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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

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agoa agriculture

AGOA & Agriculture

Increasing Value to African Agriculture

agoa trade
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 agriculture1
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 agriculture2
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 agriculture3
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 agriculture4
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 agriculture5
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 agriculture6
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 agriculture7
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 agriculture8
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 agriculture9
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 agriculture10
AGOA & Agriculture

Sources: USDA/APHIS

agoa agriculture11
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
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
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
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 background1
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

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