Ghana moves to capture opportunities created in US-China trade war escalation

… following Chinese ban on agric produce from U.S.

The continuous trade war and its escalating effects between the two largest world economies – China and the United States, is creating rare opportunities for Ghana to take advantage in maximizing its export volumes with China.

According to the International Trade Commission (ITC), Ghana’s exports to China in 2018 were worth US$2.4 billion while imports of Chinese goods into Ghana that same year amounted to US$4.82 billion. This translates into a trade deficit of US$2.42 billion for the year, in continuation of what has become a regular annual deficit. Positively, however Ghana’s exports to the Chinese market increased by 32 percent in value in 2018.

On Monday, China halted the sale of all agriculture imports from the United States in retaliation to the remaining 10 percent duty imposed by President Trump on a US$300 billion list of Chinese imports from the U.S. According to President Trump, the imposition of the tariff was necessary because Beijing had not fulfilled its promise to buy large volumes of U.S. agricultural products.

Currently, China remains the largest exporter of US agricultural products – particularly soybeans with 52 percent market share – as well as sorghum, wheat, animal hides, pork, beef and alfalfa.

Halting export of these products does not mean that consumption has been reduced. This suggests the possibility of China looking for alternative markets to get supplies of such agricultural products.

During the mid-year budget review, Finance Minister, Mr. Ken Ofori Atta said the introduction of the Planting for Food and Jobs (PFJ) Programme in 2017, has significantly increased domestic food production, stressing that foodstuff such as maize production increased by 72 percent, rice by 24 percent, soybean by 39 percent and sorghum 100 percent.

Importantly, the increase of production in soybean, sorghum and wheat can be used as the basis for local exporters to export such produce to the Chinese market.

In 2018 for instance, the American Farm Bureau reported that China imported US$9.1 billion of U.S. farm produce – mainly soybeans, sorghum and pork as against US$19.5 billion of agricultural products in 2017.

This represents more than 50 percent decrease in volume as well as value of Chinese exports from the US; indicating that China has been searching for alternative markets to get supplies for various agricultural products.

Currently, local demand for soybeans accounts for 150,000 metric tonnes whereas imports of the produce amount to 50 percent of total local demand. What this means is that domestic production of soybeans accounts for only about 75,000 metric tonnes.

The domestic production figure could however be significantly higher because it is unclear how much of the produce has been exported. Last year, a sensitization programme carried out by the Ghana Exports Promotion Authority (GEPA) revealed that a chunk of Ghana’s exports data declared by freight forwarders are lumped together and classified as “others”, making it difficult to measure export data. What is important however is that it is unanimously

Reports indicate that China bought 130,000 tonnes of soybeans, 120,000 tonnes of sorghum, 60,000 tonnes of wheat, 40,000 tonnes of pork and products from the United States between July 19th and August 2nd 2019. These are now up for grabs, with Ghana a contender with regards to sorghum and soya beans if it can quickly scale up its domestic production levels.