Promoting Agricultural Value Chains
In the OIC Member Countries
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4.3 Export promotion in OIC countries for global agricultural value chains
In parallel to the dominant focus on self-sufficiency, a number of OIC Member Countries are
large agricultural players and export significant quantities, such as Turkey, Indonesia,
Malaysia, Egypt, and Pakistan. Particularly in South Asia, agriculture is gradually diversifying
towards high value commodities. Malaysia and Indonesia are the most prominent examples of
this group: Both are large agricultural exporters of palm oil and rubber; and in the case of
Indonesia also coffee, tea and cocoa. A high level of government involvement in agriculture can
be witnessed for both countries, and is particularly manifest in Indonesia, where four
government ministries are involved in agricultural policies and regulation.
Both countries have different strategies in place to maintain and enhance their position as key
agricultural exporters in the global market; for instance, by means of market diversification
and product differentiation. As regards market diversification, both countries increasingly
broaden their customer base and cater to diverse markets, from traditional buyers in the
European Union to the emerging markets of India and China, which together account for more
than a third of global palm oil imports. Concerning product differentiation, although palm oil is
a mass commodity with limited scope for variation, both countries have supported global
sustainability standards and multi-stakeholder initiatives. This serves enhance their legitimacy
and fortify their worldwide leading position with regard to other emerging (and competing)
producer countries, such as Colombia and Nigeria. Recently, both countries have also
developed their own domestic standards for sustainably produced palm oil which have been
introduced to address sustainability concerns associated with palm oil production and
maintain access to European and US markets, where demand for sustainable products has
grown significantly over recent years.
Furthermore, both Indonesia and Malaysia aim to decrease their dependency on exporting
crude palm oil, as prices tend to be highly volatile, and to increase their domestic processing
capacities in order to capture more value added locally. Therefore, increased diversification is
targeted in the form of entering export activities with high value added within the existing
chains. Both countries have initiated programmes to locally convert palm oil into biodiesel,
which is currently mostly sold on the domestic market but may be upgraded to reach export
markets as well.
Also other OIC countries aim to make use of the opportunities offered by high value global
agricultural value chains. Success cases include Turkey, Senegal, Cameroon, Burkina Faso,
Morocco, and Egypt who managed to position themselves as suppliers of fresh fruit and
vegetables to the EU market, producing mostly non-traditional export crops such as green
beans, onions, tomatoes, grapes and citrus fruit. Several African OIC countries promote the
production of vegetable oil crops, particularly palm oil, such as Uganda (which also encourages
sunflower and sesame oil), Sierra Leone and Cameroon. In the African OIC region, attempts at
re-launching the production and export of traditional smallholder products can also be
observed. Products include sesame (e.g. Chad, Burkina Faso, Uganda, Nigeria), groundnuts (the
Gambia, Senegal, Guinea) or shea nuts (Mali, Burkina Faso, Nigeria).
However, compared to their potential, the overall integration of OIC Member Countries into
global agricultural value chains is still underdeveloped. For instance, in Arab OIC countries, the
lack of strong agricultural value chains reflects the countries’ virtual lack of strong competitive
advantage in production, processing or distribution through existing value chains (ESCWA,
2014).