Market perspectives UE market for sustainable food Cesare Zanasi - Bologna University

SALSA ProjectSustainability

meetingMexico city

14 November 2013

Latin America beef exports to EU

Latin America export to EU

Latin America: 2013 + 20% respect to 2012

Breakdown by countryBrazil + 37% shipment of beef first quarter 2013 : Causes: Brazilian Real devaluated against Euro – increase in supply

Uruguay : first quarter 2013 + 30% Shipments of Uruguayan beef to the EU. Increased product differentiation (Certified Natural Meat Program of Uruguay)

Argentina : reduced Argentinian export in the first quarter(-18% shipment of beef). Government policy (high export taxes); reduced supply : substitution with soybean closure of many export plants

Mexico EXPORT of Beef

NO EU

Demand for sustainable beef

Not directly measurable since a “sustainable beef” definition does not

existAnyway in EU organic beef or other certified beef is

still a very small niche

Driving forcesDemand for imported sustainable

food

Consumers

The importers

EU trade regulation

Tariffs – quotas – Sanitary and

Phytosanitary barriers

Media/civil societyOrganizations (NGOs)

Investors

Voluntary schemesOrganic – Fair trade –

SAN…

Retailers/processors

Key challenges influencing EU supply and import decisions

Demand for imported meat - EU

iii) Food Safety: Recognize & implement high standards across the world

ii) Cost of production: the key challenge of the Europeanmeat sector

iv) Animal welfare: a global responsibility – Alignment with OIE needs to be a priority

i) Dependency on beef import from third countries to increase

Source: World Trade Organization, 2008 pp.42-43

Demand for imported meat

v) Animal Transport: Enormous efforts made as cost of production skyrocketon animal transport; all the requirements that operators have to fulfill ….. lead to a considerable increase in the cost of production

vi) No feed import – no livestock – no competitive EU meat industry in the future

Source: World Trade Organization, 2008 pp.42-43

The Import Scenario

EU IMPORT MANAGEMENT

IMPORT IN EU

EU Tariff Barriers: duties

EU REGULATIONS AFFECTING BEEF IMPORT

EU Barriers: import licenses

Imports of some agricultural products must be accompanied by an import licence.

Allow the EU authorities to monitor trade flows and administer tariff quotas and safeguard measures.

EU REGULATIONS AFFECTING BEEF IMPORT

Demand for imported meat

EU Quotas

The EU Commission may provide import tariff quotas• HILTON grass fed beef quota• Hormone-treated beef ban Quota• Import Tariff Quota for Grain Fed High Quality Beef• GATT Frozen beef quota etc..

Specifically limits on the volume of goods which may be imported with a reduced customs duty.

Demand for imported meat

Safeguard measures

Exceptional market support applied to beef and veal, milk and milk products, pigmeat, sheepmeat and goat meat, eggs and poultry meat

Related to or consequent upon health and veterinary measures adopted in order to combat the spread of disease. Or to avoid serious disruption on the markets concerned.

EU policies regarding SPS requirements, food safety and agricultural product quality standards

Animal welfare and animal production methods could well gain increasing prominence in the coming years, with potentially important consequences for trade flows.

SPS requirements

Environmental requirements

EU Regulations mostly related to Beef sustainability

EU and Mexico and other Lat. Am. regulations compliance to Sustainability

SALSA Results• Lack of regulation on sustainability issues

• A greater focus on food safety, traceability and quality• Almost all legal regulations showed a very low association with

environmental, social and economic issues• Only very few regulations (e.g. Mexican Regulation for

Sustainable Rural Development) jointly consider the environmental social economic aspects.

• Most of the regulations are associated with food safety, especially in countries such as Brazil and Mexico

• Food traceability issues showed high values in Brazil and in the EU

• Legal regulations for Mexico focused most on food quality issues

EU food Sustainability future strategy

1. Better technical knowledge on the environmental impacts of food

2. Stimulating sustainable food production 3. Promoting sustainable food consumption4. Reducing food waste and losses5. Improving food policy coherence

Towards a more resource efficient and sustainable food system

Proposed areas for action presented for discussion:

EU food Sustainability future strategy

Source: DG Agriculture and Rural Development.

The CAP post-2013: From challenges to reform objectives

EU food Sustainability future strategy

Source: DG Agriculture and Rural Development.

The new greening architecture of the CAP

EU International Role

It is in the interest of the EU, to act in favor of a global equitable governance of resources and of food exchanges,

preserving both global availability of food and local access to food

WHY?

because of its dependence on external mineral resources, its position as a major player in the global food markets (both as

importer and exporter)• identify coalitions for a better multilateral governance

with all countries, and particularly with emerging countries

• better analyze the consequences of domestic European policies on food security and the environment in the rest of the world

HOW?

Demand for imported meatPrivate Standards vs Regulations

Private standards also play a large role, in that they are going beyond national legislation and are placing increased and in part undue pressure on suppliers.

Credibility in governmental and WTO rules needs to be restored in order to arrest the multiplication of these expensive private standards, however these standards remain difficult to control and bring under legislation.

Source: World Trade Organization, 2008 p.44

https://mc9.wto.org/official-documents-bali-ministerial

Private Standards compliance to Sustainability dimensions

SALSA Results

• Most of the private standards regulate environmental aspects as well as social issue.

• A majority of private standards have higher n. of requirements for food quality, traceability and food safety than the legal regulations examined.

• Most of the private standards are based on the legal regulations and integrate legal food safety and traceability requirements.

Private Standards compliance to SAFA Sustainability dimensions

SALSA Results

EU Animal Protection strategy and its impact on third

countries

Prof. Leonardo Nanni Costa

Potential for expansion of environmentally and ethically oriented

food quality standards in EUand Latin America

CONSEQUENCES

Opportunities

Opportunities

Little room for the export of sustainable beef in EU at the moment

Potential to be exploited by

• Improving a Country level strategy for valorizing the quality of

Beef according to the main players and Regulations’ expectations

• Exploiting the internal market for sustainable products to build dimensions of scale able to support sustainability implementation

• Building regional alliances and advocate for a global sustainability governance

Big Players’ increasingly dominant role or chance for a mainstream sustainability

implementation?

Sainsbury’s: “a sustainable supply chain is not just about sourcing with integrity, it’s about actively working with suppliers to educate them”

“Unilever has invested heavily in improving farming practices among tea farmers, building capacity to more than 170,000 tonnes of Rainforest Alliance certified tea for brands such as Liptons.

Source: How to commercialise a sustainable supply chainBy Claire Manuel

Mcdonalds: There is no definition of what sustainable beef is

“With some products [like beef], there’s not even a definition for what sustainable is. We want to use our size and influence to work with the industry and NGOs to come up with definitions of sustainable beef.

…….What I mean by that is that there are no standards, measures, accountability and traceability to make those claims today.”

Big Players’ increasingly dominant role or chance for a mainstream sustainability

implementation?

WALLMART and the Sustainability Consortium

Big Players’ increasingly dominant role or chance for a mainstream sustainability

implementation?

ConclusionsConsumers and civil society pressure

Investors’ pressure

Sustainability as an opportunity

Sustainability difficult to manage

Big Players involvement in sustainability

EU role (not fully Developed)

Latin AmericanSustainable

development

THANKS!