Europe's poultry and dairy exports to West Africa

Ghana and Senegal regulate imports of chicken meat, but use different measures: While Ghana imposes a 35% tariff, Senegal imposed a complete ban on imports in 2006 as a result of avian influenza, which remains in place today. Consequently, the sectors of both countries have been able to develop under different levels of external protection.

Within 10 years, production has nearly doubled in Ghana and nearly tripled in Senegal. Since Ghana additionally imports poultry meat, only about 20 % of consumption is covered by its own production. The rest is imported. Increases in production and imports allow Ghana to have a per capita consumption that is more than double that of Senegal.

The research showed that consumers in both countries have a preference for their local products. They perceive them as "fresh" and "tasty" and are willing to pay more for them if they can afford it. According to this, one might ask: What is the problem anyway? Production is increasing, consumers have a preference for local products, and in Ghana people have the opportunity to buy in an extra market segment at low prices or "convenient".
 

Trade policy recommendations

There is no doubt that production in Africa could develop better if it were not exposed to very low-priced competition from Europe. Therefore, there is a demand to limit or even completely stop our "cheap exports" to these countries. However, a unilateral export ban by the EU would hardly help the African farms, but would only lead to a diversion of trade. Chicken parts would then no longer come from the EU, but from the USA or Brazil. Trade policy measures would therefore be better applied at the external borders of African countries.

Would an import ban like the one in Senegal also be advisable for Ghana? Using model calculations, the research project showed that Ghana's domestic production would increase by up to 250 %. The other side of the coin is that prices would rise and, overall, consumption would be significantly lower. In addition, a ban on imports would eliminate tariff revenues, which account for a large share of total tariff revenues in Ghana. Overall, welfare would be reduced.

If the policy objective is to increase domestic production, importing countries should increase their tariff rate until they achieve the desired balance between boosting domestic production on the one hand, and avoiding excessive burdens on households on the other. Ghana could take advantage of this. The provisions of the World Trade Organization permit substantial tariff increases here, so that domestic production - according to the project results - could be increased by up to 100%. However, the situation in Senegal is different. Here, international regulations only allow a maximum tariff of 30%. Lifting the import ban would therefore place a considerable burden on domestic production in this country.

A key conclusion for our policy makers is therefore that they should work for a change in the international trade policy framework. Countries should be allowed to make their tariffs more flexible to allow a gradual opening of markets without collapsing local production. Alternatively or complementarily, countries should be able to use tariff rate quotas, i.e., a limit on the amount of imports allowed into the country at relatively low tariff rates.

Another important finding of the study is that in the West African countries, large domestic farms benefit significantly more from restrictive import policies than smaller or medium-sized farms. Thus, to the extent that governments wanted to address the differences between smaller and larger farms in addition to increasing domestic production, they would need to adopt structural policies in combination with trade policies.
 

Different conclusions for dairy products?