Summary
Negotiations with ATCL to expand air-freight services to the UK could offer a means for Tanzanian horticulture and floriculture exporters to side step the potential disruptions to shipments along triangular supply chains, which could arise under a no-deal Brexit. In products such as cut flowers and avocadoes the Netherlands and France represent important trading hubs and initial ports of landing for expanding Tanzanian exports. Many of these imports form Tanzania are traded onward into the UK market. In this context expanding direct air freight links to the UK would take on considerable importance. What is more if under a no-deal Brexit, in the interest of concluding new international trade agreements, the UK were to pursue its own system of SPS controls, then SPS control issues would become an important area for trade policy dialogue with the UK. This needs to be seen in a context where Tanzanian and other ACP horticultural exporters are facing increasingly strict EU SPS controls. These EU SPS controls are drawn up on the basis of the wide variety of agro-climatic conditions which exist across the EU27, with the agro-climatic conditions in the UK making import controls for some pests and fungal infections les relevant or even entirely irrelevant.
Tanzanian horticulture exporters are exploring with Air Tanzania Company Limited (ATCL) the possibility of establishing direct freight services to Europe, with the first planned international destination being the UK. Tanzanian horticultural exporters are unhappy with the ‘air freight rates offered by the Royal Dutch Airline, KLM, for its direct flights to Amsterdam’. These air freight rates are seen as unreasonably high as a result of the monopoly KLM enjoys on this route. Currently ‘KLM charges $1.6 per kilogram for air freighting horticultural produce from Tanzania to Amsterdam compared to $1.25 per kilogram on the Nairobi-Amsterdam route’ (1), some 28% more expensive.
Currently major horticultural crops grown in Tanzania include tomatoes, cabbages, onions, carrots, round potatoes, pineapples, mangoes, oranges, flowers, seeds and spices. In 2016 it was estimated that around ‘one million tons were produced per year with those air-freighted overseas routed through Nairobi’ (1).
In trade with the EU the Netherlands plays a major role as a distribution hub. For example 85% of Tanzanian cut flower exports to the EU are shipped to the Netherlands, with the Netherlands being the critical trading hub for cut flowers distributed across the whole of the EU. Indeed imports from the Netherlands account for 80% of all cut flowers sold in the UK (see companion epamonitoring.net article, ‘‘No-Deal’ Brexit Challenges in Cut Flower Sector Highlight Problems for ACP Triangular Supply Chains’, 1 March 2019).
Tanzanian Cut Flower Exports to the EU28 by main Destinations (tonnes) (2013-47)
| % 2013 | 2013 | 2014 | 2015 | 2016 | 2017 | % 2017 | |
| EU28 | 3,704 | 3,050 | 2,005 | 4,335 | 3,453 | ||
| Netherlands | 87% | 3,215 | 2,565 | 1,518 | 3,723 | 2,934 | 85% |
| UK | 7% | 267 | 386 | 398 | 419 | 325 | 9% |
| Other EU | 6% | 222 | 99 | 89 | 193 | 194 | 6% |
Source: EC Market Access Data Base http://madb.europa.eu/madb/statistical_form.htm
Similarly for high growth horticultural exports such as avocadoes, ports of landing in the Netherlands and France play a dominant role at present in Tanzania’s exports to the EU28. Indeed, for avocadoes direct exports to the UK have declined as a proportion of total exports to the EU28 over the past five years, despite a doubling of the volume of exports to the UK over this period. In contrast between 2013 and 2017 the Netherlands increased its share of imports of avocadoes from Tanzania into the EU28 from 34.6% to 41.4%.
Tanzanian Avocado Exports (080440) to the EU28 by main Destinations (tonnes) (2013-17)
| 2013 | 2014 | 2015 | 2016 | 2017 | % growth 2013-17 | % share EU28 2017 | |
| EU28 | 967 | 1,641 | 3,278 | 3,036 | 3,042 | +215% | |
| Netherlands | 335 | 809 | 1,988 | 1,317 | 1,258 | +276% | 41.4% |
| France | 401 | 512 | 702 | 1,322 | 1,252 | +212% | 41.2% |
| UK | 231 | 320 | 566 | 354 | 466 | +102% | 15.3% |
| Other EU | 0 | 0 | 22 | 43 | 66 | 2.2% |
Source: EC Market Access Data Base http://madb.europa.eu/madb/statistical_form.htm
ATCL has recently taken possession of six planes to operate along intercontinental routes (1). In addition in February 2019 it was announced ATCL may also be looking to buy air cargo planes, with Kilimanjaro and Songwe international airports being ‘the focal points for horticultural exports’ (2).
| Comment and Analysis
The expansion of air freight services provided by ATCL with a focus on the UK route could prove extremely valuable in the context of any no-deal departure of the UK from the EU. Like a range of other East African least developed countries, Tanzanian exports to the EU, which have been built up to serve the single EU market of 28 member states through specialist trade and distribution hubs (most notably in the Netherlands), could be severely affected if the UK leaves the EU without a transitional trade arrangement being in place (see companion epamonitoring.net article, ‘How Would ACP Least Developed Countries Be Impacted by a 12th April No Deal Brexit?’, 4 April 2019). In this context Tanzanian exporters may need to urgently find alternative direct shipping services to UK markets. This would mirroring changes in shipping arrangements which Kenyan exporters began to introduce as early as June 2017, by establishing direct cargo flights between Nairobi and Sheffield/Doncaster airport in the UK (see companion epamonitoring.net article, ‘Hard’ Brexit Could Create Fruit and Vegetable Shortages in the UK’, 23 November 2017). In this context the extension of the UK’s membership of the EU announced at the special EU Summit on 11th April 2019 would appear to provide a breathing space for Tanzanian horticultural exporters. It would nevertheless remain an urgent priority for Tanzanian floriculture and horticulture exporters of high value air freighted products to closely cooperate in setting in place alternative direct shipping routes to the UK. This would reduce the vulnerability to disruption of current exports to the UK which use triangular supply chains, involving initial ports of landing in an EU27 member state, before onward shipment to the UK. Indeed, close cooperation between exporters of different high value air freighted products who currently serve UK markets along triangular supply chains would appear to be necessary across a range of ACP countries that in recent years have been developing their export trade to EU markets. What is more, in the context of the introduction of the EU’s new far stricter Plant Health Regulations it would appear important to ensure the future basis for UK-only phytosanitary controls under a no-deal Brexit scenario is the subject of detailed discussions with the UK authorities. The reality is that if, in the interests of securing trade agreements with non-EU partners (most notably with the USA) (3), the UK decided to permit divergence from EU standards in the application of a ‘UK-only’ SPS regime, then the application of UK phytosanitary controls on imports from Tanzania and other ACP countries should become a legitimate issue for discussion in the development of future trade relations. The reality is that in a range of areas the agro-climatic conditions in the UK would not warrant the application of the kind of strict controls which the EU is currently envisaging under its new Plant Health Regulations. While primary legislation on the EU’s new plant health regime was tabled as early as 2016, these new EU plant health regulations are not scheduled to come fully into effect until December 2019 (see companion epamonitoring.net article, ‘New EU Plant Health Regulation Could Carry Important Implications for Smaller Scale ACP Exporters’, 6 November 2017). It is therefore unclear which aspects of the EU’s new Plant Health Regulation would be applicable to the territory of the UK under a no-deal Brexit scenario (see companion epamonitoring.net article ‘UK Procedures for SPS Inspections of Plant and Plant Products under a No-Deal Brexit’, 18 April 2019). |
Source:
(1) Citizen, ‘Move to use ATCL for horticulture exports’ 21 January 2019
https://www.thecitizen.co.tz/News/1840340-4943950-kxvpz/index.html
(2) Citizen, ‘Tanzania: Horticultural Exports Set for Fresh Boost’, 22 February 2019
https://allafrica.com/stories/201902220686.html
(3) USTR, ‘United States-United Kingdom Negotiations Summary of Specific Negotiating Objectives’, February 2019
https://ustr.gov/sites/default/files/Summary_of_U.S.-UK_Negotiating_Objectives.pdf