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European Union Polices Block African Agricultural Exports

(July 2002) During recent years, it has become clear that Southern African countries have a large market for their horticultural produce - vegetables, fruits and flowers - in the European Union (EU). Horticultural crops, especially processed ones, present a convenient and lucrative trading opportunity for many African countries. However, the EU keeps out African horticultural produce from its markets by subsidizing its own farmers disproportionately and by setting over-stringent requirements for imported produce.

Trading out of poverty
Africa needs to trade if it is to make money for development. The United Nations Development Program Human Development Index for 2001 states that Zimbabwe made ten times as much money from exports than from Overseas Development Assistance, for Mozambique the ratio is fourfold.

Until recently, agricultural trade for Africa has generally meant exporting a readily available, little processed commodity such as coffee, tea or cocoa. Many of these agricultural products are of low value. In addition they are frequently vulnerable to swings in the world market price which can leave a country's economic base in a very precarious position. Exporters like Tanzania and Ghana have been riding the rollercoaster of fluctuating world prices for coffee and cocoa for decades. Diversifying exports and switching to higher-value goods is identified by many, not least the IMF and World Bank, as an economic priority.

Business is booming
Horticulture is defined as the cultivation of garden crops, i.e. fruit, vegetables, flowers and nuts. Familiar Southern African horticulture crops include chillies, green beans, mangetouts, cut flowers, citrus fruits and cashew nuts. The majority of the people of Southern Africa earn their livelihoods from agriculture - in many cases taking the form of horticulture. If Southern African countries were able to expand in this area they could earn extra foreign exchange and create more jobs.

In some parts of Southern Africa horticulture is already a booming business. Horticulture is a vital export-earning sector, especially for Malawi, South Africa, Zambia and Zimbabwe and the value of horticulture to many Southern African economies is steadily increasing. Zambia exported over 5,000 tons of horticultural products in the 1997-8 season recording earnings of $48 million. By the 1999-2000 season this had risen to 8,400 tons and $62.6 million.

European markets are critical for Southern African exporters, with just under half the region's agricultural exports being sold in the EU. Some Southern African horticulture exporters have had success on the EU market by selling their produce when it is out of season in Europe. Others have managed to compete on European markets throughout the year and have attracted reasonable prices.

For example in Zimbabwe, the export of peas to the EU grew by 53% between 1993 and 1997, leading Zimbabwe to account for 12% of the EU's leguminous vegetable imports like peas and beans. Many other horticulture products originating in Southern Africa are now also sold in the EU market.

Profit from processing
Horticulture not only provides much needed income to farmers and employment for farm workers, but by processing these crops even more jobs can be created. According to the Zimbabwe Horticulture Promotions Board, every $10 000 of horticulture export revenue creates four jobs in agriculture and one and a half jobs in processing.

Processing crops also adds value to the exports. Mozambique is earning far more from peeled and roasted cashew nuts than it does from the export of raw cashews, and in South Africa the production of tinned and juiced fruit and vegetables has become a significant industry.

Other Southern African countries could benefit from developing similar industries. At first glance the EU appears to support trade with Southern Africa. However it also pursues a range of policies which serve to discourage Southern African producers from exporting their processed horticultural produce to Europe.

Mozambique's cashew workers

A World Bank report concluded that Mozambique could earn between US $130 and $230 more for a ton of shelled cashews than for a ton of raw nuts. However, in 1995 the World Bank and IMF forced Mozambique to phase out the tax that it used to discourage the export of unprocessed cashews. As a result the cashew processing industry collapsed and 7000 Mozambican workers lost their jobs. After a long battle, in January 2001 Mozambique won the right to start protecting its cashew processing industry again. The EU had gone along with the World Bank's job-destroying policy and is now giving aid to help small farmers and businesses get the sector back on track.

The European markets
European markets are very important for Southern Africa's agricultural produce. In many cases the European Union gives special access to its markets to products from African countries, whilst trying to prevent imports from elsewhere by charging high tariffs on imports from countries outside the EU. However, the EU has given even better deals to countries which are not as poor as those in Southern Africa but are politically favored by the EU. For example, Zimbabwe pays 9.2 Euros for every 100kg of sweet corn it exports to the EU, whereas Moroccan sweet corn enters Europe duty free.

Southern African countries are exempt from most of these tariffs as a result of various trade agreements. The Cotonou Agreement is an agreement between the European Union and African, Caribbean and Pacific (ACP) countries. All Southern African countries (except South Africa, which has signed a separate bilateral agreement with the EU) are part of this agreement. Under Cotonou, African countries are exempted from paying tariffs for most of their agricultural primary exports to the EU.

Most Southern African countries also have special trade privileges due to the recent Everything but Arms (EBA) treaty introduced by the EU. This allows all Least Developed Countries (LDCs) tariff-free access to Europe's markets for all their goods except arms. Although many of the countries in Southern Africa are classified as LDCs, some, which are still extremely poor, are not - including Zimbabwe and Swaziland.

Whilst on the one hand the EU is opening its markets to African producers (through agreements such as Cotonou and the EBA Treaty) on the other it is making it harder for them to be competitive. Through a range of policies, which include intervention in markets to keep prices artificially high, subsidising the processing of European horticultural produce, and the imposition of non-tariff barriers such as overly strict health and safety regulations, the EU continues to fiercely protect its markets in horticultural produce.

Unfair subsidies
Even if all tariff barriers were removed overnight European farmers would remain at an enormous advantage. Despite the fact that European farming methods are expensive and African agricultural producers are often highly efficient, African farmers find it impossible to compete. The EU boosts its agricultural competitiveness through a complex web of policies called the Common Agricultural Policy (CAP).

Through the CAP, Europe's farmers are given various support programs and large subsidies including producer subsidies, subsidies to processors, and export subsidies. These enable farmers to earn a high price for their products while consumers still pay reasonable prices in the shops. African governments simply cannot afford to give their farmers the same benefits as European farmers receive through the CAP. Subsidies to processors of tomatoes, peaches, pears, citrus fruits and dried fruits have increased recently by 75 million Euros, to180 million Euros in 2001.

If the EU continues to use these support mechanisms for European producers it could wipe out any benefit that African producers gain from not having to pay tariffs when their produce enters European markets. This would inevitably reduce the amount of Southern African produce entering the EU. These subsidies and support for European farmers also lead to cheap European agricultural produce being sold on other markets across the world. This can mean that even within Southern Africa heavily subsidized produce from Europe can be sold so cheaply that products from neighboring Southern African countries cannot compete.

Tomato canning in South Africa

The EU gives aid to its tomato canners and to the EU farmers whose tomatoes are canned. It also drastically limits the amount of South African canned tomatoes sold in the EU by imposing a 14.4% tariff on entry. EU canners are displacing South African canned tomatoes in the USA, Japan and in South Africa itself. This has already resulted in two thousand seasonal and permanent job losses in the South African canning industry. The EU does allow other Southern African countries to export canned tomatoes to the EU duty free. But, as none except South Africa has the industrial capacity to produce them efficiently and cheaply, this system continues to ensure that European tomatoes are protected from competition.

While propping up its own, economically inefficient farmers against competition, the EU is a vociferous and aggressive proponent of trade liberalization and open markets elsewhere. Under the Cotonou Agreement, ACP countries will benefit from tariff free access to EU markets but crucially they will also be obliged to reciprocate and abolish their tariffs on imports from the EU. As a result, their markets will then be open to produce from the EU without them being able to use subsidies to protect their own producers.

Backdoor protectionism
Another way in which the EU keeps out African horticulture produce is by applying overly restrictive rules on Maximum Residue Levels (MRLs) of contaminants that are permissible in food. These rules are often the main stumbling block for potential African exporters.

Under WTO rules countries have the right to introduce barriers to stop food entering their country if they are not satisfied that it meets high enough sanitary and phytosanitary standards i.e that levels of biological and chemical contaminants are not dangerously high. A UN organ, the Joint Expert Committee on Food Additives (JECFA) analyses evidence and makes recommendations to a body called the Codex Alimentarius Commission. Codex then sets MRLs that are held as being the universal standard. The EU, however, frequently chooses to ignore Codex recommendations and is often much stricter, only permitting very low levels of residues to be left on produce. Many producers and activists in Southern Africa feel this legislation is a form of back door trade protectionism.

One type of food residue that has been monitored by JECFA is aflatoxins. Aflatoxins occur naturally in or on certain foods including processed nuts and dried fruit. Aflatoxins are toxic and their occurrence in food has been linked to the incidence of certain cancers. JECFA analysed the potential human health impact of aflatoxins and concluded that even if they insisted on halving the level of residue allowed on food this would only lead to approximately two fewer deaths per billion people per year in the EU. Despite this, the European Union has chosen to demand that food entering the EU meets stricter standards than JECFA recommends and allows even less aflatoxins residue. World Bank research has shown that adhering to higher standards rather than sticking to Codex MRLs for aflatoxins could cost Africa $220 million a year, equating to a massive 47% of the trade of dried fruit and nuts alone.

Excluding small scale farmers
Whilst reducing agrochemical use and protecting workers and consumers from exposure to dangerous toxins is very important, the sanitary legislation of the EU is out of touch with realities on the ground in Africa. Particularly small, independent farmers find it impossible to comply with over-stringent EU legislation and as a result are effectively excluded from the horticultural supply chain.

The EU is in the process of "harmonizing" MRLS for 100 pesticide active ingredients. This process puts the onus (and cost) for proving that pesticides are safe on pesticide producers. As African horticultural crops are comparatively small-scale the pesticide producers are often unwilling to enter in to the process of proving that their products with low turnovers are safe. Without proof, MRLs are set at zero, meaning no residue at all can be left on the produce.

If the EU genuinely intends to improve quality of life by its food standards regulations, instead of simply setting rigid limits, it needs to make an effort to help Southern farmers comply with them. Instead of the 'stick' approach, British-based group, the Pesticide Action Network suggests the EU needs to invest in training. Poor-country farmers should learn about the use of chemicals, chemical-free Integrated Pest Management, marketing, and not least, current EU legislation on pesticides. Aid could also be targeted to improving infrastructure and reliability of supply chains. Otherwise, small-scale growers will suffer most, being the least able to keep up with standards and legislation.

ACTSA's demands
To support horticultural production in Southern Africa the EU should:

  • Cut subsidies as part of the ongoing review of the CAP

  • Stop using non-tariff barriers to prevent Southern African produce being imported in to Europe

  • Stop the over zealous application of quality standards and help Southern African farmers to comply with necessary health and safety regulations.

ACTSA's Freedom to Grow campaign seeks to improve Southern Africa's capacity to benefit from trade and calls on the EU to:

  • Remove all barriers that stop Southern Africa selling to EU markets

  • Allow Southern Africa to develop its ability to trade by protecting key sectors

  • Ensure that its trading policy promotes development and co-operation in Southern Africa.

This briefing was produced with support from DFID and the European Union.

Action for Southern Africa (ACTSA), based in Great Britain, campaigns with the people of Southern Africa as they strive to build a better future. Working for peace, democracy and development across the region, ACTSA is the successor organization to the Anti-Apartheid Movement. ACTSA influences decision-makers in Britain and Europe on policies that affect Southern Africa. It keeps the region in the public and political spotlight through lobbying, publication of reports and briefings and media work.

 

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