Emerging Markets / October 14, 2016

Agriculture in Angola and OPEC Oil Production

The prevailing decrease in petroleum prices over the last several years has severely affected those countries whose economies are highly dependent on oil exports. The financial strain has been so harsh on some national budgets that the Organization of Petroleum Exporting Countries (OPEC) recently announced it expects to cut down approximately 500.000 barrels of daily production by the end of the year. This decision has been long awaited by some OPEC members, who have exerted pressure on the oil cartel in order to drive up prices and increase their national budgets. However, some major producers in the Middle East opposed such a production decrease for several years, mainly because they still produce at a profit even with the low market prices.

Agriculture in Angola and OPEC Oil Production

Because of this economic dynamic, some OPEC members have been forced to diversify their respective economies in the short term. Such is the case of Angola, which is one of five African nations that belong to the OPEC, along with Gabon, Libya, Algeria, and Nigeria. Angola is also the second largest petroleum producer in Africa, after Nigeria, and the sixteenth producer worldwide. Likewise, within the African continent, Angola represents the sixth largest economy, after Egypt, Nigeria, Algeria, Morocco, and South Africa. Nevertheless, Angola’s economy is highly dependent on petroleum sales, which represent more than 90% of its national exports. Furthermore, over the last two years, Angola’s oil exports have decreased almost 50% in value.

The current economic situation has pushed Angola to look at its agriculture industry as a way of compensating for the low oil prices. Currently, the agriculture industry only represents 12% of the country’s GDP. However, Angola is a large country located in southern Africa with ample terrain and resources that could boast a booming agriculture industry. It is estimated that Angola has 58 million hectares of agricultural land available to be cultivated, but only 10% of it is currently being exploited. Similarly, about two-thirds of the Angolan population, or 17 million people, are engaged in farming activity. Notwithstanding, due to a lack of access to credit and an inappropriate infrastructure, these farmers only produce at subsistence levels. Angola’s agriculture industry has great potential. Nevertheless, the government needs to make agricultural development a priority and invest in empowering farmers to become a major part of the national economy.

Two crops dominate Angolan agricultural production, cassava at an overwhelming 67% and bananas at 19%. Similarly, Angola is a large Robusta coffee producer and, before its national civil war that lasted from 1975 to 2002, the country was a major supplier to the international markets. Unfortunately, the armed conflict in Angola also diminished the country’s agricultural self-sufficiency. During 2015, Angola’s agricultural exports accounted for a total of US$4.9 Million, while the country’s agricultural imports represented US$3.4 Billion. While China is Angola’s most important trade partner, due mainly to petroleum transactions, Portugal is Angola’s most important commercial partner in terms of agricultural goods. Angola’s main agricultural imports, originating primarily from Portugal and Brazil, are wheat flour, dairy products, poultry, and palm oil.

(Read more about Brazil’s Soybean Production and Trade)

Latest Media