EU Poultry Meat Exports to Sub-Saharan African Markets Surge at Beginning of 2021 Suggesting Trade Diversion is Underway

With the closure of the HoReCa sector (Hotels, Restaurants and Catering) across Europe for large parts of 2020, it may have been expected that overall EU consumption of poultry meat would have been impacted. However, EC forecasts suggest this was not in fact the case. Data released on the 2^nd of June 2021 suggests, EU poultry meat consumption grew 1.5% (182,000 tonnes) in 2020 (4).

This was probably related to the increased home consumption of breast meat and reduced consumption of poultry parts through fast food outlets like Nando’s. This will have a generated increased levels of poultry parts for export to ACP markets, a trend fuelled by the forecast 1% increase in EU poultry production (+134,000 tonnes) (4).  This needs to be seen against the background of earlier poultry industry fears over the impact Covid-19 related closures of the HoReCa sector would have on domestic EU poultry meat production.

This emerging surge in EU poultry meat exports in response to Brexit related disruptions to the EU/UK trade in poultry meat, throws into sharp focus the issue of the poultry sector trade policies being pursued by ACP governments.  In this context the contrast between trends in EU poultry meat exports to South Africa (down -62% in the first quarter of 2021) and the overall trend in EU exports to ACP markets (up +11%) is noteworthy. This is result of a sustained effort by the South African governments to prevent the dumping of low-priced poultry parts on their domestic market not only from the EU but from all major poultry meat exporters.

The South African experience of attempting to manage poultry meat imports from the EU is particularly relevant to ACP countries, given the similarities in the policy commitments on import arrangements entered into under preferential trade agreements concluded with the EU.

The South African government is currently reviewing its poultry sector trade policy, in part, in light of the types of trade policy tools used by the EU to manage poultry meat imports in the interests of domestic production expansion (see epamonitoring.net article, ‘South Africa to Undertake Comprehensive Poultry Sector Tariff Review’, 13 May 2021 and also epamonitoring.net article, ‘Can European Parliament Concerns Over the Application of the EU Entry Price System for Tomatoes Hold Lessons for South Africa’s Poultry Sector?’, 22 May 2021).  The aim is to enhance the effectiveness of South Africa’s poultry meat trade policy in support of the broader poultry sector master plan.

The importance of the use of protective non-tariff trade policy measures, which ensure a carefully managed import trade, is illustrated by trends in EU imports of poultry meat in 2020.

During the Covid-19 pandemic EU imports of poultry meat fell 14% (-83,701 tonnes), the first decline in import volumes since 2017. This trend continued into 2021, with EU imports being down a further 29% in the first quarter of 2021 compared to the first quarter of 2020.  Import volumes were down from 6 of the top 7 sources of imports in the first quarter of 2021. These countries accounted for 90% of total EU imports. This included:

·         An 85.8% decline in imports from Ukraine (which USDA in part attributed to the EU’s closure of a loophole in its TRQ structure, which allowed unlimited imports of poultry meat under classification 02071310 and in part Avian Influenza related trade restrictions).

·         A 7.4% decline in imports from Brazil.

·         A 15.1% decline in import from Thailand.

·         A 38.7% decline in imports from China.

·         A 58.7% decline in imports from Argentina.

The only top 7 supplier to increase exports to the EU was Norway, which increased its share of EU imports from 0.27% to 0.69%, following a 45.9% increase from a small base (1,375 tonnes for the whole of 2020).

The EU’s strictly controlled import regime means EU poultry producers, by one means or another, can be effectively protected at times of market crisis (in this case the Covid-19 crisis). The burden of necessary market adjustments linked to the crisis situation is effectively shifted to 3^rd country suppliers.  As recent import trends highlight the EU has in place a poultry meat trade regime which effectively protects EU domestic poultry producers from the worst effects of market crisis situations by maintaining the policy space to effectively restrict import volumes in line with market conditions.

However, it should be noted, this highly protective EU trade regime by sustaining EU production growth also fuels EU exports of poultry parts. This includes phenomenal growth in EU poultry meat exports to markets in Africa, which could more naturally be served by domestic or fellow African poultry producers.

Markets such as the DRC, Angola, Zambia can all be seen as natural destinations for South African exporters, but with this situation being made more difficult by EU export growth to these markets.  EU export volumes to the DRC in 2021 are set to be more than double the level in 2017, while EU exports to Angola by 2020 where already double what they were in 2017. EU exports to Zambia meanwhile were almost 4 times larger in 2020 compared to 2017.  This EU export growth occurred despite Covid-19 related trade disruptions (4).