The world’s largest producer and consumer of peanut oil, China, which had a bad harvest in 2015, has since turned to Senegal, one of the few countries in the world not to consume all its production but also world’s leading exporter of groundnuts. In 2015, the value of exports of this product in Senegal to Asia jumped from 1.7 to 30 billion CFA francs in 2017, according to the Ministry of Commerce, as per Afirmag.

A vital sector for African economies

Like Senegal, agricultural products are essential for trade in West Africa, for example. Their place in the various countries of this part of the continent remains globally important in terms of exports, whether for the different cash crops such as cocoa or cotton, but also in terms of imports: rice, wheat palm oil are essential to meet the needs of the people.

Figures published by the World Trade Organization (WTO) show that, on average, for the twelve countries in the area where statistics are available, agricultural exports account for 23.5 percent of the total for this sector. This percentage varies greatly from one country to another. For Côte d’Ivoire, 69 percent is achieved; in contrast, for Nigeria, this contributes only four percent, or again, five percent for Guinea.

According to Afirmag, for some countries, a product predominates widely. This is the case in Côte d’Ivoire (more than 50 percent for cocoa and more than 70 percent if cocoa by-products are added) or Benin, Burkina Faso and Mali for cotton (over 60 percent, 40 percent, and 70percent respectively).

Overall, it must be said that African countries are increasingly dependent on the export of their commodities, and agricultural products for more than half of them. Export agriculture provides 40 percent of sub-Saharan Africa’s export earnings. Indeed, the importance of agriculture in African economies is also reflected in the sector’s share of employment and exports.

According to figures from the African Development Bank (AfDB), in 2016 the labor force evaluated by region this average was 24 percent in North Africa, 46 percent in West Africa, 52 percent in Central Africa, 53 percent in Southern Africa and 77 percent in East Africa.

According to Afirmag, the marketing of African agricultural products abroad is fraught with difficulty, as exporting to international markets is often associated with stringent criteria, such as sanitary and phytosanitary standards. Agricultural exports are often dominated by one or more unprocessed or partially processed crops, such as coffee in Burundi, and Ethiopia, cocoa in Côte d’Ivoire and Togo.

According to the AfDB’s Development Effectiveness Review, fluctuations in world food and commodity prices continue to have devastating effects on trade and production, especially since the global financial crisis of 2008. “In recent years, prices of agricultural commodities have fallen sharply, following the fall in oil prices. This could significantly reduce the export earnings and profits of farmers, “says the AfDB, as per Afirmag.

It also notes that African consumers, who spend an average of 80 percent of their income on food, have also been hit hard by soaring food prices. Producers and national economies are particularly vulnerable if they depend to a large extent on one or more commodities. With trade amounting to 15 percent of all intra-African trade, agriculture is an important driver of economic growth but remains rather weak.

Blocking factors

It must be said that African countries have more to gain by developing this regional trade. For if at the international level, agriculture in African countries sometimes has productivity differences of 1 to 1,000 with that of the industrialized countries, it is also subject to competition from subsidized products for production and/or export and protectionism from industrial and emerging countries, as per Afirmag.

In relation to farm assets, the average annual support is USD 20000 in the four major powers (United States, Canada, European Union, Japan) when it does not exceed USD 300 in sub-Saharan Africa. Agricultural subsidies in OECD countries amount to USD one billion a day, more than thirty times the amount they allocate to official development assistance, as per Afirmag.

In industrial countries, the highest tariffs are for agricultural products. A recent study by the World Bank and the Center for Economic and Political Research (CEPR) quantified the impact of these tariff barriers. It has shown that if the four big powers open their markets to products from developing countries, their commercial revenues would increase by 14 percent and their exports would grow by 30 to 60 percent.

According to Afirmag, the income inequality between nations is coupled with an inequality of public expenditures in favor of agriculture. In other words, rich-country taxpayers support their farmers, while peasants in poor countries are asked to pay tribute to the financing of state budgets.

To be able to comply with these standards and access to markets, African agricultural sectors must question their production system and their mode of social organization. These adaptations are expensive and made difficult by the lack of public support, as per Afirmag.

Source: Devdiscourse

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.