USDA Official Lauds Growth in African Agribusiness Sector

Remarks delivered by Michael Scuse, Acting Under Secretary for Farm and Foreign Agricultural Services, United States Department of Agriculture (USDA), to the February 22 Launch of CCA’s Agribusiness Working Group

The opportunities for increased U.S. trade and investment in sub-Saharan Africa’s agricultural sector are enormous. According to a report from the McKinsey Global Institute last year, Africa is now among the fastest-growing regions in the world. The continent’s combined economic output was valued at $1.6 trillion in 2008—roughly equal to that of Brazil or Russia. Of four groups of industries that the report says could together generate as much as $2.6 trillion in annual revenue by 2020, agriculture ranks third. The other industries are consumer goods and services, natural resources, and infrastructure.

In calendar 2010, two-way agricultural trade between the United States and sub-Saharan Africa was $4.3 billion. Agricultural trade accounted for 7 percent of total two-way trade last year. Major U.S. agricultural products exported to sub-Saharan Africa include grains and feeds, led by wheat; poultry products; horticultural products; and dairy products. However, as African economies continue to grow, high-value product exports will be important. Major U.S. agricultural imports from sub-Saharan Africa include cocoa beans and cocoa products; rubber; coffee; forest and fishery products; tree nuts; fresh fruit; and wine and beer.

The International Monetary Fund (IMF) estimates that gross domestic product (GDP), in the 47 sub-Saharan African countries rose 4.9 percent last year. The IMF forecasts 5.5 percent growth this year. One billion people live on the African continent, and agriculture is the continent’s largest employer, encompassing 60 percent of the labor force. Agriculture also accounts for about 21 percent of the region’s GDP. The African middle class—now near 50 million—is expected to grow exponentially. These statistics beg the question, “Why aren’t more U.S. companies trading and investing in Africa?”

In 2009, when President Obama traveled to Accra, Ghana, he highlighted a “simple truth.” Africa’s prosperity can expand America’s prosperity. Attracting U.S. private sector trade and investment to Africa is critical to stimulating and sustaining the enormous economic growth that is forecast for the continent. It is also critical to increasing economic activity and creating good paying jobs here in the United States. In his January 2010 State of the Union address, President Obama announced the goal of doubling U.S. exports by the close of 2014. U.S. companies, farmers, and small- and medium-sized enterprises—the engines of economic growth—play an important role in accomplishing this goal.

In calendar year 2010, the United States exported an all-time high of $115.8 billion in agricultural products. USDA’s latest forecast indicated that agricultural exports in fiscal year 2011 would reach $126.5 billion, supporting more than a million jobs. These exports are made possible by USDA’s strong partnerships with food and agricultural industry organizations, State Departments of Agriculture, regional trade groups, private-voluntary and non-governmental organizations, and land-grant universities. For example, USDA’s foreign market development programs support the efforts of U.S. companies and industries to develop, expand, and maintain commercial markets. These programs are used in more than 100 countries for thousands of food and agricultural products.

In Nigeria, for example, USDA partnered with U.S. Wheat Associates to enhance the Nigerian flour milling industry’s processing capacity throughout the supply chain. As a result, flour is the country’s largest source of non-oil revenue. Today, Nigeria is the largest importer of U.S. wheat in sub-Saharan Africa. It is regularly one of the top three markets for U.S. wheat in the entire world. In addition, Nigeria is the largest market for U.S. agricultural products in sub-Saharan Africa. In calendar year 2010, U.S. agricultural exports to Nigeria reached $949 million. This is a 14-percent increase from the same period in 2009. These agricultural exports support nearly 8,000 jobs here in the United States, in the sectors of production, processing, transportation, and marketing.

USDA also administers the Food for Progress Program. This program partners U.S. companies with private-voluntary organizations (PVOs) and trade associations. It links small-scale farmers with local and international markets and processors to develop supply chains. Many of those here today represent organizations that successfully participate in Food for Progress programming.

In Liberia, a Food for Progress program improved cocoa cultivation, production, and marketing through a partnership of USDA, the World Cocoa Foundation, and the PVO, Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA). In addition, the PVO coordinated its advocacy with other stakeholders in the cocoa supply chain. As a result, the Government of Liberia established cocoa quality standards, an internationally recognized grading system, and permitted legally registered farmers’ associations to sell their cocoa directly to exporters beginning last year. This helped substantially raise cocoa farmers’ incomes.

In 2009, the U.S. confectionery and chocolate industry employed more than 70,000 people in over a thousand manufacturing facilities. At these facilities, chocolate and confectionery products are made from imported raw cocoa beans and processed cocoa products. This demonstrates how the work of PVOs at the farmer level in Africa ripples along the supply chain. Their efforts move from farmers to cooperatives to traders and exporters to international corporations and, ultimately, to consumers all over the world.

In Cameroon, Imperial Foods noodle factory will soon be manufacturing affordable, delicious, and nutritious noodles for the commercial market, and for aid agencies to provide rapid food assistance in times of shortage or famine. This company will be importing U.S. commodities and other ingredients to produce its noodles. Without USDA’s global network of U.S. agricultural attachés and its partnerships with food and agricultural industry organizations and PVOs, this noodle factory may not have opened.

This demonstrates how USDA liaises with agribusinesses. USDA puts them in touch with trade associations and non-profit and non-governmental organizations that are already working in Africa to provide technical assistance and build trade capacity.

In addition, USDA also organizes and leads U.S. agribusiness trade and investment missions to countries and regions where opportunities to make sales and form joint ventures are strong. These missions are unique because they focus on two-way trade. We recruit both large and small U.S. companies. They represent the full range of food and agricultural products, from bulk commodities to consumer-ready food products. On these missions, these companies have the opportunity to sit down face-to-face with potential business partners in dozens of one-on-one meetings. They also learn about a country’s trade opportunities, business practices, and government programs.

Between 2005 and 2008, USDA led three missions to the sub-Saharan Africa region—Southern Africa, East Africa, and West and Central Africa. The total value of exports of U.S. agricultural products and technology as a result of these missions was around $43.3 million and the total value of imports of African products was $4.45 million. These dollar values are a work in progress. Some business transactions and investment opportunities take time to fully develop and be implemented. The bottom line is that Africa is open for business and the time is ripe to explore the full range of opportunities there.

CCA’s U.S.-Africa Business Center will assist companies that want to trade and invest with Africa. It will direct questions from U.S. companies to USDA about export-import, joint ventures, financing, business impediments, and government programs. We also look forward to collaborating with the State Department, the Overseas Private Investment Corporation, the Export-Import Bank, the Small Business Administration, the U.S. Trade and Development Agency, and others to turn business opportunities into reality.

By keeping the lines of communication open, USDA can learn from the private sector. We look forward to hearing directly from the private sector what’s working and what’s not in the trade arena. This feedback helps us advise African countries. We can suggest to these countries how to reform their economies, improve governance, implement legal frameworks, and institute market-opening measures. These changes help create a climate for private sector-led trade and investment.

To that end, USDA has offices in seven countries in sub-Saharan Africa. They are in Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Senegal, and South Africa. USDA recently opened an office at the American Embassy in Addis Ababa, Ethiopia, where the African Union is headquartered.
 

In addition, we actively participate in regional economic communities. These include the Common Market for Eastern and Southern Africa (COMESA); Southern African Development Council; and East Africa Community. Our participation helps promote regional growth and reduce barriers to trade by establishing regional trade policies, developing infrastructure, and reducing corruption.

Also in the development arena, the Administration unveiled its Feed the Future Initiative in May 2010. This Initiative supports the international effort to increase the availability and accessibility of food and to improve nutrition and food safety. It serves as a springboard for broader economic development and food security. It also serves as a foundation for peace and opportunity in developing countries, which ensures our own national security.

USDA is working with the U.S. Agency for International Development, the U.S. Department of State, and international organizations to help implement this Initiative. We look forward to actively seeking opportunities to collaborate with the private sector on this Initiative as well.

As part of USDA’s Feed the Future efforts, we are providing support to COMESA, to establish a regional, science-based biosafety framework. This framework will enable cultivation, aid delivery, and increase trade in the products of biotechnology, both intra- and inter-regionally. This technology has an important role to play in meeting the challenges of food insecurity, climate change, and sustainable agriculture in Africa and around the world.

We encourage countries to implement policies governing biotechnology that are based on science and that call for a safe and appropriate application of the technology. In view of the increased global demand for food, responsible use of biotechnology will be essential. This agribusiness working group gives the private sector a forum where it can organize, communicate, share information on business opportunities, and resolve issues related to increasing trade and investment with Africa. USDA supports this effort. We will do all we can to create a climate that will allow trade and investment with sub-Saharan Africa to flourish.

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