Category: Dairy

The dairy sector offers scope for putting cash into the hands of smallholder farmers on a regular basis and has considerable transformative potential. However this could well be undermined by emerging patterns of EU trade and investment in ACP dairy sectors. These developments cannot be delinked from new patterns of EU support to the dairy sector. There are indications that certain EU dairy companies recognise the need to develop ‘responsible’ trade and investment relations in the dairy sector in Africa in particular. Indeed calls have been made for the establishment of a ‘Code of Conduct for Responsible Trade and Investment in African Dairy Sector Development’. There is also a need for the EU to responsibly interpret and apply the commitments entered into by ACP governments with regard to the use of non-tariff trade policy measures.
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Debate on West African Dairy Sector Trade Policies Likely to Intensify in Coming Years

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Summary
Intra-regional dairy sector trade tensions are likely to intensify in West Africa in the coming years as the Government of Nigeria seeks to refine the use of its foreign exchange allocation system to support the development of local milk production, while Ghana and Cote d’Ivoire move ahead with tariff reductions on milk powders imports from the EU. The establishment of national platforms by EU dairy companies focused on regional markets, could see a growing formal and informal trade in reconstituted dairy products across West African borders, with a view to exploiting variations in the import tariffs levied on milk powders by different ECOWAS members. Read more “Debate on West African Dairy Sector Trade Policies Likely to Intensify in Coming Years”

No Real Respite for African Milk Producers Given Projected Trends in EU Dairy Production and Exports

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Summary
EU milk production will continue to expand in the coming decade adding 1 million tonnes per year up to 2030. The growth rate in global import demand for dairy products is however slowing down as self sufficiency rate sin some developing country regions improve.  The EU will however remain the leading global diary exporter. The main area of concern for ACP countries is EU milk powder exports. Where sustained high levels of skimmed milk powder (SMP) exports will be maintained, though be it below the 2019 peak. Exports of fat filled milk powder (FFMP)will also continue to increase, reinforcing an import-based model of African dairy sector development. This will be reinforced by EC efforts to secure the removal of both tariffs and all non-tariff barriers to EU exports of dairy products to growing African markets. A more detailed analysis of the impact of these EU exports on local integrated African dairy sector development is needed, with this requiring better reporting on trends in EU export of FFMPs. A key question remains: how can the EU’s current short-term export maximization focus in dairy sector relations with Africa be reconciled with the longer term need to promote the structural development of Africa milk production and the locally integrated development of African dairy sectors? Read more “No Real Respite for African Milk Producers Given Projected Trends in EU Dairy Production and Exports”

Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers

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Summary
Given the trade in milk powders is the principal area through which EU dairy sector developments impact on ACP dairy sector development, the increase in EU SMP prices which has followed on from the elimination of EU SMP intervention stocks should offer some relieve to African milk producers. This being noted no immediate benefits will be felt given the 30% increase in EU SMP exports from January to July 2019. The situation is further complicated by the level of EU exports of fat filled milk powders to sub-Saharan Africa, which is likely to continue to expand for the foreseeable future. Monitoring this trade should be simpler in future given the creation of a consolidated tariff heading for this product (19019050). The revised EU27/UK Withdrawal Agreement along with the UK’s post Brexit MFN tariffs for dairy products could reduce the adverse trade effects of any ‘No-Deal’ Brexit which could still emerge from 1st January 2021. What this could mean for EU-ACP dairy sector trade flows will however require detailed product by product analysis, with the key consideration being the extent to which disruptions of existing EU27 dairy exports to the UK result in increased EU production and stocks of SMP. Read more “Rising EU SMP Prices and New Mechanism for Monitoring FFMP Exports Could Lay the Basis for Easing Competitive Pressures on ACP Milk Producers”

EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports

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Summary
The latest EC FTA implementation report highlighted the particular importance of such agreement to EU agro-food exporters. Attention is increasingly being focused on the removal of non-tariff barriers to EU exporters in the context of the full implementation of agreed tariff reduction commitments. While in 2018 exports to sub-Sahara Africa were an exception to the overall trend in the expansion of the value of EU agro-food exports, the decline in the value of exports to sub-Saharan Africa was less marked in countries where fully implemented FTAs were in place. A review of trends in EU exports of agro-food products where the implementation of an EU FTA had been completed (the EU-South Africa TDCA) revealed that in those products where the margins of tariff preferences generated by the agreement were significant a remarkable growth in the value of EU exports occurred between 2009 and 2016, with in most of these product areas this growth continuing through to 2018 despite South Africa’s economic difficulties (though be it at a slower rate). This illustrates the true value of EU trade agreements to the EU agro-food sector in trade relations with sub-Saharan Africa. Read more “EU FTA Implementation Report Highlights the Importance of Trade Agreements to EU Agro-Food Exports”

Report Reviews Impact of Current CAP Financial Instruments on Developing Countries

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Summary
A study for the European Committee of the Regions has found ‘CAP subsidies continue to have a production-stimulating effect’, with EU production and exports being greater than would be the case in the absence of CAP subsidies. The case studies in the report look at the effects of CAP subsidies in regard to milk powders, chicken meat and processed tomato products on vulnerable developing countries (VDCs – which includes all ACP countries). It draws nuanced conclusions in regard to the effects of the provision of CAP subsidies but on the basis of the terms of reference of the report largely neglects the effects of CAP related EU agricultural trade policies on VDCs. The report calls for: ‘greater disciplines on coupled support payments’; adjustment to EU market management measures so they do not destabilize prices for VDC producers; ‘the phasing out of decoupled payments for income support’, and ‘the creation of a platform allowing stakeholders from VDCs to be involved in a dialogue on PCD and agri-food trade issues’. Read more “Report Reviews Impact of Current CAP Financial Instruments on Developing Countries”

Arla Commits to Extended Dairy sector Cooperation in Nigeria

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Summary
Arla has announced a new partnership for the promotion of local milk production in Nigeria as part of its Milky Way Partnership Nigeria initiative. However the focus on the development of commercially viable local milk supply chains needs to be seen against the background of the serious local constraints on the development of efficient milk-to dairy supply chains in Nigeria and the expansion and changing structure of EU milk powder exports which is delivering low priced milk powders to Nigeria for reconstitution into value added dairy products. The competitive pressure from imported milk powders is only likely to be exacerbated if a no-deal Brexit occurs which would inevitably disrupt existing EU27/UK trade in dairy products. Against this background it is highly unlikely that in the foreseeable future local Nigerian milk production will make any dent in the Nigerian dairy sector’s overwhelming dependence on imported milk powders for its dairy processing activities. Read more “Arla Commits to Extended Dairy sector Cooperation in Nigeria”

EU Skimmed Milk Powder Stocks Empty, But for How Long?

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Summary
While EU skimmed milk powder stocks are now empty, after five years of overhanging global markets, this respite could be short lived. A no-deal Brexit could so severely disrupt trade in the dairy sector that the EC would return to skimmed milk powder (SMP) intervention buying and support for private storage of SMP. As with the measures adopted in response to the August 2014 Russian import embargo  this could give rise to market consequences and trade flows which undermine efforts to promote milk-to-dairy supply chains in ACP countries, particularly in West Africa. Against this background ACP governments will need to ensure they retain the trade policy space necessary to protect local markets from disruptions where initiatives to develop and sustain local milk-to dairy supply chains are underway. Read more “EU Skimmed Milk Powder Stocks Empty, But for How Long?”

Commissioner Hogan Highlights Agri-food Sector No Deal Brexit Preparations

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Summary
In the event of a ‘no-deal’ Brexit EU market disturbance mitigation measures will consist of a combination of public intervention buying, aid to private storage, support for product withdrawal schemes, targeted financial assistance and support for the development of alternative markets. These instruments can be combined in various ways in light of sectoral needs, with the EC maintaining its experience of previous market disturbance in the 2014-16 period provides a wealth of experience to draw on. The experience of trade diversion to ACP markets following the August 2014 Russian import embargo is a source of concern for ACP producers. This experience suggests a need for a pro-active ACP engagement with the EC on the design and implementation of EU Brexit-related market disturbance mitigation measures, to ensure such measures take into account the interests of ACP producers and traders. Read more “Commissioner Hogan Highlights Agri-food Sector No Deal Brexit Preparations”

ACP Livestock Sectors and the Collapse of Cross Party Talks to Resolve the Brexit Impasse

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Summary
The breakdown of cross party discussions on a compromise to break the Parliamentary impasse on ratification of the EU/UK Withdrawal Agreement is seeing renewed efforts to remove Prime Minister May from office. There are concerns this is increasing the prospect of a ‘no-deal’ Brexit. This would seriously impact on EU27/UK trade in livestock products. The resulting EU/UK trade displacement could lead to import surges which could disrupt ACP  markets and undermine the position of local livestock producers in ACP countries targeted by EU/UK exporters. Actual effects will need to be assessed country by country and product by product. ACP governments in countries where livestock based agro-food industries are under development should review the safeguard mechanisms they have available to protect local livestock producers from the trade displacement effects of a ‘no-deal’ Brexit. ACP beef, dairy and poultry companies and producers associations should review their marketing strategies and develop contingency plans to deal with the commercial consequences of the trade displacement effects of a ‘no-deal’ Brexit. Read more “ACP Livestock Sectors and the Collapse of Cross Party Talks to Resolve the Brexit Impasse”

What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?

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Summary
While the paper from Professor Mathew’s paper reviews the possible effects of specific CAP reform proposals, these cannot be assessed in isolation from the wider EU CAP related policies. This includes EU agricultural trade policies and EU SPS and food safety policies. There are inherent tensions between the quest by EU agro-food companies for new markets and African aspirations for the structural development of local agro-food sectors. Reconciling this tension in a development friendly manner will be a key challenge in addressing policy coherence issues which arise as a result of the EU’s Common Agricultural policy and associated supporting policy measures. Any attempt to get to grips with this issue will require engagement at the country and product specific level and will require full respect for the right of ACP governments’ to determine trade policy measures in all sovereignty on the basis of national structural development interests. This will de facto require the EU to respect the ‘right to development’ of ACP countries by subordinating the interpretation and application of trade agreement commitments to the structural development interests of ACP countries, as defined by the governments and concerned stakeholders in ACP countries Read more “What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?”