Markets & Trade

Trade is an important avenue through which countries transform their economies and raise standards of living. For African, Caribbean and Pacific (ACP) countries, trade in agricultural products offers great potential to boost incomes for farmers, processors, and other agricultural value chain actors.

Increasing the ability of ACP countries to participate in regional and continental trade helps to improve the well-being of consumers, raise incomes of farmers, build resilience of food markets, and boost economic growth and reduce poverty.

Rapid population and income growth are expanding the demand for food and agricultural products in developing countries, opening substantial opportunities for trade and employment not only in agricultural production but also across agri-food systems.

In Africa, given the amounts spent on imported food, the demographic changes taking place, the huge opportunities offered by urban markets, not to mention the immense productive potential for agriculture, it is evident that there are both significant opportunities and a pressing need for greater intra-African and intra-regional agricultural trade.

The African Continental Free Trade Area (AfCFTA) agreement, which came into effect on the 1st of January 2021, will create the world’s largest single, integrated market for goods and services, and a customs union that will enable free movement of capital and business travelers in Africa.

It aims to connect 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 trillion. The agreement is expected to reduce tariffs on most goods among member countries, liberalize trade of key services, and address non-tariff obstacles to intra-regional trade, including sanitary and phytosanitary (SPS) standards and technical barriers to trade, catalyze the introduction of new technology to boost productivity and ease movement of capital (World Bank).

In the Caribbean, trade in agricultural products is essential for ensuring food security. While the region produces a variety of crops, it also relies on imports to meet its food needs. By participating in regional and international trade, Caribbean countries can diversify their food sources, reducing the risk of food shortages and price volatility. Additionally, trade allows for the exchange of agricultural technologies and best practices, which can enhance local food production and resilience to climate change. Regional trade agreements, such as those facilitated by the Caribbean Community (CARICOM), help to create a more favorable trading environment, reducing barriers and providing farmers with better opportunities to sell their products.

Regional organizations like CARICOM play a crucial role in facilitating trade by harmonizing standards, reducing tariffs, and promoting the free movement of goods. This integration not only boosts economic growth but also enhances political stability and social cohesion in the region.

In the Pacific Island countries, agriculture, forestry and fishing provide from 3% to over 25% of the GDP (World Bank, 2020) and are essential sectors for the economic growth employing a large percentage of the population. By accessing regional and international markets, Pacific farmers and agribusinesses can increase their income, invest in modern technologies, and improve productivity. This, in turn, stimulates economic growth and development across the region.

Markets and trade in agricultural products also promote sustainable development in the Pacific. Organic agriculture, in particular, has a significant contribution to make towards sustainable development due to its environment and climate-friendly production systems. By integrating smallholders into markets and promoting organic farming practices, Pacific nations can achieve economic resilience, social well-being, and environmental sustainability. Regional cooperation further supports the development of sustainable agricultural practices and the growth of the organic sector.

Urbanization and urban lifestyles are also accompanied by shifts in dietary patterns. More fruits and vegetables and more processed foods are being consumed. Demand for convenience is another overarching trend across income groups and is reflected in the strong demand for processed and prepared foods and in the expansion of street food.

A major evolution of the continent’s agricultural transformation is the rapid development of processing, packaging, distribution, and retail. These transformations open up new opportunities for value addition and employment creation, and increasingly in the off-farm segments of the value chain.