GROWTH in agricultural exports could slow down as a new set of regulations, part of the EU Green Deal's Farm-to-Fork Strategy, is implemented next year, says the Agricultural Business Chamber (Agbiz).
According to Agbiz chief economist Wandile Sihlobo, the strategy would come with an additional layer of regulations which have implications on South Africa.
“As a background, the Sacu (Southern African Customs Union) and Mozambique-EU Economic Partnership Agreement (EPA) of 2016 enhanced market access benefits for South Africa. These included fully or partially removed customs duties on 98.7 percent of exports, expansion of tariff rate quotas on key agricultural exports, and a more implementable agricultural safeguard mechanism, among others. Since the implementation of the agreement in October 2016, South Africa's exports to the EU have increased by 25 percent, from $2.2 billion (R32bn) (in 2017) to $2.8bn (in 2020), according to data from Trade Map,” said Sihlobo.
Agbiz said the four key factors that would drive the re-set of the food system through the Farm-to-Fork Strategy would be technical change, business model innovation, growing food demand and policy and regulation.
The EU and the rest of the world are seeking to implement urgent policy measures to combat the negative effects of climate change.
In its 2030 climate target plan, the bloc aims to reduce greenhouse gas emissions by 55 percent from 1990 levels. To that end, the EU has crafted the "Farm-to-Fork Strategy" which is a new approach that ensures that agriculture, fisheries and the entire food system effectively contributes to achieving this target.
This Strategy was launched last year and it is at the core of a broader initiative called the "European Green Deal" aimed at reducing the environmental and carbon footprint in the way food is produced and consumed. The Farm-to-Fork Strategy lists 27 actions covering food production, processing, retailing, and waste.
The strategy has four broad pillars, Consumer demand which focuses on nutritional labelling and creating a sustainable labelling framework that covers nutrition, climate, environment and social aspects of food products, food production which sets out the fundamentals for sustainable production by setting targets to reduce the use of fertilizers and pesticides and the revision of legislation regarding feed additives and animal welfare, and industry behaviour that seeks concrete commitments from agribusiness and other food-system actors concerning health and sustainability.
To that end, the EU will develop a code of conduct on the development of business and marketing practices and require agribusinesses to integrate sustainability into their corporate strategies. The last one is trade policy which seeks commitment from some countries on the use of pesticides and animal welfare and the fight against microbial resistance which for some raised the question of creating a fine balance between resilience without turning into protectionism.
Sihlobo said that with the EU seeking to compel third world countries such as South Africa to adhere to new regulations to continue to access its lucrative market, questions had arisen about the capacity and potential for South Africa to adapt, as well as the risks and opportunities that these regulations presented to future access into the EU market.
Agbiz said SA producers and those in the rest of Sacu and Mozambique might face several challenges that include: regulatory and policy uncertainty and high costs of compliance.
Sihlobo said while regulations in the Farm-to-Fork Strategy were not expected to be implemented until next year, however, it might take a bit more time for regulators and food-system actors to align their policy, regulations and business decisions to the emerging requirements of the food system. Policy cycles and political processes could impose a lag-time of anything between three to five years, which would lead to a transition phase of regulatory and policy uncertainty, he said.
Over the years, South African agribusinesses have had to conform to stringent EU regulatory standards as well as an ever-increasing set of private standards related to traceability, authenticity, exposure to allergens, good farming practice, child labour, sustainable farming, sustainable farming practice, and various kinds of certification (eg Hazard Analysis Critical Control Points, Kosher, Halaal etc).
Sihlobo said an example was the requirement for South African citrus producers to comply with the citrus black spot (CBS) measures.
With Fair Trade Certification costing over $1000 for smallholder farmers, resource-poor farming households can seldom afford such high costs of adopting new regulations and certification. Without financial support, most smallholder farmers will inevitably be excluded from participating in export markets.”
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