Category: Southern Africa

South Africa’s Poultry Sector on the Road to Recovery as Stricter Trade Regime Applied

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Summary
According to analysis from the United States Department of Agriculture, Foreign Agricultural Service, the South African poultry meat sector is recovering following a post drought recovery of maize crops which has lowered feed costs, agreement on a Poultry Sector Master Plan and the application of new trade policy measures designed to provide relief from low cost poultry imports. However, there is a hole in South Africa’s poultry sector trade policy arising from the de facto effect of EU-South Africa trade agreements. These exclude EU exporters form general tariff changes and profoundly undermine the effectiveness of the anti-dumping and safeguard measures nominally allowed under these agreements. This situation is compounded by legal loop-hole challenges from the EC of South African safeguard measures, which if upheld would seriously undermine the development dimension of EU trade agreements with sub-Saharan African trade partners. Read more “South Africa’s Poultry Sector on the Road to Recovery as Stricter Trade Regime Applied”

Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations

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Summary
The UK government is urging businesses to use the services of freight forwarders and other customs intermediaries, to facilitate the smooth functioning of post Brexit UK/EU border clearance operations. However, the NAO reports the necessary expansion of the customs intermediate sector has simply not occurred and is unlikely to take place until the second half of 2021 at the earliest. This will see both rising costs and shortages of customs intermediaries, which could slow down border clearance operations. The resulting delivery delays could strip value out of ACP short shelf life product triangular supply chains. Urgent action is needed to secure the services of customs intermediaries for ACP trading operation along triangular supply chains in 2021. Unfortunately, given the surging demand for the services of customs intermediaries such actions may already be too late. Read more “Effective Engagement with Expanded Freight Forwarding Sector Seen as Critical to Future UK/EU Border Clearance Operations”

EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets

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Summary
The EU poultry meat sector has proved surprisingly resilient to Covid-19 trade and market disruptions. While both EU imports and exports have fallen, exports of poultry meat to the main sub-Saharan African markets have risen dramatically.  This role of sub-Saharan African markets as “markets of last resort” raises concerns about the impact of a ‘no-deal’ or ‘Thin FTA’ outcome to the Brexit process on international trade in poultry meat given the scale of current mutual EU/UK trade (1.2 million tonnes per annum). There are fears ACP markets could be targeted should this EU/UK trade be disrupted. This could then disrupt established or emerging African poultry sectors. ACP governments will need to prepare for these likely export surges, in a context where the EU’s new Chief Trade Enforcement Officer will be increasingly seeking to remove current trade restrictions on EU poultry meat exports, where these violate trade agreement commitments. Greater transparency in trade statistics on EU poultry exports to developing country markets could facilitate operationalising EU policy coherence for development commitments, particularly if a ‘window’ were opened through which the concerns of local ACP poultry producers could be made known. Read more “EU27 Poultry Sector Surprisingly Resilient in Face of Covid-19 Challenges, But Brexit Challenges Could See Expanded Export Drive to ACP Markets”

Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters

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Summary
There area host of Brexit related uncertainties overhanging the negotiation of ACP-UK supply contracts for 2021, which threaten to increase costs to such an extent as to erode the profitability of a range of ACP exports to the UK market. ACP short shelf life product exports along triangular supply chains are likely to be most severely affected. The currency issue will also affect direct ACP exports. How these short-term issues are dealt with, could carry long term implications, especially for small scale ACP exporters. Public policy interventions to support Codes of Conduct for dealing with the distribution of additional costs, based on the principles enshrined in the EU UTP directive, could usefully be launched. In the EU, traders in short shelf life products would appear to have a long term vested interest in short term burden sharing initiatives; otherwise ACP exporters will be compelled to seek out new direct routes in serving UK markets. Read more “Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters”

The Prospect of UK Port Chaos Could Open Up Opportunities for the UK Government to Fulfil Its Policy Commitment to Ensuring Continuity in Trade With Developing Country Partners Within the Brexit process

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Summary
With some UK ports already facing unacceptable delays in unloading ships and with the BPA warning of the ‘impossible’ demands for the implementation of new import controls in 2021, setting in place border clearance systems to facilitate the continued smooth flow of ACP fresh food and plant products to the UK via  ports of landing in the EU would appear a ‘no brainer’. The establishment of  a “Green Corridor” system for the border clearance of products where necessary phytosanitary and safety controls have been caried out upon entry to the EU, and duty-free/quota -free access is enjoyed to both the EU and UK market, would appear a simple means of easing pressure on UK ports. What is more, it would simultaneously fulfil the Uk governments policy commitments to ensuring ‘continuity’ in trade with developing country partners within the Brexit process. Read more “The Prospect of UK Port Chaos Could Open Up Opportunities for the UK Government to Fulfil Its Policy Commitment to Ensuring Continuity in Trade With Developing Country Partners Within the Brexit process”

If Negotiations Fail No Deal Trade Effects Likely to be Felt in Final Weeks of 2020

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Summary
With UK and EU exporters of short shelf life products fearing severe trade disruptions in the first weeks of 2021, the question arises: what strategies should ACP exporters serving the UK market via the EU seek to set in place? This will require careful planning. Possible options include moving over to direct exports to the UK, shifting to onward shipping via UK east coast or inland ports to side-step Kent traffic congestion, or diversifying markets away from the UK.  If routes to markets cannot be adjusted a critical issue will be the distribution of the additional costs within the supply chain (of which currency depreciation is one dimension). This will also require careful attention, particularly in regard to contractual arrangements for the delivery of goods to the UK at the beginning of 2021. If ACP exporters exclusively bear the additional logistical costs and losses arising from delays, this could undermine the commercial viability of such exports. A no-deal UK departure could also lead to both EU and UK export surges of certain agri-food products to 3rd country markets. This is particularly the case not only for poultry meat and long-life dairy products, but also products like onions, where alongside West African markets the UK market is a major market for Dutch traders. Were such export surges to threaten local producers, ACP governments would need to look at adopting remedial trade policy measures. Where no local ACP production is affected, ACP importers could capitalise on low priced ‘surpluses’ arising as a result of EU/UK trade disruptions. Read more “If Negotiations Fail No Deal Trade Effects Likely to be Felt in Final Weeks of 2020”

UK Decision to Roll-Over Recognition of EU Issued Organic Certification for Whole of 2021 Welcome News for ACP Organic Exporters, But IT Constraints Will Be Faced

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Summary
The UK will continue to recognise EU issued organic certification until the end of 2021. This will avoid any loss of commercial value on ACP exports to the UK market arising from the lapsing of the validity of organic certification issued by EU27 based agencies. The issue of the lapsing of EU recognition of UK issued organic certification from 1st January 2021 however remains unresolved, with an ACP coordinated political initiative in this regard now urgently needed. The UK will however, need to move over to a system of manual organic import controls, given the lapsing of UK access to the EU TRACES system from 1st January 2021, with this potentially causing delays and increasing the administrative cost of clearing organic products through UK border controls. Read more “UK Decision to Roll-Over Recognition of EU Issued Organic Certification for Whole of 2021 Welcome News for ACP Organic Exporters, But IT Constraints Will Be Faced”

Strict Management of Sugar ATQ Necessary on Public Health Grounds Given Failure of Voluntary Measures to Reduce UK Consumption of Hidden Sugars

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Summary
Voluntary sugar reduction efforts have proved largely ineffective in reducing the use of sugar in food and drink products in the UK, with the DISL in contrast demonstrating how the ‘price’ of sugar can influence the product re-formulation efforts of companies. This suggests the UK’s future sugar trade policy should be managed in a way which carefully balances the supply and demand situation on the UK sugar market, so as to maintain sugar prices and prevent surplus supplies depressing sugar prices. Otherwise, the UK’s sugar trade policy could unnecessarily depress UK sugar prices, to the detriment of wider public health policy objectives. Read more “Strict Management of Sugar ATQ Necessary on Public Health Grounds Given Failure of Voluntary Measures to Reduce UK Consumption of Hidden Sugars”

With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains

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Summary
The announcement by the UK government of new inland Border Control Posts is seen as ‘extremely last minute’, with serious road freight disruptions along the main EU/UK Ro-Ro routes through Kent now seen as almost inevitable. The UK is seen as ‘dangerously ill-prepared’ for leaving the EU customs union and single market on 1st January 2020. As a consequence, significantly large increases in costs of moving goods through EU/UK border controls are likely. However, there are expanding freight options for delivery to UK East Coast and ‘inland’ ports which will side-step traffic congestion in Kent. ACP exporters using triangular supply chains need to adequately prepare for these changes and actively seek to “Brexit-Proof” their supply chains. ACP exporters directly serving the UK market will also need to take similar “Brexit-Proofing” initiatives, with successful companies potentially being able to capitalise on the rising food prices projected for the UK market in 2021. Read more “With No Deal Brexit Preparation Underway in UK and Serious Challenges Faced ACP Exporters Will Need to Look to “Brexit Proofing” Their Supply Chains”

Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains

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Summary
While even under an EU/UK FTA mutual trade in agri-food products will be adversely affected, under a no-deal outcome these effects would be far more severe. Thus, under an FTA it is estimated UK food exports to the EU   would fall 22.5%, while under a no-deal outcome the decline would be 63.2%. The corresponding figures for EU food exports to the UK are 22.6% and 61.7% respectively under an FTA or no-deal scenario.  This would have substantial market and wider trade consequences. The knock on effects of the outcome of the EU/UK negotiations will be felt in 5 main areas:
o  The effects on ACP triangular supply chains serving the UK via the EU.
o  The effects on ACP triangular supply chains serving the EU via the UK.
o  A possible further revision of the UK’s MFN tariff schedule under a no-deal outcome.
o  New opportunities for increased direct exports to the UK market.
o  The diversion of displaced EU/UK exports to targeted ACP market.
ACP agri-food sector enterprises and governments will need to make preparations for dealing with the trade and market consequences which will arise under both an EU/UK FTA and more seriously, the growing prospect of anon-deal outcome to the ongoing negotiations. Read more “Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains”