This new war situation created, may also affect aspects related to imports and exports between Israel and Ukraine, aspects of customs duties, and other import taxes.

Israel and Ukraine have signed in 2019 a Free Trade Agreement (FTA), and entered into force in January 2021 (1).

Under the FTA, the imposition of customs duties on the movement of goods between countries was abolished, in relation to most types of products, mainly industrial, and the reduction of customs duties on agricultural products.

The main products that Israel imports from Ukraine are agricultural products and food products, metals and machinery (2).
One of the basic conditions in the FTA for granting a customs exemption for a  “made in Ukrainian” product imported into Israel, is that the product is manufactured in the territory
of Ukraine.

The FTA defines in Article 1.2(w)(1), that the territory of Ukraine, is:
“…the land territory, internal waters, and territorial sea of Ukraine and the airspace above them and the exclusive (maritime) economic zone and continental shelf, over which Ukraine exercise sovereign rights and jurisdiction in accordance with its national laws in force and international law…”

The new war situation that has arisen may intrigue the interesting legal question of: What is the origin of a product manufactured in the territories of eastern Ukraine, that are de-facto, under the control of Russia.

That is, whether for the purposes of the FTA with Israel, such a product remains a “Made in Ukriane” product, or not.
This is not an academic question, but a question that may directly affect the question of whether the product will be subject to customs duty on imports to Israel, or not.

It is important to note that there is no FTA between Israel and Russia, and therefore products made in Russia, imported into Israel, are usually subject to customs duties upon importation.
Israel has been negotiating with the Eurasian Economic Union (Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan) for several years to sign a FTA, but the talks have not yielded to an agreement yet.

For example, ketchup imported from Russia to Israel is subjected to a 12% customs duty, and if imported from Ukraine, is subjected to a reduced duty rate of about 8.5%. Imports of electric motors from Russia are subject to 12% customs duty and from Ukraine to Israel is
exempted, and there are many more examples.

Apart from Israel, Ukraine has other FTA, for example, with Canada and the EU countries, and also in these agreements a basic condition for granting a customs exemption for a product made in Ukraine is that it creates in Ukrainian territory.

The EU, by the way, has already hastened to issue a notice on February 23 rd , 2022 stating that products arriving from the Donetsk and Lugansk territories in Ukraine will not enjoy a
customs benefit when entering the EU, due to difficulty in verifying the Ukrainian origin of the product (3).

Needless to say, this is not the first time there has been a territorial dispute over certain territories in the world, and any such dispute usually has one effect or another on trade relations between countries.

For example, in this context it is interesting to note that the European Union, which has had a FTA with the State of Israel since 1995, previously declared that the territories of Judea and Samaria (the west bank), including territories from Modi’in-Maccabim-Reut, and the Golan Heights (north of Israel, near Syria), would not be considered as the State of Israel for the FTA purposes. Therefore, according to the EUs decision, a product manufactured in these territories will not enjoy a customs benefit upon entering the EU.

This case even came to a decision in the European Court of Justice, which ruled that products manufactured by Soda Club in Mishor Adumim (near Jerusalem) would not enjoy a customs benefit when
entering Germany. Contrary to this, when it comes to other territorial disputes, such as Turkish Cyprus, or the Falkland Islands (dispute between Britain and Argentina), no similar declarations have been made.

In my opinion, the State of Israel will not be interested in undermining trade relations with Ukraine or Russia, and therefore will not issue declarations regarding the disputed territories of east Ukraine.

The post The Impact of the War in Ukraine on the Free Trade Agreements with Israel and the EU appeared first on Global Trade Magazine.

EU cheese prices are expected to rise with the boosting export demand, while fluid milk and butter prices will keep relatively stable. The EU dairy market is forecast to grow only moderately, having raw milk availability restrained by sustainability objectives. Despite that, the EU is to remain the largest dairy exporter worldwide.

Key Trends and Insights

This year, EU dairy prices are forecast to increase, driven by high demand against limited supply. The average cheese price will post the most noticeable gains, rising to $3.23 (+5.1% compared to the three-year average 2019-2021), while milk will be up to $0.346 per kg (only a +0.6% increase). By 2025, cheese could reach $3.30 per kg, and milk will cost $0.361 per kg. Butter price will remain stable near $2.2 per kg throughout the next five years.

According to the EU Agricultural Outlook 2021-31, in the next decade, the growth of EU milk production will slow down to +0.5% per year due to a decline in herds driven by sustainability objectives. In 2022, dairy cow milk production should increase by 1.4% compared to the three-year average 2019-2021 and total 156M tonnes; then, it should reach 158M tonnes by 2025. The number of dairy cows is expected to decrease from 20.0M heads in 2022 to 19.6M in 2025.

This year, cream production is projected to rise to 2.5M tonnes (+1.4% compared to the three-year average 2019-2021), while by 2025, it will reach 2.6M tonnes. Yoghurt and butter production will not see significant changes, remaining at 7.8M tonnes and 2.4M tonnes, respectively.

In 2022, cheese production will expand to 10.9M tonnes (+1.8%) and reach 11.1M tonnes by 2025. Thanks to the rising demand in Asia, foreign trade in cheese will see gains, while the domestic market will expand only moderately since cheese is a long-known product with established consumption patterns. The EU is expected to keep its position as the largest exporter of dairy products, outstepping New Zealand and the U.S. in shipment volumes. Currently, the largest European suppliers of dairy products are Germany (23%), the Netherlands (12%) and France (11%).

Dairy Produce Exports in the EU

In 2020, the amount of dairy produce exported in the EU declined to 19M tonnes, stabilizing from the previous year. In value terms, dairy exports amounted to $43.4B.

In 2020, Germany (4.6M tonnes), distantly followed by the Netherlands (2.3M tonnes), France (2.1M tonnes), Belgium (1.5M tonnes), Poland (1.3M tonnes), the Czech Republic (1.1M tonnes), Ireland (1M tonnes) and Austria (0.9M tonnes) were the largest exporters of dairy produce, together constituting 76% of total exports. Denmark (765K tonnes), Italy (540K tonnes), Latvia (407K tonnes), Spain (379K tonnes), and Luxembourg (366K tonnes) occupied a relatively small share of total volume.

In value terms, Germany ($8.7B), the Netherlands ($7.5B) and France ($5.7B) constituted the countries with the highest levels of exports in 2020, with a combined 50% share of total supplies. Italy, Ireland, Belgium, Denmark, Poland, Austria, Spain, the Czech Republic, Luxembourg and Latvia lagged somewhat behind, together accounting for a further 41%.

In 2020, the average dairy produce export price in the EU amounted to $2,238 per tonne, rising by 2.1% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Italy, while Latvia was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by the Netherlands, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform

The post EU Dairy Market Forecast: Cheese Prices to Rise Sharply, Butter and Fluid Milk to Keep Calm appeared first on Global Trade Magazine.

It has been a period of intense political upheaval in the UK resulting in the departure of two successive Prime Ministers and two general elections, all against the backdrop of fraught negotiations to agree with the EU a Withdrawal Agreement (WA), setting out the terms of the departure, and a new Trade and Cooperation Agreement (TCA), designed to frame the new relationship.

The WA was concluded in December 2019. The UK exited the EU on January 31, 2020, but nothing changed until the expiry of a transition phase at the end of that year, by which point the TCA was also agreed.

The dust has still not fully settled on the definitive shape of EU-UK relations as there are several as yet unresolved issues due to certain grace periods (the UK is only this year beginning fully to implement checks on EU imports) and some unfinished business (defining the modalities of the vexed arrangements for Northern Ireland). However, the general direction of travel is clear. The UK has opted for the most severe form of exit, seeking to cut most ties with the EU and aiming to achieve the maximum degree of regulatory independence.

The economic and social dislocation caused by the pandemic has made it difficult sometimes to distinguish between the impact of Brexit only versus that of COVID 19. However, this article seeks to describe, as far as possible, how Brexit has affected the business and regulatory environment across the full range of areas covered by Steptoe and Johnson practices so far, and to identify issues of potential future concern for companies.

Trade, Customs, and the Level Playing Field

Customs and Supply Chain Issues

2021 was a year characterized by supply chain issues. Not just in the EU or the UK, but globally. While trade was down in the first half of 2020 due to the global pandemic, 2021 saw a complete reversal with global ports being highly congested. This issue was felt differently in the EU as compared to the UK, however. Euro-area exports of goods in October 2021 were close to pre-pandemic levels, being only 2,34% down from October 2019.[1] In the UK, on the other hand, exports of goods were 9,6% lower in October 2021 than in October 2018, the “most recent ‘stable’ period” in the UK.[2]

A key reason why customs and supply chain issues were more acute in the UK as compared to the EU appears to be Brexit. UK companies have so far experienced more difficulties in trading under the new customs arrangements following Brexit than EU companies.[3] Indeed, the EU has been applying full customs checks to imports from the UK since January 1, 2021, while the UK has repeatedly delayed similar checks on imports from the EU. However, as of January 1, 2022, the UK has introduced full customs checks on goods imported from the EU to Great Britain, with exceptions regarding Ireland and Northern Ireland.[4] UK importers are likely to face significant disruptions, at least in the short term, as they get used to the additional red tape due to the application of full customs checks. This could have an important impact on EU export volumes to the UK, similar to the disruptions caused to UK exports to the EU when the EU started applying full customs checks on imports from the UK.

The Level Playing Field

Ensuring a post-Brexit “level playing field” was a key issue during the Brexit negotiations. A key fear of Brussels was that having left the strict rules of the EU, the UK would turn into an economy with limited regulations and uncontrolled subsidies while retaining duty free access to the Single Market. The TCA ended up including a number of components related to the level playing field, with key parts being related to subsidies and state-aid. The outcome of this on the UK side has been the UK Subsidy Control Bill 2021,[5] which seeks to strike a balance between the UK’s obligations under the TCA, while at the same time allowing the UK with sufficient flexibility to provide subsidies where it deems fit. In its current form, its principles regarding subsidy control largely mirror those of the TCA, although there does seem to be room for interpretation and it remains to be seen whether the EU will consider the implementation thereof to be in line with the TCA.

In parallel, the EU is in the process of adopting a new regime to address distortions caused in the EU market by foreign subsidies.[6] This would give the European Commission the power to investigate foreign subsidies granted to any company active in the EU and impose regressive measures to counteract any distortive effects (see our blog post describing this proposed regime here). While this proposed legislation is not specifically related to Brexit, it could have implications for UK companies active in the EU which have received UK subsidies.

The Northern Ireland Protocol

While Brexit happened on February 1, 2020, and the Brexit transition period ended on January 1, 2021, there are still many unresolved issues under negotiation. Throughout 2021 the EU and the UK have been engaged by intense negotiations regarding the Northern Ireland Protocol, which has in effect resulted in Northern Ireland remaining in the EU Single market for goods. This has, however, resulted in several disruptions in trade between the rest of the UK and Northern Ireland, with several customs checks on goods, and severe disruptions on agri-food products, due to the absence of a veterinary agreement.

These disruptions are despite the fact that all the checks under the Protocol have not yet been fully implemented, while the UK has continued to extend the “grace period” during which lesser checks apply.

Towards the end of 2021, the situation got very tense, with the UK threatening to unilaterally suspend part of the Protocol over continued trade disruptions caused by the Protocol. Although at the time of writing the situation seems to have somewhat settled down, UK red lines remain, and the UK remains prepared to suspend part of the Protocol should the parties not come to an agreement.[7]

Should the UK suspend (part of) the Protocol, the EU has indicated that it may initiate dispute settlement proceedings and/or take retaliatory measures. There is even the potential that the EU may renounce the TCA in its entirety if the UK suspends the Protocol, although this appears less likely. It is clear, however, that a UK suspension of the Protocol would have significant consequences for EU-UK relations; not only in terms of trade but also other issues dealt with in the agreement.

Regulatory landscape

Competition

Since the end of the transition period, EU competition law ceased to apply to the UK and EU competition law is no longer applied by UK enforcement authorities. Although they must have regard to EU guidance and future EU case law, they are not bound by future EU law and may depart where appropriate.

The UK’s competition authority, the Competition and Markets Authority (CMA) is no longer party to the EEA’s cooperation network, nor does it benefit from the 60+ cooperation agreements between the EU and third countries. The TCA envisaged such an agreement and under discussion are provisions to share information, attend each other’s interviews (M&A and infringements), and request the other to conduct raids. However, it has yet to be concluded.

EU block exemptions (which define certain types of agreements that are allowed under the EU’s competition rules) have been retained as part of the UK’s domestic law. The EU has been conducting public consultations on some Block Exemptions which will expire soon, including those concerning vertical agreements. The CMA is in the process of preparing its own version. The two are likely to diverge, not least because the EU’s Single Market imperative is not relevant in the UK context, save as between the UK nations (where the UK now has its own UK Internal Markets Act).

As regards merger control, the UK regime is voluntary and the thresholds are unchanged. It is envisaged that mandatory notification may be introduced in the digital markets. The UK has now also adopted, in line with other major jurisdictions, a foreign direct investment (FDI) screening regime – the National Security and Investment Act (NSIA). Under the NSIA, there is currently mandatory notification of transactions required in 17 key “sensitive” sectors, including notably telecommunication, technology, and defense. The CMA has issued new Market Assessment Guidelines which, for example, broaden the CMA’s approach to when it will claim jurisdiction over a transaction. The CMA closely monitors the market and has significantly increased the review of transactions and called in completed transactions for investigation.

Sanctions

During Brexit negotiations, the EU and UK stated their desire to coordinate as much as possible on sanctions policy post-Brexit without agreeing on a formal framework to do so. The past year has seen several examples of continuing cooperation when EU and UK political priorities align, including announcing coordinated measures under their respective Belarus, Global Human Rights and Myanmar sanctions regimes. Yet, the decoupling brought about by Brexit has resulted in a degree of divergence between EU and UK sanctions priorities, designations and implementation.

The UK’s establishment of an autonomous Global Anti-Corruption sanctions regime in April 2021 underlines the UK’s efforts to develop a more agile autonomous sanctions regime that is capable of swift action. The move brought the UK more into line with the scope of the “Magnitsky” regimes adopted in the US and Canada, which unlike the EU’s Global Human Rights Sanctions Regime also apply to corruption offenses. It also emphasized the UK’s commitment to expanding the roster of like-minded international partners with which it will collaborate post-Brexit.

The decision to not directly transpose existing EU sanctions regimes into the UK’s new legal framework for sanctions already has resulted in divergence in designations and the implementation of sanctions policy, bringing with it the potential to create sanctions compliance difficulties for companies that are subject to both regimes. For example, the legal tests for designation are different in the EU and UK, which has resulted in disparities between EU and UK sanctions lists. It is likely that, over time, these differences will expand further in response to the refinement of designation thresholds and shifting political priorities. The UK also has introduced new tools, such as general licenses, to enable companies that meet certain conditions to undertake otherwise prohibited activities under specified sanctions regimes.  Such tools are absent from the EU’s sanctions architecture. This could potentially complicate the navigation of sanctions exemptions and licensing derogations for companies operating across Europe.

Insurance

In preparation for Brexit, many insurers rationalized their business so that UK business was handled by entities in the UK and EU business was handled by entities in the EU. Numerous books of business were transferred using portfolio transfers (almost half of those from the UK were to Ireland or Luxembourg). In other cases, insurers simply discontinued their UK or EU business.

The TCA, concluded at the last moment, largely excluded financial services.

Following Brexit, the right under EU law for insurers to passport from the UK into the EU, and vice versa, ended. However, the UK permitted EU insurers to carry on business as usual in the UK for a limited period, under a temporary permissions regime (“TPR”), the intention being to allow such insurers to become UK-authorised if they wished to do so. Fewer insurers than expected opted into the TPR. The EU did not offer any comparable arrangement, and most EU Member States now prohibit UK insurers from conducting new business and have stringent rules concerning the run-off of existing business.

During the Brexit negotiations, the possibility of the EU recognizing the UK as an equivalent regime under the EU’s insurance legislation was a key topic. Although the UK has granted equivalence to the EU, the EU has not done so with the UK’s regime. The EU and the UK regimes concerning solvency may diverge in the near future due to the ongoing reviews of an applicable framework on both sides of the Channel, which further reduces the likelihood of the EU recognizing the UK as equivalent.

UK and EU re-insurers have adjusted their operations to reflect the restricted market access rights, including by establishing local licensed entities and setting up appropriate outsourcing arrangements for the most efficient allocation of group resources.

Chemicals

Those campaigning for Brexit often cited the benefits of a more flexible, targeted, UK-centric approach to environmental regulation as one of the prizes, and in 2021 the UK government wasted no time in seeking reform. However, of all the environmental issues, the regulation of chemicals stands out as creating some of the biggest Brexit challenges.

The issue stems from the European approach of ‘no data, no market’, which requires companies to submit data on hazard properties through a registration process to obtain market access. The UK failed to reach an agreement with the EU on the existing database, so the independent regimes for the UK market require companies to populate new databases, at a cost estimated at over a billion euros.

In response to industry concerns about timescales and costs, in December 2021 the UK announced a review to explore a ‘new model’ for data packages, with longer timescales for submitting data and a greater focus on use and exposure, allowing ‘more targeted’ regulatory action. Also, in December 2021, the UK announced its approach to identifying ‘substances of very high concern’, setting a different process to the EU list. The moves generated an immediate reaction from NGOs who claim the UK is not upholding the terms of the TCA on ensuring a ‘level playing field’, and urging the EU to step in.

The arguments are likely to intensify in 2022, when the EU pushes forward with its legislative agenda to deliver the Chemicals Strategy for Sustainability, with some significant changes predicted. In 2022 we also anticipate the UK’s own chemicals strategy, first promised in its 25 Year Environment Plan back in January 2018. With chemicals underpinning so much of the economy, this is an agenda with implications far beyond the chemicals sector itself, and international companies should monitor this closely. You can read more in our briefing.

Data protection

Brexit left a question mark over the flow of personal data between the UK and the EEA. That question was not resolved until June 2021 when the European Commission issued its decision confirming that the UK does ensure an adequate level of protection. While that outcome was highly political, it was difficult for the Commission to come to any other decision given that the UK had implemented the EU’s data protection legislation into national law and, to date, applied the case law of the European Court of Justice. However, the adequacy decision is not permanent. It may be revoked by the Commission if the UK no longer provides that requisite protection and will be reviewed in 2024. If that review does not result in an extension, the decision will expire on June 27, 2025.

Notwithstanding the above, the UK has flagged its intention to deviate from the EU’s privacy strategy by adopting a supposedly more business-friendly approach. In particular, the UK is likely to adopt its own set of adequacy decisions, develop domestic data transfer mechanisms and has stated its intention to overhaul the regulation of website cookies. In addition, the UK will not be a party to the upcoming changes in the EU to the regulation of cybersecurity, AI, and more.

How quickly and how far the UK deviates from the EU’s data protection legislation is yet to be seen. Whatever the possible deviations, the key question will be how far the EU is prepared to tolerate such divergence and still grant adequacy.

Criminal Investigations

The WA and the TCA have significant implications for cross-border cooperation in criminal matters in the UK and EU.

In relation to financial crime enforcement, the key provisions in the WA are contained in Title V on ‘Ongoing Police and Judicial Cooperation in Criminal Matters.’  In relation to investigations and proceedings commenced before the end of the implementation period, requests or judicial orders received by the appropriate authority in the UK or EU prior to the end of the implementation period remain enforceable.  For requests or orders issued after that time (including European Investigation Orders (“EIOs”)) mutual legal assistance arrangements will need to be relied upon instead.  These arrangements can be administratively burdensome and time-consuming. There are also exceptions that allow members states to refuse to comply with a request, including where a matter has already been adjudicated on in another state, that state may refuse to comply with a request.

Part 3 of the TA concerns ‘Law Enforcement and Judicial Cooperation in Criminal Matters,’ and covers a number of areas including exchanges of operational information, cooperation with Europol and Eurojust, surrender, mutual legal assistance, anti-money laundering and counter-terrorism financing, and freezing and confiscation orders.  Most significantly, the UK ceased being a member of Europol and Eurojust, with its influence and involvement being significantly reduced as a result.  The availability of the European Arrest Warrant (“EAW”) in the UK also came to an end, and was replaced by a new regime known as ‘surrender’.  In essence, surrender is based on the mutual recognition of arrest warrants issued by another state.  In contrast to an EAW, states can elect to refuse to comply with a request for surrender on the basis that the underlying offense is ‘political’, and may also elect to refuse to surrender their own nationals or attach conditions to the surrender of their own nationals.

The TCA also expressly provides for Joint Investigation Teams (“JITs”) between UK and EU member state investigating authorities, although it is largely silent on the detail.  It is envisaged that changing political moods and relationships have the potential to affect the willingness and ability of authorities to cooperate with each other.

Conclusion

While some of the impacts of the UK’s departure from the EU are becoming increasingly clear, much of the detail remains to be defined. The politics of Brexit are likely to remain fraught, both around the Northern Ireland Protocol and other areas such as fisheries, data privacy, chemicals, and financial services. Companies will need to follow very closely both the fine-tuning of existing arrangements as well as the way potential new arrangements will evolve. Steptoe and Johnson can offer detailed and informed commentary and advice on all the areas covered in this article.

_______________________________________________________________

*Co-authors: Renato Antonini, Eva Monard, Byron Maniatis, Charles Whiddington, Alexandra Melia, Guy Soussan, Angus Rodger, Simon Tilling, Ruxandra Cana, Leigh Mallon, Charles-Albert Helleputte, Diletta De Cicco, Zoe Osborne

[1] See https://ec.europa.eu/eurostat/documents/2995521/11563419/6-16122021-%20AP-EN.pdf/fe1315b6-a0c5-56b3-3de3-13468db7becd, and https://ec.europa.eu/eurostat/documents/2995521/10662401/6-16122020-BP-EN.pdf/083d8003-af99-e3c6-0294-6b5df4e68156.

[2] See https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/uktrade/october2021#total-trade-three-monthly-and-annual-movements. After October 2018 disruptions caused by Brexit started to kick in, further exacerbated by the pandemic starting in 2020.

[3] In December, the British Chamber of Commerce reported that 45% of UK companies have had difficulties in trading under the new customs arrangements put in place by the TCA. See https://www.britishchambers.org.uk/news/2021/12/almost-half-of-firms-facing-difficulties-trading-with-eu-under-post-brexit-trade-agreement.

[4] See https://www.gov.uk/government/news/less-than-a-month-until-full-customs-controls-are-introduced.

[5] See https://bills.parliament.uk/bills/3015.

[6] See https://ec.europa.eu/commission/presscorner/detail/en/ip_21_198.

[7] See https://www.politico.eu/article/uk-to-eu-british-position-on-northern-ireland-remains-unchanged/.

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By 2024, EU grain prices are expected to decrease moderately due to falling demand for livestock feed. There’s a risk that if high prices for gas and a related fertilizer imbalance continue for several years, they may negate effects from the demand change. Expected increases in consumption of organic produce could also buoy the prices. By 2025, grain trade in the EU will decline by 8% to 84М tonnes due to diminished production and tough competition in global markets.

Key Trends and Insights

According to the latest EU Agricultural Outlook, there will be a decrease in the livestock herd in the EU in the next two years, causing lower demand for feed and a subsequent drop in grain prices. In 2024, wheat prices should decline from 206 to 178 euros per tonne, barley from 189 to 174 euros per tonne, and maize from 206 to 165 euros per tonne. This scenario is only possible if gas prices fall and the fertilizer imbalance is eliminated. However, high gas costs make fertilizer production in the EU less profitable and limit the possibility of a drop in prices in the next few years.

Demand for nitrogen fertilizers in the EU will remain stable, while consumption of phosphorus fertilizers will expand, driven by an increase in the input per hectare. As EU countries do not have enough phosphorus supply, a large share of the gains in consumption will be balanced by imports from the U.S., Morocco and China.

In 2025, grain prices will rise again due to higher energy resources and fertilizers costs. By 2031, costs per tonne for wheat are expected to reach 202 euros, barley – 183 euros and maize – 182 euros.

Demand for organic produce will continue to grow as Europeans place more and more preference on healthy products. This additionally will push prices up as the yield for organic produce is lower than with conventional crops due to the less aggressive use of fertilizers and pesticides.

The EU is forecast to remain competitive on the global grain market, although its share in the global exports will decrease due to tough competition from other key players, especially from the Black Sea region. Grain trade in the EU will reduce by 8% to 84М tonnes in 2025 (IndexBox estimates).

EU Grain Trade 

In 2020, the amount of grain exported in the EU stood at 91M tonnes, surging by 4.8% against the previous year. In value terms, exports rose significantly to $23.2B.

France was the major exporting country with about 32M tonnes, which accounted for 35% of total exports. Germany (12M tonnes) took the second position in the ranking, followed by Romania (11M tonnes), Poland (9M tonnes) and Lithuania (4.9M tonnes). All these countries together took approx. 41% share of exports in the EU. The Czech Republic (3.4M tonnes), Latvia (3.4M tonnes), Slovakia (2M tonnes), Croatia (1.9M tonnes), Sweden (1.8M tonnes) and Denmark (1.6M tonnes) occupied a minor share of the total supplies.

In value terms, France ($7.7B) remains the largest grain supplier in the EU, comprising 33% of total exports. The second position in the ranking was occupied by Germany ($2.8B), with a 12% share, followed by Romania (10% share).

In France, grain exports increased at an average annual rate of +5.1% in 2020. The remaining exporting countries recorded the following average annual rates of exports growth: Germany (+56.7% y-o-y) and Romania (-15.7% y-o-y).

The grain export price in the EU stood at $255 per tonne in 2020, picking up by 5% against the previous year. Major exporting countries recorded the following prices: France ($245 per tonne), Germany ($230 per tonne). In 2020, the most notable rate of growth in terms of prices was attained by Sweden, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform

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European fish fat and oil exports increased by +23% y-o-y to $541M in 2020. In physical terms, exports rose +12% y-o-y to 251K tonnes. Denmark remains the most significant European fish fat supplier, accounting for 60% of total export volume in the EU, followed by France and the Netherlands. All these countries increased their export value last year. The average fish fat and oil export price in the EU spiked by +10% y-o-y to $2,155 per tonne in 2020.

European Fish Fat and Oil Exports

Fish fat and oil exports expanded remarkably to 251K tonnes in 2020, picking up by +12% compared with the previous year’s figure. In value terms, fish fat and oil exports skyrocketed by +23.4% y-o-y to $541M (IndexBox estimates) in 2020.

In 2020, Denmark (150K tonnes) represented the largest exporter of fish fats and oils, constituting 60% of total exports. France (26K tonnes) held an 11% share (based on tonnes) of total exports, which put it in second place, followed by the Netherlands (8.6%), Germany (6.3%) and Spain (4.7%). The following exporters – Latvia (8.4K tonnes) and Poland (6.4K tonnes) – each accounted for a 5.9% share of total exports.

In value terms, Denmark ($297M) remains the most prominent fish fat and oil supplier in the EU, comprising 55% of total exports. The second position in the ranking was occupied by the Netherlands ($69M), with a 13% share, followed by France, with a 10% share.

In Denmark, fish fat and oil exports increased by +21.8% y-o-y in 2020. Exports from the Netherlands jumped by +64.0% y-o-y, while France recorded a +12.7%-increase in exports.

In 2020, the average export price for fish fat and oil in the EU grew by 10% y-o-y to $2,155 per tonne. Prices varied noticeably by the country of origin; the country with the highest price was the Netherlands ($3,194 per tonne), while Latvia ($1,057 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Denmark, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform

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European expanded clay imports continue to grow steadily. In 2020, imports reached 570K tonnes, increasing at an average rate of +3.9% y-o-y over the past eight years. Germany holds leadership in European imports. Ranking second in terms of import volume, Sweden emerged as the fastest-growing importer from 2012 to 2020. Last year, Sweden expanded clay imports boosted to 108K tonnes. In 2020, the average import price reached $334 per tonne, flattening against the previous year. 

European Clay Imports by Country

In 2020, expanded clay imports in the EU shrank modestly to 570K tonnes, approximately reflecting 2019 figures. The total import volume increased at an average annual rate of +3.9% over the period from 2012 to 2020. In value terms, expanded clays imports declined to $191M (IndexBox estimates) in 2020.

In 2020, Germany (135K tonnes) and Sweden (108K tonnes) were the largest importers of expanded clays in the EU, together finishing at approx. 43% of total imports. The Netherlands (55K tonnes) ranks next in terms of total imports with a 9.6% share, followed by Estonia (8.7%), France (6.5%), Spain (5.8%) and Portugal (4.8%). Italy (21K tonnes), Latvia (20K tonnes), Lithuania (20K tonnes) and the Czech Republic (16K tonnes) followed a long way behind the leaders.

In value terms, the largest expanded clays importing markets in the EU were Germany ($42M), Italy ($24M) and Sweden ($20M), together accounting for 45% of total imports.

From 2012 to 2020, the most notable rate of growth in terms of purchases, amongst the main importing countries, was attained by Sweden, while imports for the other leaders experienced more modest paces of growth. Sweden ramped up its clay imports from 6K tonnes in 2012 to 108K in 2020. In value terms, Sweden’s imports grew from $8M to $20M over this period.

The expanded clay import price in the EU stood at $334 per tonne in 2020, flattening at the previous year. The most prominent rate of growth was recorded in 2018 when the import price increased by 22% y-o-y. The level of import peaked at $508 per tonne in 2013; however, from 2014 to 2020, import prices stood at a somewhat lower figure. Prices varied noticeably by the country of destination; the country with the highest price was Italy, while Estonia was amongst the lowest. From 2012 to 2020, the most notable rate of growth in terms of prices was attained by Latvia, while the other leaders experienced more modest paces of growth.

Source: IndexBox Platform

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Global decaffeinated coffee exports dropped from $1.6B in 2019 to $1.5B in 2020. Germany remains the world’s largest supplier, accounting for 48% of the total decaffeinated coffee exports in 2020. Last year, Germany saw a decrease in coffee exports, as its major trade partner, the U.S., had reduced the purchases. The average export price for decaffeinated coffee jumped by +5.6% y-o-y to $4,618 per tonne in 2020. The U.S., Spain and the Netherlands continue to lead in global decaffeinated coffee imports. 

Global Decaffeinated Coffee Exports

Global decaffeinated coffee exports dropped to 319K tonnes in 2020, with a decrease of -14.3% compared with the year before. In value terms, decaffeinated coffee exports reduced from $1.6B in 2019 to $1.5B (IndexBox estimates) in 2020.

Germany constitutes the major exporter of decaffeinated coffee in the world, with the volume of exports amounting to 153K tonnes, which was approx. 48% of total exports in 2020. In Germany, decaffeinated coffee exports declined by -2.6% over the last year.

Viet Nam (24K tonnes) held a 7.5% share (based on tonnes) of total exports, which put it in second place, followed by Switzerland (7.4%), Spain (6.6%), Canada (5.9%) and Colombia (5.1%). Mexico (10K tonnes) and France (7.7K tonnes) occupied a minor share of total exports.

In value terms, Germany ($480M) remains the largest decaffeinated coffee supplier worldwide, comprising 33% of global exports. The second position in the ranking was occupied by Switzerland ($219M), with a 15% share of global exports. It was followed by France, with a 9.1% share.

In 2020, the average decaffeinated coffee export price amounted to $4,618 per tonne, picking up by +5.6% against the previous year. Prices varied noticeably by country of origin. The country with the highest price was France, while Viet Nam was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by France, while the other global leaders experienced more modest paces of growth.

World’s Largest Importers of Decaffeinated Coffee

The U.S. remains the largest importing country with an import of about 101K tonnes, which accounted for 41% of total imports. In 2020, the U.S. reduced its purchases by -7.8% against the previous year. Germany was the largest supplier of decaffeinated coffee to the U.S. last year.

Spain (34K tonnes) ranks second in terms of the total imports with a 14% share, followed by the Netherlands (5.6%) and Switzerland (4.6%). France (11K tonnes), Italy (10K tonnes), the UK (9.5K tonnes), Canada (5.7K tonnes), Saudi Arabia (4.1K tonnes), Mexico (4K tonnes) and South Korea (3.9K tonnes) held a minor share of total imports.

In value terms, the U.S. ($411M) constitutes the largest market for imported decaffeinated coffee worldwide, comprising 33% of global imports. The second position in the ranking was occupied by Spain ($121M), with a 9.8% share of global imports. It was followed by France, with a 7.7% share.

Source: IndexBox Platform

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In 2020, European imports of husked brown rice jumped nearly by +6% y-o-y to 1.1M tonnes, reaching the highest level over the past decade. Belgium, the Netherlands, Portugal, Spain, France, Italy and Poland were the largest brown rice importers, constituting more than two-thirds of total imports in the EU. Poland, Belgium and the Netherlands featured the highest growth rates regarding brown rice purchases among the key importers. Last year, total rice imports in the EU grew by +10% y-o-y to 3.5M tonnes. 

European Imports of Husked Brown Rice

In 2020, brown rice imports in the EU rose markedly to 1.1M tonnes, growing by +5.9% on the previous year’s figure. In value terms, brown rice imports jumped by +9.9% y-o-y $764M.

The purchases of the seven major importers of husked brown rice, namely Belgium (243K tonnes), the Netherlands (179K tonnes), Portugal (135K tonnes), Spain (100K tonnes), France (100K tonnes), Italy (86K tonnes) and Poland (78K tonnes), represented more than two-thirds of total imports. It was distantly followed by Germany (68K tonnes), comprising a 6.3% share of total imports.

In 2020, Poland (+29.0% y-o-y) saw the most notable growth rate of purchases amongst the key importing countries. Belgium (+11.0% y-o-y), the Netherlands (+10.5% y-o-y), Portugal (+9.3% y-o-y), Spain (+6.1% y-o-y) and Germany (+3.8% y-o-y) were following Poland.

In value terms, Belgium ($175M), the Netherlands ($127M) and France ($82M) constituted the countries with the highest levels of imports in 2020, with a combined 50% share of total imports. Italy, Portugal, Germany, Spain and Poland lagged somewhat behind, comprising a further 41%.

In 2020, the brown rice import price in the EU amounted to $708 per tonne, picking up by +3.8% against the previous year. Prices varied noticeably by the country of destination; the country with the highest price was Germany ($940 per tonne), while Portugal ($499 per tonne) was amongst the lowest. In 2020, the most notable growth rate of prices was attained by Germany, while the other leaders experienced more modest paces of growth.

Total European Rice Imports

In 2020, the amount of rice imported in the EU amounted to 3.5M tonnes, increasing +10.2% compared with the year before. In value terms, rice imports spiked by +12.8% y-o-y to $2.9B in 2020.

France (627K tonnes), Belgium (611K tonnes), Germany (462K tonnes) and the Netherlands (399K tonnes) represented roughly 60% of total imports of rice in 2020. It was distantly followed by Portugal (218K tonnes), Italy (217K tonnes), Spain (210K tonnes) and Poland (205K tonnes), together making up a 24% share of total imports.

In value terms, France ($589M), Germany ($462M) and Belgium ($390M) appeared to be the countries with the highest levels of imports in 2020, together comprising 50% of total imports.

Source: IndexBox Platform

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The market was flipped on its head during the COVID-19 pandemic, which saw restaurants, cafes, and bars close their doors and demand for deliveries rise.

Electrix, a producer of coffret électrique encastré for the food industry, explores how the pandemic has changed consumer needs and how the market could look in the coming months.

Our Changing Food Delivery Habits

The COVID-19 pandemic has changed the world. As businesses closed their front doors and we were confined to our homes, consumer behavior changed.

People were forced to turn to online shopping for non-essential items, but many also began to shop online for critical supplies, like groceries. Takeaway food deliveries increased as people sought comfort in delicious restaurant food at home. 29% of French households were already getting meals delivered to their home regularly, which naturally increased when we were unable to go out.

We were seeing a shift towards eating out before the pandemic. In 2019, there was an 8.5% increase in people eating outside the home, whether that was in bars, restaurants, or cafes. 48% of people said this was the activity they were most eager to get back to, scoring it higher than seeing family and friends or attending events.

Fast Grocery Delivery will Become the Norm

Demand for grocery deliveries rose as people sought to avoid contracting the virus in shops. Stores struggled to keep up with this demand initially, but they soon adapted. Because of this huge response, we’re now seeing companies offer grocery deliveries in as little as 15 minutes across the country. Interestingly, this activity reached a new high in Europe in the first quarter of 2021 rather than during the first lockdown.

Cajoo, the first French company to offer immediate grocery deliveries, put itself up for sale as its competition rose quickly. It went from being an innovator to one of many businesses offering the same services in an instant, so high is the demand for fast food shopping deliveries.

It’s important to note that these operations are expensive and require multiple locations. Cajoo committed to paying its drivers a salary, while we’ve seen other providers cut delivery costs in order to remain more profitable, which can impact driver earnings. One thing is for sure – fast grocery delivery is here to stay.

Will People Dine out More Again?

While lockdown restrictions have eased, capacity in restaurants, bars, and cafes is still limited as the vaccine rollout continues. We know that eating out is the activity the French public has missed the most during the lockdown, but we’re seeing mixed results on people returning to restaurants.

In December 2020, a survey was released on our intentions to dine out after lockdown restrictions were eased, and the results were surprising. 51% of respondents said they intended to dine out less than usual, while 35% said they’d do it as much as they had prior to the pandemic. While many restaurants have been fully booked since reopening, the hospitality industry union UMIH has estimated that the recent introduction of green passes could reduce visitor numbers by 15–20%.

It’s clear that we’re taking precautions as France continues its roadmap out of lockdown. While visits to restaurants after the easing of restrictions exceeded 2019 levels by 50%, consumers are currently dining out less. We expect this trend to continue in the coming months because of the backlash to the COVID pass, despite the fact that dining out is a much-loved activity in the country.

Fast Food Delivery will Get More Competitive

As people ordered more fast food through the pandemic, delivery services increased fiercely. Uber Eats has long dominated the takeaway delivery market in France, but we saw Deliveroo triple its subscribers by offering unlimited deliveries for a small initial fee of 1€, rising to only 5.99€ at the end of 2020.

When France fully exits from lockdown restrictions – whenever that may be– we may see a decline in fast food delivery orders. The pandemic increased competition between the providers of these services as they looked to capitalize on increased demands, but we may see even more discounts as spend in this area inevitably drops.

A Backlash to Competitiveness?

With competition at an all-time high in the food delivery market, we’re seeing businesses undercut themselves and each other to gain key market shares, such as the low delivery prices offered by Deliveroo. We know that this can impact the earnings of its drivers, so could we also see a backlash to this type of ruthless competitiveness? Just Eat, which has a smaller share in the market, hired 4,500 drivers on permanent contracts in order to build and an ethical brand.

Values matter to French consumers, and half wouldn’t continue to buy from a business that didn’t have similar values to them. We could see businesses that take an ethical stance increase their market share.

There’s no doubt that the past 18 months have shifted consumer behaviors in a way we never expected, and this will impact the future of the market. The food delivery market in France is highly valuable, and we’re seeing new trends emerge as a result of our changing habits.

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Sources

https://blog.paylead.fr/the-pandemic-ignites-a-food-delivery-war-in-france/

https://www.statista.com/statistics/1103928/coronavirus-restaurant-visitation-impact/

https://www.la-croix.com/Economie/Restauration-cafes-Le-passe-sanitaire-pourrait-entrainer-baisse-frequentation-15-20-2021-08-09-1201170029

https://www.statista.com/statistics/1242287/restaurant-visits-by-french-covid-19-pandemic/

https://www.bloomberg.com/news/articles/2021-07-22/grocery-delivery-shakeout-pushes-france-s-cajoo-to-explore-sale

https://www.kantarworldpanel.com/global/News/How-the-French-Food-Market-Changed-in-2019

https://www.eurostartentreprises.com/en/business-advice/five-reasons-you-should-start-a-food-business-in-france

https://sifted.eu/articles/food-delivery-startups-europe/

https://santandertrade.com/en/portal/analyse-markets/france/reaching-the-consumers

https://www.eurostartentreprises.com/en/business-advice/five-reasons-you-should-start-a-food-business-in-france

https://blog.paylead.fr/the-pandemic-ignites-a-food-delivery-war-in-france/

https://www.france24.com/en/france/20201125-as-they-reopen-with-fresh-restrictions-french-businesses-rely-on-new-avenues-to-drive-sales

https://dealroom.co/uploaded/2020/06/Food-Tech-Prez-FINAL.pdf

https://www.connexionfrance.com/French-news/Coronavirus-Daily-updates-on-the-situation-in-France

https://www.thelocal.fr/20210518/fully-booked-for-a-month-frances-bars-and-cafes-prepare-to-reopen-after-six-months-of-closure/

https://www.ceicdata.com/en/france/consumer-survey

https://fortune.com/2020/05/20/amazon-warehouse-shutdown-france/

The post Has COVID-19 Changed the French Food Delivery Market Forever? appeared first on Global Trade Magazine.

There are a few instances other than COVID-19 where disasters have interrupted the supply chain, causing economic damage. Agriculture tends to take the biggest financial hits and losses during disasters such as extreme weather, which are becoming more frequent, intense, and complex. Between 2008 and 2018, agricultural disasters cost developing countries more than €908 billion, having a profound effect on the livelihoods of smallholder farmers who were already struggling against large corporations.

The wine disaster

Unseasonal frost hit France this year, seeing a usually warm April suddenly struck by freezing temperatures and bitter frost. The initial record-warm early spring resulted in vines and fruit trees blooming earlier than they would usually, and they were then ruined by an unexpected bout of cold temperatures. Research has found that as the world’s temperature rises, the timing of seasons will change and become more severe.

Vineyards in Bordeaux, Burgundy, Provence, and the Rhône Valley were affected and resorted to lighting thousands of fires and candles near the vines and trees in an attempt to keep them warm overnight. Sadly, many winemakers have reported a 100 percent loss on their yield.

French agriculture minister Julien Denormandie commented: “This is probably the greatest agricultural catastrophe of the beginning of the 21st century.” Meanwhile, Prime Minister Jean Castex pledged €1bn in aid to winemakers and farmers. It may take years for some vineyards to recover.

France’s wine industry has already been dealing with the effects of COVID-19 and decreased demand from restaurant orders, as well as previously battling with Donald Trump’s tariffs on key French goods, including wine and cheese, which resulted in a near 14 percent drop in French wine and spirits exports last year. Furthermore, due to the effects of climate change, the flavors of wine will likely change or, in some cases, disappear forever. Merlot, for example, could become a thing of the past due to the grapes used in that particular wine being less resilient to changing weather patterns.

Thirsty crops exhausting groundwater

Rice is the primary source of food for more than three billion people every day and is helping prevent the world’s food crisis from getting worse. Sadly, there is a risk of rising food insecurity for such a staple food.

India is experiencing both a water and agricultural crisis that has been developing for decades. Rice is one of the thirstiest crops that exist – farmers use 15,000 liters of water on average to grow one kilogram of paddy (rice plant). Rice is draining northern India’s Punjab of its groundwater, with the ground expected to be exhausted by 2039 and become comparable to a desert. A fifth of the world’s population lives in India, who only have four percent of global water while simultaneously being the largest user of it with 90 percent of their water used for agriculture.

India isn’t the only country struggling to grow rice due to a lack of water – countries in Southeast Asia such as China are facing the same challenge. Climate change is making extreme weather like flooding and droughts happen more regularly, making water difficult to source. Scientists are looking to develop new strains of rice that require less water and are more resilient to drought and climate change.  Plus, water technologists in New Delhi are looking to design water management techniques that use no more than 600 liters of water for one kg of paddy.

Increased breeding of rodents in Australia

Australia has faced the brunt of climate change, ranging from bushfires that devastated 27.2 million acres of land to damaged food and crops due to the largest plague of mice ever seen. Australian farmers are used to a mouse plague every ten years or so; however, with the planet warming up, they could become more regular with more mice than ever. The temperatures create the perfect breeding ground for the rodents, which then go on to destroy crops.

Farmers are even forced to burn their crops which have been infested with mice and mice urine.

A disaster-resilient future is possible if we develop sustainable agriculture. Preparing for risk management can help in reducing agriculture’s vulnerability to natural disasters and climate change.

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Sources

http://www.fao.org/news/story/en/item/1381672/icode/

https://www.axios.com/french-wine-disaster-climate-change-1f86c34c-917c-4d86-b126-73f7618316a9.html

https://www.france24.com/en/20200328-france-issues-call-to-buy-french-as-coronavirus-erodes-single-market

https://www.theguardian.com/food/2021/apr/15/agricultural-disaster-two-billion-worth-of-french-wine-production-lost-after-cold-snaps

https://www.foodandwine.com/news/france-wine-vineyards-frost-damage-2021

https://www.foodandwine.com/news/france-wine-vineyards-frost-damage-2021

https://www.downtoearth.org.in/news/water-use-is-excessive-in-rice-cultivation-30352

https://apnews.com/article/india-climate-change-business-science-environment-and-nature-52a57d80d1dcb85f508cfd5f80120870

https://www.bbc.com/future/bespoke/follow-the-food/a-staple-food-to-withstand-disaster/

https://theprint.in/economy/rice-the-one-grain-thats-keeping-the-worlds-food-crisis-from-getting-worse/653855/

https://www.bbc.co.uk/news/world-australia-50951043

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