Market Opportunities for African Agriculture: an Examination of Demand-Side Constraints on Agricultural Growth
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View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics DSGD DISCUSSION PAPER NO. 1 MARKET OPPORTUNITIES FOR AFRICAN AGRICULTURE: AN EXAMINATION OF DEMAND-SIDE CONSTRAINTS ON AGRICULTURAL GROWTH Xinshen Diao, Paul Dorosh, and Shaikh Mahfuzur Rahman with Siet Meijer, Mark Rosegrant, Yukitsugu Yanoma, and Weibo Li Development Strategy and Governance Division and Markets, Trade and Institutions Division International Food Policy Research Institute 2033 K Street, N.W. Washington, D.C. 20006 U.S.A. http://www. ifpri.org September 2003 Copyright © 2003 International Food Policy Research Institute DSGD Discussion Papers contain preliminary material and research results, and are circulated prior to a full peer review in order to stimulate discussion and critical comment. It is expected that most Discussion Papers will eventually be published in some other form, and that their content may also be revised. DSGD DISCUSSION PAPER NO. 1 MARKET OPPORTUNITIES FOR AFRICAN AGRICULTURE: AN EXAMINATION OF DEMAND-SIDE CONSTRAINTS ON AGRICULTURAL GROWTH Xinshen Diao, Paul Dorosh, and Shaikh Mahfuzur Rahman with Siet Meijer, Mark Rosegrant, Yukitsugu Yanoma, and Weibo Li Development Strategy and Governance Division and Markets, Trade and Institutions Division International Food Policy Research Institute 2033 K Street, N.W. Washington, D.C. 20006 U.S.A. http://www. ifpri.org September 2003 Copyright © 2003 International Food Policy Research Institute DSGD Discussion Papers contain preliminary material and research results, and are circulated prior to a full peer review in order to stimulate discussion and critical comment. It is expected that most Discussion Papers will eventually be published in some other form, and that their content may also be revised. ACKNOWLEDGEMENTS We wish to thank the many people who made important contributions to this paper, particularly Peter Hazell for providing overall guidance and many helpful suggestions. Eleni Gabre-Madhin, Michael Johnson and Nicholas Minot also provided valuable input in brainstorming sessions during the early stages of the study. Steven Haggblade and Jock Anderson, external reviewers of the manuscript, provided helpful comments and suggestions. Thanks also go to Sarah Cline, Christen Lungren and Liangzhi You who assisted with data and other aspects of the research. Finally, we thank USAID for funding this research as part of IFPRI’s analytical support to the U.S. Initiative to End Hunger in Africa (IEHA). i TABLE OF CONTENTS 1. Introduction.................................................................................................................1 2. Agricultural Export Markets: Trends, Constraints, and Opportunities....................... 4 Export Performance of the Sub-Saharan African Countries: 1981-2000............ 5 Traditional Export Crops.................................................................................... 14 Non-Traditional Agricultural Exports ................................................................ 17 Summary............................................................................................................. 29 3. Prospects for Increased Market Food Demand....................................................... 30 Production, Consumption and Trade in Food Crops.......................................... 30 Future Demand and Supply: Impact Model Simulation Results........................ 34 4. Economy-Wide Analysis of Agricultural Productivity and Trade Opportunities .... 41 Description of the Model and the Data............................................................... 41 Findings from the World CGE Model Simulations............................................ 43 5. Conclusions............................................................................................................... 61 Implications for an Agricultural Development Strategy…………………….…64 References ................................................................................................................... 66 Appendix I: Appendix Tables........................................................................................ 69 Appendix II: Country Case Studies ................................................................................ 86 Appendix III: List of Commodities and Countries in the four Sub-Saharan African Regions in the Impact Model.................................................................. 104 Appendix IV: Country and Sector Aggregation in the World CGE Model.................... 106 ii LIST OF TABLES Table 1: Some basic facts about Sub-Saharan Africa....................................................... 3 Table 2: World and Sub-Saharan countries total and agricultural exports, 1981-2000.... 7 Table 3: Composition of exports from Sub-Saharan Africa, 1980, 1990, and 1997 ........ 9 Table 4: World and SSA exports of agriculture by major product categories................ 10 Table 5: Sub-Saharan African (SSA) major agricultural export commodities, 1996-2000 annual average ............................................................................... 12 Table 6: Sub-Saharan African (SSA) major agricultural import commodities, 1996-2000 annual average ............................................................................... 13 Table 7: Export of fish and fishery products from SSA: 1981-2000.............................. 21 Table 8: Summary of food safety restrictions of fish exports to the European Union ... 23 Table 9: Value of cut flower exports to the EU by top 12 countries (Reala million US dollars)................................................................................ 26 Table 10: Export of cut flowers and foliage from Kenya and Uganda by volume ('000 tons)......................................................................................................... 26 Table 11: Comparison of capital and operating costs of floriculture between Uganda and other competing countries ......................................................................... 28 Table 12: Sub-Saharan African major food crop demand and supply -- 1996-2000 annual average.................................................................................................. 31 Table 13: Ratio of wholesale maize prices to import parity price: 1994-2002................. 32 Table 14: Baseline projection of meat and cereal production, demand and net imports in Sub Saharan Africa ..................................................................................... 35 Table 15: Summary of projected annual growth rate of meat, maize and all cereal production, and demand in Sub-Saharan Africa .............................................. 36 Table 16: Description of the world CGE model’s scenarios ............................................ 44 Table 17: Agricultural growth scenarios: Sub-Saharan Africa macro results .................. 45 Table 18: Agricultural growth scenarios: Sub-Saharan Africa sector results................... 46 Table 19: Multipliers of the world CGE model simulations............................................. 48 Table 20: Change in SSA Land Returns and Wage Rate -- Normalized by consumer price index........................................................................................................ 53 Table 21: Comparison of the IMPACT and CGE model results ...................................... 58 iii LIST OF APPENDIX TABLES Appendix I Table 1: East African major agricultural export commodities, 1996-2000 annual average ............................................................ 69 Appendix I Table 2: East African major agricultural import commodities, 1996-2000 annual average ............................................................ 70 Appendix I Table 3: West African major agricultural export commodities, 1996-2000 annual average ............................................................ 71 Appendix I Table 4: West African major agricultural import commodities, 1996-2000 annual average ............................................................ 72 Appendix I Table 5: Southern African major agricultural export commodities 1996-2000 annual average ............................................................ 73 Appendix I Table 6 Southern African major agricultural import commodities, 1996-2000 annual average ............................................................ 74 Appendix I Table 7: Baseline projection of meat and cereal production, demand and net imports in the four Sub-Saharan African regions............. 75 Appendix I Table 8: Projected annual growth rate of meat, maize and all cereal production, and demand in northern Sub-Saharan Africa ............ 76 Appendix I Table 9: Projected annual growth rate of meat, maize and all cereal production, and demand in central and western Sub-Saharan Africa ............................................................................................ 77 Appendix I Table 10: Projected annual growth rate of meat, maize and all cereal production, and demand in Southern Sub-Saharan Africa............ 78 Appendix I Table 11: Projected annual growth rate of meat, maize and all cereal production, and demand in eastern Sub-Saharan Africa............... 79 Appendix I Table 12: Agricultural growth scenarios: Southern Africa macro results ..... 80 Appendix I Table 13: Agricultural growth scenarios: Mozambique macro results..... 81 Appendix I Table 14: Agricultural growth scenarios: Uganda macro results .............. 82 Appendix I Table 15: