Promoting Agricultural Trade to Enhance Resilience in Africa, 2014

RESAKSS

Click to download the full report here

Released the 9th of October 2014, the latest Annual Trends and Outlook Report from the Regional Strategic Analysis and Knowledge Support System (ReSAKSS)  ‘Promoting Agricultural Trade to Enhance Resilience in Africa’, assesses the structure and performance of trade by African countries in global and regional agricultural markets.

The food price crises of 2007/2008 and 2010/2011 highlighted how trade in agricultural products can have serious impacts on the livelihoods of poor and vulnerable people in particular. For instance, some government responses such as safety nets for the vulnerable were instrumental in preventing people falling further into poverty, but protectionist measures restricting exports proved ineffective or costly for local farmers in terms of lost income.

This report highlights how trade is of particular importance as it affects the availability of and access to food and the rate at which the economy grows. It evaluates the extent of integration of African countries in regional and global markets but also investigates how further integration could be viable.

Nine key findings are laid out, which include how weather shocks are found to negatively affect trade performance. The good news however is that Africa’s share of world trade of goods and services, specifically for agricultural products, has increased since the 2000s and that regional trade in Africa is growing (albeit from a low level). Three key areas for progress are recommended in order to build resilience of both food systems and vulnerable communities and reduce food price volatility, allowing the full potential of global and regional trade to be harnessed: invest in social safety net programs, raising agricultural productivity and removing regional trade barriers.

  • Governments should invest in social safety net programs

Safety nets can be expensive, but if properly implemented their short- and long-term benefits for food security far outweigh the initial costs. Ethiopia’s Productive Safety Net Programme for example delivers cash and/or food transfers to 7-8 million rural Ethiopians for six months every year. By investing in social safety net programmes, food insecurity can be reduced, increasing the resilience of the most vulnerable communities to shocks and stressors.

  • Invest in raising agricultural productivity

It is broadly accepted that agriculture is a powerful tool for reducing global poverty—it is up to 4 times more effective in raising incomes among the very poor than investments in other sectors. Raising agricultural productivity through investments such as irrigation and agricultural research increases the capacity of the domestic agricultural sector to supply local markets and adjust more effectively to shocks.

  • Focus on removing regional trade barriers

Strengthening regional trade can also have tremendous impact for improving food security and increasing resilience against shocks and stressors. For example, there is significant potential to stabilize domestic food markets by expanding regional trade, and that trade openness between African countries can broaden food markets and dilute the effect of local supply shocks. Results indicate that low production shocks in one country can be offset by even an average production in countries within the same region.  However, despite recent growth, regional trade levels remain low due to the high costs imposed by trade barriers. Reducing tariffs and removing administrative barriers to regional trade can, produce a significant positive impact on food security and agriculture.

  • Infrastructure

Poor infrastructure in Africa is one of the major challenges to agricultural growth and development. Africa’s growing trade shares in goods and services and agricultural products is in part due to significant improvements in local trade infrastructure such as telecommunications. On the other hand, less than 50% of the rural population lives close to useable roads, which, combined with a lack of storage facilities, leads to massive post-harvest losses – almost one third of global agricultural production never makes it to the consumer or arrives in poor condition.  Improving transport infrastructure will make it easier to move grains from surplus areas to deficit zones, whilst also reducing post-harvest losses, contributing to an increase in food security.

Moving forward

African countries have made good progress in strengthening regional and global trade. This can be attributed to the continent’s improved economic growth and improvements in local trade infrastructure. However, food price volatility caused by environmental shocks and stressors, as well as other social and economic factors will continue to affect food prices and food availability, especially for the most vulnerable communities, unless the key recommendations highlighted in this report are addressed.

The full report can be downloaded from www.resakss.org or from www.ifpri.org

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