. TOP 10 AFRICAN AGRICULTURAL IMPORTS Cumulative 52% Cumulative 49% 1998 2013
  14. 14. 0.7 0.8 0.9 1.0 1.1 1.2 1.3 EquatorialGuinea WesternSahara Angola Chad SaoTome&Principe CentralAfricanRep. Zimbabwe Gabon Mali D.R.Congo Madagascar Eritrea Benin Libya Guinea Sudan Mauritius Senegal Congo Côted'Ivoire Burundi Seychelles Malawi Comoros Cameroon SACUcountries Gambia Kenya Mauritania SaintHelena Togo Morocco Uganda Tanzania Niger Tunisia Mozambique BurkinaFaso GuineaBissau SierraLeone Liberia Zambia Ghana Rwanda Ethiopia Nigeria Egypt Djibouti Algeria Somalia CapeVerde Changeincompetitiveness COUNTRY COMPETITIVENESS IN GLOBAL MARKETS: 1998-2013  Around 40 percent of all countries have become more competitive  About 50% have seen no major changes  10 percent have become less competitive Value > 1 means increase in competitiveness Source: Badiane et al: Africa Agriculture Trade Monitor 2018
  15. 15. 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 Groundnutoil Meat&edibleoffal Organicchemicals Poultry Cotton,notcardedorcombed Coffee Canesugar Spices Palmoil Fish&seafoods Hides&skins Othercereals Ediblepreps.ofmeat,fish&crustaceans Tea Preps.ofvegs.,fruits&nuts Gums&resins Cocoabeans Otheranimalproducts Groundnuts Cotton,cardedorcombed Ediblefruits&nuts Essentialoils&resinoids Sugarconfectionery Oliveoil Otheroilseeds Othervegetabletextilefibres Misc.ediblepreparations Rice Furskins Beverages,spirits&vinegar Millingindustryproducts Vegetableplaitingmaterials Finishingagentsfortextiles&paper Sorghum Maize Potatoes Tobacco&substitutes Tomatoes Albuminoidalsubstances Residuesfromfoodindustries Cocoapreparations Medicinalplants Wheat Onions&substitutes Otherlivetrees&plants Otherediblevegetables Otherliveanimals Otheroils&facts Soybeans Wool Preps.ofcereals,flour,starchormilk Sheep&goats Animalfats Roots&tubers Dairy,eggs&honey Silk Cattle Soybeanoil Rye,barley&oats Changeincompetitiveness Value > 1 means increase in competitiveness COMMODITY COMPETITIVENESS IN GLOBAL MARKETS: 1998-2013  Competitiveness increased for 75% of export commodities  Little change / modest loss of competitiveness for 25% of commodities Source: Badiane et al: Africa Agriculture Trade Monitor 2018
  16. 16. SHARE OF AGRICULTURE IN AFRICA’S GLOBAL TRADE Share of agriculture in overall exports by African countries has fallen by 50%
  17. 17. Normalized Trade Balance: (X-M)/(X+M) Source: Badiane et al: Africa Agriculture Trade Monitor 2018 -0,3 -0,25 -0,2 -0,15 -0,1 -0,05 0 0,05 0,1 AFRICA BECAME A NET IMPORTER A DECADE AND A HALF AGO Normalized Trade Balance
  18. 18. -80 -60 -40 -20 0 20 40 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Africa ECOWAS ECCAS COMESA SADC REGIONAL DIMENSION OF TRADE IMBALANCE  ECCAS has experienced rapid deterioration  Same with SADC which moved form net exporter to net importer  ECOWAS has the lowest gap, but also turned net importer  All regions have lost their next exporting position around 10 years ago Source: Badiane et al: Africa Agriculture Trade Monitor 2018
  19. 19. DIRECTION OF AFRICAN AGRICUILTURAL EXPORTS AND IMPORTS Exports Imports Europe is Africa’s largest agricultural trading partners It plays a larger role as an export market than an import supplier
  20. 20. MAIN SOURCES OF AFRICA’S AGRICULTURAL IMPORT GAP US$MILL. sugar maize wheat rice palm oil wheat wheat milk cream Source: Badiane et al: Africa Agriculture Trade Monitor 2018  Africa is now net importer with EU  The Americas are main contributor to trade gap Net Agricultural Exports by Africa
  21. 21.  Asia is catching up to the Americas  EU has continued to lose share TRENDS IN MARKET SHARES OF MAIN EXPORTERS TO AFRICA
  22. 22. RECENT TRENDS AND OUTLOOK IN AFRICAN AGRICULTURAL TRADE Based on the first edition of the Africa Agriculture Trade Monitor OUTLINE  Growth Recovery and Trade by African Countries  Africa in Global Agricultural Markets: Trade Patterns and Performance  Trends, Potential and Outlook in Intra-African Agricultural Trade
  23. 23. TRENDS IN INTRA-AFRICAN AGRICULTURAL TRADE Value in intra-trade Volume of intra-trade
  24. 24. SHARE OF AGRICULTURE IN INTRA-AFRICAN TRADE Value share in intra-trade Volume share of intra-trade Agriculture now accounts for less then 40 percent of intra-African trade; Rising only for COMESA
  25. 25.  Low but increasing intra-African trade  Faster growth than other regions. Low base Increased from 13% to 20% Between 2000 and 2013 TRENDS IN INTRA-AFRICAN AGRICULTURAL TRADE Source: Badiane et al: Africa Agriculture Trade Monitor 2018
  26. 26. CHANGES IN INTRA-TRADE SHARES Intra-trade expansion driven primarily by growth within SADC and COMESA
  27. 27. TOP 10 COMMODITIES IN INTRA-AFRICAN TRADE Shares in intra-African trade (~40%)
  28. 28. POTENTIAL TO EXPAND INTRA TRADE: EXAMPLE OF ECOWAS COUNTRIES Dissimilar production / specialization patterns indicates scope for trade expansion Large majority of country pairs have low production similarity indexes (< 50)
  29. 29. POTENTIAL TO EXPAND INTRA TRADE: EXAMPLE OF ECOWAS COUNTRIES Dissimilar export patterns indicates scope for trade expansion Degree of dissimilarity is even more pronounced for export patterns
  30. 30. Intraregional Trade By 2025 Under Current Trends Source: Badiane et al. 2014 INTRA REGIONAL TRADE OUTLOOK
  31. 31. BARRIERS TO AFRICAN TRADE PERFORMANCE Source: Bouët, Cosnard and Laborde, 2017 0% 200% 400% 600% 800% Mayotte Namibia Comoros Djibouti Senegal Centr. Af.r R. South Africa Burundi Gambia, The Chad Algeria Average Import Duty Average Ad-Valorem NTM Cost of Time to Import (Border) Cost of Time to Import (Documentary) Components of import cost - 2004/2013 0% 50% 100% 150% 200% Sudan Mayotte Mauritius Mali Ethiopia Sierra Leone Chad South Africa Namibia Cote d'Ivoire Angola Congo DR Average Export Duty Export restrictions Cost of Time to Export (Border) Cost of Time to Export (Documentary) Border costs to export NTMNTM Components of export cost - 2004/2013 NTB are by far more important impediments to agricultural trade by African countries than tariffs measures
  32. 32. Exports to African Markets Exports to Non African Markets GDP in importing Market + ++ GDP of exporting African country ++ ++ Per capita GDP in importing Market ++ Per capita GDP of exporting African country - - - Quality of port in exporting African country ++ ++ Efficiency of custom clearings Index ++ ++ Quality of transport infrastructure + Share of PAE in agricultural GDP + + Arable land in exporting African country - Agricultural labor in exporting African country - NTB in importing market - Average tariff level in importing market + - Belonging to same regional eco. community ++ DETERMINANTS OF AGRICULTURAL EXPORT PERFORMANCE BY AFRICAN COUNTRIES
  33. 33. POLICY OPTIONS TO BOOST INTRA-AFRICAN TRADE Source: Badiane et al. 2014 Three policy options for competitive domestic value chains in regional markets Notes: Notes: * COMESA+Tanzania. Figures on top of bars indicate cumulative increases in regional export supply in 1000 mt.
  34. 34. UNPROCESSED PROCESSED LOW VALUE ADDED PROCESSED HIGH VALUE ADDED Non- Perishable 4x (8%) 5.5x (17%) 7x (23%) Perishable 6.5x (20%) 8X (18%) 10X (15%) THE RISE OF PROCESSED FOOD SECTORS Source: Tschirley, D et al. 2014. CHANGING DEMAND AND THE FUTURE INTRA AFRICAN AGRICULTURAL TRADE Projected Demand Growth 2010 – 2040 (Estimated Purchased Food Budget Share in 2040 parenthesis)
  35. 35. 1. TRADITIONAL MILLET VALUE IN SENEGAL RAPDIDLY TRANSFORMING REGIONAL VALUE CHAINS
  36. 36. 2. MILLET BASED MEALS RAPDIDLY TRANSFORMING REGIONAL VALUE CHAINS
  37. 37. TRADITIONAL MILLET BASED MEALS HOME BASED MILLET PROCESSING READY TO COOK MILLET PRODCUTS ON THE SHELF 3. THE NEW MILLET VALUE CHAIN RAPDIDLY TRANSFORMING REGIONAL VALUE CHAINS
  38. 38. READY TO EAT MILLET MEALS ON THE SHELF TRADITIONAL MILLET BASED MEALS HOME BASED MILLET PROCESSING READY TO COOK MILLET PRODCUTS ON THE SHELF 3. THE NEW MILLET VALUE CHAIN RAPDIDLY TRANSFORMING REGIONAL VALUE CHAINS
  39. 39. Renewed growth in Africa’s agricultural sector Rapid expansion in agricultural exports and imports Rising incomes, urbanization and population Demand grows faster than production, hence import gap Potential to expand intra-trade is substantial Requires removal of numerous local barriers to trade Rapidly transforming value chains Growth of nascent processing sector will determine trade Europe has become a net exporter but is losing shares Asia slowly catching up to Americas as main supplier CONCLUSIONS AND IMPLICATIONS FOR THE DEVELOPMENT COMMUNITY 1 2 3 4 5
  40. 40. Renewed growth in Africa’s agricultural sector Rapid expansion in agricultural exports and imports Rising incomes, urbanization and population Demand grows faster than production, hence import gap Potential to expand intra-trade is substantial Requires removal of numerous local barriers to trade Rapidly transforming value chains Growth of nascent processing sector will determine trade Europe has become a net exporter but is losing shares Asia slowly catching up to Americas as main supplier CONCLUSIONS AND IMPLICATIONS FOR THE DEVELOPMENT COMMUNITY 1 2 3 4 5
  41. 41. Renewed growth in Africa’s agricultural sector Rapid expansion in agricultural exports and imports Rising incomes, urbanization and population Demand grows faster than production, hence import gap Potential to expand intra-trade is substantial Requires removal of numerous local barriers to trade Rapidly transforming value chains Growth of nascent processing sector will determine trade Europe has become a net exporter but is losing shares Asia slowly catching up to Americas as main supplier CONCLUSIONS AND IMPLICATIONS FOR THE DEVELOPMENT COMMUNITY 1 2 3 4 5
  42. 42. Renewed growth in Africa’s agricultural sector Rapid expansion in agricultural exports and imports Rising incomes, urbanization and population Demand grows faster than production, hence import gap Potential to expand intra-trade is substantial Requires removal of numerous local barriers to trade Rapidly transforming value chains Growth of nascent processing sector will determine trade Europe has become a net exporter but is losing shares Asia slowly catching up to Americas as main supplier CONCLUSIONS AND IMPLICATIONS FOR THE DEVELOPMENT COMMUNITY 1 2 3 4 4
  43. 43. Renewed growth in Africa’s agricultural sector Rapid expansion in agricultural exports and imports Rising incomes, urbanization and population Demand grows faster than production, hence import gap Potential to expand intra-trade is substantial Requires removal of numerous local barriers to trade Rapidly transforming value chains Growth of nascent processing sector will determine trade Europe has become a net exporter but is losing shares Asia slowly catching up to Americas as main supplier CONCLUSIONS AND IMPLICATIONS FOR THE DEVELOPMENT COMMUNITY 1 2 3 4 5
  44. 44. REFERENCES Badiane, O. S. Odjo and J. Collins. 2018. Africa Agriculture Trade Monitor. International Food Policy Research Institute. Washington DC. Badiane, O. 2014. “Agriculture and Structural Transformation in Africa.” In Frontiers in Food Policy: Perspectives on sub-Saharan Africa, edited by W. P. Falcon and R. L. Naylor. Stanford, CA, US: Stanford University, Center on Food Security and the Environment. Printed by CreateSpace. Badiane, O. and T. Makombe (Eds). Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report. Badiane, O., and T. Makombe. 2015. “Agriculture, Growth, and Development in Africa: Theory and Practice.” In Oxford Handbook of Africa and Economics, Vol. 2, edited by C. Monga and J. Lin. Oxford, UK: Oxford University Press. Badiane, O. and McMillan, M. 2016. Economic transformation in Africa: Patterns, drivers, and implications for future growth strategies. In Badiane, O. and T. Makombe (Eds). Beyond a Middle Income Africa: Transforming African Economies for Sustained Growth with Rising Employment and Incomes. ReSAKSS Annual Trends and Outlook Report.

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