African Reserves

Africa must remove barriers to cross-border trade to target food insecurity, warns IFPRI

African countries must improve their cross-border transport infrastructure or risk remaining vulnerable to shocks in global food supply chains, experts from the International Food Policy Research Institute (IFPRI) have warned following the publication the United States Department of Agriculture’s (USDA) monthly World Agricultural Supply and Demand Report. Estimates.

Structural problems remain

Africa‘s food security has come under intense scrutiny in the six months since the Russian invasion of Ukraine began. While the direct impact of shortages, caused by the closure of Ukraine’s Black Sea ports, has been mitigated by substituting its grain for imports from other major producers in the southern hemisphere, including Argentina, Brazil, n Australia and India, the indirect effects of disruptions to agricultural supply chains have been far-reaching.

“The biggest problem facing African farmers is not that they are too connected to global supply chains, but that their connections to these supply chains are not sufficiently developed,” said David Laborde, senior researcher at IFPRI, during a September 13 press briefing.

Global cereal price increases have not been passed on to farmers in sub-Saharan Africa, who mainly sell their produce in national or regional markets.

Meanwhile, input costs have soared, with sharp increases in the price of fuel and fertilizers combining to jeopardize farmers’ profitability. Nearly 40% of the world’s potash comes from Russia and Belarus; the latest USDA report shows that a 30% rise in fertilizer prices in the first three months of the war had a greater effect on rural poverty in Africa than on any other continent.

Self-sufficiency in fertilizer is unrealistic, warns expert

Developing a degree of self-sufficiency in fertilizer production in Africa is one potential way forward. In recent years, foundations have been laid for this purpose: the phosphate rock reserves stretching from Morocco to Tunisia account for more than 70% of the total world supply, while the new phosphate-based fertilizer plant Dangote Group’s urea, inaugurated in Lagos in March, is the second largest in the world. of its kind.

IFPRI panelists, however, questioned Africa’s ability to be self-sufficient in fertilizer production: “Africa will always have a potash deficit because the main mines are in Eritrea, and these reserves will not cover all of the continent’s needs because some crops such as bananas and plantains require high levels of potash,” Laborde warned.

“Africa will need to be better connected to the rest of the world to get all the nutrients it needs, but it’s clear there are plenty of opportunities to turn natural gas into fertilizer on the continent.”

Even if fertilizer prices fall in the near future, prohibitive barriers to cross-border trade will prevent Africa from meeting its own rapidly growing fertilizer demand in the short to medium term. Labyrinth customs regulations, poor road infrastructure and frequent lack of rail links between ports and inland agricultural centers mean that African fertilizer products are more likely to be sold in international markets than to geographical neighbors. .

AfCFTA will streamline trade but logistics networks need to be improved

The inauguration of the African Continental Free Trade Area (AfCFTA) promises to synchronize regulatory standards and reduce bureaucratic costs associated with intra-continental agricultural supply chains, but extensive trade between major fertilizer producers and markets regions will remain illusory unless logistics costs are drastically reduced.

Panelist Joe Glauber, senior research associate at IFPRI, said the AfCFTA “will be very important in bringing down some of these external tariffs and barriers to trade. The real key, however, is to reduce transaction costs in terms of moving grain from domestic markets to export markets and vice versa.

Laborde added, “For countries like Nigeria, it always makes sense to export their fertilizer to countries like Brazil, which have a large market ready to pay. In many cases, it will be cheaper to export fertilizer from Nigeria to Brazil than from Nigeria to Ethiopia. Improving Africa’s connectivity will be essential in the coming years to make the AfCFTA a reality.

Rather than avoiding deals with foreign buyers, it has been suggested that African countries adopt a two-pronged strategy. First, improving transport links that connect rural communities to major overseas trade corridors in Mombasa, Dar es Salaam, Beira, Abidjan-Dakar, Djibouti, Togo, Benin, Durban and Walvis Bay will prevent the effect external shocks from being amplified by localized logistics costs.

Second, panelists called for resilient supply chains to be complemented by more localized and decentralized fertilizer production which, if powered by renewable energy sources, could pave the way for a greener transition. towards food security on the continent.