Summary
The difficult global sugar market situation and rapid transition from a large projected deficit to a significant surplus is likely to put pressure on EU sugar prices, which have to date held up well. There are concerns the UK duty free sugar quota of 260,000 tonnes could see EU/UK sugar trade restricted, with this driving EU27 sugar exports off the UK market and intensifying competition on the EU market. This could also complicate the onward trade in ACP sugar and products containing ACP sugar between the UK and the EU. Disturbances on European sugar markets look likely in 2021, including for ACP Fairtrade sugar, where exporters may need to review their routes to market and refining partners. Alternatively, special onward trade arrangements may need to be negotiated as part of wider efforts to avert disruption of ACP triangular supply chains. This can be seen as an urgent policy priority. Meanwhile ACP sugar exporting companies will need to explore their sugar marketing options for 2021, in the light of a variety of scenarios for the UK’s departure from the EU customs union and single market. Read more “EU Sugar Market Still Attractive but Brexit Related Complications Likely in 2021”
Category: Southern Africa
UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU
Summary
The UK Trade Secretary has expressed concerns over plans for a phased implementation of UK border controls on imports from the EU27 regarding their WTO compatibility, the impact on smuggling operations and the credibility of UK trade policy. Concerns have also been raised over the practicality of implementing ‘light touch’ border control systems between the mainland UK and Northern Ireland. Problems in designing and implementing ‘light touch’ border control systems and concerns over smuggling could see more rigorous controls applied to ACP goods entering the UK market via EU27 member states. Unless special arrangements are set in place to facilitate the continued smooth functioning of ACP triangular supply chains, the functioning of important ACP export sectors could be seriously undermined (e.g. short shelf life horticulture products and cut flowers, value added cocoa products and even fisheries products). Read more “UK International Trade Secretary Raises Concerns Over UK Border Control on Imports From EU”
Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains
Summary
Proposals for consolidated electronic document requirements for the movement of goods from the mainland UK to Northern Ireland could provide a basis for special arrangements to facilitate the continued smooth functioning of ACP triangular supply chains. Additional arrangements to remove the need for phytosanitary checks on ACP goods entering the UK market via EU27 countries would however be required. While there is seen as being no political objection in the UK to averting disruption of trade with developing countries which enters the UK market via EU27 member states, there is not currently the ‘band width’ in UK government services to deal with this issue, given Covid-19 related demands and the fraught state of UK/EU negotiations. There is therefore a need for the most directly affected ACP governments to launch a political initiative for the establishment of special arrangements to ensure the continued smooth functioning of ACP triangular supply chains. Such an initiative would need to reach out to both the UK and EU authorities to make sure suitable arrangements are in place along the whole of the supply chain. Read more “Could Leaked Requirements for Movement of Goods to Northern Ireland Provide Basis for Special Arrangements for ACP Triangular Supply Chains”
EU Figure Highlights Importance of UK Market to EU27 Poultry Sector
Summary
The UK is a major export market for EU27 poultry meat producers, in recent years taking 1/3 of extra-EU27 exports. In the absence of a UK/EU trade agreement which preserves duty free access on mutual trade in poultry meat, EU exporters would face standard MFN duties in exporting to the UK, while UK exporters would face standard MFN duties in exporting to the EU. If EU exporters faced the same tariffs as Brazilian exporters, then EU exporters of chilled and frozen chicken meat would rapidly be displaced from the UK market in most product areas. This would be likely to generate a substantial surplus of poultry meat on the EU market, for which markets would need to be found across the globe. This needs to be seen in the context of the current importance of African markets in total extra-EU poultry meat exports. Read more “EU Figure Highlights Importance of UK Market to EU27 Poultry Sector”
What Lessons Can the ACP Draw from the EU’s Post Covid 19 EU Recovery Plan
Summary
The EU has launched a huge €1.98 trillion EU Recovery Plan in response to the Covid-19 crisis. The focus of the long-term recovery dimension of this plan and the basis for its financing, raise a number of issues in an ACP context. The most important of these are: the need to identify ways in which ‘easier and quicker access to finance’ can be provided to ACP companies which would otherwise be viable in the absence of the crisis; the options for using the EC’s good credit rating to mobilise funds in support of economic recovery in ACP countries; the scope for adopting the ‘strategic autonomy’ approach in sectors whose critical importance and vulnerability has been highlighted by the crisis; opening a dialogue with the EU on how future development assistance financing can be used to reimburse the budgets of agreed programmes from which funds have been redirected to address current emergency needs. Read more “What Lessons Can the ACP Draw from the EU’s Post Covid 19 EU Recovery Plan”
EU Moves Swiftly to Redeploy Existing Funds to Meet Immediate Crisis and Long-Term Structural Needs
Summary
The EU has moved swiftly to unlock Covid-19 blocked development expenditures for redeployment to meeting immediate health crisis and longer term structural economic needs. To date the EU framework for effectively supporting a recovery in trade and production in ACP countries is still under development, with ACP farmers organisations and agri-food sector associations urgently needing to initiate a dialogue with the local EU delegate to assist in defining the approach to be adopted by the EU locally in supporting the restoration of production and trade in the face of the ongoing Covid-19 pandemic. There is a need to ensure EU action in support of economic recovery focuses on the specific needs of farmers and agri-food sector enterprises, given the potentially serious food and livelihood security issues raised by the ongoing pandemic. Read more “EU Moves Swiftly to Redeploy Existing Funds to Meet Immediate Crisis and Long-Term Structural Needs”
Growing Cold Store Shortage Generating Further Additional Costs in Serving European Markets
Summary
The Covid-19 surge in demand for cold storage space is generating significant increases in cold storage charges and an absolute shortage of space in Europe. In the case of the UK this situation is being compounded by the growing prospect of a no-deal UK departure from the EU customs union. This will generate yet another cost increase for ACP agri-food exporters of fresh products which require cold storage before delivery to final customers. This suggests ACP exporters of products requiring cold storage need to shorten their supply chains through the establishment of arrangements for direct delivery of goods to final buyers. This would allow these ACP exporters to side-step the commercial costs of the worsening cold storage availability situation in not only the UK but elsewhere in Europe. Smaller ACP exporters may need to explore their options for accessing the ‘Airbnb’ model of cold store provision. Read more “Growing Cold Store Shortage Generating Further Additional Costs in Serving European Markets”
What Future Air Passenger Flight Based Cargo Services?
Summary
The collapse of global air passenger has reduced cargo capacity and led to higher air freight rates for ACP horticulture and floriculture exporters. Analysis suggest air passenger numbers in Africa and Europe are unlikely to recover to pre-Covid19 levels fort five years, with Africa-Europe intercontinental air services likely to be similarly limited. East Africa is likely to be seriously affected, with exporters needing to explore the scope for: interim air freight solutions between East Africa and major EU27 and UK markets; the development of a commercially sustainable dedicated model for air freight shipments between east Africa and Europe and rethinking the basket of products air freighted to Europe given increased air freight charges. Regionally based air cargo services could usefully be designated as a sector where ‘strategic autonomy’ should be promoted, with international assistance being sought in pursuit of this goal. Read more “What Future Air Passenger Flight Based Cargo Services?”
Grim Sugar Market Prospects Will Require Better ACP Marketing to Exploit Available Evolving Opportunities
Summary
The nascent recovery of the EU sugar market which was getting underway in the 2019/20 marketing year has been reversed by the Covid-19 pandemic. The collapse of global sugar prices is making raw cane sugar imports cheaper and EU sugar exports less competitive. While some ACP sugar exporters are increasingly focussed on trade into sugar deficit markets in the EU (region 3), where prices are on average stronger, these average prices mask large differences in contracted prices and between different contracted prices and spot market prices. This makes marketing strategies and contract negotiations critical to the overall revenue position of ACP sugar exporters to the EU market. Other ACP exporters remain dependent on the UK market where profound uncertainties are faced. The future basis for UK/EU trade and the arrangements for the management of the UK’s Autonomous Tariff Quota will be critical to future UK sugar market price developments. With the recessionary effects of Covid-19 likely to profoundly impact on sugar sector consumption and the structure of demand, ACP exporters will need to pay close attention to evolving policy developments and market conditions in the coming 6 months. Read more “Grim Sugar Market Prospects Will Require Better ACP Marketing to Exploit Available Evolving Opportunities”
Future UK Only MFN Tariff Schedule Announced
Summary
After much speculation, the MFN tariffs on most agricultural and food products of greatest export intertest to ACP countries have been retained largely unchanged by the UK government. This will bring considerable relief to ACP banana, sugar, canned tuna, and value-added cocoa product exporters, where fears of the adoption of a ‘zero production-zero tariff’ approach had arisen. Across a range of other areas, relatively minor tariff reductions are unlikely to carry serious trade implications for ACP agri-food product exporters. The only area of uncertainty arises from the removal of the EU entry price system currently applied to a range of products and its replacement by simpler ad valorem import duties. It is unclear what the commercial impact of this change will be on individual ACP exporters of specific products. Read more “Future UK Only MFN Tariff Schedule Announced”