Summary
Expanding EU sugar production and contracting EU sugar consumption up to 2030 will see EU sugar imports decline (by -300,000 tonnes) and EU sugar exports expand (+700,000 tonnes) compared to 2020. This will increase competition for ACP sugar exports on the EU27 market, in a context where heightened health consciousness and active campaigning is seeing pressure to reduce ‘hidden sugars’ in food and drink products. Further pressures to move away from the use of cane sugar in high sugar content food and drink products will arise from the rules of origin agreed under the EU/UK trade agreement. ACP sugar exporters will need to better understand the market components their exports serve and how they will be impacted by evolving trends. The pressures on ACP sugar exporters could be eased by policy interventions designed to secure automatic cumulation under rules of origin where duty free/quota free access is enjoyed to both the EU and UK markets. Read more “EU Sugar Projections to 2030 Suggest Less Room on EU27 Market for ACP Sugar Exports”
Category: CAP
Emerging UK/EU Dispute Over ‘Green Box’ Payments Highlights Long-Standing ACP Concerns
Summary
The UK is objecting to the inclusion of a ‘peace clause’ in any future EU/UK trade agreement which would prevent the UK from challenging the trade distorting effects of EU ‘green box’ agricultural support payments. The trade distorting effects of EU ‘green box’ support payments, has long been a focus of discontent for ACP producers, who see the trade effects of these measures as grossly unfair. While the EU is unlikely to abandon its robust defence of the non-trade distorting nature of existing ‘green box’ payments, the accommodation reached with the UK on this issue could potentially hold important lessons for ACP governments seeking to defend domestic producers against unfair ‘green box’ support driven trade distortions. It would therefore be appropriate for ACP governments to closely monitor these UK/EU discussions. Read more “Emerging UK/EU Dispute Over ‘Green Box’ Payments Highlights Long-Standing ACP Concerns”
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”
EC Rejects Accusations South African Imports Behind Spanish Citrus Sector Difficulties
Summary
An EC analysis has found that contrary to Spanish citrus industry claims, imports from South Africa are not the cause of the current difficulties in the Spanish citrus sector. The lack of well organised producer organisations is seen as the root cause of many of the sectors problems. This view is supported by the latest data posted on the EU’s Citrus Market Observatory website. The Citrus Growers Association of South Africa has welcomed the EC’s findings and has called for joint action with Spanish producers to boost global citrus consumption in the face of competition from other fruits. The heightened consumer health consciousness linked to the Covid-19 pandemic could provide a springboard for such a longer-term citrus promotional campaign. Read more “EC Rejects Accusations South African Imports Behind Spanish Citrus Sector Difficulties”
Dairy Price Recovery Likely to be Reversed by Covid-19 Pandemic
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
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”
Report Reviews Impact of Current CAP Financial Instruments on Developing Countries
Summary
A study for the European Committee of the Regions has found ‘CAP subsidies continue to have a production-stimulating effect’, with EU production and exports being greater than would be the case in the absence of CAP subsidies. The case studies in the report look at the effects of CAP subsidies in regard to milk powders, chicken meat and processed tomato products on vulnerable developing countries (VDCs – which includes all ACP countries). It draws nuanced conclusions in regard to the effects of the provision of CAP subsidies but on the basis of the terms of reference of the report largely neglects the effects of CAP related EU agricultural trade policies on VDCs. The report calls for: ‘greater disciplines on coupled support payments’; adjustment to EU market management measures so they do not destabilize prices for VDC producers; ‘the phasing out of decoupled payments for income support’, and ‘the creation of a platform allowing stakeholders from VDCs to be involved in a dialogue on PCD and agri-food trade issues’. Read more “Report Reviews Impact of Current CAP Financial Instruments on Developing Countries”
EU Production Growth Impacts on Both Profitability of EU Sugar Companies and ACP exports to the EU in 2018
Summary
The expansion of EU sugar production in addition to reducing the volume and value of ACP sugar exports has also undermined the profitability of EU sugar beet processing companies, with major operators such as Suedzucker looking to shut some processing plants in response to low EU sugar prices. In 2017/2018 regional EU sugar price trends in part correlated with trends in sugar production, with price falls being most dramatic in areas where the production increase was greatest. Meanwhile voluntary coupled support has held back the geographical redistribution of EU sugar production. Some ACP exporters remain dependent on the UK market while others have diversified, targeting sugar deficit regions of the EU where sugar prices have held up better. Longer term trends in EU sugar consumption do not bode well for traditional ACP sugar exporters. Brexit uncertainties will need to be taken on-board in the marketing decisions of ACP sugar exporters in the 2019/20 marketing year, with various Brexit scenarios being explored and export markets to be targeted identified accordingly. Read more “EU Production Growth Impacts on Both Profitability of EU Sugar Companies and ACP exports to the EU in 2018”
What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?
Summary
While the paper from Professor Mathew’s paper reviews the possible effects of specific CAP reform proposals, these cannot be assessed in isolation from the wider EU CAP related policies. This includes EU agricultural trade policies and EU SPS and food safety policies. There are inherent tensions between the quest by EU agro-food companies for new markets and African aspirations for the structural development of local agro-food sectors. Reconciling this tension in a development friendly manner will be a key challenge in addressing policy coherence issues which arise as a result of the EU’s Common Agricultural policy and associated supporting policy measures. Any attempt to get to grips with this issue will require engagement at the country and product specific level and will require full respect for the right of ACP governments’ to determine trade policy measures in all sovereignty on the basis of national structural development interests. This will de facto require the EU to respect the ‘right to development’ of ACP countries by subordinating the interpretation and application of trade agreement commitments to the structural development interests of ACP countries, as defined by the governments and concerned stakeholders in ACP countries Read more “What Issues Arise in Relations with Developing Countries From the EU’s 2020 CAP Reform Proposals?”