According to the EC’s agricultural trade report for 2013, growth in EU exports of agricultural products slowed down to 5.8% in 2013, compared to 12% in 2012 and 17% in 2011. Nevertheless, with €120 billion in exports, the EU28 remained the world’s leading agro-food product exporter.
Despite the strength of the euro and modest overall growth in world trade, EU exports were “stimulated by demand for particular commodities in developing countries”. In general, final products for direct consumption account for two-thirds of EU agricultural exports, however, in 2013 the value of commodity exports increased by 27% following a surge in cereal exports. In contrast, export growth in final and intermediate products was limited to a more modest 3–4%. Some 90% of the gains in EU export values were accounted for by increased volumes and 10% price increases. The report states that, for food preparations in particular, “higher quantities contributed more to the export increase than higher prices did.”
In 2013 milk and cereals preparation accounted for 12.5% of EU food and agricultural exports, totalling some €8.7 billion; these followed closely behind wines (€9.1 billion) and spirits and liquors (€10 billion). Wheat and chocolate confectionery are among the EU’s other specific agro-food sector exports.
Exports to China showed the largest absolute growth in the food and agricultural product category, including for certain dairy products, where growth has been very strong (whey exports have more than tripled since 2008).
In Russia, the second biggest export market for EU agro-food products, the Russian government’s self-sufficiency policies have been impacting on certain EU exports, notably the poultry meat sector (a sector of considerable importance to ACP countries).
In 2013 the EU remained the largest importer of agricultural products, but import values were just below last year’s level at €101.5 billion. This generated an agriculture trade surplus of €18.6 billion, an increase of €7 billion on the 2012 figures. Since the EU became a net exporter of agro-food products in 2010, the trade surplus has consistently increased. In 2013 agricultural products accounted for 7% of total EU exports.
In 2013 the unit value of imports of coffee fell by 24%, and those of cocoa beans by 8.5%, cotton by 7.5% and sugar by 5.2%, compared to 2012. Among ACP countries in 2013, South Africa recorded a high growth rate in exports to the EU (+13%), “with a particularly positive trend for various fruits and wine”.
While the EU continued to be the top importer of agro-food products from developing countries, on average since 2011 only 2.8% of EU imports of agro-food products came from LDCs. However, this import volume remained larger than the combined total for Canada, the US, Australia, New Zealand and Japan. Nearly half of EU imports from LDCs are final products, 30% commodities and 20% intermediate products. In 2013 EU imports of sugar from LDCs increased by 14%.
The EU’s success in transforming itself into a net agro-food product exporter with a growing trade surplus can be attributed to the success of EU agricultural policy reforms since 1992 and the EU’s trade policy focus on opening up third-country markets.
In terms of agricultural reforms, a central element has been to reduce the costs of agricultural raw materials by shifting from a system of price support to a system of producer support payments. This has enabled EU prices to fall towards world market price levels without undermining EU agricultural production. The competitiveness of EU agro-food sector exports has also been helped by rising global commodity prices, in the face of surging demand in developing countries.
Targeted promotion programmes for exports of quality-differentiated, value-added food products, alongside the extension of the geographical coverage of recognised schemes such as the EU’s Geographical Indications, has also served to boost export earnings.
Since the mid 1990s, the EU’s growing focus on bilaterally concluded FTA agreements has been systematically removing both tariff and non-tariff barriers to EU agro-food sector exports. South Africa provides a vivid example of the impact EU policy changes have had on the EU’s trade position.
Since 2002, when tariff dismantling under the EU–South Africa Trade Development and Cooperation Agreement (TDCA) got under way, EU food and agricultural exports to South Africa grew four times as fast as exports to the ACP, and 2.5 times as fast as overall EU food and agricultural product exports. Food and agricultural products accounted for 5.5% of total EU exports to South Africa in 2011, up from 3.2% in 2002. By 2011 South Africa’s food and agricultural trade surplus with the EU had fallen to €567 million, down from €1,378 million in 2002 (see Agritrade ‘ Executive Brief Update 2013 – Southern and Eastern Africa: Agricultural...’, 11 December 2013).
To date, the EU has not concluded any significant reciprocal market access deal with any country that is a producer and exporter of competing agro-food sector products. Against these trade partners the EU maintains a managed trade regime, and actively uses trade policy tools to ensure that internal reforms are first completed and fully effective in guarding EU producer interests before trade liberalisation is undertaken.
Developments in the EU’s trade with Russia and China in certain key sectors (poultry meat and dairy products) could have an important bearing on trade relations between the EU and African ACP countries in the coming years.