Summary
The UK’s reversion to paper based organic product documentation is generating additional costs and value losses for ACP organic exporters. This takes the form of increased internal administrative costs and value losses resulting from misplaced or delayed documentation. These problems are particularly severe for small volume exports of mixed organic products. Bulk exports of single organic products are less severely affected, since additional costs are lower and there is less risk of document loss. Political relations between the EU and UK around Brexit related trade issues would appear to be such as to rule out any arrangements which might allow a temporary restoration of UK access to EU IT systems used for trade in organic products until such time as UK systems are fully in place.
According to the UK Department of Environment, Farming and Rural Affairs (DEFRA) there have been no changes to UK import requirements for organic products as a result of the Brexit process. However, the UK is no longer able to access the EU’s electronic documentation system for organic certification and has to rely on old fashioned manual paperwork (1). This needs to be seen in a context where over the 2014-2020 period the EU has rolled out its Electronic Certificate of Inspection (E-COI) within its TRACES trade monitoring and facilitation system (2) (see box for more details on TRACES).
Having left the EU TRACES system on 1 January 2021 there is no clarity on when the new UK only system will be in place and how the issue of compatibility with the EU system will be addressed.
In March, press reports indicated DEFRA was ‘still scoping out plans to set up its own IT system that mirrors the EU one.’ This will be part of the UK’s IPAFFS IT system, which in the first stage, is focussing on animal products (5), with wider functions to be added incrementally, including in regard to the importation of organic products.
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What is the TRACES IT System? TRACES (Trade Control and Expert System) is the European Commission’s online platform for sanitary and phytosanitary certification for the importation of food, feed, animals, animal products and plants into the EU. The main objective of TRACES is to streamline the certification process and all linked entry procedures and to offer a fully digitised and paperless system which ensures traceability ad facilitates the cross-border movement of goods. TRACES is seen as an efficient tool for ensuring traceability, facilitating the exchange of information on trade movements and minimising risks to human, plant, and animal health. The TRACES tool is used in about 90 countries, with more than 55.000 users worldwide. It serves to enhance ‘cooperation and coordination between the competent authorities of EU countries and non-EU countries’ and between 3rd country producers/traders and the competent authorities in countries of production. The electronic certification capability of TRACES NT enables EU and non-EU authorities to stamp digitally official documents and certificates, thus, making the use of paper certification obsolete. It allows the acquisition of an electronic seal and secure electronic signatures for official certifications and controls (3). As an integral part of the TRACES system the EU has established a system of electronic-Certificate of Inspection for organic products imported into the EU (4). |
According to Amit Shah, director at VAL Group and TSA International, the largest fruit and vegetable supplier from Africa to the UK (1), the move back to a paper-based import system for organic products is ‘a total mess.’ It is adversely affecting the export of wide range of organic products from Kenya and other East Africa countries including French beans, sugar snaps, tender stem broccoli, avocados, mangoes, and passion fruit, amongst other products (1).
The issues faced in East Africa affect a wide range of ACP countries, with in 2019, some 45 ACP countries involved in exporting organic products to Europe (6) (see companion epamonitoring.net article ‘Dominican Republic and Bananas Dominate ACP Organic Products Exports to the EU28’, 18 August 2020)
According to Shah there are two main areas of concern, the extra cost and the increased scope for errors which see organic exports denied access as organic products.
Shah highlighted how the paper-based system requires 10 paper documents to be completed per product. With multiple products being exported in each daily consignment, up to 70 documents need to be prepared each day. This has required the employment of two additional full-time staff just to handle all the new paper-based organic documentation requirements.
The direct and indirect costs are estimated a £400 to £500 per shipment, with this running into an additional cost of hundreds of thousand of £ per annum. This comes on top of further cost increases faced as a result of Covid-19 air freight disruptions, which have been compounded by UK’s introduction of ‘red list’ travel restrictions in April 2021. These have seen the cancellation of all direct passenger flights from the UK to Kenya, Ethiopia and a number of Gulf air freight transhipment hubs (see epamonitoring.net article, ‘East African Air Freighted Horticulture and Floriculture Exports to UK facing Devastation Given UK ‘Red List’ Travel Restrictions’, 13 April 2021).
What is more, in the course of shipment these physical documents can be misplaced or delayed, with this resulting in consignments being denied entry as organic products. These organic exports then need to be repacked and relabelled for sale on the general product market. In some instances, this is not possible, and products have had to be destroyed. Shah estimated that in the first months of 2021 around 5% of consignments suffered this fate. This is undermining the value obtained by ACP organic exporters from exporting to the UK.
This is creating a situation where organic exporters are beginning to turn away from the UK market, if alternative markets are readily available, since ‘from a cost point of view, its not looking as if it’s going to be economical’ to continue to serve the UK market (1). This is not an ideal situation since in the longer term there is seen as being considerable growth potential for organic products in the UK.
However, the current situation for organic exports to the UK also needs to be seen in the context of the EC’s March 2021 ‘Action Plan for the Development of Organic Production’ which will be driven by sustained efforts to boost consumer demand for organic products. While the EC’s plan has a strong focus on developing local supply chains and minimising food miles, the generalised awareness raising programmes on the health and environmental benefits of organic production are likely to boost overall demand for organic products from all sources.
Against this background the current difficulties in accessing the UK market could see ACP organic food producers cutting their exports to the UK in the short term, until current trade documentation difficulties are resolved.
| Comments and Analysis Given the EU TRACES system is used in around 90 countries, with more than 55.000 users worldwide, the failure of the UK to ensure access to the EU system until the UK’s own parallel system had been developed and was operationally in place, would appear to have been a serious oversight. This oversight is now undermining UK imports of organic products from ACP countries, reversing the recent growth trend in imports of organic products, and holding back post-Covid recovery on the basis of more climate friendly systems of production.The additional costs arising as a result of the shift back to a paper-based system of UK controls on organic product imports, are not felt equally by all 3rd country organic product suppliers. The commercial impact on individual suppliers is critically influenced by the volume and value of exports being undertaken and the extent to which consignments are product specific rather than containing multiple organic products. ACP organic exporters would appear to be particularly vulnerable in this regard. The hard reality is some 17 ACP countries export under 100 tonnes of organic products to the EU annually, with 27 exporting under 500 tonnes. A further 11 ACP countries export between 1,000 and 10,000 tonnes per annum, with only 9 ACP countries exported more than 10,000 tonnes annually. The bulk of ACP organic exporters thus ship small volumes, often consisting of multiple products in each consignment, with this generating particular challenges in terms of increased administrative costs and value losses as a result of misplaced or delayed documentation. The largest ACP organic exporter, the Dominican Republic, is however likely to be less severely affected, since its organic exports are heavily focussed on bananas, which account for more than half of all ACP organic exports. Such high volume, single product exports, carry lower internal administrative costs and reduced risks of documents going astray than smaller volume multiple product consignments. However, while the bulk of the Dominican Republic’s organic exports are likely to be little affected, lower volume higher value air freighted organic cargoes are likely to be almost as severely affected as East African organic exporters. While the East African case relates to higher value air freighted cargoes, problems also arise for sea freighted organic exports (e.g., organic soya bean exports from Togo). This needs to be seen in a context where for sea freighted organic products the certificate of inspection (COI) issued by the relevant control authority in the country of export, cannot always be issued before the consignment leaves the country of origin, as required under new EU regulations (7). This situation has been compounded by the social distancing requirements arising from the Covid-19 pandemic. However, in the face of these challenges the EU introduced regulatory changes to the use of the electronic system of document transmission to allow the COI process to be completed while the cargo is on the high seas, provided this occurs within 10 days of the issuing of the initial COI, but before arrival and clearance of the cargo in an EU member state. This has helped to facilitate the continued import trade in organic products, despite regulatory changes and Covid-19 related disruptions in exporting countries. However, this option is no longer possible in trade with the UK, where a far more cumbersome and less secure process of courier-based document transmission would be required. It should be noted the trade disruptions now arising in the UK in regard to the importation of organic products from ACP countries were flagged as early as January 2020 (see epamonitioring.net article, ‘EU Organic Import Control Implementing Regulation Highlights Potential for Brexit Related Trade Administration Based Disruption of ACP Exports’, 30 January 2020). It is unclear what steps can be taken to address these problems, given the UK decision to establish its own IT systems and the operational challenges faced in getting the new system in place, (particularly in regard to trade in organic products which is not being accorded a high priority). The state of political relations between the EU and UK around Brexit related trade issues would appear to be such, as to rule out any compromise arrangement which would allow the UK to re-establish temporary access to the EU system for the electronic transmission of organic certification documentation. |
Sources
(1) politico.eu, ‘Organic food hit by UKʼs ‘1970sʼ Brexit red tape’, 10 March 2021
https://www.politico.eu/article/global-organic-food-exporters-bitten-by-brexit-trade-barriers/
(2) EC, ‘Action Plan for the Development of Organic Production’, COM (2021) 141 final, 25 March 2021
https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/com2021_141_act_organic-action-plan_en.pdf
(3) EC TRACES
https://ec.europa.eu/food/animals/traces_en
(4) EC, COI Online User Manuel
https://webgate.ec.europa.eu/cfcas3/tracesnt-webhelp/Content/E_COI/Intro.htm
(5) gov.uk, Guidance, Import of products, animals, food, and feed system (IPAFFS), 10 May 2021
https://www.gov.uk/guidance/import-of-products-animals-food-and-feed-system
(6) EC, ‘EU imports of Organic agri-food products: Key developments in 2019’, EU Agricultural Market Brief No. 17, June 2020
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/market-brief-organic-imports-june2020_en.pdf
(7) EC, ‘The Commission Implementing Regulation (EU) 2020/25 amending and correcting Regulation (EC) No 1235/2008, published in the Official Journal of 14 January 2020, will enter into force on 3 February 2020’, 13 January 2020
https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32020R0025&from=EN
(8) COLEACP, ‘Positive amendments regarding Commission Implementing Regulation (EU) 2020/25’, 24th January 2020
https://eservices.coleacp.org/en/actu/positive-amendments-regarding-commission-implementing-regulation-eu-202025