EU Agricultural Commissioner Hogan has called for investment to be mobilised in sustainable agro-food sector development in Africa to combat migration pressures. While an EU action plan is under development in this area, calls have been made for the EU to extend its planned regulatory initiative on Unfair Trading Practices (UTPs) to Africa-EU supply chains. Current widespread abusive practices by EU importers fall particularly heavily on smallholder farmers. Given its economic significance, this is an issue which the ACP Group could usefully take up in its post-Cotonou negotiations with the EU as part of the wider dialogue with the EU on migration issues.
In July 2017 when addressing an EU/AU Ministerial meeting organized by the FAO, EC Agricultural Commissioner Hogan highlighted the EU’s role in supporting African countries in overcoming the ‘structural difficulties that prevent the continent from transforming its agro-food sector.’ According to Commissioner Hogan key factors inhibiting the transformation of African agro-food sectors include: ‘outdated methods, skill deficits and limited resources to invest responsibly in agriculture’. Commissioner Hogan argued there was ‘a need to create an attractive environment to carry out such investments and prevent young people from migrating to cities from rural areas’ (1).
Commissioner Hogan argued while African exporters already enjoyed preferential access to the EU market, this was only of value if Africa had ‘competitive products to sell’. Against this background he noted the EU was ‘preparing the launch of an action plan to promote private investment abroad in areas such as sustainable agriculture’ (1).
Meanwhile within the EU the issue of addressing unfair trading practices (UTPs) along agro-food supply chains is being given increasing importance, with Parliamentarians and EU Agricultural Ministers supporting regulatory action to curb UTPs. The issue of addressing UTPs was made ‘one of the priorities by the Maltese Presidency’ of the EU Council in the first half of 2017 (3).
In June 2017 in the European Parliament, Agricultural Commissioner Phil Hogan announced a timetable for legislation on unfair trading practices (UTPs), starting with an impact assessment, to be followed by public consultations and legislative proposals in the Spring 2018 (3).
Joe Healy President of the Irish Farmer Union (IFU) had earlier pointed out that while the Agri-Markets Task Force had recognised the need for independent enforcement of retail regulation and some 20 EU member states already had some form of legislation in place, what was needed was ‘legislation at EU level with independent enforcement by an authority to combat unfair practices and sanction those who do not comply’. This was essential since it was clear ‘voluntary initiatives do not work’, having failed so far to bring about the ‘necessary change in retailers behaviour’ (3).
Mandatory contracts between farmers, processors and retailers were seen as an important starting point, since this provides a bench mark against which to measure unfair trading practices in individual transactions (3). Within the EU such a system of mandatory contracts was introduced between sugar beet growers and processors as part of the 2005 round of EU sugar sector reforms.
In response to the June 2017 announcement of the timeframe for tabling specific legislative proposals on UTPs the European Fair Trade Movement called for the ‘the inclusion of non-EU producers exporting into the EU’ within the scope of the proposed legislation. It was argued UTPs along supply chains from developing countries into the EU were negatively impacting on producers and jeopardizing ‘the EU’s development efforts and SDG commitments’. (4) This position forms part of the long standing Power In Supply Chains Campaign organised by the Brussels based Fair Trade Advocacy Office (5).
This issue of UTPs has been taken up at the national level in the UK in submissions to the review of the role of the Groceries Code Adjudicator. In addition to concerns over the functioning of banana supply chains, Traidcraft, in a series of confidential annexes, highlighted cases of the imposition of excessive risks on East African agricultural producers by UK importers supplying major supermarket chains. This commonly involved making deductions from agreed prices on grounds which breach the Principle of Fair Dealing, which provides the basis for improving businesses practices along domestic UK agro-food sector supply chains (for more details see companion article ‘Role of UK Groceries Code Adjudicator could be extended’, 17 July 2017).
Meanwhile in France a new ‘duty of vigilance law’ is under consideration which would oblige French companies to ‘assess and prevent…adverse human rights and environmental impacts’, in their commercial dealings in developing countries. (6)
|Comment and Analysis
While Agriculture Commissioner Hogan in his comments at the FAO meeting in Rome highlighted the need to ‘invest responsibly in agriculture’, there is also a need for European companies to trade responsibly with Africa. To promote this objective there is a need for European policy makers to extend the planned legislative framework on UTPs to importers, with the aim of curbing some of the worst abuses currently taking place along Africa-EU agro-food sector supply chains.
As a submission by Traidcraft to the Groceries Code Adjudicator review highlighted, African countries do have high quality ‘competitive products to sell’, but unfortunately too frequently face UTPs which seriously reduce returns on investments made by farmers. This in turn undermines further investment in the development of smallholder agricultural production, whether this is for international, regional or national markets.
In this context the AU Commissioner for Rural Economy and Agriculture has highlighted Africa’s current food import dependency, estimated at $35 billion per annum. She also stressed the importance of transforming this situation, so that Africa increasingly met its own food needs, creating millions of job opportunities for women and young people in Africa (1).
However if this is to be achieved to the commercial benefit of Africa’s many smallholder producers, then issues related to the functioning of national agro-food sector supply chains will also need to be addressed. There are already successful examples of such initiatives in Africa, whether this is Namibia’s Horticulture Development Initiative or the newly launched Retail Sector Charter (see companion article, ‘Namibia’s Retail Sector Charter and the Strengthening of Local Supply Chains’, 6 March 2017) or the efforts of the Horticulture Crops Directorate of the Kenyan government to promote good business conduct in the horticulture sector.
There would appear to be scope for closer cooperation between African governments on the elaboration of a set of minimum standards for the conduct of business transactions along agro-food sector supply chains, whether serving, national, regional or international markets
Returning to the need for EU regulatory initiatives to promote responsible and fair trading practices with Africa, it would appear essential for the EC to include these international dimensions in its forthcoming legislative proposals on UTPs. This can be seen an essential complement to any initiatives aimed at expanding investment in smallholder farming in Africa. If the creation of sustainable jobs and livelihoods in rural areas is the primary concern, this would appear a more important priority than the launch of further investment initiatives which open up African agricultural lands to European investors.
If Agriculture Commissioner Hogan is serious about creating an environment to curb migration pressures then ensuring responsible trading practices along ACP-EU supply chains to prevent nebulous deductions which can strip away up to 80% of the initially agreed price when final payments are made to African producers, would appear to be essential. Otherwise it should come as no surprise that African farmers come to believe that if they want to make money and improve their lives Europe is clearly the place to be.
Against this background there would appear to be a role for the ACP in engaging with the European Commission on its current plans to set in place a legislative framework for curbing UTPs, in order to ensure any future regulatory framework includes measures to limit UTPs along ACP-EU agro-food sector supply chains. Such an ACP-EU dialogue on strengthening the functioning of ACP-EU agro-food sector supply chains should be seen as an integral part of the dialogue on migration issues, which the EU is seeking to promote as part of the post-Cotonou ACP-EU negotiations.
(1) EFE, ‘EU to boost investments in African agriculture to prevent migration’, 5 July 2017
(2) Copa-Cogeca, ‘Benefits of tools to help farmers better manage risk and of EU legislation to ensure farmers get fairer share of price paid by consumers underlined at high-level workshop’, 27 January 2017
(3) Hortidaily.com, ‘European Parliament calls for EU legislation to tackle unfair trading’
(4) Fair Trade Advocacy Office , ‘EU process on Unfair Trading Practices (UTPs) must not forget about non-EU producers’
(5) FTAO, ‘Power In Supply Chains Campaign’
(6) FTAO, ‘New duty of vigilance law in France sets example for Europe’
|Key words: Functioning of supply chains, GCA, UTPs
Area for Posting: CAP, post Cotonou, East Africa