GE REPORTS; How U.S.-Africa trade can fight hunger

Food security should be the focus of a new U.S.-Africa dialogue on trade. Aligning U.S. trade and development policies would help alleviate hunger in Africa — and benefit America’s economy.

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play According to the U.S. Department of Agriculture, U.S. commercial agriculture and food shipments far outstrip food aid, accounting for about 80 percent of American agriculture exports to Africa.
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This article was written  by Andrea Durkin, Principal of Sparkplug, a consulting and advisory firm based in Washington, D.C. She is the author of the report, “Grow Markets, Fight Hunger: A Food Security Framework for US-Africa Trade Relations,” published by the Chicago Council on Global Affairs.


 Eighty percent of Africans work in the food and agriculture sector — yet one in every four people in Africa suffers chronic hunger, and 227 million people in Africa are considered undernourished. While rates of agricultural productivity in Africa are growing, they’re still far too low to meet projected demand in 2030. If current trends continue, hunger in Africa will remain a persistent threat to the continent’s economic development and stability — with dire global consequences.

But as intractable as this problem seems to be, the United States has at its disposal a vital — but underutilized — lever to alleviate hunger in Africa while at the same time promoting its growth: trade policy.

The countries targeted for U.S. agriculture development assistance represent some of the largest and fastest-growing food markets of the future. But our trade policies are not in sync with our approach to development, which does not advance U.S. commercial interests.

Aligning these priorities would benefit farmers in rural Africa by removing hurdles to market access, moving food more efficiently to people in need and serving the growing number of people buying food in African city centers. At the same time, it would support American companies seeking partners and customers in new markets.

Today, food trade is stifled in Africa due to barriers that targeted trade policies between the United States and Africa can help solve.

For example, it can take an extra seven to eight years to bring critical inputs such as newer, high-yielding seeds to market due to varying systems for approvals between African nations. Long delays at the borders between African countries contribute to food spoilage in a region where an estimated $4 billion worth of grains each year are lost after harvest. That’s more than twice the amount the U.S. spent in total food aid in fiscal year 2013.

African business journals also lament that while it costs between $1,400 and $1,700 to ship a 40-foot container from Dubai to Mombasa, the average transportation and clearing cost for the same container between Mombasa and Kampala — about a quarter of the distance — is $3,800.

Despite these challenges, the African agriculture and food sector isexpected to reach a value of $1 trillion by 2030. But to tap this $1 trillion potential, trade on the continent must be freer.

Where to begin? Historically, the centerpiece of U.S.-Africa trade relations has been the African Growth and Opportunity Act (AGOA), which provides Africa with access to the U.S. market — but not U.S. access to Africa — and does little to benefit African food exports. Nor does it require African countries that benefit from the program to provide the kind of legal rights and policy environment that attracts U.S. investors.

According to the U.S. Department of Agriculture, U.S. commercial agriculture and food shipments far outstrip food aid, accounting for about 80 percent of American agriculture exports to Africa. But the United States only has about 7 percent market share in Africa, where food sales are anticipated to increase nearly 60 percent over the next decade.

If American food producers are going to grow their market share and supply much-needed food to fulfill the demand of a rapidly growing African population, U.S. trade policy must sow the seeds. The United States should open a new trade dialogue with Africa focused on food — one of the most critical sectors for African economic growth and security and one of the biggest opportunities for American farmers and food producers.

 

Among the goals this of this dialogue should be to advance and support regional integration, including harmonization of food-related standards and the streamlining of procedures — such as customs — to move food across borders and reduce the losses now occurring. Regional economic integration is already a goal that African leaders have set for themselves. Focusing U.S. trade policy on helping Africa advance economic integration would create larger, less risky markets for U.S. producers.

Improved stability and food security can also be supported through U.S.-Africa cooperation in the World Trade Organization (WTO). Restrictions on food exports imposed mainly by larger developing countries have hurt poorer, food importing countries in Africa. A global agreement to curb their use could help advance global agriculture negotiations that have not seen progress in well over a decade.

Trade policy can also serve to support and reinforce U.S. development aid, including investments in rural infrastructure, agriculture development and nutrition. While the United States should continue to mobilize and deploy these efforts, which are yielding promising returns in reducing poverty, U.S. trade policies designed to generate opportunities for African and American food producers could amplify these positive results while promoting a sustainable approach to development in Africa.

For example, the United States could use a new platform with Africa to discuss investment agreements to attract more private sector resources and foster long-term relationships with local suppliers along the value chain, diminishing the need over time for public investments in agriculture development.

Though trade alone cannot eradicate food insecurity, it can help alleviate it. Getting our trade policy right with Africa will support African livelihoods, generate opportunities for American agriculture and food producers, and ensure that U.S. development assistance programs achieve their potential to eliminate hunger.

This piece also appears in Republic 3.0. and Ideas Lab

For more info on General Electric's endeavors in Africa visit:- http://www.gereportsafrica.com

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