Potential Implications for ACP Agro-Food Exporters of the State of Play in UK/EU27 Brexit Negotiations: August 2018

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Summary
There remain substantive issues in the EU/UK Withdrawal Agreement which still need to be addressed. The most serious issue relates to the trade arrangement across the Irish border. While open to other viable solutions which the UK government may advance, the EU is insisting on a ‘back-stop’ arrangement which would ensure the same tariff and non-tariff regime in the Republic of Ireland and Northern Ireland in order to ensure the maintenance of a soft border. The UK government will not accept any arrangement it sees as compromising the integrity of the UK single market. Resolving this issue is intimately linked to the nature of the future EU27/UK trade arrangement. The EC has expressed major concerns about the UK’s proposals for future trade arrangements, particularly the UK’s proposals for a two tier tariff system with no EU rules of origin or fiscal controls on UK-EU trade. These issues could prevent the conclusion of a Withdrawal Agreement. This would then carry important consequences for ACP agro-food exporters. ACP governments and private sector operators need to start preparing for a ‘hard’ Brexit, while maintaining a close eye on the progress of the EU27/UK negotiations.

If the current Withdrawal Agreement were agreed and legally adopted this would defer any adverse effects on ACP agro-food exporters and could provide time for the negotiation of EU27/UK and trilateral arrangements which would reduce the negative effects of Brexit on ACP agro-food sectors. Read more “Potential Implications for ACP Agro-Food Exporters of the State of Play in UK/EU27 Brexit Negotiations: August 2018”

Limited Prospects of a Global Sugar Market Price Recovery Exacerbates the Impact of Reduced EU Import Demand and Lower EU Prices

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Summary
Global sugar price trends in the coming decade are likely to offer little support to ACP sugar exporters in the face of both lower EU prices and import volumes. Sugar consumption growth is increasingly in the global south, including in sub-Saharan Africa, where production growth although strong is lagging behind consumption growth. This is in part being driven by urbanisation and increased consumption of high sugar content processed food and drinks. This is recognised by the EU sugar companies which are increasingly focused on regaining export markets and developing new ones in sugar deficit regions such as sub-Saharan Africa. Rising EU export volumes beyond earlier projected levels is exacerbating the low price situation on global sugar market. Read more “Limited Prospects of a Global Sugar Market Price Recovery Exacerbates the Impact of Reduced EU Import Demand and Lower EU Prices”

Dairy UK and the European Dairy Association (EDA) Launch Joint Position to Minimise Brexit Related Dairy Sector Disruptions

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Summary
UK and EU dairy associations are seeking to develop a common approach to avoiding Brexit related disruptions of the existing dairy trade. While the UK governments white paper proposals appear aimed at remaining as close as possible to the single market and customs union, while formally leaving both, it is unclear whether these UK proposals would be consistent with the ‘redlines’ the EU has established in order to maintain the integrity of the single market and the alignment of its trade policy with WTO rules. The potential for ‘terrible market turbulence’ which a poorly manage Brexit process could give rise to in the dairy sector is an issue of concern to ACP countries, since as Dairy UK and the EDA position paper highlights, the last time EU exporters lost access to 3rd country markets (the Russian import embargo) this saw a massive expansion in EU exports of milk powders to Africa. This has served to further undermine efforts to develop local milk-to-dairy supply chains in Africa. Read more “Dairy UK and the European Dairy Association (EDA) Launch Joint Position to Minimise Brexit Related Dairy Sector Disruptions”

Questionable Increase in Future EU Development Financing

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Summary
An EC information note suggests the future multi-annual financial framework for EU external action programmes will see a 30% increase in the budget. However factoring in proposals to incorporate the EDF into the future multi-annual financial framework for EU external action programmes, suggests an almost 16% reduction in the real value of total EU external action programme expenditures in the coming period and even a small decline in planned expenditures in nominal terms. However it remains unclear where the burden of the reduced level of the EU’s planned expenditures in real terms will fall. Caribbean and Pacific ACP countries seem most likely to see a decline in grant financed development cooperation expenditures, while certain sub-Saharan African regions could see traditional development assistance activities down-sized as EU external action expenditures are more closely aligned with EU policy priorities along the West Africa-North Africa axis which plays a central role in migration flows. Read more “Questionable Increase in Future EU Development Financing”

Polish Poultry Sector Expansion Suggests Increased Exports to Africa Can be Expected

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Summary
Investments in Polish poultry meat production continue, consolidating Poland’s position as the EU’s leading poultry producer (23% of the total). This is fuelling the growth in extra-EU poultry meat exports, with the rapid growth in Polish exports to sub-Saharan Africa in part being masked by the opening up of new export opportunities in neighbouring Ukraine. Given the lower production costs in Poland, this export growth is set to continue, with the prospect of a ‘hard’ Brexit likely to fuel the Polish quest for new markets beyond the EU’s borders. Read more “Polish Poultry Sector Expansion Suggests Increased Exports to Africa Can be Expected”

UK Food Exporters Warn of Dangers of a Rules of Origin Based ‘Hidden Hard Brexit’

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Summary
Rules of origin issues arising from the UK’s withdrawal from the EU could potentially give rise to a ‘hidden hard Brexit’ in the agro-food sector, unless specific new arrangements are set in place. Depending in how EU27/UK rules of origin issues are addressed this could reduce the adverse effects of Brexit on existing ACP exports where processing takes place in the UK prior to onward sale. In addition it could create opportunities for ACP governments to reopen rules of origin issues which have inhibited movement up agro-food sector value chains in trade with the EU. However with these rules of origin issues coming to ahead in March 2019 swift and targeted consultations are needed to identify the specific ‘asks’ which ACP governments should be putting forward to advance the interests of value added food product manufacturers. Read more “UK Food Exporters Warn of Dangers of a Rules of Origin Based ‘Hidden Hard Brexit’”

What Could the UK’s July 2018 Negotiating Position Mean for ACP Agro-Food Producers

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Summary
This article seeks to review the implications of three main elements of UK’s consensus position on future trade relations with the EU for ACP agro-food sectors. It reviews the impact of the UK’s proposed approach on 4 of the 6 main areas of impact of Brexit, namely: the value of ACP tariff preferences on the UK market; the impact on the functioning of triangular supply chains; the impact on non-tariff measures to be applied to future ACP agro-food exports to the UK and EU27 market; the scope for displacement of current EU27/UK trade onto ACP markets. The current UK proposals as set out in the post Chequers statement do not directly impact on the prospects for the retention of current ACP DFQF access to the UK market or the functioning of EU27 markets in the post Brexit period. Read more “What Could the UK’s July 2018 Negotiating Position Mean for ACP Agro-Food Producers”

FC WAMCO Dairy Development Programme Expands Amidst Continued Import Dependence

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Summary
While FCW continues to invest in milk collection centres and farmer training to expand local milk procurement, local milk purchases continue to be dwarfed by the scale of milk powder imports form the EU. Indeed product development such as the introduction of Peak Fat Filled Milk for cholesterol conscious consumers would appear to further lock in the import dependent dairy sector development model which dominates West Africa. It may need to await fundamental changes in the dairy supply and demand equation for any changes in the current import dependent model to be brought about. Read more “FC WAMCO Dairy Development Programme Expands Amidst Continued Import Dependence”

Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted

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Summary
EU SMP exports reached record levels despite declining prices in 2017, while the EU is committed to eliminating SMP intervention stocks in an orderly fashion, discounts have to be offered to encourage purchases. This exerts further downward pressures on SMP prices. No sustained recovery in SMP prices is likely as long as EU public intervention stocks overhang the market. Low SMP prices are a particular source of concern for African ACP countries, since imported milk powder prices provide a bench mark for local milk prices, undermining efforts to develop local milk-to-dairy supply chains in African regions targeted by EU exporters. Trends in EU SMP exports highlight just how divorced EU export patterns can be from underling price trends and the extent to which EU policy measures drive trade flows. Whether the profound effects EU policies have on the functioning of milk powder markets can be mitigated in ways which create new opportunities for the structural development of dairy production in ACP countries remains to be seen. Read more “Ageing EU SMP Intervention Stocks See EU SMP Prices Discounted”