Post on 03-Jun-2020
TRADE BARRIERS & GLOBAL
AGRI-FOOD TRADE:
IMPLICATIONS FOR FOOD
SECURITY & FRAUD
Michael Haverty
November 20181/13
ASSESSING FOOD FRAUD AND TRADE
Sources: SSAFE and PwC
Food Fraud
VulnerabilityOpportunities Motivations Control
Measures
SSAFE-PwC Food Fraud Assessment Framework
Rules of Origin
Complex
supply-chains
Arbitrage (price
divergence)
Profit
Corruption
level
Competitive
environment
Official &
Customs controls
Traceability
systems
Legal framework
& enforcement
Resourcing
Geographic
proximity
Sudden
changes to
Terms of
Trade
2/13
TRADE BARRIERS -
TARIFFS
3/13
MAJOR SOYBEANS TRADE FLOWS (TONNES)
Sources: Rabobank / Bloomberg / USDA
EU 28
5M
37.5M
13.5M
48M
20.5M
ChinaUS
Brazil
Argentina
Rest of
World
22.5M
9.5M
8.75M
4/13
US-CHINA TRADE WAR IMPACTS
• US agricultural exports to China estimated at $20 billion
- soybeans ($12bn) account for 60% of this amount
- 25% tariff projected to reduce US trade by >38% ($4.5bn)
- more US soybeans coming into Europe.
- Brazil is gaining and prices are 20% higher than US.
$200
$250
$300
$350
$400
$450
US $
per
Ton
ne
US $/T
Brazil $/T
Potential
Fraud
Opportunity?
China announces
plan to impose 25%
tariff
Sources: USDA / CEPEA / Andersons 5/13
CHINA – IMPACT ON FOOD SECURITY
Sources: Rabobank / Bloomberg / USDA
Commodity Trading (5 Year Average)
220,100
116,100
94,320
55,622
12,743
40,211
7,543
0
50,000
100,000
150,000
200,000
250,000
Corn Wheat Soybeans Pig meat Chicken
meat
Dairy Beef &
Veal
Imports
Domestic Production
6/13
NON-TARIFF BARRIERS
(NTBS) AND BREXIT
7/13
UK-AGRI-FOOD TRADE SITUATION 2017
Sources: HMRC / Andersons
-10.0 -5.0 0.0 5.0 10.0 15.0
Others
Beverages, spirits & vinegar
Fruit & vegetable preparations
Misc preparations (cereals, starch, etc.)
Cereals
Fruit & nuts
Vegetables (incl. tomatoes)
Dairy, eggs, etc.
Meat & edible offal
Live animals
£ Billion
Exports (EU)
Exports (Non-EU)
Imports (EU)
Imports (Non-EU)
8/13
BREXIT TRADE EFFECTS
Trade Deal
with EU?
Yes
Little change in
prices. Small
due to extra trade costs (customs etc.)
NoCurrent Trade
Balance?
Net Importer (e.g. beef, cheese,
pigmeat, etc.)
Net Exporter (e.g. lamb, feed
wheat, etc.)
Prices fall. Due to tariffs on exports
Post-Brexit UK
Tariff Level?
High (e.g.
similar to
current EU)
UK prices rise. Due to tariffs on imports
Low (‘cheap
food’ policy or
trade deals*)
UK prices fall. Cheap imports
* with rest of the world – Brazil, NZ, US etc. 9/13
NTBS – MEAT IMPORT MAPPING PROCESSES
Rural Payments
Agency (RPA)
Shipping
Line
Competent Authority (CA) /
Port Health Authority (PHA)
HM Revenue
& CustomsPort
Mo
nth
s
ah
ead
Weeks
/ D
ays
ah
ead
Po
st-
Cle
ara
nce
At
arr
ival
Entry into the EU / UK
Mandatory step (De-Facto Mandatory step)
Agent/haulier return
empty shipping
container to shipping
line (usually at port)
RPA returns security
after licence is used
up
Agent sends stamped
CVED to final destination
(Final destination keeps
copy of CVED for one
year)
(If released from port into any
procedure other than Free
Circulation compliance with
relevant procedures applies)
Importer/Agent keep applicable
records
Importer/Agent receives
Shipping Line’s ETA
(Importer receives EUR1 Cert.
of Authenticity & Origin
Documents if applicable)
Shipping line pre-notifies
HMRC with Shipping Manifest
Agent makes declaration to
HMRC (incl. reference to RPA
licence)
Agent sends supporting
documents to HMRC’s
National Clearance Hub
Importer sends all relevant
documents to Agent
Importer receives original
Veterinary Health Cert.
from Exporter
Importer/Agent prepares
CVED and submits to PHA
via TRACES
Agent sends paper copy of
CVED & supporting
documents to the BIP
(Ship arrives at port’s
stevedore & offloads cargo)
Shipping line releases cargo
(HMRC may conduct inspection)
HMRC request CVED copy &
supporting docs, if not already submitted by agent
Ensure copy of stamped CVED is
sent to HMRC’s NCH
HMRC releases its hold on cargo
Agent pays applicable port
charges
Agent arranges collection of
cargo from port using port
community system
(Appointed haulier collects
& delivers cargo to final
destination)
Agent pays all
applicable PHA fees
(PHA conducts applicable checks and stamps CVED))
Agent collects/receives
stamped CVED
Sources: Derived from
Grainger (2013); FSA/Gov.uk
Importer applies
for licence
Sets up security
Importer receives
RPA’s confirmation
Importer/Exporter/Agent
books vessel
Ensure that both third
(exporting) country and
concerned dispatch plant
of import are EU-
approved
(Agent books and pays for
VBS premium collection
slots)
Have customs and Border
Inspection Post (BIP)
authorisation
(Note: For Peer Review Only) 10/13
POTENTIAL NTB IMPACTS
• Customs and official controls would rise significantly
- estimates of increased checks vary from 325% - 800%
- Official Controls require physical checks (20% red meat; 50%
poultry; 5% cereals)
- exports to non-EU require new certification processes
- severe staff shortages, no clear plans on addressing gaps
• Various studies on effective ‘cost’ of NTBs
- Andersons’ N. Ireland meat study suggests 5.7% tariff
equivalent if no agreement on standards between EU/UK
- increases with divergence (e.g. >25% for US→EU agri-food)
- UNCTAD suggests 131 NTBs imposed by EU on 3rd countries
• Greater effect on ‘just-in-time’ products (meat) than bulk
commodities (grain) - 2 min delay at Dover = 17 mile tailback
11/13
CONCLUDING REMARKS
• Protectionism is rising and is causing distortions which
increase vulnerability to food fraud.
• Biggest impacts in geographically proximate markets
vulnerable to illegal substitution, concealment etc.
• US protectionism unlikely to change in short-term.
• Brexit: upheaval as trade affected by new processes
- prices for agri-food goods to be more volatile
- cross-border trade to cost more (currency + NTBs)
- on average, lower profitability in the industry
- agri-food supply chains will be less ‘lean’ (storage, staffing etc.)
- greater incentive to commit fraud, affect food security
• Key means to mitigate this is continued standards
harmonisation (processes and outcomes)
12/13
CONTACT INFORMATION
Tel: +44 (0) 79 00 90 79 02
mhaverty@theandersonscentre.co.uk
Michael Haverty
Thanks For Your Attention!
Merci De Votre Attention!
Any Questions, Please Contact:
13/13