Agriculture Exports from East Africa to the World
In this column called “The Indicator, ”we will be taking an economic or financial statistic from East Africa and breaking it down into bite-sized nuggets of knowledge for investors.
source: The Exchange
Today’s indicator figure is 53.3
53.3 of what?
53.3% is the percentage of agricultural exports out of total exports from the EAC to the rest of the world according to the most recent statistics from 2015, using data from the United Nations COMTRADE database. This translates to $15.1 billion USD worth of exports from a total of $28.3 billion USD worth of exports.
What are agricultural exports?
The export of agricultural goods includes raw materials such as tobacco, tea leaves, and coffee beans. Also, value-added goods such as cotton yarn, fruit juice, wheat flour, manufactured tobacco or cigarettes, and processed coffee are included in this metric.
Which EAC country has the highest and which the lowest amount of agricultural exports?
Kenya has the largest value of exports of agricultural goods at $3.1 billion USD. In the most recent data available, the value of Tanzania’s exports was $2.8 billion USD. While Uganda exports the highest percentage of its gross agricultural product, the value of Uganda’s agricultural exports totaled to $1.7 billion USD. Tea and coffee dominate the export portfolios of Kenya and Tanzania. Horticultural products (such as fresh vegetables) ranked second for Kenya’s exports followed by corn, wheat, rice, and cotton.
How do agricultural exports in the EAC compare to other regions of the world?
Average exports as a percentage of GDP in the EAC were 8.6% in 2013. Compared to the Sub-Saharan average of 19% the EAC measure looks small. However intra-regional trade within the EAC has nearly doubled from 2008-2012, indicating that the level of trade is increasing; however the metric to measure it has changed from individual countries to one large customs union.
In comparison, agricultural exports from Latin America and the Caribbean account for 25% of all exports from Latin America whereas agricultural exports from the US are less than 10% and less than 3% from China.
Are agricultural exports in the EAC increasing or decreasing?
According to all projections, agricultural exports are projected to increase over the long term. Recent droughts, floods, El Nino and other interferences have slightly brought down agricultural production in the EAC as a total, which affects exports. However, there is no comprehensive or systemic factor that will drag down either agricultural production or exports from the EAC.
What is the larger/broader significance of this percentage of agricultural exports?
The rate of growth of agricultural exports to the world has been quite high despite economic challenges. From 2005 to 2013, the EAC experienced a 50% rise in global agricultural exports. Despite the economic challenges to EAC countries between 2005-2013, the rate of exports grew and remained mostly steady. The majority of these exports are typically non-food items such as tobacco, coffee, and tea.
What’s behind the increase in the higher amount of agricultural exports in the EAC?
This consistent rise should be seen as a result of the EAC’s and member countries’ strong policies supporting agricultural growth and development in every EAC country. As the EAC facilitates the integration of markets, the technology and information flow today provide even more access and productivity in the agricultural industries of the EAC.
The EAC is continuing to make agricultural development a high priority. The EAC signed on to the Comprehensive Africa Agricultural Development Programme (CAADP). The stated goals of the CAADP are to increase agricultural output and reduce poverty and hunger by investing 10% of each nation’s annual budget into the growth of the agricultural industry. This progress will be monitored with various productivity and growth measures.
What challenges do rising rates of agricultural exports pose?
The internal distribution of agricultural products, especially food, can become a two-edged sword. Exports are good for industry and growth; however, as products are exported and in higher demand, their prices across the board tend to rise. The residents of the EAC need to be able to afford food from local areas and if the price of staple crops rises too high people will be put in a precarious position. Using an example from Bolivia, as the global demand for quinoa, a very nutritious grain, rose, the less the local people were able to afford it. It is essential for the EAC to have a balanced approach to this growth in the agricultural sector and its global trade.
What is being done in the EAC to mitigate the potential negative impacts?
Kenya, Rwanda, and Uganda have well-established programs that support innovation in agricultural practices, which will increase yield and overall positive outcomes in the agricultural sector and aid those suffering from hunger.
One illustrative organization is the Kilimo Trust which promotes low-risk agricultural strategies that serve local communities more reliably. By supporting neighborhood farms in their production of critical food staples instead of cash crops, they are making hunger less likely for residents nearby. They have developed a local approach to this problem, ensuring that citizens can both afford and access dietary staples such as rice, tomatoes, and other essential food items.