Trends in African Agricultural Trade

Brussels Policy Briefings No. 47Regional Trade in Africa: Drivers, Trends and Opportunities

Ousmane Badiane, Director for Africa

Brussels, February 3, 2017

Trends in African Agricultural Trade

Composition and Direction of African Agricultural Trade

Changing nature of African Agricultural Trade Balance

Competitiveness in Global and Regional Markets

Intra-African Trade: Trends and Outlook – The case of ECOWAS

Outline

Source: African Agricultural Trade Status Report (2017)Unless otherwise specified, graphs are based on data from Base pour le commerce international (BACI), Centre d’Etudes Prospectives et d’Information Internationales (CEPII).

Share of Top 10 Ag. Exports (value) - 1998 Share of Top 10 Ag Exports (value) - 2013

Change in African Trade Composition - EXPORTS

Traditional commodities continue to dominate African Exports Coffee and cotton have lost ground Cocoa remains dominant export Citrus fruits and oilseeds have moved up

Change in African Trade Composition - IMPORTS

Wheat is by far the largest import Rice has gained significant shares and now ranks second Palm oil has made the largest gains; now ranks 4th, closely behind sugar Meat has made its entry recently

Share of Top 10 Ag. Imports (value) - 1998 Share of Top 10 Ag Imports (value) - 2013

Direction of Agricultural Trade by African Countries

Exports Imports

African countries are destination of 20% of African exports 15% of imports originate from other African countries EU is the largest trading partners for both exports and imports Asia is a close second Americas play a more significant role as a source of imports

Direction of Agricultural Trade by African Countries

Exports Imports

EU has been losing market shares rather rapidly Asia has gained shares and is now close to EU African countries are also gaining shares, particular for exports America’s shares have remained unchanged

African Share in Global Agricultural Exports Share of agriculture in Total African exports

Source: Unless otherwise specified, graphs are based on data from Base pour le commerce international (BACI), Centre d’Etudes Prospectdives et d’Information Internationales (CEPII).

Evolution of the Role of Africa in Global Markets and Agriculture in African Exports

Share of Africa in global Agricultural Markets within 3-4% range

Share of agriculture in African Exports fell by 50% in last 15 years

Total agricultural exports, current US$B Normalized Agricultural Trade Balance

African Agricultural Trade Balance

African exports have increased more than 3 times But imports rose nearly 5 times Import gap started to widen in early 2000s Import gap is now around 20% of total value of trade

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

-80

-60

-40

-20

0

20

40

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

Main Commodities Contributing to Agricultural Imports Gap

sugar maize wheat

rice palm oil wheat

wheat milk cream

Wheat is a major import from all regions It is followed by milk products in Europe Rice & Palm oil are the main net imports from Asia Sugar and maize from Americas

• Agricultural production collapsed in the 1970s-1980s

• But population continued to grow

• Unmet demand continued to pile up

• Rising incomes in post 2000s accelerate demand

• Agriculture grows again but rates cannot keep up with demand

Why the Growing Trade Gap Despite Rising African Production and Exports

Source: Badiane et al (2016).

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Average Change in Export Competitiveness: 1998-2013

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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

Land productivity Public ag. expenditure to ag. GDP ration of exporter Efficiency of customs clearing index Quality of port Exporting countries’ GDP Importing countries’ GDP Road density

Key Determinants of Trade Performance

Evolution of Intra-African Trade

The share of intra-African trade has increased sharply since 2000 But the level is still a fraction of what is observed in other regions

Africa ECOWAS ECCAS COMESA SADC0%

5%

10%

15%

20%

25%

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1998-2006 2007-2013 Overall

Growth in Intra-regional Trade (Value)

Intra-trade has grown by an average of between 10 and 15% Growth has accelerated over time for ECOWAS and SADC It has fallen drastically in ECCAS

2001-2005 2006-2010 2011-2013

Live animals 87.7 155.6 95.7

Fish & animal products 165.7 348.4 439.2

Vegetables 27.3 28.1 133.7

Cereals 30.1 81.5 64.5

Oilseeds 16.8 17.8 31.8

Edible oils 75.8 137.4 307.3

Other food crops 20.6 28.5 54.8

All staple food products 424.1 797.3 1127.0

Trends in Intra-regional trade in West Africa (US$Mill.)

2008 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 20250

500

1000

1500

2000

2500

3000

CEREALS ROOTS OTHER FOODS ALL FOOD CROPS OTHER CROPS

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Projected Increase in Intra-regional Trade Based on Current Trends

With current growth rates in yields, area, population and incomes:

Regional trade is expected to increase significantly, except for cereals Most growth in cereals demand is captured by rice imports from outside

Abidjan Bamako‐Abidjan-Ouagadougou

Bamako-Dakar

Bamako-OuagadougouOuagadougou-Lomé

Ouagadougou-Tema0.01.02.03.04.0

Average number of checkpoints per 100 km

Abidjan Bamako‐Abidjan-Ouagadougou

Bamako-Dakar

Bamako-OuagadougouOuagadougou-Lomé

Ouagadougou-Tema0

2000400060008000

Average bribe taken per 100 km

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Bamako-Dakar

Bamako-OuagadougouOuagadougou-Lomé

Ouagadougou-Tema0

20

40

60

Delay per 100 km

Min

utes

Cross-border Trade Obstacles in West Africa

Cereals Roots & tubers Other food crops All food crops Other crops0

5

10

15

20

25

30

35

4010% reduction in trade costs Removal of harassment costs 10% increase in crop yields

% o

f bas

elin

e qu

antit

ySelected Interventions to Further Boost Regional Trade

Local cereals / roots & tubers gain the most from yield increases and trade reforms Removal of cross border trade harassment would have the most effect on trade Reduction in overall trade costs is good for both extra and intra-regional trade

Thank you!