Summary
This is the first in a series of articles which look at the implications of the EU’s new climate change focussed policy documents for ACP-EU agri-food sector trade relations. This article reviews the EU’s basic Farm to Fork strategy, which was first tabled in May 2020, and its implications for ACP-EU agri-food sector relations. A companion article will review the EU’s July 2021 Code of Conduct on Responsible Food Business and Marketing Practices, with both of these articles needing to be read in association with the recent epamonitoring.net article on Afruibana’s appeal to banana buyers in Europe to take on board the dramatic freight and input cost increases, so that all stakeholders in the supply chain carry a fair share of the burden of promoting the necessary ecological and energy transition which the climate crisis demands.
In July 2021 the EC released its “Fit for 55” plan which set out a template for reaching the EU’s objectives in regard to minimising climate change. According to the EC, the proposals tabled will ‘enable the necessary acceleration of greenhouse gas emission reductions in the next decade.’ It is seen as consisting of a ‘comprehensive and interconnected set of proposals’ (1).
The proposals cover
- The ‘application of emissions trading to new sectors.’
- A ‘tightening of the existing EU Emissions Trading System.’
- Promoting ‘increased use of renewable energy.’
- Promoting ‘greater energy efficiency.’
- Supporting ‘a faster roll-out of low emission transport modes and the infrastructure and fuels to support them.’
- ‘Tools to preserve and grow our natural carbon sinks.’
- ‘An alignment of taxation policies with the European Green Deal objectives.’
- ‘Measures to prevent carbon leakage.’
The EC has acknowledged ‘making the European Green Deal a reality’ is ‘crucial to Europe becoming the world’s first climate-neutral continent by 2050’ (1).
The EC has in turn acknowledged the EU’s Farm to Fork Strategy is at the heart of the European Green Deal. Indeed, it is the EU’s Farm to Fork Strategy which provides the critical interface between the EU’s new “Fit for 55” plan on climate change and the EU-ACP agri-food sector trade relationship.
Recent EC policy pronouncements, whether part of its “Fit for 55” plan on climate change or its “Code of Conduct on Responsible Food Business and Marketing Practices” (2) need to be seen in light of the basic EU Food to Fork strategy approach.
As set out in the May 2020 policy foundation document “A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system”, the EC’s Farm to Fork Strategy is seen as comprehensively addressing ‘the challenges of sustainable food systems’, while also promoting more healthy food consumption patterns and the achievement of the United Nations’ Sustainable Development Goals (SDGs) (3). This represents an ambitious multifaceted set of objectives.
According to the EC ‘all citizens and operators across value chains, in the EU and elsewhere, should benefit from a just transition, especially in the aftermath of the COVID-19 pandemic and the economic downturn.’ For the EC a principal objective of its Farm to Fork strategy is ‘ensuring a sustainable livelihood for primary producers’, with this being seen as ‘essential for the success of the recovery and the transition’ (3).
The EC is seeking to create a food system environment which while paying increasing attention to ‘environmental, health, social and ethical issues’, also makes it easier for European citizens to ‘choose healthy and sustainable diets.’ The EC also implies it wants to encourage shorter supply chains so as to reduce carbon emissions from the transport and distribution of food products (3).
Pursuit of these multiple objectives potentially carry diverse and often contradictory implications for ACP-EU agri-food sector trade relations.
Significantly within the EU’s Farm to Fork strategy the EC is looking to establish ‘the global standard for sustainability.’ In this context, the EC see’s the green transition as an opportunity for EU farmers to ‘make sustainability their trademark and to guarantee the future of the EU food chain before their competitors outside the EU do so.’ According to the EC, ‘the transition to sustainability presents a ‘first mover’ opportunity for all actors in the EU food chain’ (3).
This needs to be seen as part of the EU’s long term product differentiation strategy which is intended to enable EU producers to secure price premiums through serving quality differentiated, ‘luxury purchase’ markets, while imports are restricted to lower value ‘necessity purchase’ market components. This implies a systemic bias in the process of regulatory initiatives in favour of EU producers within the operationalisation of the Farm to Fork Strategy and associated codes of conduct, through facilitating the ‘quality-based differentiation’ of EU products on environmental and climate friendly grounds.
However, in terms of the global standard for sustainability, there is an additional aspect which relates not to EU exports but to EU imports. This lies in the EC’s recognition the green transition cannot achieve climate related goals if the EU makes the transition in isolation. Within the EC’s policy approach therefore there is a focus on taking the rest of the world along the same trajectory for agri-food systems. This needs to be seen in a context where ‘the EU is the biggest importer and exporter of agri-food products and the largest seafood market in the world.’
Against this background it is held ‘efforts to tighten sustainability requirements in the EU food system should be accompanied by policies that help raise standards globally, in order to avoid the externalisation and export of unsustainable practices’ (3).
How this is to be achieved is an important area of ongoing policy discussions. It is a major area of concern to EU farmers (see box) and should be a matter of close scrutiny by ACP governments and agri-food exporters who have an economic stake in serving EU markets. The outcome of these internal EU policy discussions is likely to carry important implications for the costs of entry for ACP agri-food exports to the EU market.
| EU Farmers Response to the EC’s “Fit for 55” Plan
The EU farmers lobby Copa-Cogeca has been critical of the lack clarity in the EC’s “Fit for 55” proposals in regard to dealing with ‘carbon leakage’ in the agri-food sector. While expressing the agriculture and forestry sectors commitment to ‘achieving carbon neutrality as soon as possible’, Copa-Cogeca believes there needs to be consistency between internal EU measures and international trade arrangements. Copa-Cogeca took the view that EC proposals on avoiding ‘carbon leakage’ through the proposed ‘carbon border adjustment mechanism’ (CBAM), were inadequate since they fail to establish a CBAM for agri-food products. Copa-Cogeca has long been calling for an extension of the Carbon Border Adjustment Mechanisms proposal to the agri-food sector, to prevent dumping on the EU market of products which ignore climate considerations and can thus be made available at prices which undermine the position of EU agri-food producers. Copa-Cogeca continues to lobby for practical mechanisms to be established which will ensure third countries placing goods on the EU market are also committed to the green transition and abide by the same climate related requirements. See, Thepigsite.com, ‘European Commission releases its Fir for 55 Plan to reach climate goals’, 15 July 2021 |
Illustrative of EU farmers concerns are EC proposals to ‘reduce the overall use and risk of chemical pesticides by 50% and the use of more hazardous pesticides by 50% by 2030.’ EU farmers believe the introduction of these types of measures without parallel mechanisms for imported products will place EU producers at a competitive disadvantage vis third country suppliers (for an illustrative example, see companion epamonitiring.net article ‘Complex Reality Behind UK Beet Grower Concerns Casts Shadow Over ACP Sugar Exports’, 14 October 2021). To placate farmers concerns, the EC has emphasised how it wants to ensure ‘all foods placed on the EU market become increasingly sustainable’ (3). A critical concern to EU farmers is how this is to be achieved in practice.
According to the EC, the Food to Fork strategy needs to ensure ‘the food chain, covering food production, transport, distribution, marketing and consumption, has a neutral or positive environmental impact’, and helps to ‘mitigate climate change’ and support climate adaptation. In this context the EC has highlighted how if ‘European diets were in line with dietary recommendations, the environmental footprint of food systems would be significantly reduced’ (3).
However, while making the whole of the food supply chain climate neutral, the EC also wants to ensure ‘the affordability of food, while generating fairer economic returns in the supply chain.’ This is a tricky circle to square in the short term. Currently this issue is being addressed largely through general statements on ‘fostering the competitiveness of the EU supply sector, promoting fair trade, creating new business opportunities.’ Technology is seen as having an important role to play, with the EC taking the view ‘the circular bio-based economy is still a largely untapped potential for farmers and their cooperatives’ (3).
In addition, within this transition the EC wants to accord greater priority to promoting organic production and wants to see ‘at least 25% of the EU’s agricultural land under organic farming by 2030’ (3)
Finally, the EC also highlights how ‘climate change brings new threats to plant health’. In this context the EC claims part of the sustainability challenge will be the need for ‘measures to protect plants better from emerging pests and diseases.’ The EC is therefore looking to ‘adopt rules to reinforce vigilance on plant imports and surveillance on Union territory’ (3).
Overall, it is recognised this foundation document, first published in May 2020 needs to be elaborated through specific legislative proposals, which will create a comprehensive ‘framework for a sustainable food system before the end of 2023’ (3).
Given the tensions and contradictions between the objectives set out in the EU Farm to Fork strategy how these legislative proposals are drawn up, could have an important bearing on the future trajectory for ACP-EU agri-food sector trade relations with individual ACP countries.
| Comment and Analysis
The implications for ACP countries of the pending legislative elaboration of the EU’s Farm to Fork strategy, in the context of the EU Green Deal and ‘Fit for 55’ plan, need to be assessed at two levels: · The general cost and market accessibility implications of the likely EU legislative · The sectoral and cross cutting product specific implications of the elaboration of the General Concerns While this may not take the form of a Carbon Border Adjustment Mechanism for agri-food products, it is likely to take the form of a growing number of production process related regulatory requirements. Thus, we are likely to find EU actions aimed at reducing the use of pesticides and chemicals will carry implications for producers in ACP countries in the form of ever stricter minimum residue levels for pesticides and a growing range of proscribed products, the use of which in goods destined for sale on the EU market will be prohibited. This is likely to require a growing focus on the use of integrated pest management systems for products placed for sale on the EU market. ACP exporters who can get ahead of this particular curve are likely to gain some market advantages However, it may also take the form of buyer requirements placed on third country suppliers, which are established in response to internal EU regulatory requirements. This while being less visible carries no less serious commercial implications for ACP suppliers. Indeed, it can serve to disproportionately increase costs if multiple different buyer requirements are established in response to EU regulatory initiatives which seek to operate through the market. The EC’s concern over the impact of climate change on the global distribution of plant health threats is likely to see a further strengthening of EU SPS market access requirements (e.g., in regard to the application of Citrus Black Spot (CBS) import controls). In this context, the departure of the UK for the EU’s common SPS regulatory regime could open up new opportunities for ACP exporters in an increasingly difficult market access environment. In the case of CBS, the UK has already removed the need for phytosanitary certification for the entry of citrus fruit to the UK market. ACP governments and exporters will need to pay close attention to EC regulatory requirement initiatives during the process of discussion of these measures, since if ACP concerns have been ignored in the formulation of EU regulations, bringing about changes subsequent to their adoption will be virtually impossible. In looking at any new EU regulatory requirements, it needs to be recognised the burden generated will be likely to fall disproportionately on smaller scale producers. Larger scale ACP exporters and those associated with major EU companies will be better placed to adjust to climate related regulatory changes than smaller producers. This has important implications for income distribution in ACP countries and the ownership of export orientated agri-food sector companies. The EC’s focus on promoting shorter supply chains is also likely to raise challenges for the market positioning of a range of ACP exports, particularly temperate and Mediterranean horticultural products. A final point to note at the general level is the tensions within the EC’s approach to a ‘just transition’, which provides primary producers with sustainable livelihoods and the focus on affordability for EU consumers. It is difficult to see how, in sectors where the ACP have major export interests (such as cocoa and bananas), a ‘just transition’ can be promoted which provides primary producers with sustainable livelihoods, without issues related to the distribution of commercial benefits and costs through the supply chain being addressed. This includes the supply chain all the way up to the consumer. If this issue is not addressed, ACP exporters could find themselves excluded from this ‘just transition’, as the sustainable livelihood needs of producers in ACP countries are largely ignored (see companion epamonitoring.net article ‘West African Banana Producers Call for a Fairer Distribution of Commercial Benefits Along Banana Supply Chains’, 7 October 2021). Specific Sectoral and Cross Cutting Concerns However, the EC’s focus on healthier diets, if effectively promoted, could boost demand for fresh fruit and vegetables, including for imports. This being noted, the focus on promoting shorter supply chains could well serve to discourage imports. A lot will depend on the ability of EU producers to costs effectively supply increased demand arising from the focus on healthier eating. The impact is thus likely to vary from product to product depending on seasonality factors and promotional programmes for specific fruits and vegetables Equally, stricter EC regulation of the use of antimicrobial products in goods imported into the EU and animal welfare labelling requirements could impact on ACP beef exporters serving EU markets This being noted, it could equally generate new market opportunities for exporters who can get ahead of the curve through targeted product differentiation initiatives (e.g., Namibia’s Nature’s Reserve quality differentiation scheme for its beef exports). However, such schemes may need support in going further by reducing their carbon footprint for the transportation and packaging operations carried out prior to export. The EC’s focus on the role of organic production in the necessary green transition is potentially helpful for ACP exporters given recent trends (see epamonitoring.net article, ‘Growth Continues in EU27 Imports in Organic Products Where ACP Producers Have an Export Interest’, 27 July 2021). However, it is unclear where organic imports will fit into the EU’s overall objectives for the promotion of organic consumption. This is particularly the case given the focus on promoting shorter supply chains. This could however represent an important area of focus for ACP dialogue with the EU. Finally, while the EC places emphasis on the importance of new technology, particularly the circular bio-based economy, it is unclear whether the EC plans to support and promote the circular bio-based economy in developing country partners. Once again this is potentially an area for intensified ACP-EU dialogue. |
Sources:
(1) Thepigsite.com, ‘European Commission releases its Fir for 55 Plan to reach climate goals’, 15 July 2021
https://www.thepigsite.com/news/2021/07/european-commission-releases-its-fit-for-55-plan-to-reach-climate-goals
(2) EC, ‘EU Code of Conduct on Responsible Food Business and Marketing Practices: A common aspirational path towards sustainable food systems’, June 2021
https://ec.europa.eu/food/system/files/2021-06/f2f_sfpd_coc_final_en.pdf
(3) EC, ‘A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system’, 20 May 2020, (COM (2020) 381 final
https://eur-lex.europa.eu/resource.html?uri=cellar:ea0f9f73-9ab2-11ea-9d2d-01aa75ed71a1.0001.02/DOC_1&format=PDF