TRALAC - Trade Law Centre

Agriculture Specialists Examine US-Africa Trade Progress

Tuesday, 28 June 2005

Source: United States Department of State

The African Growth and Opportunity Act (AGOA) has helped level the playing field for Africa's access to U.S. agricultural markets, but American tariffs and subsidies are still blocking full access by Africa's farm producers, according to a panel of agricultural specialists participating in the 2005 Corporate Council on Africa U.S.-Africa Business Summit in Baltimore June 21-24.

Rosa Whittaker, former assistant U.S. trade representative (USTR) for Africa, while acknowledging the steps forward, pointed to some of the basic problems that need to be overcome if African agriculture is to make a place for itself on world markets.

She stressed that diversification is vital if Africa is to become more than just an exporter of raw materials. "Africa must move from subsistence farming, a common phenomenon throughout sub-Saharan Africa, to a more organized system of crop selection, crop growing, packaging and delivery," she said.

Other issues she noted were the need to develop Africa's infrastructure to replace poor transportation systems, which often delay bringing fresh produce to market, as well as the need to make large-scale investment in research and training to create facilities for African farm producers to both raise and maintain output levels to meet world market demands.

Patrick Coleman, an agricultural economist and director for African affairs in the Office of the U.S. Trade Representative, looked on the bright side. "African agriculture is ripe for transformation, hungry for investment -- and the technology needed for production, distribution and transportation to help promote marketing, and the future of AGOA, depend on the work [done] in these areas," he said.

AGOA has become "the cornerstone of our African trade policy," Coleman declared, providing Africans access to the $11 billion U.S. market. It also allows Africans to diversify their exports while adding to the growth of their job markets, he said. "Ninety percent of African imports now enter the U.S. duty free," he added, with AGOA allowing for greater U.S.-Africa farm trade. But, he said, "I'd like to see more countries involved and more products traded."

At present, 66 percent of all U.S. agricultural trade with sub-Saharan Africa involves primarily three countries, South Africa, Madagascar and Cote d'Ivoire, Coleman said. "With Cote d'Ivoire, it's cocoa; Madagascar, vanilla beans; and with South Africa, you see much more of a diversity of products coming in [from citrus fruits to wines]."

"Under AGOA, South Africa is now the Number 1 foreign supplier of fresh oranges, with over $26 million in such exports entering the U.S. in 2004, holding about 45 percent of the U.S. citrus market, which is pretty remarkable, " he said. "South African wine exports likewise have increased [under AGOA] up to $18.2 million, an increase of 41 percent over the previous year."

Coleman conceded that Europe-Africa agricultural trade is still higher than U.S.-Africa agricultural trade -- in part because of former colonial connections -- with 60 percent of Africa's agricultural exports going to Europe while only 6 percent makes its way to the U.S. market. But he looked at this as "an opportunity for growth in the U.S.-Africa agricultural relationship."

Coleman outlined some of the changes occurring in African agricultural sectors, largely the result of liberal trade legislation like AGOA, spurred by increased and more open trade: pooling resources to automate farm production; farming through cooperatives, rather than individual "mom and pop" plots; changing land tenure systems and land ownership.

"In Madagascar, with reforms come greater capital investment opportunities. Africans are more apt to innovate and to take advantage of changes and fluctuations in the U.S. trade market, and fine-tune their trade options accordingly to determine what particular products may be more competitive," Coleman explained.

"Marketing surveys done by Madagascar, and trade discussions with U.S. partners are resulting in a more diverse vanilla bean product line: vanilla extracts, spices, oils and perfumes; Ghana, now sending processed cocoa butter, in addition to its cocoa beans; Uganda, not just exporting coffee beans, but roasting specialty coffees. So in order to maximize the benefits of AGOA trading, African countries are learning to diversify their product lines," he said.