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’.
The most recent survey from the international floriculture organisation AIPH and FloraCulture International suggests while there were fears at the beginning of the Covid-19 crisis in Europe over extensive bankruptcies in the floriculture sector, a survey at the end of May 2020 revealed most growers now expect to recover from the crisis (1). This is in part a result of the financial support measures for companies and producers introduced at different levels (EU, national and even the provincial level in some countries).
For example, in Belgium the Flemish regional authority has extended support to the floriculture sector, with the combination of these different support measures meaning ‘the most severely affected floriculture companies will be able to compensate some of their losses’. As a result, many of these businesses will be able to restart their operations (2). The situation in Europe is however uneven, with some support schemes being criticised for setting eligibility criteria too strictly, with, as a consequence, large numbers of floriculture enterprises with smaller levels of turnover being ineligible for support (3). Nevertheless, overall Royal Flora Holland reported a 19.5% increase in turn-over in week 23 compared to the same week last year (4).
This being noted some Dutch exporters who were dependent on the UK and Russian markets have seen the Covid-19 pandemic entirely halting their export trade. Companies serving the out-of-home market have also been severely affected (e.g. servicing social events and conferences).
However, there are serious concerns over the ‘lack of air freight capacity’ and resulting high air freight rates, which ‘continues to disrupt international trade for horticulture’. In the Netherlands, the Logistics Taskforce of the crisis organization Corona Crisis Horticulture has called for measures to ‘quickly increase capacity in order to maintain worldwide trade relations.’ These measures it is held will need to include ‘financial support, extra cargo capacity on important horticultural routes and extra access to Schiphol for (cargo) aircraft (more slots)’. The Taskforce urged the Government of the Netherlands to ‘play an active role in restarting international trade’, since ‘air freight was an engine of the Dutch economy’. According to Daco Sol, programme manager at GroentenFruit Huis, decisive action on the air freight issue would ‘avoid loss of turnover and maintain trade relations’, thereby releasing the ‘handbrake’, which has been imposed by the Covid-19 pandemic, from this engine of the Dutch economy (3).
The sudden halting of air passenger services which provided an important source of air freight capacity for floricultural and horticultural exports from East Africa to the Netherlands, saw not only a dramatic reduction in air freight capacity but also a rapid increase in air freights costs; in some instances by as much as 200%. This situation is only being partially eased by the emergency air freight capacity adjustment measures which have begun to be implemented (see companion epamonitoring.net article ‘Covid-19 Related Cancellation of Commercial Flights Beginning to Bite for ACP Horticulture Exports’, 7 April 2020).
It is not surprising therefore that calls are being made for EU government support for the restoration of airfreight links at commercially sustainable pricing levels, with this being focussed on what is the Netherlands principal source of extra-EU cut flower imports (East Africa provided over 75% extra EU cut flower imports to the Netherlands in 2019), and which provides the basis for an extensive and highly profitable onward trade across Europe.
While the Kenya Flower Council reports exports have recovered from a low of 20% of normal volumes in April to around 65% of normal volumes in in May, it is expected to take until the end of 2020 for exports to recover to 80% of their normal volumes (5). This assumes the avoidance of a worst-case scenario of a second wave of infections in Europe and the consequent renewal of lockdown measures and movement restrictions. This worst-case scenario is not something which the EC in its Covid-19 recovery planning is entirely ruling out (6).
Dutch Extra-EU Flower Imports (0603) – 2019 – Value €, Volume Tonnes (exceeding 1, 000 Tonnes)
| Country | Value € | Volume Tonnes | % Share |
| TOTAL Extra-EU | 772,455,378 | 247,597 | |
| East Africa | 75.5% | ||
| Kenya | 337,851,965 | 134,457 | 54.3% |
| Ethiopia | 87,676,336 | 38,651 | 15.6% |
| Uganda | 20,289,081 | 9,055 | 3.7% |
| Tanzania | 14,668,697 | 3,365 | 1.4% |
| Rwanda | 3,622,922 | 1,163 | 0.5% |
| Other Africa | 4.9% | ||
| Zambia | 5,659,973 | 5,021 | 2.0% |
| Zimbabwe | 4,606,077 | 4,985 | 2.0% |
| South Africa | 11,898,910 | 2,119 | 0.9% |
| Other suppliers | 18.8% | ||
| Ecuador | 160,473,470 | 22,572 | 9.1% |
| Colombia | 90,026,933 | 14,479 | 5.8% |
| Turkey | 23,100,194 | 8,490 | 3.4% |
| Israel | 3,510,031 | 1,265 | 0.5% |
| Total Imports Covered | 99.2% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
Meanwhile ‘Tanzania and Kenya have agreed that vehicles should not be forced to unload at the border as part of a wider deal to end the recent border crossing dispute over coronavirus testing between the two countries.’ This is seen by the Tanzania Horticultural Association as an important development since the emerging border dispute was endangering Tanzania’s horticultural export sector, which is heavily dependent on exports via Jomo Kenyatta International Airport and the port of Mombasa in Kenya (7) (see companion epamonitoring.net article, ‘Tanzanian Avocado Exports Show Strong Growth Amidst Growing Competition’, 4 June 2020).
There would appear to be a need to build on this progress in Kenya/Tanzania Covid-19 related transportation sector relations to ensure trade keeps flowing as the pandemic in Africa continues to spread. Ideally, given the growing demand for testing this should include the development of a common coronavirus testing standard with an associated system of regionally recognised attestation and test renewal, so as to ensure testing arrangements are sustainable as the pandemic evolves.
This needs to be seen in a context where in the last week of May a more than 50% increase in recorded Covid-19 infections was reported in Kenya and Ethiopia (8), while serious concerns have been raised about the reliability of data from Tanzania, where official reporting suggests infection levels are stabilising (9).
| Comment and Analysis
Concerted action to ease the air freight crisis along important floriculture and horticulture supply routes would appear to be vital for East Africa’s trade in short shelf life products into the EU. For the Netherlands, East Africa is a vital source of supply for national use and onward distribution across Europe. It is thus a commercially important sector, where the current air freight challenges could serve to exacerbate emerging challenges arising from the faltering post-Brexit trade negotiation process and the growing and Covid-19 pressures on retailers to shorten their supply chains and enhance their reliability and security. This air freight issue if of equal importance to East African exporters, given the majority of East African floriculture exports serve the EU market via air freighted shipments to the Netherlands and Belgium. The Netherlands also serves as an important distribution hub for a range of other fruit and vegetable exports from East Africa, many of which area also air freighted. Against this background there would appear to be a clear mutual interest in a coordinated and concerted East Africa-EU air freight recovery initiative, with the Dutch government needing to take a lead in this regard on the EU-side. Such an air freight recovery initiative would need to reach beyond the current KLM/Air France/Martinair initiatives, which, although warmly welcomed, only scratches the surface of the problem. Main Southern and Eastern African Cut Flower Exporters to the EU28, Netherlands, Belgium (tonnes and % share) – 2019
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm Given the Kenya Flower Council expects export volumes to increase over the course of 2020, if air freight capacity and pricing issues are not effectively addressed, this could put increased commercial pressure on the viability of other horticultural product exporters whose positions are not so firmly established on the EU market as cut flowers (e.g. the fresh bean sector, where Moroccan exporters who use trucks (and in the face of the Covid-19 movement restrictions newly established rail freight services from Southern Spain) to serve northern European markets). If these new and dynamic East African horticultural export sectors are not to be undermined, at the cost of 100s of thousands of livelihoods, then there would appear to be a need for a concerted East Africa-EU air freight recovery initiative, designed to expand air freight capacity and bring down air freight charges along this critical route for the delivery of fresh produce to the EU market. At the most basic level this would appear to require the EU to open up its national contact point system established under the ‘green lane’ initiative as one-stop-shop for resolving administrative/logistical problems faced in expanding air freight services between East Africa and key EU logistical hubs (primarily in the Netherlands, Belgium and to lesser extent Germany). However, this would just be a starting point, and would need to extend to the implementation of a number of cost reduction measures which could immediately, if only modestly, ease some of the financial burdens on East African floriculture and horticultural air freight exporters. This includes: · Promoting a waiving or reduction of landing fees for reconfigured cargo flights delivering fresh produce to the EU market (given the reduced demand for landing slots). · Waive phytosanitary import inspection fees for the duration of the COVID-19 crisis, given comparable inspection service costs for national producers are carried on government budgets. · Endorsing the temporary waiving of competition policy requirements which constrain the comprehensive stakeholder dialogues required to address current airfreight challenges. · Establishing a coordination mechanism for return flight cargoes for newly established air freight services, so as to enhance the commercial viability of reconfigured air freight services. However, such an East Africa-EU air freight recovery initiative would also need to support an extension of locally focussed air freight capacity. This could include such measures as: · Concerted action to mobilise financial support for reconfiguring idle passenger aircraft for cargo freight services and their deployment along air routes to key logistical hubs in Europe at freight rates which are comparable to pre-Covid-19 freight cost levels. · Linking of the provision of state aid to struggling European airlines to an expansion of freight services along key air freight routes (at pre-COVID-9 freight rates). · Supporting stakeholder dialogues to identify the most appropriate medium to long term solutions to current air freight challenges along key air freight transport corridors between East Africa and major European markets. · Promoting an EIB/World Bank initiative to provide financial assistance to regional airlines in East Africa to provide stable air freight services focussed exclusively on the East Africa-EU air corridors. These types of substantive support measures need to be seen in the context of the huge levels of state aid being deployed in support of the airline industry in Europe and in some instances struggling airports. These EU programmes could potentially generate serious distortions of competition in the airline sector (see companion epamonitoring.net article ‘Linking Bail Outs to Broader Policy Objectives’, 28 April 2020). These types of measures would be consistent with the EU’s approach in its Covid-19 recovery plan which places emphasis on ensuring otherwise viable companies are supported in sustaining their commercial activities and recovering to previous levels in the post Covid-19 crisis period and to do so through providing ‘easier and quicker access to finance’ (6). What is more, it would address the serious competition issues which have been raised by European state aid measures in the airline sector, by providing targeted support to airlines in partner companies operating along the same routes. Such a comprehensive initiative would also be consistent with EC commitments in the background documents to its massive Covid-19 recovery programme to being ‘open and ready to support its partners’ by ‘investing in a sustainable global recovery’. As in the case of the Dutch floriculture sector there would be a strong element of self-interest behind such an EU initiative, for as the EC has acknowledged, ‘in the longer-term, the EU will only successfully recover if our partners around the world also recover’ (6). There is furthermore an important political dimension to such an EU initiative, given heightened European concerns over growing Chinese commercial and political influence in Africa, particularly in Eastern and Southern Africa. |
Sources
(1) Royalfloraholland.com, ‘Corona crisis: country updates – World’, 4th June 2020
https://www.royalfloraholland.com/en/news-2020/week-11/corona-ministry-of-agriculture-gives-an-update-per-exporting-country
(2) Royalfloraholland.com, ‘Corona crisis: country updates – Belgium’, 4th June 2020
https://www.royalfloraholland.com/en/news-2020/week-11/corona-ministry-of-agriculture-gives-an-update-per-exporting-country
(3) Royalfloraholland.com, ‘Corona crisis: country updates – Netherlands’, 4th June 2020
https://www.royalfloraholland.com/en/news-2020/week-11/corona-ministry-of-agriculture-gives-an-update-per-exporting-country
(4) Royalfloraholland.com, ‘Market developments week 23 2020’, 5 June 2020
https://elinkeu.clickdimensions.com/m/1/19440787/p1-b20157-c20bbeddeffe42abb4ec5f143e7e6d92/1/2/091d9efc-4151-42a6-a6a5-c4471a486c20
(5) Royalfloraholland.com, ‘Corona crisis: country updates – Kenya’, 4th June 2020
https://www.royalfloraholland.com/en/news-2020/week-11/corona-ministry-of-agriculture-gives-an-update-per-exporting-country
(6) EC, ‘Europe’s moment: Repair and Prepare for the Next Generation’, COM(2020) 456 final, 27 May 2020
https://ec.europa.eu/info/sites/info/files/communication-europe-moment-repair-prepare-next-generation.pdf
(7) Royalfloraholland.com, ‘Corona crisis: country updates – Tanzania and Kenya’, 4th June 2020
https://www.royalfloraholland.com/en/news-2020/week-11/corona-ministry-of-agriculture-gives-an-update-per-exporting-country
(8) USAID, FeedtheFuture, IFDC, AfricaFertilizer.org, ‘Covid-19 Fertiliser Watch – East and Southern Africa’ Bulletin No.4, 29 May 2020
https://ifdc.org/wp-content/uploads/2020/05/East-Southern-Africa-COVID-19-Fertilizer-Watch-Country-Status-No4-29May-prod-EN_v29May2020.pdf
(9) Guardian, ‘Tanzanian president accused of covering up Covid-19 outbreak’, 27 May 2020
https://www.theguardian.com/world/2020/may/27/tanzanian-president-accused-of-covering-up-covid-19-outbreak