Summary
Given the role the London Cocoa Future market plays in setting the benchmark for cocoa prices, through its impact on the value of the £ a ‘No-Deal’ Brexit could have a significant impact on cocoa prices. With growing investment in local cocoa value added processing for the domestic market in countries such as Ghana, the application of the UK’s currently proposed post-Brexit unilateral MFN tariff schedule could create new market opportunities for the export of not fatted cocoa paste and cocoa butter to the UK market. However, given the existing ownership structure of value added cocoa processing activities, there may be a reluctance to plan for an expansion of local value added processing to serve the UK market since this would directly compete with similar facilities in the Netherlands and Belgium which are part of the same corporate family. Read more “No-Deal Brexit Could Adversely Impact Cocoa Prices but Open Up opportunities for Increased Value Added Cocoa product Exports to the UK”
Category: Brexit
EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports
Summary
In the face of sustained low prices EU sugar production is declining as part of the now post-quota abolition market adjustment, with lower areas under sugar beet being contracted by beet processing companies. There is a growing variation in prices across EU markets with ACP exporters needing to enhance their marketing operations in the EU to maximum total revenues gained on sales to the EU. ACP export volumes to the EU nearly doubled in 2018/19 compared to the depressed levels of 2017/18, while EU export volume fell back dramatically (-53%), but nevertheless remained above pre-quota abolition export levels (+23%). ACP sugar exporters have a disproportionate dependence on the UK market with Belize Guyana and Fiji being particularly exposed. ACP sugar exporters will thus need to keep a close eye on developments around Brexit in the coming year, given the impact a ‘Hard’ Brexit could have on price levels on both the UK and EU27 markets. Read more “EU Sugar Production Adjusting After Quota Abolition and In Face of Low Prices, with Renewed Growth in Imports and Reduced Exports”
EU Exports of Poultry Meat Continue to Increase Dramatically
Summary
EU poultry meat production and consumption continues to increase, with this generating a 12% growth in exports in the first half of 2019 and the prospect of continued growth in exports up to 2021. EU poultry meat exports are once again taking off to South Africa as the December 2016 AI based import restrictions are progressively removed. The expansion of EU poultry meat exports to sub-Saharan Africa is unlikely to ease in the coming years with this posing policy dilemmas for governments where local poultry industries exist. Given current trends in EU policy, African government are likely to come under increased pressure to remove all existing non-tariff measures which inhibit EU poultry meat exports, where these are in technical violation of EPA commitments. These pressures would be intensified by a ‘No-Deal’ of ‘Hard’ Brexit from 1st January 2021. Read more “EU Exports of Poultry Meat Continue to Increase Dramatically”
Uganda Could Face a New Import Ban if Sub-Standard Producers Not Eliminated From EU Export Supply Chains
Summary
Uganda has once again be warned by the EC over the export of chemical residue contaminated horticulture products, with the report of an October inspection visit by the EU FVO to determine the adequacy of national control systems now awaited. In the longer term a more serious threat arises from increasingly strict EU phytosanitary controls which will require the completion and submission to the EC of risk assessments (including detailed action plans) before goods will be allowed on the EU market. This could lead to the closure of the EU market until such risk assessments have been completed and approved. The UK’s departure from the EU could however lead to phytosanitary controls being introduced in trade with the UK based solely on UK only risk assessments determined by the agro-climatic conditions and patterns of production in the UK (rather than the EU as a whole). As a consequence for some products future UK phytosanitary controls could be far less stringent than EU requirements. However a ‘No-Deal’ Brexit would also see the UK introduce its own autonomous MFN tariff schedule which will see the complete removal of existing high EU MFN duties on virtually all existing Ugandan exports to the UK. Read more “Uganda Could Face a New Import Ban if Sub-Standard Producers Not Eliminated From EU Export Supply Chains”
Spanish Citrus Producers Intensify Pressure for More Controls on Citrus Imports from South Africa
Summary
New arrangements have been set in place for phytosanitary clearing of South African citrus through the port of Vigo. This is causing consternation in the financially stressed Spanish citrus sector, with calls being made for a ‘political solution’ to ease their plight. A variety of trade restrictive measures are being advanced including: the designation of a single EU port of entry to maximize the effectiveness of phytosanitary controls; EU in country inspections in South Africa; mandatory cold treatment for all imports; precautionary border closures when a maximum permitted level of interceptions occurs; and the invocation of the safeguard provisions of the EU-SADC EPA. However the commercial implications of many of these measures would lead generate fierce resistance from northern European commercial interests (traders, port authorities, supermarkets). Any pro-active use of pre-export risk assessment requirements against the South African citrus sector meanwhile would send shock waves across all ACP fruit and vegetable exporting countries are of which have weaker compliance enforcement capacities than the highly organized South African citrus sector. Read more “Spanish Citrus Producers Intensify Pressure for More Controls on Citrus Imports from South Africa”
Tremendous Short Term Scope for African Avocado Exports Identified Although Long Term Market Saturation in the EU Likely
Summary
While ACP exporters have seen considerable growth in avocado exports to the EU since 2008, their market share has been undermined since the entry into force of the EU-Andean Pact Trade Agreement in 2013, with this being particularly acute on the UK market. In addition while consumer demand for avocadoes continues to grow in the EU, the rate of growth is slowing down. Nevertheless African ACP countries have considerable unexploited production and export potential, with a considerable growth in the area under avocadoes being underway. The UK governments’ decision to remove MFN tariffs and import levies on avocadoes post Brexit, will further undermine the position of all but the most competitive ACP avocado exporters on the UK market. This is likely to be compounded by the potential of Brexit to disrupt the functioning of triangular supply chains for the export of avocadoes to the UK market via EU27 member states. Policy dialogues between the governments of ACP avocado exporting countries and the EU27 and UK authorities on the administrative arrangements required to minimise customs and border clearance delays for products which enjoy duty free access to both the EU27 and UK market are needed, with this dialogue being extended to arrangements for SPS inspections along triangular supply chains. Read more “Tremendous Short Term Scope for African Avocado Exports Identified Although Long Term Market Saturation in the EU Likely”
Continued Duty Free Quota Free Access to UK Market Secured but the MFN Issue Looms
Summary
LDCs and all ACP countries who have in place Economic Partnership Agreements with the EU now have in place arrangements which will roll over existing DFQF access to the UK market. However the future value of this rolled over DFQF access will be determined by the MFN tariff regime which the UK government will apply either under a no-deal Brexit or at the end of any agreed transition period in UK/EU trade relations. While the UK government announced a ‘development friendly’ temporary no-deal Brexit tariff schedule in March 2019 (with this being slightly revised in October 2019), a full scale review of the UKs temporary MFN tariff schedule is planned from January 2020, with this involving a two month period of public consultations. Following on from this review it is anticipated the UK government will make an announcement on the long term MFN tariffs it plans to apply. It is only at this point that the future value of the rolled over DFQF access granted ACP countries will finally be known. The preferential duty free access rolled over for preferred ACP partner countries adds nothing to the competitive position of ACP exporters if all other competing suppliers also enjoy duty free access as a result of the elimination of MFN duties. Read more “Continued Duty Free Quota Free Access to UK Market Secured but the MFN Issue Looms”
Making Sense of Brexit What Does the Current Confusion Mean for ACP Agro-food Sectors
Summary
Despite a Parliamentary vote approving in principle the revised Withdrawal Agreement concluded between the UK and EU, efforts to ram the Withdrawal Bill through Parliament with minimum discussion and no amendments failed. This means uncertainty over the outcome of the Brexit process remains. While an extension to the article 50 process no looks inevitable, a ‘hard Brexit’ or even a ‘no-deal Brexit’ still looks most likely, with a ‘soft Brexit’ requiring a general Election which would result in a new government being installed which was committed to remaining in the EU customs union and single market. Despite having secured continued DFQF access to the UK market in the event of a ‘no deal Brexit’ ACP exporters will still need to address a range of issues if exports to the UK are not to be disrupted under either a ‘hard Brexit’ or a ‘no-deal Brexit’. A further extension of the article 50 period could provide time for ACP exporters to prepare to deal with potentially trade disruptive challenges, but this will require pro-active engagement from the concerned ACP exporters during the breathing space a further extension will provide. Read more “Making Sense of Brexit What Does the Current Confusion Mean for ACP Agro-food Sectors”
Exploring New Cross Channel Ferry Routes for ACP Exporters Serving UK Market via EU27 Countries
Summary
ACP exporters of short shelf life products serving the UK market via initial ports of landing in an EU27 member state will face significant challenges under a no-deal Brexit, despite the reconsolidation of duty free-quota free access to the UK market having been secured by all LDC and EPA signatory ACP countries. These ACP exporters will not only need to address the inevitable administrative challenges arising from the UK becoming a separate customs jurisdiction, but will also need to get to grips with the severe transportation disruptions a no-deal Brexit will give rise to along existing EU27/UK transportation corridors. ACP exporters using triangular trade routes will need to:
- ensure they are ready for inevitable administrative changes a no-deal Brexit will bring about (with new EORIs BOIs and BTIs being obtained where necessary);
- ensure valid certification and authorisations are in place and their exports remain compliant with labelling and marking requirement ;
- clarify the location and basis of SPS inspections of products traded along triangular supply chains (ACP/EU/UK) into the UK market;
- review and revise contractual arrangements for delivery of products to clients in the UK;
- take unilateral action to review and revise their current shipping arrangements for serving the UK market ;
- intensify dialogue with trade partners on how best to address specific Brexit related trade disruptions;
- explore the use of the new ferry services being set in place to address Brexit related transportation disruption focussed on the RORO cross channel routes centred on Kent;
- in some case seek out new direct routes to UK markets abandoning their existing triangular trade partnerships.
Arla Commits to Extended Dairy sector Cooperation in Nigeria
Summary
Arla has announced a new partnership for the promotion of local milk production in Nigeria as part of its Milky Way Partnership Nigeria initiative. However the focus on the development of commercially viable local milk supply chains needs to be seen against the background of the serious local constraints on the development of efficient milk-to dairy supply chains in Nigeria and the expansion and changing structure of EU milk powder exports which is delivering low priced milk powders to Nigeria for reconstitution into value added dairy products. The competitive pressure from imported milk powders is only likely to be exacerbated if a no-deal Brexit occurs which would inevitably disrupt existing EU27/UK trade in dairy products. Against this background it is highly unlikely that in the foreseeable future local Nigerian milk production will make any dent in the Nigerian dairy sector’s overwhelming dependence on imported milk powders for its dairy processing activities. Read more “Arla Commits to Extended Dairy sector Cooperation in Nigeria”