AGOA & Agriculture

AGOA & Agriculture Increasing Value to African Agriculture

AGOA & Trade • AGOA+GSP imports: $53.8 billion in 2011 • 500% increase from 2001 ($8.2 billion) • AGOA import share rose from 0.7 to 2.5% • Mineral fuel & oil were 91.6% of imports • Non-petroleum imports rose from $1.2 to $4.5 billion • Leading sectors (2011) • Apparel ($850 million) • Automobiles ($2.1 billion) • Agriculture: <1% of AGOA exports Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Limited impact in agriculture for these market-related reasons: • Some commodities not competitive in US market • Lack of investment in production/logistics • Underdeveloped infrastructure • Lack of market linkages • Lack of supporting institutions • Cost of complying with private/industry standards Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Commodities not competitive in US market • High transportation costs • Strong US/NAFTA/FTA competitors • Lack of investment in production/logistics • Quality/post-harvest losses • Cold chain/grain storage • Underdeveloped infrastructure • Poor roads, limited airfreight, congested ports • Limited grid electricity • High transport costs, road tolls Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Commodities not competitive in US market • Might not be always possible to change • Reduce transportation costs • Lack of investment in production/logistics • Increase/support investment in ag logistics • Underdeveloped infrastructure • MCC, OPIC, USTDA and Ex-Im to improve • Public-private partnerships • Example: Power Africa Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Lack of market linkages • Lack of regional/global market connections • Many middlemen reduce farmgate prices • Lack of supporting institutions • Limited extension/technical assistance • Limited access to credit • Gap between donors & for-profits • Complying with private/industry standards • High costs for higher-end markets (Global GAP) Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Lack of market linkages • Focus on connecting for/non-profit sectors • Development sustainability through profit • Lack of supporting institutions • Support extension/technical assistance • Boost access to credit • Create supporting network (legal and other) • Complying with private/industry standards • Technical support to boost capacity • Example : Cochran Fellowship Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Limited impact in agriculture for these policy-related reasons: • Many commodities already had MFN duty-free access • TRQs on some products • Some products not given duty-free treatment • Counterproductive local government policy • Sanitary and Phytosanitary (SPS) barriers Sources: CCA, CDG, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Products already had MFN zero duty access • 620 of 1,300 ag tariff lines MFN duty-free • Products not given TRQ/duty-free treatment • Sugar, peanuts, tobacco, processed foods affected • Cotton, beef, dairy less affected • Counterproductive local government policy • Turnover & export taxes, marketing boards • Land policy/tenure • Negative foreign investment regulations Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Products facing TRQs • May need to expand TRQ-free list • Lower costs of TRQ operation • Products facing duties • May need to expand duty-free list • Counterproductive local government policy • Cooperation with government to reduce negative policies and promote position ones • Example: No duty or VAT on ag inputs or capital Sources: CCA, ITC, DFID, Brookings, USDA, World Bank, FAO

AGOA & Agriculture • Sanitary and Phytosanitary (SPS) barriers • Some legitimately protect food quality and human, plant and animal health • SPS issues are a huge barrier to African exports • US regulatory system is complex and difficult to navigate: • Risk Assessment • Country Consultation • Risk Management Document (RMD) • Rule-Making • Approvals can take years Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA & Agriculture Sources: USDA/APHIS

AGOA & Agriculture • Sanitary and Phytosanitary (SPS) barriers • USDA and USAID support activities to assist in SPS compliance • USDA/FAS has offices in Senegal, Ghana, Nigeria, Ethiopia, Kenya and South Africa • Need more support on the ground • However, SPS support for African exporters is insufficient Sources: CCA, ITC, Brookings, USDA, World Bank, FAO

AGOA Beyond 2015 • Develop a comprehensive ag trade & investment strategy • Support regional integration • Agricultural/food standards • More efficient input markets • Regional customs cooperation • Boost technical assistance & capacity building • Support USDA & Cooperator programs • USAID FTF, Global Development Alliance, Development Innovation Ventures Sources: CCA, ITC, DFID, Brookings, USDA, World Bank, FAO

Thank you! Eric Trachtenberg Director, Food & Agriculture Sector McLarty Associates 900 Seventeenth St, Suite 800 Washington, DC 20006 1-202-419-1420 Acknowledgements/Sources: USDA/Foreign Agricultural Service (FAS), TAHA, Economic Research Service (ERS) Congressional Research Service, GCCA, GMF

AGOA – Background • African Growth and Opportunity Act • Signed into law on May 18, 2000 • Covers Africa except Sudan, CAR, Somalia, Madagascar, Eritrea & Zimbabwe • Supports democratic governance • Shift from development assistance • Reduce poverty • Build on African strengths • Increase focus on trade • Expires in 2015 Sources: CCA, Brookings, USDA, World Bank, FAO

AGOA – Background • Specific changes • AGOA + GSP – no duties on 6,400 products • The GSP total is around 4,600 products • 70% AGOA country exports duty free Sources: CCA, Brookings, USDA, World Bank, FAO

AGOA & Agriculture