What Future Air Passenger Flight Based Cargo Services?

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Summary
The collapse of global air passenger has reduced cargo capacity and led to higher air freight rates for ACP horticulture and floriculture exporters. Analysis suggest air passenger numbers in Africa and Europe are unlikely to recover to pre-Covid19 levels fort five years, with Africa-Europe intercontinental air services likely to be similarly limited. East Africa is likely to be seriously affected, with exporters needing to explore the scope for: interim air freight solutions between East Africa and major EU27 and UK markets; the development of a commercially sustainable dedicated model for air freight shipments between east Africa and Europe and rethinking the basket of products air freighted to Europe given increased air freight charges. Regionally based air cargo services could usefully be designated as a sector where ‘strategic autonomy’ should be promoted, with international assistance being sought in pursuit of this goal. Read more “What Future Air Passenger Flight Based Cargo Services?”

Grim Sugar Market Prospects Will Require Better ACP Marketing to Exploit Available Evolving Opportunities

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Summary
The nascent recovery of the EU sugar market which was getting underway in the 2019/20 marketing year has been reversed by the Covid-19 pandemic. The collapse of global sugar prices is making raw cane sugar imports cheaper and EU sugar exports less competitive. While some ACP sugar exporters are increasingly focussed on trade into sugar deficit markets in the EU (region 3), where prices are on average stronger, these average prices mask large differences in contracted prices and between different contracted prices and spot market prices. This makes marketing strategies and contract negotiations critical to the overall revenue position of ACP sugar exporters to the EU market. Other ACP exporters remain dependent on the UK market where profound uncertainties are faced. The future basis for UK/EU trade and the arrangements for the management of the UK’s Autonomous Tariff Quota will be critical to future UK sugar market price developments.  With the recessionary effects of Covid-19 likely to profoundly impact on sugar sector consumption and the structure of demand, ACP exporters will need to pay close attention to evolving policy developments and market conditions in the coming 6 months. Read more “Grim Sugar Market Prospects Will Require Better ACP Marketing to Exploit Available Evolving Opportunities”

Signs of Recovery in the EU Floriculture Sector but Air Freight Challenges Overhang East African Cut Flower Exports

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Summary
There is an urgent need for a coordinated East Africa-EU air freight corridor recovery initiative. The Dutch government needs to take a lead on this in Europe, given the central role of the Netherlands in the air freighted floriculture and horticulture trade between East Africa and the EU. This is a critical sector in East Africa’s trade with the EU, with the Covid-19 pandemic threatening to undo 20 years of sustained improvements in livelihood opportunities and poverty focussed growth. Such an initiative should include immediate measures involving: waiving competition policy requirements; opening up the EU’s ‘green lane’ National Contact Point Initiative to East African exporters to rapidly address logistical challenges faced both with new and existing air freight services; waiving phytosanitary inspection fee and lowering landing fees for the duration of the pandemic; and financial support measures to expand regionally focussed air freight capacity.  Such measures would be wholly consistent with the EC’s Covid-19 recovery plan, which emphasises how ‘in the longer-term, the EU will only successfully recover if our partners around the world also recover’. Read more “Signs of Recovery in the EU Floriculture Sector but Air Freight Challenges Overhang East African Cut Flower Exports”

Tanzanian Avocado Exports Show Strong Growth Amidst Growing Competition

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Summary
Over the past decade Tanzania has developed a sea freighted avocado export industry initially focussed on the EU market. With global avocado production for export surging, while there is still considerable growth potential on the EU market, competition is intensifying, with EU consumption likely to stabilise in 5 to 8 years. This will require a greater focus on quality and identifying stable and remunerative routes to market, which can mitigate price instability, as well as efforts to diversify markets served. In the short-term, challenges are faced along intra-regional routes to ports in Kenya arising from Covid-19 related movement restrictions. Operationally effective intra-regional ‘green lane’ protocols will be needed to keep the main export routes open and mitigate escalating reefer costs. Unless effectively addressed the Covid-19 pandemic could leave the Tanzanian avocado industry poorly placed to meet longer term challenges. Read more “Tanzanian Avocado Exports Show Strong Growth Amidst Growing Competition”

Ghanaian Exports to the UK and the Outcome of the UK’s MFN Tariff Review

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Summary
Despite earlier fears over the potential impact of the UK’s MFN tariff review the proposed future schedule has largely left unaffected MFN tariffs on agri-food products of export interest to Ghana. The principal issues now faced will arise if the UK leaves the EU customs union on 1st January 2021. These issues relate firstly to the how the Government of Ghana can retain duty free-quota free access to the UK market after this date. Secondly, the prospect a no-deal UK exit from the EU customs union seeing the UK radically revise its’ proposed MFN tariff schedule so as to avert high food price inflation during a severe Covid-19 induced economic recession. Read more “Ghanaian Exports to the UK and the Outcome of the UK’s MFN Tariff Review”

Kenyan Exports to the UK and the Outcome of the UK’s MFN tariff Review

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Summary
Despite earlier fears over the potential impact of the UK’s MFN tariff review the proposed future schedule has largely left unaffected MFN tariffs on agri-food products of export interest to Kenya. The principal issues now faced relate to the future of Kenya’s duty free-quota free access to the UK market if the UK leaves the EU customs union on 1st January 2021, given the Covid-19 interruption of still incomplete regional trade negotiations; the need to ensure the continued smooth functioning of triangular supply chains through which the UK market is served via initial ports of landing in the Netherlands or Belgium and the future phytosanitary import controls to be applied by the UK, once the UK is no longer bound by the EU’s increasingly strict phytosanitary import regime. Read more “Kenyan Exports to the UK and the Outcome of the UK’s MFN tariff Review”

The Caribbean and the Outcome of the UK MFN Tariff Review

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Summary
Despite earlier fears the UK’s proposed future schedule has largely left unaffected MFN tariffs on agri-food products of export interest to Caribbean ACP countries. The principal issues now faced in future agri-food sector exports to the UK arise in the context of a possible ‘no-deal’ departure of the UK from the EU customs union and single market. These include: the need to ensure the continued smooth functioning of triangular supply chains given the regions limited shipping service options; the future evolution of EU sugar prices and the sourcing decisions of Tate & Lyle Sugars; the future basis of access for African banana exporters in the absence of rolled over UK-only ‘Continuity Agreements’ with Ghana, Cameroon and Cote d’Ivoire and the Covid-19 related interruption of negotiations; and the future phytosanitary imports controls to be applied to UK citrus imports. Read more “The Caribbean and the Outcome of the UK MFN Tariff Review”

Future UK Only MFN Tariff Schedule Announced

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Summary
After much speculation, the MFN tariffs on most agricultural and food products of greatest export intertest to ACP countries have been retained largely unchanged by the UK government.  This will bring considerable relief to ACP banana, sugar, canned tuna, and value-added cocoa product exporters, where fears of the adoption of a ‘zero production-zero tariff’ approach had arisen. Across a range of other areas, relatively minor tariff reductions are unlikely to carry serious trade implications for ACP agri-food product exporters. The only area of uncertainty arises from the removal of the EU entry price system currently applied to a range of products and its replacement by simpler ad valorem import duties.  It is unclear what the commercial impact of this change will be on individual ACP exporters of specific products. Read more “Future UK Only MFN Tariff Schedule Announced”

East African Dairy Sector Trade War Continues to Simmer

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Summary
An ongoing dairy sector trade war in the EAC over accusations of the use of imported milk powders in value added products exported regionally, is seeing non-tariff barriers being used to block the free movement of dairy products within the EAC. The situation in the dairy sector is complex, with the conflict reflecting wider trade tensions. At heart there would appear to be a need to deepen regional economic integration if such trade conflicts are not to periodically flare up.  The simmering trade war makes it particularly difficult for the EAC to reach agreement on ‘green lane’ protocols to keep trade moving in the face of the Covid-19 pandemic.  This could potentially carry serious economic and food security consequences. In addition, regional trade tensions could well be exacerbated by the UK’s final departure from the EU customs union, which in the face of Covid-19 disrupted trade discussions could present the Government of Kenya with some very difficult choices between losing duty free access to the UK market at considerable cost to the Kenyan economy or going it alone with tariff liberalisation commitments to the UK which would impact on the whole of the EAC and exacerbate existing intra-regional trade tensions.  The only way out of this bind would be for the UK governments to unilaterally extend the Transitional Protection Mechanism initially proposed for an 18-month period in October 2019. Read more “East African Dairy Sector Trade War Continues to Simmer”

EC Covid-19 Linked Agri food Sector Support Measures Extended

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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”