Evidence on trends in the single factoral terms of trade in African agricultural commodity production

The ability of African countries to achieve sustained improvements in agricultural incomes depends on their ability to generate total factor productivity (TFP) change in their agricultural sectors and adjust to movements in agricultural output and input prices. The single factoral terms of trade index measures these changes, calculated as changes in the product of TFP and the agricultural terms of trade. Estimates of the single factoral terms of trade index for the selected commodities over the period 1970-2002 are reported and discussed for 33 African countries for which data sets are available. The index is estimated for producers of coffee, cocoa, copra, palm kernel oil, coconut oil, palm oil, rice, cotton and sugar using annual agricultural sector data. Few countries managed to achieve an increase in the index over this period and it declined in many countries. In the light of the empirical evidence assembled, three broad strategic options are considered, covering agricultural trade reform, economic diversification strategies and strategies to improve total factor productivity in commodity production.