Summary
Food demand in West Africa is both growing rapidly and changing, with a growing emphasis on convenient, safe, quality food products. This potentially creates opportunities for the structural transformation of local agro-food sectors. However major obstacles are faced which inhibit the efficient functioning of local supply chains and this is creating growing reliance on imports. These obstacles, many of which lie outside the agricultural sector need to be urgently addressed.
A joint FAO/OECD paper posted in December 2016 has reviewed changing patterns of food demand in West Africa and the challenges this poses for domestic agro-food systems. It notes how food demand in West Africa is both growing rapidly and changing.
West Africans increasingly buy their food and do not produce it themselves, with between 2/3 and ¾ of all, food consumed passing through the market. This is the case for both rural and urban consumers. West Africans are also consuming an increasingly diversified range of foods, with a rise in rice and wheat consumption as well as meat protein and fresh fruit and vegetables. There is also a strong trend towards more convenient food types and an increased concern over product quality, attributes (nutritional value) and food safety. However given income levels, within this trend, price remains a key determinant of food accessibility.
These trends are likely to continue and even accelerate, with the population of ECOWAS members projected to double by 2050 (from 349 million to 789 million). This is seen as creating ‘great opportunities’ for West African agro-food sectors, since the production, processing and marketing investment required to meet this rising and evolving consumer demand offer the opportunity to ‘create many new jobs’.
However governments are faced with the challenge of creating ‘the economic and policy environment that will allow West Africans to capitalize on this opportunity’.
In West Africa there has been substantial growth in production of basic agricultural commodities, particularly since the 2008 food price crisis. However ‘most agricultural value chains remain plagued by poor co-ordination, underdeveloped marketing and transport infrastructure, and erratic electricity supplies’. Given these systemic weaknesses agro-processors, retailers and wholesalers ‘often revert to imports to meet urban demand’.
This is particularly the case in coastal urban zones, where population growth is likely to be concentrated (43% of the population already lives in urban areas, with West Africa being the most urbanized region in sub-Saharan Africa). These coastal urban areas, are already heavily integrated into global food supply chains (with most dairy products, for example, being produced on the basis of imported milk powders), while the smaller rural towns interact with local agricultural producers but are poorly linked to major population centres.
Patterns of food production growth which have taken place since 2008 have not always taken into account evolving patterns of consumer demand, with insufficient investments having been made in post-harvest processing, packaging, storage and distribution, given the trend towards more convenient types of food.
The report identifies the many factors which have limited production and productivity growth in West Africa and which ‘have contributed to the erosion of West African producers’ market shares for many products’. Nevertheless it recognizes that for certain agricultural products there is scope for the substitution of local raw materials.
Changing food consumption patterns is also impacting on the structure of the retail sector. Traditional open markets are struggling to meet more sophisticated consumer demand, while traditional neighbourhood retailers appear to be doing better in serving evolving patterns of demand. This being noted the growth of the modern retail sector (supermarkets) ‘has accelerated in recent years’, with both regional and international players establishing and expanding their operations (particularly in Nigeria, Ghana, Senegal and Cote d’Ivoire). The analysis notes that opportunities for ‘the development of domestic supply chains’ to serve ‘higher value market segments’ need to be fully exploited.
The OECD/FAO analysis explicitly rejects government efforts to use import restrictions (tariffs, quotas, trade bans) as a means of supporting farmers arguing this is ’harmful to the majority of consumers’. Instead the report recommends:
- higher levels of state related investment in infrastructure outside the agriculture sector, which is nevertheless central to the efficient functioning of local supply chains;
- more investment in agriculture in line with CAADP targets;
- a greater focus on investment in post-harvest components of the food supply chain;
- investment in strengthening the functioning of supply chains through increased use of contractual arrangements and strengthening of inter-professional organization to better organize the supply chain and improve the efficiency of local food supply systems ;
- support for improved market information systems, including support for understanding where consumer demand trends are heading;
- investment in food safety systems and quality assurance schemes and associated enforcement infrastructure to enhance consumer confidence in local food products;
- promotion of the nutritional benefits of local food stuffs and support to associated local marketing
- improvement in policy coordination, harmonisation and implementation
Sources:
OECD/FAO, ‘West African food systems and changing consumer demand’, West African papers No. 4, December 2016
http://www.oecd-ilibrary.org/docserver/download/b165522b-en.pdf?expires=1482326191&id=id&accname=guest&checksum=A63E39C087878B55D4218EAAB06A6B42
| Comment and Analysis Addressing the systemic weaknesses in the West African agro-food sector which leads agro-processors, retailers and wholesalers to ‘often revert to imports to meet urban demand’, is vital if the opportunities presented by rapidly rising demand are to be exploited in ways which lead to structural change in the agro-food sector in West Africa. This is vital, for agro-food exporters in the EU are eagerly eying expanding West African markets and are seeking to position themselves to fully exploit these rapidly growing markets.The adverse domestic context for local agro-food sector development in West Africa, alongside the pro-active initiative of EU trade negotiators and rapidly expanding engagement of EU agro-food sector enterprises in serving expanding West African markets, is likely to place trade policy issues centre stage in the coming years. This is despite the OECD/FAO warnings that efforts to support farmers through the use of trade policy tools harm the majority of consumers. The reality is, according to WTO trade policy reviews conducted since October 2010, no less than 9 West Africa government pro-actively make use of trade policy tools as an integral part of agro-food sector development initiatives, in no less than 9 agricultural sectors. The Use of Non-Tariff Trade Policy Measures in West Africa (by country and sector)
Experience in West Africa (see companion article ‘Senegal remains major market for Dutch onion exports despite growth in domestic production’) and elsewhere in sub-Saharan Africa, suggest that the calculated and measured use of trade policy tools, in line with a realistic assessment of local production expansion potential, can play a role in kick-starting agricultural expansion and investment in the development of local supply chains. This needs to be seen in the context of the expansion of EU agro-food exports to West Africa across a range of sectors. This growth in EU exports has often taken place when markets elsewhere served by EU exporters have come under pressure or have been lost. When this happens, this can see imported products offered for sale at prices which fundamentally undermine any prospect of sustainable local production. It is in this context that the measured and calculated use of trade policy tools would appear to be justified, despite the temporary harm to consumer interests. In terms of the EU-West Africa agro-food sector relationship, West Africa’s close geographical proximity and the low cost of sea freight, makes the region the main destination for EU agro-food sector exports to ACP countries. Between 2009 and 2013 the value of EU exports grew 75.6%, while the value of EU imports from West Africa grew only 3.5%. This saw West Africa’s agro-food sector trade surplus with the EU fall 91.7% (from €1.6 billion to €134 million). While declining oil prices saw imports fall sharply in 2014, 2015 and into 2016, the longer term trend in expanding EU agro-food exports to West Africa is clear. While meeting immediate consumer demand, this trade is potentially narrowing the space for local agro-food sector development, particularly where it directly or indirectly (via fostering importation of raw materials for further processing) substitutes for the development of local supply chains. This is particularly the case given the commitments entered into under the regional Economic Partnership Agreement with the EU, which could limit the use of non-tariff trade policy tools which are still extensively used across the West African region. The foregone employment creation opportunities this kind of trade could give rise to in the longer term, is likely to further fuel trans-continental migration flows which are such a source of concern to EU policy makers in their preparations for the post-Cotonou negotiations between the EU and ACP countries. Addressing the root causes of long term migration trends requires the kind of responsible trade and investment engagement by EU companies in West Africa which Arla has called for, but which it is not yet practicing itself (see article ‘Arla’s Senegalese milk powder repackaging plant begins operations’) and which the EC appears to have endorsed in its November 22nd 2016 communication on ‘A renewed partnership with the countries of Africa, the Caribbean and the Pacific’. |
| Key words: West Africa EPA Tags: West Africa EPA |