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”
Category: Poultry
Given rising food demand the poultry sector offers considerable cope for rural transformation. This arises primarily not through the formal wage employment generated on poultry farms and in poultry processing facilities but through the development of local poultry feed supply chains. However these opportunities for transformation are being undermined by growing exports of residual, low cut poultry parts to mainly African ACP markets. The EU plays a major and expanding role in this trade, with the preferential treatment negotiated for EU exporters under reciprocal trade agreements with African countries playing a major role in the expansion of EU poultry meat exports. The EU’s restrictive poultry import regime also plays a major role in promoting EU poultry meat exports. This raises important issues of policy coherence for the EU.
Consideration should be given to the promotion of the responsibly interpretation and application of the commitments entered into by ACP governments with regard to the use of non-tariff trade policy measures and the establishment of a ‘Code of Conduct for Responsible Trade in Poultry Parts’, aimed at addressing both the adverse developmental and health effects of the current EU trade in poultry parts.
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Report Spells Out Impact of Brexit Scenarios for Food and Beverage Supply Chains
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”
UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market
Summary
The UK governments’ decision to breach substantive provisions of the Northern Ireland Protocol to the jointly agreed Withdrawal Agreement threatens to make ratification of any EU/UK agreement which may still be concluded extremely difficult. It increases the prospect of an acrimonious no-deal UK departure from the EU customs union and single market at the end of 2020. While the scope exists for policy measures to minimise the negative impact of a no deal UK departure on ACP exports, the window of opportunity for taking these necessary measures is rapidly closing. The absence of appropriate policy intervention will leave ACP exporters alone in facing the cost increasing challenges of a no-deal UK departure will generate. Not all current ACP exporters will be able to adjust to these new commercial realities, with all but the largest and best prepared ACP exporters being squeezed out of UK and some EU27 markets. Read more “UK Abrogation of Withdrawal Agreement Commitments Heightens Danger of a No Deal UK Departure from the EU Customs Union and Single Market”
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”
EC Covid-19 Linked Agri food Sector Support Measures Extended
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”
Restrictions on Poultry Meat Imports Called for in the Face of Covid-19 Impact on EU Poultry Market
Summary
The European Poultry Producers Association (AVEC) has called for the EC to review the application of its TRQ based import regime for poultry meat to ensure import levels reflect the collapse of demand for out-of-home poultry meat consumption. With the EC being a strong advocate of open markets and with trade disputes pending in the poultry sector to remove barriers to EU exports, it will be worthwhile monitoring the EC’s response to AVEC’s call to limit imports via a review of how the TRQ regime for poultry meat is managed. Read more “Restrictions on Poultry Meat Imports Called for in the Face of Covid-19 Impact on EU Poultry Market”
Conditional Lifting of South African HPAI Import Ban on Dutch Poultry Meat Follows New HPAI Based Ban on Polish Poultry Meat
Summary
In January 2020, the South African government introduced HPAI based restrictions on poultry meat imports from Poland. Within 5 weeks similar restrictions on imports from the Netherlands, which had been in place since the beginning of 2017 were lifted. However, this was conditional on the validated certification the birds from which the meat was derived had been raised and processed in the Netherlands. The EU strongly objects to these conditions. In the fourth week of April the South African authorities were notified of the launching of a dispute settlement case under the EU-SADC EPA. This case was however immediately suspended in light of Covid-19 related constraints. South Africa’s conditional opening of its market to Dutch poultry products needs to be seen in light of the multiple HPAI outbreaks across Europe, the pan European nature and intra-corporate sourcing practices of European poultry companies and the serious constraints on the operation of South African SPS import controls in the face of the Covid-19 pandemic Read more “Conditional Lifting of South African HPAI Import Ban on Dutch Poultry Meat Follows New HPAI Based Ban on Polish Poultry Meat”
Absence of Clear Region of Origin Labelling of Poultry Suggests a Need for Pre-emptive Import Restrictions as Spread of Highly Contagious AI Spreads Across Europe
Summary
The spread of highly contagious avian influenza (AI) across Europe in the absence of clear place of origin labelling of the birds from which poultry meat exports are derived, would suggest a need for the pre-emptive introduction of import restrictions where domestic ACP poultry production could be vulnerable to infection. If the EU wants to keep export markets open in the face of periodic outbreaks of high contagious AI within Europe, then mandatory labelling of the place of origin of the birds from which poultry meat exports are derived would appear to be essential. Read more “Absence of Clear Region of Origin Labelling of Poultry Suggests a Need for Pre-emptive Import Restrictions as Spread of Highly Contagious AI Spreads Across Europe”
The Link Between EU Agri Food Sector Protectionism and the Value of ACP Trade Preferences Highlighted
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”
EU Poultry Sector Projections Suggest Continued Strong Growth in EU Poultry Exports to Africa
Summary
The export of chicken parts (particularly bone- in quarters and halves) is driven by expanding EU poultry meat production, given the EU consumer preference for breast meat. This is greatly assisted by a protective trade policy which carefully manages imports of poultry meat to allow EU producers to fully benefit from growing EU consumer demand, despite their production cost disadvantages compared to competitive 3rd country poultry meat exporters. This enables the maintenance of higher EU market prices which allows a cross subsidisation of exports of residual poultry parts. Against this background across a growing number of sub-Saharan African countries, the strong growth in EU poultry meat exports which stifles local poultry sector development in the face of growing African consumer demand is set to continue. Read more “EU Poultry Sector Projections Suggest Continued Strong Growth in EU Poultry Exports to Africa”