Summary
Despite initial setbacks linked to Avian Influenza outbreaks and Covid-19 linked demand effects, EU poultry meat production is projected to increase in 2021, with this growth continuing through to 2031 (though be it at almost half the annual rate of the preceding decade). Despite average EU poultry meat prices being substantially above Brazilian prices, the EU continues to increase exports of frozen and fresh meat and offal from Gallus poultry to sub-Saharan Africa. This increase has continued despite a major slump in EU exports to other non-sub-Saharan African markets. While overall EU poultry meat exports are projected to stabilise up to 2031, the likely further collapse in exports to the UK will increase export pressures on sub-Saharan African markets. If African governments wish to boost local poultry production in response to growing consumer demand and Covid-19 supply chain disruptions, greater use will need to be made of non-tariff measures in regulating imports, including a more precautionary approach in response to AI outbreaks. This could then provide the market space for expanded local production if this forms part of comprehensive poultry sector development strategies. Read more “The Halting of the Decline in EU Poultry Production and Open Sub-Sharan African Markets, Fuels Continued Growth in EU Poultry Meat Exports to SSA”
Category: Central African EPA
What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?
Summary
The EC’s proposed forestry due diligence regulation seeks to ensure only commodities from land not subject to deforestation and produced in line with national legal frameworks are placed for sale on the EU market. This will involve the progressive establishment of full traceability of all of the affected commodities (beef, wood, palm oil, soya, coffee, and cocoa) placed for sale on the EU market. Obligations placed on businesses will vary based on country and region-specific assessments of the risk of deforestation or forest degradation. A process of benchmarking will be undertaken to establish these risk assessments (high, standard, and low risk). The EC favours a collaborative approach involving all concerned stakeholders in building Forestry Partnerships to promote the transition to active protection of global forestry resources. A €1 billion EC managed facility is to be established to support these Forestry Partnerships. The value of exports to the EU27 from the main ACP exporting countries potentially affected by the new due diligence requirements amounted to nearly €7 billion in 2020. In the ACP the most important affected sector is the cocoa sector, which accounts for 75% of the value of ACP exports of the affected commodities. Important questions arise related to the distribution of the costs of new traceability systems and mitigation measures along supply chains and whether forestry due diligence will be closely linked to decent living income objectives. Addressing living income issues, particularly in the cocoa sector, is seen as essential to ensuring active farmer ‘buy-in’ to the necessary farm level production process transition required to better protect global forestry resources. Read more “What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?”
Can the Tesco Commitment Provide a Basis for a Wider Pan European Retailer Programme of Action Ensuring a ‘Living Wage +’ Outcome for Banana Workers?
Summary
Tesco’s latest commitment on ensuring banana plantation workers are paid, at a minimum, a living wage includes two important innovations: independent determination of the living wage requirement and the establishment of a clearly defined timeline for attaining living wage objectives. This approach is indicative of the kind of ‘best practice’ which the EC ‘Code of Conduct on Responsible Food Business and Marketing Practices’ would like to see generally adopted (including in other sector such as the cocoa sector). By concentrating responsibility for establishing living wage levels at the level of the stakeholder with the greatest power within the supply chain, the Tesco initiative offers a real prospect of progress on living wage issues. This would be particularly the case, if it was generalised across products and throughout the corporate family of which Tesco forms a part (ABF). Read more “Can the Tesco Commitment Provide a Basis for a Wider Pan European Retailer Programme of Action Ensuring a ‘Living Wage +’ Outcome for Banana Workers?”
Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers
Summary
The EU’s ‘Code of Conduct on Responsible Food Business and Marketing Practices’ can only be welcomed. However, its limitations, in terms of delivering on objectives which ACP governments, producers and exporters share, need to be recognised. The focus on increased collaboration along the whole of the supply chain, means commitments entered into by EU companies will carry real implications for production practices adopted by ACP suppliers. These implications need to be recognised and addressed, in the context of the Codes commitment to ensuring the social and commercial sustainability of the required changes. In regard to each of the aspirational objectives identified, in operationalising the code of conduct there will be a need for meaningful dialogues with ACP stakeholders and governments, if the burden of necessary adjustments is not to be largely shifted on to the shoulders of ACP primary producers. This will require the identification of appropriate institutional frameworks for the conduct of these meaningful dialogues in each of the major areas of concern. Read more “Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers”
EU Cereals Production Rises but Global Situation Remains Tight with Rising Cereals Prices
Summary
Globally cereals prices have reached multi-year highs, with this threatening to compound national and household food security challenges which have been heightened as a result of the Covid-19 pandemic. While EU soft wheat and maize production is projected to show strong growth in 2021/220 (+7.3% and +8.7% respectively), far exceeding EU consumption growth, the scope for direct EU interventions in support of food deficit ACP countries is limited by the absence of any EU held intervention stocks. EU ending stocks which are at high levels are all held in private hands. Current global cereal sector trends suggest a need for a stronger and more sustained policy focus on developing local and regional supply chains, wherever this is possible. This applied both to direct human consumption and the use of cereals as part of local livestock sector development programmes (e.g., for poultry meat). Such a policy development, however, will require the retention of policy space for the implementation of a supportive trade policy framework.
- Macro-Economic and Global Trends
According to the EC’s most recent short term agricultural outlook report for the summer of 2021, economic recovery is not only underway, but is ‘stronger than previously forecast.’ This being noted ‘private consumption and foreign demand for EU goods and services decreased in Q1 2021’, although a rebound effect on the demand side is expected from Q3 2021. According to the EC in the EU ‘the impact of the crisis on unemployment is expected to remain contained’ (1).
Despite this more favourable outlook for the EU, ‘uncertainties and economic risks will remain for as long as the health crisis lasts’ (1). It should be noted the duration of the both the direct and indirect impacts of the ongoing health crisis is likely to be far longer in ACP countries than in the EU due to both the uneven rolling out of vaccination campaigns at the global level and the limited resources in ACP countries to support national and household level coping strategies in response to the profound economic disruptions generated by the Covid-19 health crisis.
In terms of the cereals sector, the EC’s analysis highlights how globally ‘prices for the main arable crops have been subject to notable variations in spring, driven by a high demand from China and the US and weather-related uncertainties around global production levels’ (2). According to the EC analysis, at the global level, ‘despite a close-to-record production, the continuous increase of maize global consumption weighed on global stocks which dropped to an 8-year low.’ This is likely to see global ‘grain prices reach multi-year highs’ (1).
This needs to be seen in the context of the other global factors driving up food prices. According to IMF analysis, this needs to be seen against the background of a pre-pandemic trend towards high food prices, which was compounded by ‘early lockdown measures and supply chain disruptions’ which ‘induced a spike in consumer prices’, in part linked to stockpiling of food reserves. This situation has then been compounded by ‘soaring shipping and transport costs’, which ‘have increased around 2-3 times’ since June 2020 (3). Weather related uncertainties arising from dry weather (and subsequently serious floods in some areas) have come on top of these pre-existing trends. The net effect however is to drive up cereal import prices for food deficit developing countries such as many of those in the ACP.
In certain cereals categories where ACP countries have a strong production presence, such as sorghum, rising demand for inputs for animal feed has seen a massive year on year increase in demand globally (+11.4%). To date however, ACP countries have only a marginal presence in the export trade in sorghum to the EU.
- EU Cereal Market Developments
According to the EC short term agricultural outlook report ‘EU cereals production is expected to reach 288.7 million tonnes’ in 2021/2022, this is an increase of 3.8% in usable production compared to the 2020/21 season (and an increase of 3.4% over the five-year average). This is a result of an increase in production of both soft wheat (+7.3% or + 8,679,000 tonnes), durum wheat (+8.2% or + 594,000 tonnes) and maize (8.7% or + 5,652,000 tonnes) (4). There is thus a significant increase in EU soft wheat and maize availability.
Not surprisingly, both barley and rye production, were down reflecting the reduced demand resulting from the closure of the hospitality sector.
Breakdown of EU-27 cereals gross production (1 000 t)
| 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22(f) | % Change 20/21 to 21/22 | |
| Total | 289 626 | 277 371 | 284 960 | 271 272 | 297 015 | 280 531 | 291 209 | +3.8% |
| Soft wheat | 136,072 | 120,641 | 128,306 | 115,751 | 132,145 | 118,101 | 126,780 | +7.3% |
| Durum wheat | 8,389 | 9,675 | 8,810 | 8,767 | 7,472 | 7,223 | 7,817 | +8.2% |
| Rye | 7,739 | 7,349 | 7,309 | 6,174 | 8,156 | 9,067 | 8,413 | -7.2% |
| Barley | 54,536 | 53,324 | 51,642 | 49,931 | 55,496 | 55,155 | 53,959 | -2.7% |
| Oats | 6,783 | 7 321 | 7 322 | 6 887 | 6 941 | 8 368 | 7 827 | -6.5% |
| Maize | 59,261 | 62,963 | 65,049 | 69,309 | 70,410 | 65,258 | 70,910 | +8.7% |
| Triticale | 12,674 | 11,785 | 11,646 | 9,770 | 11,200 | 11,481 | 11,068 | -3.6% |
| Sorghum | 719 | 688 | 719 | 833 | 1,016 | 1,191 | 1,106 | -7.1% |
| Others | 3,453 | 3,625 | 4,158 | 3,851 | 3,880 | 4,686 | 3,311 | -29.3% |
Source: EC, ‘Annexes for EU27‘Short-term outlook for EU agricultural markets in 2021’, Summer 2021,
On the consumption side, EU cereals consumption in 2021/2022 ‘is expected to rebound year on year’ (+1.1%). This increase will be equally shared between increased demand for direct consumption and increased feed demand. This rise in feed demand is occurring despite the projected decline in EU poultry production. This will give rise to an overall increase in EU domestic consumption of only 2.6 million tonnes for the 2021/22 marketing year. This will take EU cereals consumption back to only 0.04% above 2017/18 levels, after two years of declines. This growth in EU consumption demand of 2.6 million tonnes compares to an increase in EU usable production of 10.7 million tonnes, a projected increase in EU exports of 2.9 million tonnes and a projected decline in EU cereals imports of 2.7% or some 600,000 tonnes.
The projected decline in EU cereals imports was to be expected given the increase in projected EU cereals production in 2021/22 (+3.8%), which followed on from the 5.6% decline in EU cereals production in 2020/21 season.
Significantly the EU is no longer holding intervention stocks, which it needs to dispose of. Indeed, the EU has not held any cereals stocks in intervention since 2011, with no serious volumes in intervention stocks since 2009 (when ending stocks in intervention reached 6 million tonnes) (6). All ending stocks of cereals in the EU are currently privately held (4).
EU-27 overall cereal balance (million tonnes)
| 2015/16 | 2016/17 | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22(f) | % Change 20/21 to 21/22 | |
| EU Beginning stocks | 38.4 | 36.0 | 31.1 | 39.8 | 39.7 | 42.8 | 40.8 | -4.7% |
| EU Gross Production | 289.6 | 277.4 | 285.0 | 271.3 | 297.0 | 280.5 | 291.2 | +3.8% |
| EU Usable Production | 287.1 | 274.9 | 282.4 | 268.9 | 294.4 | 278.0 | 288.7 | +3.8% |
| EU Consumption | 259.3 | 258.8 | 261.0 | 261.1 | 260.3 | 258.6 | 261.2 | +1.0% |
| EU Exports | 51.4 | 39.4 | 35.7 | 35.9 | 55.1 | 41.6 | 44.5 | +7.0% |
| EU Imports | 23.4 | 20.5 | 25.0 | 30.2 | 25.8 | 21.9 | 21.3 | -2.7% |
| EU Ending Stocks° | 36.0 | 31.1 | 39.8 | 39.7 | 42.8 | 40.8 | 43.3 | +6.1% |
° all of which are privately held with EU intervention stocks at zero
Source: EC, ‘Annexes for EU27‘Short-term outlook for EU agricultural markets in 2021’, Summer 2021,
| Comment and Analysis Rising cereals prices and increased logistical costs alongside Covid-19 induced income reductions and the ongoing spread of the pandemic across ACP countries, could lead to a perfect storm of heightened food insecurity at national and household levels, which could persist for many years.Against this background, in the short term, with EU production growth substantially higher than consumption growth, there would appear to be an increase in the availability of EU cereals for use in Covid-19 related food aid relief programmes. However, with cereals stocks available in the EU being in private hands, rather than public intervention storage, there would appear to be limited scope for direct EU administrative interventions to provide food aid to food insecure countries. This suggests a need for ACP governments to focus, wherever possible, on longer-term solutions involving a sustained policy focus on the development of local and regional cereal and wider agri-food sector supply chains, particularly in sub-Saharan Africa. For example, while growing international demand for sorghum as an animal feed could potentially hold out market opportunities for ACP producers, these opportunities should not be allowed to divert attention away from the need to develop local animal feed supply chains, as part of national and regional poultry sector development strategies. Sorghum has an equivalent nutritional value to corn as an animal feed, and providing millers are available to produce the appropriate feed mixes can be used as a more environmentally friendly animal feed input in the poultry sector (5). These opportunities need to be fully exploited if longer term food security is to be enhanced and vulnerability to global supply chain disruption reduced. However, this is also likely to require the granting of greater policy space to ACP governments in deploying trade policy tools, aimed at fostering long term local supply chains. This is likely to require the European Commission to continue to be flexible in how it interprets and applies commitments ACP governments have entered into under economic partnership agreements. This needs to be seen in the context of the creation of the post of Chief Trade Enforcement Officer, whose primary function is to enforce compliance by third countries with the commitments they have entered into with the EU under trade agreements they have signed on to (see companion epamonitoring.net article ‘The Implications of the EUs More Assertive Trade Policy: The EU Trade Policy Review Part 2’, 15 April 2021 and ‘Appointment of Chief Trade Enforcement Officer Could Signal a Push More Rigorous Enforcement of EPA Commitments Made by ACP Governments’, 11 December 2020). |
Sources
(1) EC, ‘Short-term outlook for EU agricultural markets in 2021’, Summer 2021
https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/short-term-outlook-summer-2021_en.pdf
(2) thedairysite.com, ‘Positive projections for EU agriculture in latest short-term outlook’, 16 July 2021
https://www.thedairysite.com/news/57194/positive-projections-for-eu-agriculture-in-latest-shortterm-outlook/
(3) IMF, ‘Four facts about Soaring Consumer Food Prices’, 24 June 2021
https://blogs.imf.org/2021/06/24/four-facts-about-soaring-consumer-food-prices/
(4) EC, ‘Annexes for EU27‘Short-term outlook for EU agricultural markets in 2021’, Summer 2021,
https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/short-term-outlook-statistical-annex_en.pdf
(5) sorghumcheckoff.com, ‘Sorghum in Poultry Production Feeding Guide’
https://www.sorghumcheckoff.com/assets/media/feedingguides/Poultryguideforweb.pdf
(6) EC, ‘Prospects for Agricultural Markets in the EU 2020-2030’, December 2020 – statistics
https://ec.europa.eu/info/sites/info/files/food-farming-fisheries/farming/documents/medium-term-outlook-tables_en.pdf
(7) EC, ‘Short-term outlook for EU agricultural markets in 2021- Highlights’, Summer 2021
https://ec.europa.eu/info/sites/default/files/food-farming-fisheries/farming/documents/short-term-outlook-summer-2021-highlights_en.pdf
Growth Continues in EU27 Imports in Organic Products Where ACP Producers Have an Export Interest
Summary
ACP organic exporters have sustained strong growth in volumes to the EU market in 2020 despite a slight reduction in overall EU organic imports. In some organic product areas (rice and sugar) opportunities appear to exist which ACP producers have yet to exploit. Given the growing EU policy focus on the environmental sustainability of patterns of agri-food imports to the EU, exploring expansion into organic production in these areas could prove worthwhile. However, three headwinds are faced in continuing the expansion of ACP organic exports to the EU: the scheduled reforms to the EU’s organic product regime; the new trade administration complications for ACP organic exports to the UK, resulting from the UK’s departure from EU electronic systems for the management of imports of organic products; and the likely divergence of EU and UK organic certification requirements. Close attention will need to be paid to this issue by ACP organic exporters if existing growth in the volume of ACP organic exports to the Europe are to be sustained. Read more “Growth Continues in EU27 Imports in Organic Products Where ACP Producers Have an Export Interest”
Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?
Summary
President Macron is throwing his weight behind efforts to establish regulatory ‘mirror clauses’ in EU trade agreements to combat ‘environmental and social dumping’. However, despite strong European Parliament support, there is no consensus among EU member states governments on the scope and practicality of such a ‘mirror clause’ approach. ACP exporters and governments need to define where their interests lie within these EU regulatory discussions, so as to be able to protect and promote ACP producer interests within these policy debates. Read more “Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?”
Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation
Summary
The EC’s much heralded human rights and environmental due diligence regulation looks set to be limited to establishing a common minimum standard, which businesses will be required to adhere to, with an enabling environment being created aimed at incentivising companies to address the negative impacts of their activities. In the face of corporate lobbying Tony’s Chocolonely has broken ranks demanding the EC establish an ambitious minimum standard. This would appear essential, given current corporate efforts to side-step the overall cocoa procurement cost implications of the Living Income Differential initiative, by reducing other components of cocoa bean payments made in Ghana and Cote d’Ivoire. A clear Organisation of African, Caribbean and Pacific (OACP) States and African Union position in support of an ambitious and rigorously enforced corporate minimum standard for living wage, human rights and environmental protection commitments would appear to be required. Read more “Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation”
Brexit Costs Are Leading to a Restructuring of UK to EU Supply Chains
Summary
Brexit related cost increases are beginning give rise to a restructuring of supply chains to avoid crossing the UK/EU border. While analysis to date focusses on the impact on the UK livestock products sector, serious disruptions to ACP triangular supply chains for the delivery of fruit and vegetables to EU markets via the UK area also being impacted. This is in part a result of the phytosanitary certification and phytosanitary import control requirements not faced by re-exported ACP products. There is a need to take practical steps to address these phytosanitary related challenges, so as to avoid undermining export opportunities for a range of smaller ACP agri-food exporters. These exporters faced particular challenges because of the ‘thin’ nature of the EU/UK trade agreement, which has left important phytosanitary issues unaddressed. Read more “Brexit Costs Are Leading to a Restructuring of UK to EU Supply Chains”
EU Poultry Meat Exports to Sub-Saharan African Markets Surge at Beginning of 2021 Suggesting Trade Diversion is Underway
Summary
Trade diversion to ACP poultry markets, as a result of Brexit related disruptions to the EU/UK poultry trade appears to be underway. This situation of trade diversion is likely to get worse before it gets better, given full UK border controls on imports from the EU are only scheduled to be introduced in 2022. For those ACP countries seeking to develop their domestic poultry production on national food security grounds, this gives added importance to poultry sector trade policy. Here lessons can be drawn from South Africa’s current poultry sector trade policy review, which seeks to draw inspiration from EU policy practice in the poultry sector as opposed to EU policy prescriptions. EU trade protections in the poultry sector serves not only to protect the domestic EU market, but also support EU poultry meat exports. These low-priced EU exports of poultry parts are in turn serving to undermine efforts aimed at developing both domestic African poultry production (in response to heightened food security concerns) and intra-African trade in poultry meat. Read more “EU Poultry Meat Exports to Sub-Saharan African Markets Surge at Beginning of 2021 Suggesting Trade Diversion is Underway”