Trends in African Agricultural Trade Ousmane Badiane, Director for Africa Brussels Policy Briefings No. 47 Regional Trade in Africa: Drivers, Trends and Opportunities Brussels, February 3, 2017

Trends in African Agricultural Trade Outline 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 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).

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

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 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 Exports Imports

Direction of Agricultural Trade by African Countries 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 Exports Imports

of Africa in Global Markets and Agriculture in African Exports 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 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).

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

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 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 wheat milk cream rice palm oil wheat sugar maize wheat

Why the Growing Trade Gap Despite Rising African Production and Exports 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 Source: Badiane et al (2016).

Average Change in Export Competitiveness: 1998-2013 Africa lost competitiveness in global markets but gained in regional markets ECOWAS increased competitiveness the most in global markets COMESA gained competitiveness the most in regional markets Global markets Regional Markets Value > 1 means increase in competitiveness

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

Commodity Competitiveness in Global Markets: 1998-2013 Competitiveness increased for 75% of export commodities Little change / modest loss of competitiveness for 25% of commodities Value > 1 means increase in competitiveness

Key Determinants of Trade Performance 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

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

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

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

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

Cross-border Trade Obstacles in West Africa

Selected 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!