Agriculture to be a Focus of the Renewed Africa-EU Partnership

As with so many aspects of EU policy statements, the key issue will be how this commitment is interpreted and applied in practice. African governments may have rather different views to the EC on what the appropriate ‘regulatory and policy framework’ should be for the development of African agri-food sectors.

Governments in sub-Saharan Africa continue to make extensive use of non-tariff trade policy tools in support of local agro-food sector development, while under the various economic partnership agreements now in place; the EC is seeking to secure the systematic dismantling of the use of such trade policy tools.

While the commitment to the promotion of ‘responsible value chains’ is to be welcome, the critical issue once again is how this commitment will be operationalized.

In the dairy sector there is already a debate on the need for responsible EU trade and investment engagement in African dairy sector development. The leading EU dairy company Arla has committed to a ‘cause no harm’ policy in developing its trade and investment engagement with sub-Saharan Africa. However Arla continues to face serious challenges in realising this policy commitment in practice, given the trade and investment policy model it has adopted (for more details see companion article ‘EU dairy companies commit to help building milk-to dairy supply chains in Nigeria’, 8 May 2017).

Similarly in South Africa, the Minister of Trade and Industry has called for an international initiative to address the problems created for African poultry producers by the surplus of ‘brown’ poultry meat at the global level (for more details see companion article ‘Need to restore differentiation in trade rules in support of structural transformation in Africa’, 27 April 2017) (5). To date the EU has shown no interest in such an international initiative despite the intensifying EU-South Africa poultry trade dispute (see companion articles ‘Will South Africa’s introduction of poultry safeguard duties by challenged by the EC?’ 23 February 2017).

Meanwhile in the cocoa sector, calls continue to be made for measures to be adopted which will ensure primary cocoa producers obtain a larger share of the final sale price of cocoa products, through setting ‘a minimum price for cocoa and to eventually move to a flexible premium system’ (3). This call followed a 30% decline in cocoa prices since September 2016.

In the cocoa sector movement on the price issue is seen as vital to ensuring the economic and inter-generational sustainability of cocoa production in West Africa. This issue was implicitly raised by Ghana’s Minister of Food and Agriculture, Dr Afriyie Akoto, who at the launch of the Ghana-Cote d’Ivoire Sustainable Cocoa Initiative highlighted how the growth in Asian demand for cocoa has ‘not been matched by impressive prices’ for cocoa producers (4).

However it is far from clear to what extent the European Commission and broader EU is likely to be willing to support regulatory initiatives to strengthen the functioning of cocoa value chains to the benefit of primary producers in Africa and across the ACP. Rather the focus is on research and innovation to boost productivity.  However in the cocoa sector if the price issue is not addressed, despite rising global demand expanded production could simply result in lower prices and a net loss to primary producers. In the cocoa sector, while not denying the importance of productivity improvements, the price issue remains at the heart of the challenge of developing ‘responsible value chains’.

In Africa the promotion of ‘responsible value chains’ has to ensure private sector investments contribute to the structural transformation of African agro-food sectors, so more value is added and retained locally in the production of agro-food products for national, regional and international markets. Ensuring a focus on serving national and regional markets in Africa, as well as international markets, needs to be seen in the light of the projected growth in Africa’s population up to 2050.  This population growth will create not only enormous new demand for food across the African continent, but also opportunities for the structural transformation of African agri-food sectors.

In this context if the primary policy concern is the contribution which the agri-food sector in Africa can make to poverty eradication and rural development, the emphasis placed in the joint communication on the ‘major opportunities’ offered by EPA arrangements for access to the EU market,  appears profoundly misplaced.

The reality is there is an exceptionally low level of demand growth in the EU for food products. Indeed, the EU agri-food market served through the Economic Partnership Agreements is shortly to undergo a profound contraction. Once the UK leaves the EU its’ trade with Africa will no longer be governed by the existing EU trade agreements.  The departure of the UK from the EU will reduce the EU population by some 65.14 million or some 12.8% of the current total EU population of 510.1 million.  This contrasts markedly with population growth in Africa, which by 2050 is projected to have doubled (6), having accounted for 54% of the global population growth of 2.37 billion projected to occur by 2050. (7).

The importance of growing African markets in overall demand for food products is recognised within the EU food sector, which sees Africa as the new frontier for EU food exports. Across a range of sectors African markets are of growing importance to EU exporters.  For example, since 2009 the importance of the sub-Saharan African market to extra-EU poultry meat exports has increased from 23% to 47% in 2015 (see companion article, ‘EU poultry meat exports to Africa continue to grow’, 15 December 2016). Similarly, at the national level, the West African market now takes almost 50% of extra-EU Dutch onion exports (see companion article, ‘Senegal remains major market for Dutch onion exports despite growth in domestic production’, 28 January 2017).  While at the corporate level, for 2016 Arla reported a 15.8% growth in revenue in its operation in sub-Saharan Africa compared to 1.3% revenue growth in its European operations (see companion article, ‘EU West Africa Dairy Sector Developments’).

This tension between the growing export interests of EU agro-food sector companies in African markets (and in Africa as a source of raw materials for further processing in Europe for subsequent re-export to expanding markets in Asia) and African aspirations for the development of their local agri-food sectors, poses challenges for the EU in realising its ambition of promoting ‘responsible value chains’.  This is particularly the case if this promotion of ‘responsible value chains’ is to take as its foundation African aspirations for the structural transformation of their agri-food sectors.

However if these challenges are recognised, practical ways of resolving tensions can be found. Thus for example, we find that while West Africa is the major market for Dutch onion exports, Dutch onion traders are already investing in local production in Senegal.  In addition, according to press reports, the Dutch Embassy in Ghana has ‘described as unacceptable Ghana’s importation of onions and other vegetables from Holland when they could be grown locally’ and has committed to providing  field technology to support the development of commercial onion production in Ghana (8).

This suggests there are those in Europe who recognise that the future of African agri-food sector development lies in competitively serving expanding African food markets. This needs to be taken on board in the renewed Africa-EU partnership.