Summary
While after the exceptional level of EU sugar exports in 2018, export volumes are projected to be substantially reduced in 2019 (with export levels down 50% so far), these are still projected to be above EU export volumes in 2016/17 (+73% so far). What is more on average ACP markets in 2018 took 1 in every 5 tonnes of extra-EU sugar exports, up from 1 in every 14 tonnes in 2014. West Africa is the main ACP region for EU sugar exports, with Ghana and Senegal the two most important markets. Central Africa is the second most important ACP region with Cameroon leading the way as a destination for EU sugar exports. There have been surprisingly high levels of EU sugar exports to the eastern and Southern Africa region, given this is a sugar surplus region. EU sugar exports to the Caribbean have varied with exports to Haiti dominating the trend in overall EU sugar exports. While weather events and national trade policies play a role in patterns of EU sugar exports, there are concerns that ‘no-deal’ Brexit related trade disruption could lead to a growing EU corporate focus on sub-Saharan African markets. This could well give rise to pressure form the EC on ACP governments to abandon policies which restrict EU sugar exports. Read more “EU Sugar Exports to ACP Markets Are Falling After Record Levels of EU Exports in 2018”
Category: Southern Africa
MHP Looking to Africa as Part of its On-Going Expansion Outside of Ukraine
Summary
Following its expansion into the EU the Ukrainian poultry producer MHP is looking to expand in Africa and the Middle East. This needs to be seen in the context of a projected 15% expansion of MHPs exports in 2019 and a further planned production expansion of 15% in 2019. This expanded production will need to be exported. Current Ukrainian exports are facing growing criticism from EU poultry producers because of their market effects in the EU. These criticisms are only likely to intensify in the event of a ‘no-deal’ Brexit. This could leave MHP seeking markets elsewhere, including in African countries where acquisitions are being targeted. This could then replicate the MHP practice of using locally acquired poultry processors to channel Ukrainian poultry meat on to the local market. African poultry producers and concerned African governments will need to carefully monitor the evolution of MHPs’ African investment policy. Read more “MHP Looking to Africa as Part of its On-Going Expansion Outside of Ukraine”
EU Production Growth Impacts on Both Profitability of EU Sugar Companies and ACP exports to the EU in 2018
Summary
The expansion of EU sugar production in addition to reducing the volume and value of ACP sugar exports has also undermined the profitability of EU sugar beet processing companies, with major operators such as Suedzucker looking to shut some processing plants in response to low EU sugar prices. In 2017/2018 regional EU sugar price trends in part correlated with trends in sugar production, with price falls being most dramatic in areas where the production increase was greatest. Meanwhile voluntary coupled support has held back the geographical redistribution of EU sugar production. Some ACP exporters remain dependent on the UK market while others have diversified, targeting sugar deficit regions of the EU where sugar prices have held up better. Longer term trends in EU sugar consumption do not bode well for traditional ACP sugar exporters. Brexit uncertainties will need to be taken on-board in the marketing decisions of ACP sugar exporters in the 2019/20 marketing year, with various Brexit scenarios being explored and export markets to be targeted identified accordingly. Read more “EU Production Growth Impacts on Both Profitability of EU Sugar Companies and ACP exports to the EU in 2018”
ACP Livestock Sectors and the Collapse of Cross Party Talks to Resolve the Brexit Impasse
Summary
The breakdown of cross party discussions on a compromise to break the Parliamentary impasse on ratification of the EU/UK Withdrawal Agreement is seeing renewed efforts to remove Prime Minister May from office. There are concerns this is increasing the prospect of a ‘no-deal’ Brexit. This would seriously impact on EU27/UK trade in livestock products. The resulting EU/UK trade displacement could lead to import surges which could disrupt ACP markets and undermine the position of local livestock producers in ACP countries targeted by EU/UK exporters. Actual effects will need to be assessed country by country and product by product. ACP governments in countries where livestock based agro-food industries are under development should review the safeguard mechanisms they have available to protect local livestock producers from the trade displacement effects of a ‘no-deal’ Brexit. ACP beef, dairy and poultry companies and producers associations should review their marketing strategies and develop contingency plans to deal with the commercial consequences of the trade displacement effects of a ‘no-deal’ Brexit. Read more “ACP Livestock Sectors and the Collapse of Cross Party Talks to Resolve the Brexit Impasse”
What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?
Summary
While the paper from Professor Mathew’s paper reviews the possible effects of specific CAP reform proposals, these cannot be assessed in isolation from the wider EU CAP related policies. This includes EU agricultural trade policies and EU SPS and food safety policies. There are inherent tensions between the quest by EU agro-food companies for new markets and African aspirations for the structural development of local agro-food sectors. Reconciling this tension in a development friendly manner will be a key challenge in addressing policy coherence issues which arise as a result of the EU’s Common Agricultural policy and associated supporting policy measures. Any attempt to get to grips with this issue will require engagement at the country and product specific level and will require full respect for the right of ACP governments’ to determine trade policy measures in all sovereignty on the basis of national structural development interests. This will de facto require the EU to respect the ‘right to development’ of ACP countries by subordinating the interpretation and application of trade agreement commitments to the structural development interests of ACP countries, as defined by the governments and concerned stakeholders in ACP countries Read more “What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?”
Task Force for Rural Africa Sets Out Four Strategic Areas and Six Initiatives
Summary
The Task Force Rural Africa (TFRA) advances a series of specific recommendations and initiatives aimed at ensuring African agro-food sector development contributes fully to addressing the employment and income earning opportunities challenge faced in Africa. A critical challenge is seen as promoting an appropriate trajectory for ‘the development of the African food industry and food markets’. However this will need to address the tension between the EU’s quest for new food product markets and African aspirations for the structural development of national agro-food sectors. In some sectors this will require a critical review of current patterns of trade and investment relations (e.g. in the dairy sector). TFRA recommendation on structured policy dialogues could prove valuable in this regard. A key issue to be addressed will be the interpretation and application of existing EU-Africa trade agreement commitments, which go beyond WTO rules and undermine national trade policy sovereignty and the effectiveness of chosen policy measures. It will also need to effectively operationalize the EU’s new unfair trading practices directive as this impacts Africa-EU trade flows and support measures to strengthen the functioning of local agro-food sector supply chains. Read more “Task Force for Rural Africa Sets Out Four Strategic Areas and Six Initiatives”
EU Sugar Exports to ACP Markets Are Falling After Record Levels of EU Exports in 2018
Summary
While after the exception level of EU sugar exports in 2018, export volumes are projected to be substantially reduced in 2019 (with export levels down 50% so far), these are still projected to be above EU export volumes in 2016/17 (+73% so far). What is more on average ACP markets in 2018 took 1 in every 5 tonnes of extra-EU sugar exports, up from 1 in every 14 tonnes in 2014. West Africa is the main ACP region for EU sugar exports, with Ghana and Senegal the two most important markets. Central Africa is the second most important ACP region with Cameroon leading the way as a destination for EU sugar exports. There have been surprisingly high levels of EU sugar exports to the eastern and Southern Africa region, given this is a sugar surplus region. EU sugar exports to the Caribbean have varied with exports to Haiti dominating the trend in overall EU sugar exports. While weather events and national trade policies play a role in patterns of EU sugar exports, there are concerns that ‘no-deal’ Brexit related trade disruption could lead to a growing EU corporate focus on sub-Saharan African markets. This could well give rise to pressure form the EC on ACP governments to abandon policies which restrict EU sugar exports.
- Overview EU Sugar Exports to ACP Markets
The expansion of EU sugar production in response to the planned abolition of EU sugar production quotas saw a major expansion of EU sugar exports in 2017/18, to a total for the season of 3,353,000 tonnes (1). This expansion of exports began even before the 1st October 2017 abolition of EU national sugar production quotas. In terms of exports to ACP markets it began in 2016, while in terms of overall extra-EU exports it began in 2017.
A review of 2018 EC market access data base statistics shows that in 2017 total EU sugar exports rose 59% compared to 2016, while exports to ACP countries increased 151% compared to 2016. 2018 saw a further 49% increase in total extra-EU sugar exports and a further 24% increase in exports to ACP countries. Average annual EU sugar exports to ACP countries in 2017 and 2018 were over four times larger than the annual average for the years 2014,2015 and 2016 (550,969 tonnes compared to 136,762 tonnes) (2).
By 2018 the EU was exporting 611,244 tonnes of sugar to ACP countries, with this accounting for 18.9% of total extra-EU sugar exports, up from 6.9% in 2014. Overall, since 2014 EU sugar exports to ACP markets have increased 482.5% while overall EU sugar exports between 2014 and 2018 increased only 113%. On average in the two post quota years of 2017 and 2018 ACP countries took 1 in every 5 tonnes of sugar which the EU exported. By 2018 the EU was exporting 77% as much sugar as it was importing from ACP countries, this compares to only 5.6% in 2014, when the EU was importing almost 18 times more sugar from the ACP than the EU was exporting to ACP markets (2).
EU Sugar Export Total and to ACP Countries (tonnes)
| 2014 | 2015 | 2016 | 2017 | 2018 | % change 17-18 | |
| EU Total exports | 1,523,854 | 1,342,485 | 1,370,544 | 2,178,927 | 3,241,842 | +48.8% |
| – Sub Total ACP | 104,937 | 109,988 | 195,360 | 490,694 | 611,244 | +24.6% |
| ACP annual % change | -2.3% | +4.8% | +77.6% | +151.2% | +24.6 | |
| % share ACP of total | 6.9% | 8.2% | 143% | 22.5% | 18.9% |
Source: Extracted from EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
- A Heavy Concentration of EU Sugar Exports in West Africa
EU sugar exports to ACP countries are heavily concentrated in West Africa, which took almost 2/3rd of total EU sugar exports to ACP markets.
By far the most important West African markets are Ghana and Senegal, taking in 2018 25.2% and 21.8% respectively of total EU sugar exports to West Africa. Between 2014 and 2018 EU sugar exports to Ghana and Senegal increasing respectively 32-fold, 9-fold (2). In the first four months of 2019 Ghana retained its leading position as a destination for EU sugar exports to West Africa. Guinea and Togo followed, taking 12.5% and 12.1% of total EU sugar exports to West Africa, on the back of a 19-fold and 25-fold increase in EU exports between 2014 and 2018. The 2014-18 also saw a 4-fold increase in sugar exports to Benin and Burkina Faso., who by 2018 were taking 8% and 7.9% of total EU sugar exports to West Africa (2).
Since 2014 Mauritania has also seen strong growth in EU sugar exports, with in 2017 Mauritania surging into the position as the leading destination for EU sugar exports, taking 41% of all exports to West Africa. However this was not sustained with export volumes falling 87% in 2018, to account for only 3.6% of total EU sugar exports to West Africa. Mali meanwhile saw a 56 fold increase in EU sugar export volumes, coming to take 4.9% of EU exports to the region in 2018, while Sierra Leone has also emerged as a growing destination market (an 8-fold increase since 2014), taking 6.6% of export to West Africa in 2018 (2).
A noticeable trend since 2014 has been the virtual disappearance of Nigeria as a destination market for EU sugar exports, with Nigeria having previously been not only the leading destination for EU sugar exports in West Africa but across the whole of the ACP.
This may well be attributable to efforts by the Nigerian government to promote domestic sugar production through more tightly controlling imports (3). This policy may also account for why between 2014 and 2018 there was a four-fold increase in EU sugar exports to Benin (2). In April 2019 Dangote Sugar claimed ‘illegal, low-quality imports’ were ‘putting pressure on its selling price’. It was claimed that ‘although Nigeria banned packaged-sugar imports to protect local industries and diversify the economy, importers take advantage of the nation’s porous borders to bring in the product’. It was reported Dangote’s sugar revenue dropped 26% in 2018, while net income fell 44% (4)
EU Sugar Exports to West Africa (tonnes) % share exports to West African region
| % share 2018 | 2014 | 2015 | 2016 | 2017 | 2018 | % share 2018 | |
| West Africa | 57,472 | 56,895 | 55,045 | 280,536 | 406,825 | ||
| Ghana | 5.55% | 3,187 | 4,586 | 9,192 | 42,441 | 102,417 | 25.2% |
| Senegal | 16.65% | 9,568 | 11,690 | 10,717 | 22,566 | 88,759 | 21.8% |
| Guinea | 4.64% | 2,668 | 1,570 | 1,679 | 7,645 | 52,175 | 12.8% |
| Togo | 3.38% | 1,940 | 12,385 | 5,282 | 19,070 | 49,401 | 12.1% |
| Benin | 13.21% | 7,593 | 10,704 | 5,541 | 17,624 | 32,687 | 8.0% |
| Burkina Faso | 16.03% | 9,215 | 4,331 | 4,706 | 6,594 | 32,110 | 7.9% |
| Sierra Leone | 5.78% | 3,324 | 3,211 | 8,193 | 21,739 | 26,822 | 6.6% |
| Mali | 0.62% | 354 | 677 | 340 | 14,508 | 19,968 | 4.9% |
| Mauritania | 0 | 0 | 1 | 45 | 115,330 | 14,518 | 3.6% |
| Niger | 6.32% | 3,634 | 4,995 | 6,182 | 9,074 | 7,317 | 1.8% |
| Liberia | 0.28% | 161 | 155 | 220 | 874, | 4,378 | 1.1% |
| Ivory Coast | 0.22% | 124 | 29 | 20 | 246 | 4,247 | 1.0% |
| Guinea Bissau | 0.002% | 1 | 71 | 67 | 239, | 2,853 | 0.7% |
| Cape Verde | 0.34% | 195 | 213 | 288 | 285 | 1,150 | 0.3% |
| Sao Tome & Principe | 4.14% | 2,379 | 2,264 | 2,573 | 1,335 | 704 | 0.2% |
| Nigeria | 23.46% | 13,483 | 13 | – | 966 | 6 | 0.001% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
- Central Africa Variable Export Trends
The second most important market for EU sugar exports in the ACP was Central Africa. Cameroon was the most important market for EU sugar exports to Central Africa accounting for 60% of export to the region, down from almost 75% in 2014, following a diversification of EU export markets in the region.
EU Sugar Exports to Central Africa (tonnes) % share exports to Central African region
| % share 2018 | 2014 | 2015 | 2016 | 2017 | 2018 | % share 2018 | |
| Central Africa | 35,190 | 32,089 | 63,570 | 67,746 | 87,806 | ||
| Cameroon | 74.93% | 26,367 | 22,292 | 38,356 | 55,604 | 52,740 | 60.06% |
| Angola | 11.07% | 3,894 | 3,952 | 18,312 | 6,143 | 25,377 | 28.90% |
| Chad | 0.45% | 16 | 17 | 21 | 757 | 5,916 | 6.74% |
| Equatorial Guinea | 6.18% | 2,173 | 2,273 | 2,569 | 2,142 | 2,165 | 2.47% |
| DRC | 0.92% | 323 | 255 | 447 | 768 | 760 | 0.87% |
| Gabon | 7.65% | 2,693 | 3,135 | 3,794 | 2,277 | 618 | 0.70% |
| Congo | 0.03% | 12 | 164 | 65 | 53 | 228 | 0.26% |
| CAR | 0.10% | 35 | 1 | 6 | 2 | 2 | 0.002% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
EU exports to Cameroon nevertheless doubled between 2014 and 2018. The most dramatic areas of growth in EU exports to central Africa occurred to Angola (a 6 ½ fold increase) and Chad with an increase from 16 to nearly 6,000 tonnes between 2014 and 2018. In addition from a limited base EU sugar exports to the DRC have more than doubled (2).
However EU sugar exports to other Central African markets such as Gabon and CAR have shown declines with this being most noticeable in the case of Gabon. EU sugar exports to Equatorial Guinea meanwhile have largely stagnated though be it on a variable trend (2).
- Eastern and Southern Africa: Surprising Export Growth
While given the close proximity and sugar deficit nature of these markets these patterns of EU market exports were understandable, more surprising is the expansion of EU sugar exports to Eastern and Southern Africa markets. This region, as a whole, is a surplus sugar production region. By 2018 this region was taking a total of 109,218 tonnes of EU refined sugar up from a mere 5,217 tonnes in 2014 (2).
EU Sugar Exports to Eastern and Southern Africa – ESA (tonnes) % share exports to ESA region
| % share 2018 | 2014 | 2015 | 2016 | 2017 | 2018 | % share 2018 | |
| Sub-Total ESA | 5,217 | 13,642 | 67,733 | 124,189 | 109,218 | ||
| Southern Africa | 4.93% | 257 | 4,483 | 32,023 | 36,605 | 50,621 | 46.35% |
| South Africa | 2.89% | 203 | 4,480 | 32,022 | 15,768 | 42,421 | 38.84% |
| Namibia | 0.98% | 51 | – | 1 | 10,836 | 8,194 | 7.50% |
| Mozambique | 0.06% | 3 | 3 | 0 | 1 | 6 | 0.01% |
| EAC | 1.36% | 71 | 5,255 | 5,135 | 28,883 | 44,276 | 40.54% |
| Kenya | 0.65% | 34 | 978 | 2,061 | 3,285 | 21,859 | 20.01% |
| Tanzania | 0 | 0 | 4,231 | 3,020 | 24,184 | 17,107 | 15.66% |
| Uganda | 0.06% | 3 | 8 | 1 | 1,357 | 3,732 | 3.42% |
| Rwanda | 0.21% | 11 | 17 | 17 | 17 | 1,519 | 1.39% |
| Burundi | 0.44% | 23 | 21 | 36, | 40 | 59 | 0.05% |
| other ESA (sub-Total) | 93.7% | 4,889 | 3,904 | 30,575 | 58,701 | 14,321 | 13.11% |
| Djibouti | 1.94% | 101 | 306 | 169 | 1,379 | 7,404 | 6.78% |
| Sudan | 77.63% | 4,050 | 2,383 | 30,314 | 56,822 | 4,313 | 3.95% |
| Ethiopia | 13.32% | 695 | 1,198 | 68 | 50 | 2,231 | 2.04% |
| Comoros | 0.02% | 1 | 1 | 8 | 284, | 301 | 0.28% |
| Mauritius | 0 | 0 | 0 | 0 | 13 | 45 | 0.04% |
| Madagascar | 0.79% | 41 | 8 | 12 | 149 | 23 | 0.02% |
| Seychelles | 0.02% | 1 | 5 | 4 | 3 | 3 | 0.003% |
| Eritrea | 0 | 0 | 4 | 0 | 1 | 1 | 0.0009% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
By far the most important market in the eastern and Southern African region in 2018 was South Africa, which accounted for almost 39% of EU sugar exports to the 16 ESA countries to which exports currently take place. In 2018 South Africa replaced Sudan as the leading ESA destination. In 2017 Sudan had taken almost 40% of EU sugar exports to ESA countries, before declining by over 92% in 2018 (2).
This may well in part be attributable to the drought conditions in Southern Africa, neighbouring Eswatini (Swaziland) and the Sudan. However, in terms of trade with South Africa it could also be attributable to specific patterns of sugar demand from the manufacturing sector.
The other noteworthy trend is the expansion of EU sugar exports to the EAC market, in the context of the continued application of safeguard measures by Kenya under the COMESA trade agreement. between the 2014-16 period and 2017//-18 period there was a more than 10-fold increase in the average volume of EU sugar exports to the EAC region, with Kenya in 2018 taking 49% of EU sugar exports to the EAC market (2).
EU sugar exports to other ESA countries however has proved highly variable with no clear trend, but a surprising rise in EU sugar exports to Ethiopia in 2018, though be it from a low base (2).
It is noteworthy that some of the largest increases in EU exports are in countries and sub-regions where EU based sugar companies have developed partnerships or enjoy major ownership stakes in local sugar producers, most notably in the EAC and SADC EPA regions (2).
- Variable Trends in EU Exports to the Caribbean
Beyond Africa EU sugar exports to the Caribbean have increased marginally by 4.8%. This however has taken place on a highly variable trend. Exports to Haiti are a major determining factor in trends in EU sugar exports to the Caribbean ACP countries. In 2017 Haiti accounted for 60% of EU sugar exports to Caribbean ACP countries, with this falling to a mere 0.8% in 2018. Indeed the fall in EU sugar exports to the Caribbean ACP region was wholly accounted for by changes in export levels to Haiti (2).
The most consistent destination market for EU sugar exports over the past five years has been Barbados, though be it on a declining trend. Between 2014 and 2018 the volume of EU sugar exports to Barbados fell 19%, with the share of Barbados in EU sugar exports to the Caribbean ACP region falling from 74.5% in 2014 to 57.3% in 2018 (2).
Elsewhere in the Caribbean the most noticeable trend was the increase in EU sugar exports to Suriname, with these exports largely coming from the Netherlands and Belgium. In 2018 Suriname accounted for 36% of EU sugar exports to the Caribbean ACP region, up from 14% in 2014 (2).
EU Sugar Exports to Caribbean Countries (tonnes) % share exports to Caribbean ACP region
| % share 2014 | 2014 | 2015 | 2016 | 2017 | 2018 | % share 2018 | |
| Caribbean | 7,056 | 7,762 | 9,012 | 18,223 | 7,395 | ||
| Barbados | 74.50% | 5,257 | 4,828 | 4,364 | 3,406 | 4,239 | 57.3% |
| Suriname | 14.82% | 1,046 | 1,368 | 1,324 | 2,912 | 2,665 | 36.04% |
| Bahamas | 3.43% | 242 | 198 | 242 | 198 | 220 | 2.97% |
| St Lucia | 0 | 0 | 246 | 2,772 | 374 | 88 | 1.19% |
| DR | 0.07% | 5 | 34 | 38 | 55 | 67 | 0.91% |
| Haiti | 0.03% | 2 | 1 | 3 | 10,904 | 56 | 0.76% |
| St Vincent | 0.31% | 22 | 66 | 44 | 44 | 27 | 0.37% |
| Grenada | 6.96% | 484 | 621 | 225 | 330 | 22 | 0.30% |
| Jamaica | 0 | 0 | 0 | 0 | 0 | 7 | 0.09% |
| Trinidad & Tobago | 0 | 0 | 2 | 0 | 0 | 4 | 0.05% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
- EU Export Trends in 2019
Reduced EU production in the 2018/19 season has seen EU sugar export volumes for the 2018/19 marketing year down to just over half the level attained in 2017/18 over the same period (to 1,086,000 tonnes compared to 2,178,000). However these export volumes were still almost 73% above the levels attained during this period in 2016/17. Overall therefore EU sugar exports continue to be at enhanced levels (5).
Total EU Sugar Exports 2018/19 up to 21st April 2019 (tonnes)
| Period | 2016/17 | 2017/18 | 2018/19 |
| 1st Oct 2018to 21 April 2019 | 629,000 | 2,178,000 | 1,086,000 |
Source: EC, ‘EU Total exports – EU cumulated exports (CN 1701)’ Sugar Market situation, AGRI G 4 Committee for the Common Organisation of Agricultural Markets, 25 April 2019,
https://ec.europa.eu/agriculture/sites/agriculture/files/market-observatory/sugar/doc/market-situation_en.pdf
As the ACP Group has pointed out this has seen EU sugar suppliers taking market share away from ACP producers on regional ACP markets, compounding the earnings losses suffered as a result of substantially lower EU prices and ACP export volumes to Europe (6).
| Comment and Analysis
While EU sugar exports to West Africa have seen a more than seven-fold increase since 2014, this trend has not been replicated in Nigeria. Current efforts by the Nigerian government to develop backward linkages in the sugar sector are actively discouraging imports of refined sugar and favouring imports of raw sugar, linked to commitments from refining companies to expand local sourcing of sugar cane. This Nigerian government policy includes: · the granting of ‘a five-year tax holiday for investors in the sugar value chain’; · the imposition of ‘a 20% duty and 60% levy for imported refined sugar’; · the imposition of a ‘10% import duty and 50 % levy on imported raw sugar’, but with a special three year dispensation during which a ‘concessionary tariff of a 5% import duty and 5% levy on imported raw sugar’ is granted to refineries that signed-on to the government’s Backward Integration Program (7). This Nigerian government’s policy thus actively discourages the importation of refined sugar from regions like the EU and favours the importation of raw sugar, by refiners who have committed to local sourcing to greater local sourcing. However as USDA analysis points out Nigerian government ‘policies on sugar have not resulted in increased production’. Indeed it is held the Nigerian governments ‘backward integration programs for sugar production still remain significantly challenged, due to weak infrastructure, poor policy formulation/implementation, limited funding and insecurity’ (7). This creates a situation where according to USDA for ‘MY 2018/19 imports are forecast to remain relatively constant at 1.8 million tons’, while production continues to languish at a mere 80,000 tonnes (7). Thus while the Nigerian governments policy has systematically discriminated against refined sugar imports from the EU and encouraged imports of raw sugar, this has so far seen no significant improvement in domestic sugar production. What it has seen is a fourfold increase in EU refined sugar exports to Benin and accusations of increased smuggling of refined sugar across the Benin-Nigeria border (4). Against this background were a ‘no deal’ Brexit to lead to a displacement of EU27 sugar exports to the UK to non-EU markets (EU27 sugar exports to the UK in MY 2017/18 amounted to 550,000 tonnes of white sugar – see epamonitoring.net article, ‘First Post Production Quota Year Shows Dramatic Changes on the EU Sugar Market’, 18 February 2019). The need to find markets for this displaced sugar without further undermining EU27 sugar markets could see the EC exerting pressure on ACP governments to abandon trade policies which are seen as discriminating against EU exports. ACP governments will need to remain alert to the potential trade displacement effects of a ‘no-deal’ Brexit in the sugar sector in a context where the UK’s ‘no-deal’ Brexit temporary MFN tariff schedule would see high MFN duties applied on imports from EU27 member states, bringing this trade to a virtual standstill. This would leave EU sugar companies looking for alternative export markets equivalent to 90% of the total level of EU sugar exports to ACP markets in 2018. The expansion of EU sugar exports to Central African countries like Angola potentially has implications for the intra-African sugar trade, with Angola being a natural market for South African, Eswatini (Swazi) and Zambian exports. Indeed, the regional marketing strategy adopted by Illovo owned Zambian Sugar may account for the more limited expansion of EU sugar exports to the DRC. Indeed, given the extent of EU corporate ownership and partnership arrangements in the Eastern and Southern African sugar sector, the pan-continental marketing strategies adopted by these Europe based sugar companies could have a significant bearing on sugar trade flows. This will be complicated by a ‘no-deal’ Brexit, given the major role which the British company Associated British Foods plays in sugar production in Southern and Eastern Africa and the potential which the French sugar company Tereos has for redirecting sugar production from associated companies in Sub-Saharan Africa to serving UK markets under a ‘no-deal’ Brexit scenario, were current exports to the UK from their French operations to be disrupted. Against this background governments of ACP sugar exporting countries will need to maintain a close eye on developments around the Brexit process and the market positioning strategies adopted by EU sugar companies, to ensure national sugar sector interests are protected. While EU sugar exports to the ESA region appear to be weather related, it is unclear to what extent, having established a market presence in countries such as Namibia and Kenya; EU exporters will seek to maintain their market presence. The pressure to maintain a market presence is likely to intensify under a ‘no-deal’ Brexit scenario given the scale of the EU27 trade displacement in the sugar sector which would arise under the application of the UK’s proposed temporary MFN tariff schedule (see epamonitoring.net article, ‘The UK’s Proposed New MFN Tariff Regime: Protects ACP Interests in the Short Term But…..’, 14 March 2019). If EU sugar exporters seek to maintain their market presence this will reduce intra-regional trade opportunities for Eswatini (Swaziland) the traditional supplier of the Namibian market and a recent sugar exporter to Kenya. Despite long standing efforts to revitalise the domestic sugar sector, the Kenyan government continues to apply safeguard measures in the sugar sector under the COMESA agreement (see epamonitoring.net, ‘EAC Sugar Sector Continues to Seek Protection and Effective Management of Sugar Imports’, 15 November 2018). This limits the level of sugar imports allowed under the COMESA agreement. However according to the USDA the top 5 sugar suppliers to the Kenyan market are: Brazil (377,349 tonnes – 48%); Thailand (111,065 tonnes – 14%); Egypt (a COMESA member 87,059 tonnes – 11%); India (84,817 tonnes – 11%); and Mauritius (a COMESA member, 78,463 – 10%). COMESA members thus account for only 21% of Kenyan imports from the top five sources of supply (8). In addition despite these import restrictions under the COMESA agreement imports from the EU have grown rapidly since 2014 (2). This raises questions about the consistency of such imports with the extension of the special sugar sector safeguards under the COMESA agreement. This being noted the EU remains a minor player as a supplier of sugar to the Kenyan market, with EU exports consisting exclusively of refined sugar. While these COMESA safeguard measures would appear to have a bearing on Swazi sugar exports to the Kenyan market, which totalled 66,475 tonnes in MY 2017/18, a more important factor was the lapsing of the special dispensation which Eswatini (Swaziland)was able to avail itself of under COMESA trade arrangements while still a member of the SACU. Given the failure of SACU to acceded to the COMESA trade protocol this special dispensation for Eswatini’s sugar exports lapsed during the MY 2018/19. This saw total Eswatini sugar exports to Kenya fall to 10,687 tonnes, a reduction of 84% (9). Given efforts underway to create a pan-African Continental FTA, the issue of the impact of EU sugar exports to Sub-Saharan Africa on the development of intra-regional trade in sugar is only likely to gain in prominence. This will be particularly the case as production levels recover from recent drought affected levels in countries like Eswatini and South Africa. |
New EU Market Observatory for Certain Fruit and Vegetables Launched
Summary
The EC has established a new fruit and vegetable market observatory. The value of this market observatory for ACP producers crucially hinges around the product coverage and the level of detail provided through the activities of the observatories. If it is to be of value to ACP producers the fruit and vegetable market observatory needs to cover products of particular interest to ACP producers (e.g. onions) and regularly provide data on EU exports to all ACP countries in products which are of concern to ACP producers. This is essential given the disparity in size between EU production and the size of most ACP economies, where even small export volumes in EU terms can have serious market disturbance effects in individual ACP countries. The work of the market observatory in the citrus sector could help ease some of the pressure from EU producer interests for the stricter application of EU SPS controls, given the unjustified allegations of market domestic citrus market crisis in Spain. Read more “New EU Market Observatory for Certain Fruit and Vegetables Launched”
UK Procedures for SPS Inspections of Plant and Plant Products under a No-Deal Brexit
Summary
If the EU no longer carries out necessary phytosanitary checks on plants and plant products imported into the UK via EU27 member states, the UK will need to apply standard 3rd country phytosanitary controls to ACP plant products exported to the UK via a EU27 member state. The application of standard 3rd country phytosanitary controls along ACP triangular supply chains could prove disruptive given the UK government’s current planned system of controls. These controls are seen as commercially non-viable by operators involve in current triangular supply chain arrangements. There is therefore an urgent need for ACP governments whose exporters are involved in triangular supply chains involving the affected products to secure from the EU authorities a firm commitment that necessary plant health checks on products destined for the UK market will continue to be carried out in the EU27. Read more “UK Procedures for SPS Inspections of Plant and Plant Products under a No-Deal Brexit”
EU Council Agrees Article 50 ‘Flextension’ Until 31st October 2019
Summary
The EU Council has agreed an extension of the Article 50 process until 31st October 2019. The UK will be bound by the same rights and obligations as other EU members during this period. This extension period could come to an end earlier if the Withdrawal Agreement is ratified. In this context while there is now time to find a negotiated position this would require: ratification of the Withdrawal Agreement; revising the UK’s whole Brexit strategy or revoking Article 50. This will hinge solely around political developments in the UK. The prospect of a ‘no-deal Brexit’ remains, with critical decision points relating to the conduct of European Parliament elections in the UK, and the June 21st EU Council review of the Brexit process. In addition a ‘no-deal Brexit’ or a ‘hard Brexit’ could still occur on the 31st October 2019. Against this background ACP EPA signatories will still need to retain the option of signing Continuity Agreements with the UK if a ‘no-deal Brexit’ looks imminent. Even under a ‘hard Brexit’ ACP governments would need to address the range of issues identified as requiring the inclusion of a detailed “Annex of Concerns” in each of the concluded Continuity Agreements. This will be vital to ensuring both a smooth transition to post-Brexit trade relations with the UK and the future value to ACP exporters of the rolled over tariff preferences which Continuity Agreements seek to enshrine in ‘UK only’ trade agreements with ACP countries. Read more “EU Council Agrees Article 50 ‘Flextension’ Until 31st October 2019”