One of the most interesting aspects of my job is meeting interesting people from all parts of the world. Last week I only had to travel as far as Kansas City to meet nearly two dozen African ministers of trade, commerce, and agriculture for a visit to the Kansas City Board of Trade as part of the African Growth and Opportunity Act Forum.
As agriculture plays a key role in African development, governments have a crucial role to play in ensuring a favorable market climate for their farmers and agricultural products. The ministers learned about the Board of Trade’s day-to-day exchange operations, where hard red winter wheat is bought and sold in the futures market. We took a tour of the trading floor to see traders in action and also met with researchers at some of America’s premier land grant universities to learn how they provide farmers and USDA with valuable research and new technologies.
I explained how USDA creates a favorable climate by supporting market infrastructure like the Kansas City Board of Trade in a number of ways. For example, USDA collects data and facilitates reporting on domestic and international crop prices, which informs trading decisions. The Department of Agriculture also establishes and enforces grading standards for agricultural products, so that buyers know the quality to expect. Finally, the U.S. Warehouse Act allows agricultural products to be graded and classified, providing a receipt which can act as portable collateral for a future loan. Government support and standardization provides buyers with reliable information allowing them to make confident decisions. I hope the ministers will take some of these ideas back with them.
The United States is actively helping African governments create and monitor their own commodity exchanges, for example, with Malawi’s Agricultural Commodity Exchange for Africa (ACE). ACE is an internet-based regional exchange operating in the spot (immediate) and forward (futures) market, set up with help from U.S. Agency for International Development. ACE helps to give small-scale farmers leverage in negotiating for their crops by providing them with reliable market information both pre- and post-harvest, which ultimately improves competition and communications, and ensures higher prices for higher quality.
Participating in the AGOA forum has been a pleasure for me, and I look forward to next year, when we can hear about success from agricultural business partnerships created during this year’s forum.