Presentation: Economic Performance of Agro-Processing Sectors
- 22 September 2017
Mmatlou Kalaba, an International Trade Economist from the University of Pretoria and the Bureau for Food and Agriculture Policy (BFAP) gave a presentation on ‘Economic performance of the Agro-processing sub-sector’. Kalaba presented on four topics: the Great Agricultural Potential (GAP), agribusiness opportunities, trade agreements and future trends, such as threats and opportunities.
On the theme of Africa’s GAP, Kalaba highlighted that Africa is a net-importer of food, but as demand for food rises this must be met by supply. Key decisive issues that have direct implications include (i) population growth; (ii) the current gap as African supply fails to meet demand; (iii) the expansion of production, (iv) the role of infrastructure and (v) the status of the continent as a net food importer.
On agribusiness potential f Africa, the presentation highlighted that massive growth is predicted by the World Bank, but it also raised several fundamental questions in relations to who will own the projected growth: (i) who will have the future share of agribusiness growth in Africa? What needs to be done now? Which institutions should be involved and what policies need to be in place?
The decisive factors to respond t these non-negligible questions include: (i) integration of value chains, from rural and small farmers to the regional and global levels; (ii) transformation of the structure of the sector; (iii) competitive, high standards and thriving sectors; (iv) growth in agro-processing; (v) investment, such as infrastructure and irrigation; (vi) strengthening institutions, such as enforcement and regulation; (vii) policy environment amongst many other factors. The presentation also pointed out that while incomes are rising, distribution remains skewed.
On the topic of regional trade agreements, the presentation responded to the vital question of whether the Tripartite Free Trade Area (TFTA) will create additional opportunities and in particular, whether agriculture can respond to the future incentives. The main responses given outlined that: (i) national markets will absorb most of the production; (ii) TFTA will create opportunities but only where supply is available; (iii) the major benefits will only benefits a few countries; (iv) generally there is low African agricultural trade and even lower agro-processed products trade; (v) there is need for supply expansion, which includes additional area, yield and even possibly diversification; (vi) trade barriers are also a decisive factor.
The opportunities in African agriculture are related to market dynamism; (ii) African investment; (iii) growing urbanisation; (iv) linking rural markets with urban consumers; (v) increase manufacturing; (vi) strengthening value chains; (vii) increased role of private sector.
In conclusion, creating ‘the Africa we want’ will depend addressing the issues of (i) population growth; (ii) youth population; (iii) technology; (iv) energy; (v) land markets and (vi) climate change shocks. It will also depend on overcoming some challenges such as: (i) political decisiveness; (ii) insurance and financial markets; (iii) regional markets (and value chains); (iv) investing in R&D, extension, and education; (v) infrastructure improvement; (vi) policy environment and regulation.