Category: Corporates

Growth in EU28 poultry meat exports to ACP markets could accelerate under a no deal exit of the UK from the EU

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Summary
SPS restrictions on poultry meat imports from Brazil saw EU poultry meat production expand in 2017 despite AI outbreaks. This highlights how important trade measures can be in stimulating domestic poultry meat production. In the face of AI related import bans EU poultry meat exporters have found new alternative markets for exports in Africa. The projected 3.9% expansion of EU poultry meat production to 2030 will drive a further expansion of exports (+18.4% or +219,000 between 2018 and 2030), with growing volumes of poultry parts being exported to Africa at progressively lower prices. Given likely Brexit related disruptions of the EU27/UK poultry meat trade, export growth to Africa could be even higher, particularly for UK poultry parts exports of which are currently concentrated on EU27 markets. Potential Brexit related trade effects are not factored into current EU projections. ACP governments may need to use non-tariff trade policy tools to protect against sudden import surges, with this potentially becoming a contentious issue. Additional SPS issues arise from the growing level of processing of Ukrainian raised chickens in the EU, parts of which are then exported as EU chicken to ACP markets. Read more “Growth in EU28 poultry meat exports to ACP markets could accelerate under a no deal exit of the UK from the EU”

Europeanisation of National EU Poultry Producers Continues with New Plukon Acquisition

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Summary
The recent acquisition by Plukon highlights the pan-European nature of EU poultry companies. This potentially complicates the application of ACP SPS controls on imports of poultry meat from the EU, in the face of regular national outbreaks of HPAI, which requires the application of protective SPS measures. Intra-corporate trading raises the issue of need for country of origin labelling of EU products based on the country in which poultry was raised (not processed. This would facilitate effective SPS controls in the face of frequent outbreaks of HPAI in individual EU member states. Issues also arise around the application of country specific anti-dumping duties and rules of origin under EU trade agreements since such measures can easily be circumvented given the pan-European structure of many EU poultry companies, with this in some instances extending beyond the EU’s borders. Read more “Europeanisation of National EU Poultry Producers Continues with New Plukon Acquisition”

RFC Announces Factory Expansion and Investments in Local Milk Supplies in Nigeria Amid Slowdown in Growth EU Exports of SMP

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Summary
Royal FrieslandCampina has announced a new €23 million investment in developing milk-to-dairy supply chains in Nigeria. However it is unclear how much of this €23 million is linked to factory improvements to process locally sourced milk and how much targets the processing of imported milk powders. A revival of SMP prices to the December 2013 highs would appear necessary to provide a commercially significant stimulus to local milk production in Nigeria. This is likely to require the removal of production distorting EU farm supports, which stimulate EU milk production despite the production costs of most EU milk producers exceeding the revenue gained from milk sales. Since such an EU policy shift is highly unlikely, the Nigerian government may need to consider the introduction of a carefully manged dairy sector trade policy which links import licences to investments in the gradual expansion of local milk production serving local milk-to-dairy supply chains. This would need to be designed and implemented in close consultation with dairy sector stakeholders. However it is unclear whether the implementation of such a carefully managed trade regime would be possible in a country as large and politically complex as Nigeria. Read more “RFC Announces Factory Expansion and Investments in Local Milk Supplies in Nigeria Amid Slowdown in Growth EU Exports of SMP”

Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand

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Summary
While the impact of EU sugar production quota abolition is the most immediate concern to ACP exporters given the dramatic decline in EU prices paid for ACP sugar and the 60% decline in ACP sugar export volumes to the EU, the long term trend towards replacing sugar and reducing sugar usage in food and drinks is also a major source of concern. This will lead to an overall reduction in EU sugar consumption in a context where the future scaling back of EU production from record levels in 2017/18 is unlikely to see a return to historical levels of EU imports from ACP countries. This is likely to be compounded by the withdrawal of the UK from the EU. This means ACP sugar exporters will need to look to markets in Asia and particularly for African producers, in Africa. They will also need to look to the more systematic exploitation of non-sugar revenue streams linked to sugar cane production. Read more “Sugar Substitution Gaining Pace in EU Amid Falling EU Import Demand”

Ukrainian Poultry Company MHP Secures Third foothold inside the EU

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Summary
MHP has succeeded in purchasing a third EU based poultry company, the Slovenian meat processor Perutnina Ptuj. This needs to be seen in the context of concerns that Ukrainian raised poultry processed in the EU is giving rise to exports of poultry parts which are being mislabelled as EU raised poultry. This could potentially undermine effective SPS controls for Avian Influenza in ACP countries. It is essential all EU exports of poultry parts are properly labelled on the basis of the country of origin of the bird from which the poultry parts were derived. Read more “Ukrainian Poultry Company MHP Secures Third foothold inside the EU”

Continued Dominant Role for EU Dairy Exports Forecast

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Summary
From an ACP perspective the OECD/FAO analysis highlights the impact of EU skimmed milk powder (SMP) stocks on prospects for global SMP prices. It suggests EU SMP stock polices continue to limit the rise of global SMP prices.  This is important since SMP and fat filled milk powder (FFMP) imports represent the principal competitor to domestic milk producers in African ACP countries. There is however also a growing EU export trade in liquid milk to African and Caribbean countries. The role of the EU in the global dairy trade is projected to grow in the coming ten years, in a context where the EU is less well placed to serve the main import market China, than Oceanian dairy exporters. The OECD/FAO highlighted how import restrictions continue to influence patterns of global dairy trade, with this suggesting eliminating import restrictions on EU products on a preferential basis likely to  become an important focus of EU trade policy in the coming period.   Read more “Continued Dominant Role for EU Dairy Exports Forecast”

Polish Poultry Sector Expansion Suggests Increased Exports to Africa Can be Expected

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Summary
Investments in Polish poultry meat production continue, consolidating Poland’s position as the EU’s leading poultry producer (23% of the total). This is fuelling the growth in extra-EU poultry meat exports, with the rapid growth in Polish exports to sub-Saharan Africa in part being masked by the opening up of new export opportunities in neighbouring Ukraine. Given the lower production costs in Poland, this export growth is set to continue, with the prospect of a ‘hard’ Brexit likely to fuel the Polish quest for new markets beyond the EU’s borders. Read more “Polish Poultry Sector Expansion Suggests Increased Exports to Africa Can be Expected”

FC WAMCO Dairy Development Programme Expands Amidst Continued Import Dependence

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Summary
While FCW continues to invest in milk collection centres and farmer training to expand local milk procurement, local milk purchases continue to be dwarfed by the scale of milk powder imports form the EU. Indeed product development such as the introduction of Peak Fat Filled Milk for cholesterol conscious consumers would appear to further lock in the import dependent dairy sector development model which dominates West Africa. It may need to await fundamental changes in the dairy supply and demand equation for any changes in the current import dependent model to be brought about. Read more “FC WAMCO Dairy Development Programme Expands Amidst Continued Import Dependence”

Ukrainian Poultry Firm Loses Out in Battle for Doux but Continues Quest for EU Expansion

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Summary
Despite the setback to its efforts to take over the failing French poultry processor Doux, the Ukrainian poultry producer MHP remains committed to further acquisitions in the EU. This is seen as an important vehicle for sustaining the expansion of Ukrainian poultry meat exports, which increased almost 67% to the EU in 2017. The processing of Ukrainian produced poultry in the EU potentially raises important SPS control and rules of origin issues under EU preferential trade agreements with Africa (notably South Africa), where export from the Netherlands have traditionally played an important role in EU poultry meat exports. Read more “Ukrainian Poultry Firm Loses Out in Battle for Doux but Continues Quest for EU Expansion”

British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit

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Summary
The debate on future UK sugar sector trade policy is intensifying. A British Sugar commissioned study recommends future UK sugar trade policy should: recognise the distortions in global sugar markets; ensure future UK policies address these distortions; avoid any unilateral cuts in sugar tariffs and replicate existing EU trade arrangements. The reports treatment of the subsidisation issue ignores the current effects of EU policies on EU27-UK trade in sugar and the knock-on effects this has on ACP/LDC suppliers, which are now being squeezed out of the UK market. The report also underestimates the difficulties of securing acceptance of the proposed apportionment of existing bilaterally agreed EU28 sugar TRQs between EU27 and UK markets post Brexit. Read more “British Sugar Commissioned Study Favours Maintenance of Existing Sugar Trade Policies Post-Brexit”