Category: Dairy

The dairy sector offers scope for putting cash into the hands of smallholder farmers on a regular basis and has considerable transformative potential. However this could well be undermined by emerging patterns of EU trade and investment in ACP dairy sectors. These developments cannot be delinked from new patterns of EU support to the dairy sector. There are indications that certain EU dairy companies recognise the need to develop ‘responsible’ trade and investment relations in the dairy sector in Africa in particular. Indeed calls have been made for the establishment of a ‘Code of Conduct for Responsible Trade and Investment in African Dairy Sector Development’. There is also a need for the EU to responsibly interpret and apply the commitments entered into by ACP governments with regard to the use of non-tariff trade policy measures.
Read more.

The Implications of the EUs More Assertive Trade Policy: The EU Trade Policy Review Part 2

epamonitoring

 

Summary
The EC is proposing a ‘more assertive’ trade policy, emphasising the need for partner countries to fully live up to commitments entered into under trade agreements their governments have signed on to. There are concerns the more assertive promotion of EU trade and economic interests will dominate other EU trade policy objectives. The EC’s ‘Open Strategic Autonomy’ concept seeks to reconcile the EU’s ‘managed trade’ import regime applied in sensitive agri-food sector, with the need for more open markets for EU exporters. There is a contradiction at the heart of EU agri-food sector trade policy, with the EC seeking to deny ACP EPA signatories the right to use trade policy tools to regulate imports in trade with the EU which the EC itself routinely uses to manage imports from other major agri-food sector competitors. This contradiction is likely to come to the fore in the coming years as the EC seeks to operationalise its ‘more assertive’ trade policy. This will be especially the case if the application of full UK border controls on goods crossing from the EU, generate the kinds of agri-food sector disruptions which have affected UK exporters since 1 January 2021. This could then see surges in EU exports to ACP markets for livestock products such as poultry meat and milk powders. Read more “The Implications of the EUs More Assertive Trade Policy: The EU Trade Policy Review Part 2”

Continued Disruption of African Dairy Markets Likely as Continued EU Export Growth Projected Amid Changing Pattern of Milk Powder Exports

epamonitoring

 

Source
The EU is projected to continue to dominate the global trade in dairy products, with EU milk production growth slowing down but continuing. There is a growing trend towards increased EU exports of low priced ‘fat filled milk powders’, in the face of growing competition on milk powder markets from Latin American exporters. This is increasing the importance of negotiated EU tariff and non-tariff preferences on sub-Saharan African markets. There is growing concern over the devastating impact of increased ‘fat filled milk powder’ imports on local milk supply chains in West Africa. Maintaining the policy space for managed trade in milk powders would appear to be an essential part of sustainable strategies to promote the development of local milk production in the face of surging demand for dairy products in sub-Saharan Africa. Read more “Continued Disruption of African Dairy Markets Likely as Continued EU Export Growth Projected Amid Changing Pattern of Milk Powder Exports”

Non-Tariff Issues Threaten to Undermine UK Meat Exports to EU27 Markets and Generate Displace of UK Exports to ACP Markets

epamonitoring

Summary
The shortage of UK veterinarians required to sign off on Export Health Certificates could seriously constrain UK exports of livestock products destined for the EU market. While Export Health Certification issues should impact on exports to all destinations, if the UK government adopts the BMPA proposals to use supervised Certification Support Officers instead of fully qualified veterinarians to sign off on Export Heath Certificates this could facilitate exports of UK livestock products.  However, the EU is unlikely to accept such a downgrading of export health certification controls, without a thorough assessment of the phytosanitary and food safety implications. This could create a situation where in 2021 the new supervised Certification Support Officers were able to sign off on exports to non-EU destinations but not exports to the EU. This would lay the basis for an expansion of displaced UK livestock product exports to ACP markets rather than the EU markets currently served. In the poultry sector, this needs to be seen in a context where over half of all UK extra-EU poultry meat exports were destined for ACP market in 2019. Read more “Non-Tariff Issues Threaten to Undermine UK Meat Exports to EU27 Markets and Generate Displace of UK Exports to ACP Markets”

UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible

epamonitoring

 

Summary
A Kenya-UK trade agreement has been concluded which preserves duty free access for Kenyan exports to the UK market beyond 31st December 2020. However, this agreement fails to avoid potential disruptions of all current supply routes for tariff free access to the UK market.  This is a result of the failure to address future trade issues along triangular supply chains, which serve the UK market via initial landing in the EU. This issue is of considerable importance to the East African region, given the current routes used in serving the UK market in major export sectors (e.g. cut flowers). In the context of a no-deal UK departure, issues will also arise for other major ACP triangular supply chains where some repackaging or simple processing takes place in the EU prior to onward shipment to the UK. These triangular supply chain issues need to be urgently addressed. While the relaxation of UK phytosanitary controls could facilitate an expansion of Kenyan exports to the UK, this is highly unlikely in the livestock sector. Rules of origin improvements could prove relevant in other ACP-UK EPA contexts and should be studied closely. Finally, the 7-year moratorium on tariff reductions defers any immediate conflicts between the implementation of the UK-Kenya agreement and the maintenance of a common external tariff for the East African Customs Union Read more “UK Kenya Agreement Leaves Triangular Supply Chain Issues Unresolved but Suggests Progress on Rules of Origin Issues Could be Possible”

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

epamonitoring

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”

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

epamonitoring

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”

East African Dairy Sector Trade War Continues to Simmer

epamonitoring

Summary
An ongoing dairy sector trade war in the EAC over accusations of the use of imported milk powders in value added products exported regionally, is seeing non-tariff barriers being used to block the free movement of dairy products within the EAC. The situation in the dairy sector is complex, with the conflict reflecting wider trade tensions. At heart there would appear to be a need to deepen regional economic integration if such trade conflicts are not to periodically flare up.  The simmering trade war makes it particularly difficult for the EAC to reach agreement on ‘green lane’ protocols to keep trade moving in the face of the Covid-19 pandemic.  This could potentially carry serious economic and food security consequences. In addition, regional trade tensions could well be exacerbated by the UK’s final departure from the EU customs union, which in the face of Covid-19 disrupted trade discussions could present the Government of Kenya with some very difficult choices between losing duty free access to the UK market at considerable cost to the Kenyan economy or going it alone with tariff liberalisation commitments to the UK which would impact on the whole of the EAC and exacerbate existing intra-regional trade tensions.  The only way out of this bind would be for the UK governments to unilaterally extend the Transitional Protection Mechanism initially proposed for an 18-month period in October 2019. Read more “East African Dairy Sector Trade War Continues to Simmer”

EC Covid-19 Linked Agri food Sector Support Measures Extended

epamonitoring

Summary
The EC has been far more modest in its market interventions in the agricultural sector in response to the Covid-19 crisis than to previous crisis situations. In many respects the EC is seeking to work with current trends, such as increased private sector stock holdings, with its measures being less likely to result it stock levels which will overhang global markets and depress future global prices to the detriment of ACP producers.  However, a close eye will need to be kept on the impact of EU market intervention measures on trade flows in sensitive products to regions where this could exacerbate regional trade tensions. Of more general interest, the EC’s decision to re-deploy financing for longer term activities to short term emergency measures, offers a precedent which could usefully be applied to existing EDF financed cooperation activities in ACP countries, with the aim of assisting hard pressed ACP governments in responding to both the health and wider economic effects of the Covid-19 pandemic. However, this will hinge around an EC policy commitment to use future post-Cotonou financing instruments to reconstitute the budgets from which emergency funding has been re-deployed. Read more “EC Covid-19 Linked Agri food Sector Support Measures Extended”

Dairy Price Recovery Likely to be Reversed by Covid-19 Pandemic

epamonitoring

Summary
Covid-19 pandemic related disruptions to EU and global dairy markets has led the European Milk Board (EMB) to call for the implementation of a production restricting Market Responsibility Programme, which it is argued should become a permanent feature of the EU diary sector policy tool kit. While the EC is likely to resist such call, favouring traditional intervention buying, ACP milk producers could usefully support the EMB proposal in order to avert future ‘dumping’ of low priced EU milk powder on ACP markets, to the detriment of local milk producers and national efforts to boost local milk production. Read more “Dairy Price Recovery Likely to be Reversed by Covid-19 Pandemic”

The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted

epamonitoring

 

Summary
The WTO has once again highlighted the EU’s extensive use of tariffs and non-tariff measures to manage EU agri-food markets. Preferred ACP exporters benefit from these protectionist EU trade policies, with any movement away from these policies potentially see mainly ACP/LDC exporters losing out to the tune of €1.6 billion.  The prospects of such losses are very real with regard to the UK market, where there is strong pressure under the current MFN tariff review to abandon MFN tariffs where the UK has no or only limited production interests to protect. Looking forward, within the EU, a long standing insistence on abolishing quantitative restrictions on imports from the EU under economic partnership agreements concluded with ACP countries, is being given new impetus with the creation a Chief Trade Enforcement Office, dedicated to making sure existing trade agreement commitments by 3rd countries are fully implemented. Such a course of action however sits uneasily with the EU’s own extensive use of quantitative restrictions in sensitive agri-food sectors. Read more “The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted”