Africa’s dream to feed China hits hard reality

THIKA, Kenya: Watching workers poke avocados from the treetops at an orchard owned by Kenyan agricultural company Kakuzi, director Chris Flowers relishes the thought that some may soon be heading to the crown jewel of emerging consumer markets: China.

Taking advantage of Beijing’s increased focus on trade with African countries to help reduce its gaping deficits, Kenya signed an export deal with China for fresh avocados in January after years of lobbying for market access.

Six months later, there are no more shipments, the Kenyan avocado company, the East African country’s phytosanitary inspectorate and Kakuzi told Reuters.

While 10 avocado exporters have passed Kenyan inspections, China is now looking to conduct its own audits and, based on the previous experience of some other African fruit growers, it could be 10 years before the green light is given.

“You can actually have a market, but if you can’t meet the standards, you can’t take advantage of it,” said Stephen Karingi, head of trade at the United Nations Economic Commission for Africa.

Reuters spoke to nine officials and companies across Africa who said China’s red tape and a reluctance to negotiate broad trade deals were undermining Beijing’s plan to boost African imports.

However, ramping up agricultural exports is one of the few options many African countries have to rebalance their trade ties with China and earn the hard currency they need to pay off mountains of debt, much of it to Beijing.

Take Kenya. The annual trade deficit with China is about $6.5 billion and it has about $8 billion in Chinese debt. It needs nearly $631 million this year alone to pay off that debt, but that’s nearly three times the exports to China in 2021.

Many African countries are now saying they simply can no longer afford Chinese loans and need to boost exports to China. Recognizing the need to address the imbalances, or at least prevent them from getting worse, China announced a change of strategy in November.

At a China-Africa summit typically used by Beijing to unveil dazzling loans, President Xi Jinping announced a series of initiatives to increase Chinese imports from Africa to $300 billion over the next three years and to $300 billion by 2035. per year.

In theory, agriculture is one of the most promising avenues, experts say. China is the world’s largest food importer, while the agricultural sector in Africa is both the main employer and contributor to economic activity.

In addition, 60 percent of the world’s undeveloped farmland is in Africa, meaning there is huge growth potential.

“It’s a win-win choice for China and Africa,” said Mei Xinyu of the Chinese Academy of International Trade and Economic Cooperation, a think tank under China’s Ministry of Commerce.

TRADING IMBALANCES

For decades, China has lent billions of dollars to Africa to build railways, power plants and highways, while deepening ties with the continent while extracting minerals and oil.

That has helped the China-Africa trade balloon 24-fold over the past two decades, and mutual trade reached a record $254 billion last year despite the turmoil of the global pandemic.

But for $148 billion worth of Chinese goods shipped to Africa in 2021, China only imported $106 billion, and five resource-rich countries — Angola, the Republic of the Congo, the Democratic Republic of the Congo, South Africa and Zambia — were good. for $75 billion of that.

Nigeria, Africa’s most populous nation, is the largest importer of Chinese goods, worth $23 billion in 2021, but those imports surpassed Nigerian exports to China by eight times.

Inequality is greater in Uganda, where about 80 percent of exports are agricultural products, such as coffee, tea and cotton. Last year, it shipped $44 million worth of goods to China, but imports exceeded $1 billion.

Chinese customs data shows that more than three quarters of African countries have trade deficits with Beijing.

Wu Peng, director-general of the Chinese Foreign Ministry’s African Affairs Department, said such imbalances were unintentional.

“China has always focused on promoting a balanced development of trade between China and Africa,” he told Reuters.

African leaders have been pushing for action on trade for years, said Hannah Ryder, founder of Development Reimagined, an African-owned development consultancy headquartered in Beijing.

The pandemic, meanwhile, sharpened their focus on debt. About 60 percent of low-income countries – mainly in Africa – are indebted or at high risk, with debt at its highest in 20 years.

“African countries were under pressure to stop borrowing,” Ryder said. “Trade is where (the Chinese) think they can do something.”

GREEN LANES

When it comes to food and agriculture, China’s imports were worth $13 billion two decades ago. By 2020 they had risen to $161 billion, but Africa accounted for just 2.6 percent of that.

Wu, head of African affairs, said capitalizing on that growth would ensure balanced trade, more jobs in Africa and help industrialize the continent.

“(China) has been actively responding to the major concerns of African countries about China-Africa trade cooperation,” he said.

President Xi’s plan calls for centralized clearance zones, or “Green Lanes,” to speed up inspections of agricultural commodities from Africa, increased zero-tariff access and $10 billion in trade finance for Chinese companies importing from the continent.

On paper, China’s growing food needs present a huge opportunity for Africa to use agricultural exports to generate foreign exchange, said Lauren Johnston, a visiting lecturer at the University of Adelaide’s Institute of International Trade.

“The debt situation has brought it up,” she said. “It’s just a super logical investment at first.”

But some countries struggle to capitalize on the opportunities, such as Kenya. It is the largest avocado producer in Africa, exporting $154 million last year, mainly to Europe.

Eric Were of the Kenya Plant Health Inspectorate Service (Kephis) said they had jumped through hoops to get 10 avocado companies approved for Chinese export this year.

“For the Chinese, we need to inspect the orchard, we need to inspect the packing station and we need to inspect the fumigation facilities,” he said.

He said that for a month, Kakuzi, Kenya’s largest avocado grower, has shown it can track its produce, from the seeds to how the trees are managed and how the avocados are harvested, processed and packaged. By contrast, the European Union only requires inspection at the point of exit, Were said.

Last month, the inspectorate announced that the Chinese authorities have decided to conduct their own checks – which has not always been a positive experience next door in Uganda.

“When they come, they often notice that we are not well,” Emmanuel Mutahunga, Uganda’s foreign trade commissioner, told Reuters.

RED LINES

Tanzanian coffee farmers have also struggled to make their mark, while in Namibia it took nine years from the signing of a beef export agreement to satisfy Chinese regulators, leading to the first shipments in 2019.

Wu said China’s planned initiatives would help African farmers improve their quarantine and food safety capacities, although Mei and Johnston said easing phytosanitary regulations on African imports was unlikely.

“There is no bigger red line than China and food security,” Johnston said.

China is also missing out on other ways to speed up access, say experts such as Wandile Sihlobo, chief economist at South Africa’s Agricultural Business Chamber.

He said Beijing could negotiate broad trade deals with African countries and regional blocs, as the EU does.

Instead, China continues to negotiate bilateral deals, and then only for individual products.

“The key message here is that China needs to be a little more open to Africa’s food exports,” he said. “A lot of it will have to come down to individual countries getting better deals.”

The South African citrus sector was one of the continent’s first pioneers in China, signing the first protocol with Beijing in 2004. In 2021 it exported 162,000 pallets of fruit, but the success did not come overnight.

“It’s an incredible market for SA citrus fruits,” said Justin Chadwick, chief executive of the Citrus Growers Association of Southern Africa.

Yet Britain and the European Union, which have strict food safety standards, are still by far the main destination for South African citrus, accounting for 44 percent of exports last year.

“If you want to go to China, you have to get a separate protocol for each agricultural product. It takes on average about 10 years before the protocol for each product is concluded,” says Chadwick. “Unfortunately, China does this product by product.”