False Economy - Alan Beattie [112]
When you look at the attempts to bring more parts of the supply chain into Africa, it is clear that these are the most important constraints on trade and production. Mali, in West Africa, for example, is a traditional cotton-growing area, with near-perfect climatic and soil conditions. But apart from "ginning" the cotton—a basic mechanized process for removing seeds and stalks—its attempts to go further up the value chain have struggled. I visited a cotton spinning factory in Mali a few years ago and was told that the plant was running below capacity and was some way from making a profit. Labor was cheap but largely unskilled, and production was hobbled by unreliable and expensive power and difficulties exporting through either neighboring Cote d'lvoire, frequently rocked by civil conflict, or the overloaded port at Dakar, in Senegal.
Being landlocked is a particular problem, which helps to explain why so many African and Central Asian countries have difficulty achieving economic liftoff. Having to rely on neighboring countries to truck out goods involves inevitable border delays and makes exporters vulnerable to conflict or other disruptions in its transit routes. It is notable that the products that landlocked countries like Uganda and Zambia have begun successfully to export—fresh flowers and high-value vegetables—are often those carried by air. Each day's delay in shipping reduces a country's trade on average by 1 percent, and by a striking 6 percent for time-sensitive goods like perishable fruit and vegetables. One week longer to get your goods to market, and your country's ability to trade in high-value perishables is nearly halved.
It takes an average of twenty-four hours just to cross the border between Uganda and Kenya en route to the Kenyan port of Mombasa, where further delays are commonly imposed. And as with the East India Company's ships sailing to Asia, it is not just the time but also the uncertainty that is so damaging to trade. Andrew Rugasira of the Good African coffee company reckons it takes a month to get his coffee from Uganda to Mombasa. Until a special valve technology was developed that allowed ground coffee to be bagged in a sterile atmosphere of nitrogen, thus stopping it going stale in transit, Uganda was simply not able to roast and grind its own coffee beans for export outside Africa.
It isn't just Africa, of course. Time and again across the developing world, the real constraints to competing with foreign producers are not trade policy but the lack of something to sell and the inability to get it to market cheaply. The plight of vegetable farmers in the Philippines is a case in point. A couple of years ago I visited the farmers high in the mountainous region of Baguio, who grow garlic, cabbage, lettuce, and other fresh produce. They complained vociferously about cheap Chinese garlic, lettuce, and carrots, which, they said, were appearing in the markets in Manila and putting them out of business.
But in reality it seemed that a slow and expensive supply chain had more to do with their inability to compete than the threatened removal of protection by import tariffs. Unlike the markets of medieval Islam, or of seventeenth-century Netherlands, the local wholesale distribution market for vegetables to which farmers trucked their produce had no forward prices, not even a day ahead. So no one could be sure what price they would fetch when they rolled up with their lettuce. A shortage (and hence high prices) of lettuce one day would induce lots of growers to turn up the next with truckloads of lettuce, creating a glut and causing prices to fall.
There were few refrigerated warehouses and trucks, so the "cold chain" so important to managing the supply of fresh produce