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Peeling Away Trade Protections for Bananas

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Peeling Away Trade Protections for Bananas

Simple in appearance, pleasantly sweet, nutritious, and nearly universal in appeal, that Cavendish bunch of bananas on your counter comes off as pretty unassuming. In reality, it has been through jungle wars and trade wars and now sits on the precipice of extinction. More than half of the bananas traded globally are the Cavendish variety. But with two diseases threatening the world’s largest Cavendish plantations, growing to love more varieties could help save trade in bananas.

Still an Important Cash Crop

Grown in more than 150 countries, bananas are the eighth most important food crop in the world – fourth most important in developing countries. Bananas are among the most traded fruit in the world, generating revenues of more than $8 billion a year for the top banana exporters including Ecuador, the Philippines, Costa Rica, Colombia and Guatemala. However, most are produced for local or national consumption.

For example, the Food and Agriculture Organization estimates that between 70 and 80 percent of bananas in Africa are produced by smallholder farmers. Around 114 million tons are produced globally beyond what isn’t too small to be counted, yet only 19 million tons were shipped globally. That said, for the top five exporters, bananas are a major contributor to the total value of their agricultural exports. India and China are among the biggest producers but their output mainly serves the large domestic markets.

global bananas trade

Peeling Away Trade Protections

The Banana Wars, centered on the European Union’s (EU) banana trade regime, spanned 20 years as the longest running series of disputes in the multilateral trading system to date (although the Boeing-Airbus dispute may be on track to take that title). As one of the most significant episodes in trade law, the Banana Wars are deserving of more attention, but here are some abridged highlights.

Europe’s banana regime began as an umbrella for complex arrangements at the individual EU Member State level that were designed to offer exclusive or preferential access to former colonies in Africa, Caribbean and the Pacific (ACP), and at the same time shield EU producers from competition.

Under the EU’s original regime, ACP countries received a zero-tariff rate while imports from other countries were taxed at 20 percent. However, each Member State was allowed to “derogate” and maintain special protective provisions for imports from their overseas departments. For example, France set aside two-thirds of its market for Guadeloupe and Martinique and the remaining third for the ACP Franc Zone states of Cameroon and Cote d’Ivoire. The Spanish market was reserved for shipments from the Canary Islands. Greece banned imports to protect its own production in Crete. Only Germany opened to free trade.

The Single European Act of 1986 mandated an integrated EU market by January 1993, which required that Member States consolidate their programs into a common regime for bananas. As devised, this version still enabled members to discriminate among imports by source, offering better terms to their overseas departments and to imports from ACP countries. Colombia, Costa Rica, Guatemala, Nicaragua and Venezuela (supported by the United States) challenged the regime as inconsistent with the EU’s obligations under the GATT.

The EU’s ability to offer tariff preferences was upheld because it had a waiver in the GATT for its general tariff preference program; but the GATT Panel found the EU’s discrimination through tariff quotas to be inconsistent with its obligations. However, prior to the WTO, a GATT member could simply veto the outcome of a panel decision, enabling the EU effectively to ignore the GATT Panel ruling.
EU banana imports

Second Banana

The EU revised its banana regime in 1993 to include new special distribution licenses under a general quota. Licenses were divvied up among primary importers and importers performing secondary activities such as customs clearance, warehousing and storage; licenses were dependent on historical performance, subject to country allocations, market share and other criteria. After yet another challenge by the five Latin American countries, a GATT Panel found in 1994 that the EU’s licensing system was excessively restrictive and not covered by its waiver.

After 1995, with the WTO’s enforceable dispute settlement system in place and additional obligations to avoid discrimination in trade in services, the EU recognized it would face more challenges to its regime. The large multinational producers involved in shipping, warehousing, ripening, marketing and distribution had an even stronger case to make. The EU negotiated with all of the disgruntled Latin American producers but Guatemala to head off the legal challenge. Having offered additional or expanded quotas, they temporarily pleased some countries but further worsened the discriminatory effect for those countries not a part of the negotiation.

A third complaint against the EU’s banana regime was reviewed in the WTO in 1996, this time with the United States as the lead plaintiff in response to complaints from Chiquita and the Hawaiian Banana Association. A WTO decision in 1997 again concluded that, although the EU’s discriminatory tariffs were covered under its historical waiver, its tariff quota allocations and convoluted import licensing administration violated its WTO obligations. The EU’s next version of its banana regime did little to remedy the discriminatory elements, which led to the imposition of tariffs by the United States and Ecuador in response to the EU’s failure to comply with the WTO ruling. By 2001, the EU made another attempt to transition its system, but not until 2006 would the EU decide to phase in a tariff-only system, dispensing with quotas.

Banana Splits

At the end of 2009, after negotiations with non-ACP producers, the EU agreed to reduce the tariff rate it applies to all WTO members. Tariffs would come down from 176 euros per ton to 114 euros per ton by January 2017 (stipulating it could revert to higher rates if exporting countries exceed a “trigger” amount of imports). It wouldn’t be until 2012, that the EU and 10 Latin American countries finalized signed an agreement in the WTO to codify the revised EU banana tariff schedule (“The Geneva Banana Agreement”), officially closing the longstanding legal disputes.

As a prologue, the EU signed trade agreements with Andean and Central American countries in 2013 and Ecuador in 2017. Ecuador has seen a large bump in global export volume as its agreement with the EU is implemented. By next year, the tariff on bananas from Ecuador to the EU will go down to 75 euros per ton with no quota on the amount eligible for this rate. As the EU continues to edge toward “freer” trade in bananas, the ACP producers will face considerable adjustment.

2009 Geneva Banana Agreement

Going Bananas

Having survived the banana trade wars, the popular Cavendish banana faces a new challenge, one that could actually wipe them out.

“Panama disease TR4” has ravaged thousands of acres of Cavendish plantations throughout Southeast Asia and Australia and is spreading to Africa and the Middle East. It can lie dormant in soil for decades and has proven resistant to fungicides and fumigants. It is only a matter of time before TR4 takes hold in Latin America, which supplies nearly the entire U.S. market. Banana plantations in the Caribbean are threatened by another disease called Black Sigatoka, which has been reducing banana yields by 40 percent every year in affected areas.

Before Cavendish was top banana, a banana called the Gros Michel (Big Mike) dominated the banana trade in the early 1900s until the fungus TR1 took it to the brink of extinction in the mid-1950s. At that time, the Cavendish variety from China was discovered to be resistant to TR1 so it replaced Mike. But bananas don’t have seeds. They breed asexually so they cannot recombine their genes to ward off threats. In other words, the Cavendish is ripe for attack because it cannot evolve – every generation is a clone of the previous.

Try Hanging with a New Bunch

If scientists don’t make a breakthrough, TR4 and TR1 could spell the end for the beloved Cavendish. With over 1,000 different varieties of bananas growing around the world, why not get to know some others that might grow more popular through trade – here are a few to get you started.

For your next dessert, try using Niño, Manzano (“apple bananas”) that have a hint of apple and strawberry flavor, or Goldfinger, a newer variety from Honduras. Intriguingly, there’s also Blue Java, named for its blue skin, which has a creamy, ice cream-like texture and purportedly offers a subtle vanilla flavor.

Cooking bananas include the Macho plantain and other fun-sounding varieties like the Burro which has squared sides and a lemon flavor when ripe, and the Rhino Horn from Africa, which can grow up to two feet long. If consumers demand it, perhaps global trade in bananas will finally branch out.

_________________________________________________________________________

Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fourteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

 

dog and cat food

EU Dog And Cat Food Market Is Set to Reach 9.6M Tonnes by 2025

IndexBox has just published a new report: ‘EU – Dog And Cat Food – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

The revenue of the dog and cat food market in the European Union amounted to $12.1B in 2018, surging by 3.6% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +1.1% over the period from 2008 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed over the period under review. The pace of growth appeared the most rapid in 2013 when the market value increased by 8.1% year-to-year. In that year, the dog and cat food market attained its peak level of $12.6B. From 2014 to 2018, the growth of the dog and cat food market remained at a somewhat lower figure.

Consumption By Country in the EU

The countries with the highest volumes of dog and cat food consumption in 2018 were the UK (1.5M tonnes), France (1.3M tonnes) and Germany (1.3M tonnes), together accounting for 45% of total consumption. Spain, Italy, Poland, the Netherlands, Portugal, Sweden, Belgium, Romania and Hungary lagged somewhat behind, together comprising a further 42%.

From 2008 to 2018, the most notable rate of growth in terms of dog and cat food consumption, amongst the main consuming countries, was attained by Romania, while the other leaders experienced more modest paces of growth.

In value terms, the largest dog and cat food markets in the European Union were the UK ($2.7B), France ($2.3B) and Germany ($2B), together accounting for 57% of the total market. These countries were followed by Italy, Spain, Sweden, the Netherlands, Poland, Belgium, Hungary, Portugal and Romania, which together accounted for a further 32%.

The countries with the highest levels of dog and cat food per capita consumption in 2018 were Sweden (32 kg per person), Portugal (31 kg per person) and Hungary (25 kg per person).

From 2008 to 2018, the most notable rate of growth in terms of dog and cat food per capita consumption, amongst the main consuming countries, was attained by Romania, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in the EU

Driven by increasing demand for dog and cat food in the European Union, the market is expected to continue an upward consumption trend over the next seven-year period. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +1.1% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 9.6M tonnes by the end of 2025.

Production in the EU

In 2018, the production of dog and cat food in the European Union stood at 9.8M tonnes, flattening at the previous year. The total output volume increased at an average annual rate of +1.8% from 2008 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2010 with an increase of 4.1% against the previous year. Over the period under review, dog and cat food production attained its peak figure volume at 9.8M tonnes in 2017, leveling off in the following year.

In value terms, dog and cat food production amounted to $13.1B in 2018 estimated in export prices. The total output value increased at an average annual rate of +1.4% from 2008 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being recorded over the period under review. The most prominent rate of growth was recorded in 2013 when production volume increased by 13% against the previous year. In that year, dog and cat food production attained its peak level of $13.6B. From 2014 to 2018, dog and cat food production growth remained at a somewhat lower figure.

Production By Country in the EU

The countries with the highest volumes of dog and cat food production in 2018 were France (1.8M tonnes), Germany (1.4M tonnes) and the UK (1.2M tonnes), with a combined 45% share of total production. Spain, Hungary, the Netherlands, Italy and Poland lagged somewhat behind, together accounting for a further 37%.

From 2008 to 2018, the most notable rate of growth in terms of dog and cat food production, amongst the main producing countries, was attained by Poland, while the other leaders experienced more modest paces of growth.

Exports in the EU

In 2018, the amount of dog and cat food exported in the European Union amounted to 5.5M tonnes, increasing by 2.9% against the previous year. The total export volume increased at an average annual rate of +4.0% over the period from 2008 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The pace of growth appeared the most rapid in 2017 when exports increased by 9% against the previous year. The volume of exports peaked in 2018 and are expected to retain its growth in the near future.

In value terms, dog and cat food exports stood at $9.2B (IndexBox estimates) in 2018. The total exports indicated a strong expansion from 2008 to 2018: its value increased at an average annual rate of +4.0% over the last decade. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, dog and cat food exports increased by +29.5% against 2015 indices. The growth pace was the most rapid in 2013 with an increase of 16% year-to-year. Over the period under review, dog and cat food exports reached their maximum in 2018 and are likely to see steady growth in the immediate term.

Exports by Country

In 2018, Germany (829K tonnes), France (807K tonnes), the Netherlands (572K tonnes), Poland (527K tonnes) and Hungary (517K tonnes) were the main exporters of dog and cat food in the European Union, comprising 59% of total export. It was distantly followed by Spain (323K tonnes), Ireland (309K tonnes), the UK (272K tonnes), the Czech Republic (266K tonnes), Belgium (260K tonnes) and Italy (252K tonnes), together comprising a 31% share of total exports.

From 2008 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Poland, while the other leaders experienced more modest paces of growth.

In value terms, the largest dog and cat food markets in the European Union were Germany ($1.8B), France ($1.5B) and the Netherlands ($1.1B), together comprising 48% of total exports. Poland, Belgium, Hungary, the UK, the Czech Republic, Italy, Ireland and Spain lagged somewhat behind, together accounting for a further 41%.

Poland recorded the highest rates of growth with regard to exports, in terms of the main exporting countries over the last decade, while the other leaders experienced more modest paces of growth.

Export Prices by Country

The dog and cat food export price in the European Union stood at $1,668 per tonne in 2018, going up by 7.5% against the previous year. Overall, the dog and cat food export price continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2011 an increase of 11% against the previous year. The level of export price peaked at $1,730 per tonne in 2014; however, from 2015 to 2018, export prices stood at a somewhat lower figure.

There were significant differences in the average prices amongst the major exporting countries. In 2018, the country with the highest price was Germany ($2,124 per tonne), while Spain ($885 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by the Czech Republic, while the other leaders experienced more modest paces of growth.

Imports in the EU

The imports totaled 4.6M tonnes in 2018, surging by 2.7% against the previous year. The total import volume increased at an average annual rate of +2.9% over the period from 2008 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. The pace of growth was the most pronounced in 2012 with an increase of 8.1% y-o-y. Over the period under review, dog and cat food imports attained their peak figure in 2018 and are expected to retain its growth in the near future.

In value terms, dog and cat food imports totaled $7.7B (IndexBox estimates) in 2018. The total import value increased at an average annual rate of +3.6% from 2008 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. The pace of growth was the most pronounced in 2017 when imports increased by 14% against the previous year. Over the period under review, dog and cat food imports reached their peak figure in 2018 and are likely to see steady growth in the near future.

Imports by Country

The countries with the highest levels of dog and cat food imports in 2018 were Germany (646K tonnes), the UK (528K tonnes), Belgium (392K tonnes), France (374K tonnes), Italy (342K tonnes), Poland (290K tonnes), the Netherlands (288K tonnes), Austria (251K tonnes), Spain (196K tonnes), Romania (186K tonnes) and Portugal (179K tonnes), together resulting at 79% of total import. Greece (109K tonnes) held a little share of total imports.

From 2008 to 2018, the most notable rate of growth in terms of imports, amongst the main importing countries, was attained by Romania, while the other leaders experienced more modest paces of growth.

In value terms, Germany ($1.3B), the UK ($878M) and France ($638M) were the countries with the highest levels of imports in 2018, with a combined 36% share of total imports. Italy, Poland, Belgium, the Netherlands, Austria, Spain, Portugal, Romania and Greece lagged somewhat behind, together comprising a further 45%.

Among the main importing countries, Poland experienced the highest rates of growth with regard to imports, over the last decade, while the other leaders experienced more modest paces of growth.

Import Prices by Country

In 2018, the dog and cat food import price in the European Union amounted to $1,654 per tonne, rising by 2.5% against the previous year. Overall, the dog and cat food import price continues to indicate a relatively flat trend pattern. The pace of growth appeared the most rapid in 2011 when the import price increased by 11% y-o-y. The level of import price peaked at $1,718 per tonne in 2014; however, from 2015 to 2018, import prices stood at a somewhat lower figure.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was Germany ($1,976 per tonne), while Romania ($874 per tonne) was amongst the lowest.

From 2008 to 2018, the most notable rate of growth in terms of prices was attained by Poland, while the other leaders experienced more modest paces of growth.

Source: IndexBox AI Platform

chicken egg

Chicken Egg Market in Eastern Europe – Russia’s Production Is Growing Rapidly, Driven by Strong Domestic Demand and Expanding Exports

IndexBox has just published a new report: ‘Eastern Europe – Hen Eggs – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The revenue of the chicken egg market in Eastern Europe amounted to $9.7B in 2018, surging by 6.6% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). Over the period under review, chicken egg consumption continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2013 when the market value increased by 13% against the previous year. The level of chicken egg consumption peaked at $10.8B in 2014; however, from 2015 to 2018, consumption stood at a somewhat lower figure.

Consumption By Country in Eastern Europe

The country with the largest volume of chicken egg consumption was Russia (2.6M tonnes), accounting for 54% of total consumption. Moreover, chicken egg consumption in Russia exceeded the figures recorded by the region’s second-largest consumer, Ukraine (898K tonnes), threefold. The third position in this ranking was occupied by Poland (345K tonnes), with a 7.2% share.

In Russia, chicken egg consumption expanded at an average annual rate of +1.6% over the period from 2007-2018. In the other countries, the average annual rates were as follows: Ukraine (+1.0% per year) and Poland (-3.8% per year).

In value terms, the largest chicken egg markets in Eastern Europe were Ukraine ($4.5B), Russia ($2.8B) and Hungary ($673M), together accounting for 82% of the total market.

The countries with the highest levels of chicken egg per capita consumption in 2018 were Ukraine (20 kg per person), Belarus (18 kg per person) and Russia (18 kg per person).

From 2007 to 2018, the most notable rate of growth in terms of chicken egg per capita consumption, amongst the main consuming countries, was attained by Russia, while the other leaders experienced more modest paces of growth.

Market Forecast 2019-2025 in Eastern Europe

Driven by increasing demand for chicken egg in Eastern Europe, the market is expected to continue an upward consumption trend over the next seven years. Market performance is forecast to retain its current trend pattern, expanding with an anticipated CAGR of +0.8% for the seven-year period from 2018 to 2025, which is projected to bring the market volume to 5.1M tonnes by the end of 2025.

Production in Eastern Europe

The chicken egg production amounted to 5.1M tonnes in 2018, therefore, remained relatively stable against the previous year. Overall, chicken egg production continues to indicate mild growth. The most prominent rate of growth was recorded in 2010 when production volume increased by 3.2% against the previous year. The volume of chicken egg production peaked in 2018 and is expected to retain its growth in the near future. The general positive trend in terms of chicken egg output was largely conditioned by slight growth of the number of producing animals and a relatively flat trend pattern in yield figures.

In value terms, chicken egg production stood at $11.3B in 2018 estimated in export prices. The total output value increased at an average annual rate of +1.4% from 2007 to 2018; the trend pattern indicated some noticeable fluctuations being recorded in certain years. The most prominent rate of growth was recorded in 2013 with an increase of 39% against the previous year. The level of chicken egg production peaked at $12B in 2014; however, from 2015 to 2018, production stood at a somewhat lower figure.

Production By Country in Eastern Europe

Russia (2.5M tonnes) constituted the country with the largest volume of chicken egg production, comprising approx. 50% of total production. Moreover, chicken egg production in Russia exceeded the figures recorded by the region’s second-largest producer, Ukraine (895K tonnes), threefold. The third position in this ranking was occupied by Poland (600K tonnes), with a 12% share.

From 2007 to 2018, the average annual rate of growth in terms of volume in Russia totaled +1.6%. In the other countries, the average annual rates were as follows: Ukraine (+0.9% per year) and Poland (+0.8% per year).

Producing Animals in Eastern Europe

In 2018, approx. 444M heads of producing animals were grown in Eastern Europe; approximately reflecting the previous year. This number increased at an average annual rate of +1.1% over the period from 2007 to 2018; the trend pattern remained relatively stable, with only minor fluctuations being observed over the period under review. The growth pace was the most rapid in 2012 with an increase of 5.3% y-o-y. Over the period under review, this number attained its peak figure level in 2018 and is likely to continue its growth in the near future.

Yield in Eastern Europe

In 2018, the average chicken egg yield in Eastern Europe totaled 11 kg per head, remaining stable against the previous year. Over the period under review, the chicken egg yield continues to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2009 when yield increased by 7% year-to-year. In that year, the chicken egg yield attained its peak level of 12 kg per head. From 2010 to 2018, the growth of the chicken egg yield remained at a lower figure.

Exports in Eastern Europe

In 2018, approx. 437K tonnes of chicken eggs were exported in Eastern Europe; rising by 6.8% against the previous year. Over the period under review, chicken egg exports continue to indicate resilient growth. The most prominent rate of growth was recorded in 2013 when exports increased by 91% year-to-year. The volume of exports peaked in 2018 and are likely to see steady growth in the immediate term.

In value terms, chicken egg exports amounted to $657M (IndexBox estimates) in 2018. In general, chicken egg exports continue to indicate a buoyant expansion. The most prominent rate of growth was recorded in 2013 when exports increased by 53% against the previous year. The level of exports peaked in 2018 and are expected to retain its growth in the immediate term.

Exports by Country

Poland prevails in chicken egg exports structure, finishing at 267K tonnes, which was near 61% of total exports in 2018. Belarus (40K tonnes) took the second position in the ranking, followed by Russia (33K tonnes), Latvia (23K tonnes) and the Czech Republic (20K tonnes). All these countries together occupied approx. 27% share of total exports. Bulgaria (15K tonnes) and Romania (12K tonnes) followed a long way behind the leaders.

Poland was also the fastest-growing in terms of the chicken eggs exports, with a CAGR of +21.8% from 2007 to 2018. At the same time, Russia (+19.2%), Bulgaria (+15.5%), the Czech Republic (+6.4%), Latvia (+5.8%), Romania (+5.6%) and Belarus (+2.5%) displayed positive paces of growth. From 2007 to 2018, the share of Poland, Russia, Bulgaria, Latvia, the Czech Republic and Belarus increased by +54%, +6.5%, +2.8%, +2.4%, +2.3% and +2.2% percentage points, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Poland ($402M) remains the largest chicken egg supplier in Eastern Europe, comprising 61% of total chicken egg exports. The second position in the ranking was occupied by the Czech Republic ($43M), with a 6.5% share of total exports. It was followed by Bulgaria, with a 5.2% share.

From 2007 to 2018, the average annual growth rate of value in Poland amounted to +19.0%. The remaining exporting countries recorded the following average annual rates of exports growth: the Czech Republic (+2.1% per year) and Bulgaria (+11.2% per year).

Export Prices by Country

In 2018, the chicken egg export price in Eastern Europe amounted to $1,504 per tonne, picking up by 3.6% against the previous year. Over the period under review, the chicken egg export price, however, continues to indicate a noticeable slump. The growth pace was the most rapid in 2017 when the export price increased by 24% against the previous year. Over the period under review, the export prices for chicken eggs attained their peak figure at $2,301 per tonne in 2007; however, from 2008 to 2018, export prices stood at a somewhat lower figure.

Prices varied noticeably by the country of origin; the country with the highest price was Bulgaria ($2,219 per tonne), while Belarus ($733 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Poland, while the other leaders experienced a decline in the export price figures.

Imports in Eastern Europe

In 2018, the imports of chicken eggs in Eastern Europe stood at 182K tonnes, jumping by 6.4% against the previous year. The total imports indicated strong growth from 2007 to 2018: its volume increased at an average annual rate of +4.6% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, chicken egg imports decreased by -6.8% against 2015 indices. The most prominent rate of growth was recorded in 2013 with an increase of 20% y-o-y. The volume of imports peaked at 196K tonnes in 2015; however, from 2016 to 2018, imports stood at a somewhat lower figure.

In value terms, chicken egg imports amounted to $383M (IndexBox estimates) in 2018. Over the period under review, chicken egg imports continue to indicate a relatively flat trend pattern. The growth pace was the most rapid in 2014 when imports increased by 20% y-o-y. In that year, chicken egg imports attained their peak of $489M. From 2015 to 2018, the growth of chicken egg imports remained at a lower figure.

Imports by Country

Russia represented the main importing country with an import of around 84K tonnes, which amounted to 46% of total imports. It was distantly followed by the Czech Republic (20K tonnes), Hungary (17K tonnes), Poland (12K tonnes), Lithuania (11K tonnes), Latvia (8.7K tonnes) and Romania (8.5K tonnes), together creating a 42% share of total imports.

Imports into Russia increased at an average annual rate of +6.5% from 2007 to 2018. At the same time, Hungary (+15.5%), Lithuania (+15.4%), Romania (+7.6%), Latvia (+3.7%) and Poland (+2.7%) displayed positive paces of growth. Moreover, Hungary emerged as the fastest-growing importer in Eastern Europe, with a CAGR of +15.5% from 2007-2018. The Czech Republic experienced a relatively flat trend pattern. While the share of Russia (+23 p.p.), Hungary (+7.3 p.p.), Lithuania (+4.6 p.p.), Romania (+2.6 p.p.), Poland (+1.6 p.p.) and Latvia (+1.6 p.p.) increased significantly, the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Russia ($208M) constitutes the largest market for imported chicken eggs in Eastern Europe, comprising 54% of total chicken egg imports. The second position in the ranking was occupied by the Czech Republic ($35M), with a 9% share of total imports. It was followed by Hungary, with a 7.2% share.

From 2007 to 2018, the average annual growth rate of value in Russia amounted to +3.3%. In the other countries, the average annual rates were as follows: the Czech Republic (-4.1% per year) and Hungary (+10.6% per year).

Import Prices by Country

The chicken egg import price in Eastern Europe stood at $2,099 per tonne in 2018, picking up by 3.7% against the previous year. Overall, the chicken egg import price, however, continues to indicate a noticeable slump. The pace of growth was the most pronounced in 2017 an increase of 11% y-o-y. Over the period under review, the import prices for chicken eggs attained their maximum at $3,152 per tonne in 2007; however, from 2008 to 2018, import prices failed to regain their momentum.

There were significant differences in the average prices amongst the major importing countries. In 2018, the country with the highest price was Russia ($2,490 per tonne), while Latvia ($1,300 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of prices was attained by Russia, while the other leaders experienced a decline in the import price figures.

Source: IndexBox AI Platform

european

European Greenhouse: What Climate Change and Green Politics Mean for Business in Europe

France, Germany and the Netherlands broke 40-year temperature records this year. Traditional wine areas, such as Bordeaux, have had to accept new grape types into the area for the first time in 80 years to combat the devastating impact of new weather patterns. In Germany and other central European countries, large swaths of forest died off this summer due to climate conditions. 

This summer of extreme weather follows on the heels of a dramatic gain in Green party popularity during and after the spring European parliament elections. What does this mean for companies that do business in the European Union? How will markets and regulations change in the near future as a result of rising concern over climate change across the Atlantic?  

European voters (and consumers) and highly concerned about climate change, with many of them naming climate change as the greatest threat to world security. Equally important, there are substantially fewer people in European Union member states who doubt the impact that climate change is having on the world compared to countries such as the United States. 

In a recent poll, thirteen percent of U.S. respondents expressed doubt over the existence of climate change or that it was due to human influence. This American response was the highest level of skepticism in the developed world; double that of Germany or France, and much higher than other countries such as Spain, where polls have shown as little as 2% of the population voicing any doubt as to the reality and danger of climate change.

Why Europe having fewer skeptics matters

Extreme weather in the summer is not a new issue in Europe. The heat wave of 2003 was estimated to have killed as many as 30,000 people in Europe due to the lack of air conditioning and infrastructure to care for those vulnerable to heat strokes, such as the elderly. The heat wave that broke records across the EU this summer was even hotter. These weather changes, hand-in-hand with the sudden surge in Green party success in EU and national elections, underscore that there is both pressing concern over climate change and a willingness to prioritize it among voters. 

Without climate deniers across the political aisle to delay or weaken environmentally-oriented legislation, it is likely that the business environment will soon be dramatically changed as the EU and member state governments adjust policies and regulations to combat climate change and protect their populations from future extreme weather.

Why the ‘American solution’ won’t work and building styles won’t change

The U.S. has extreme heat on a constant basis in places like Arizona and Texas, but the classical solution – to air condition every building – will not work in Europe because energy costs are twice the U.S. average and likely to rise quickly as governments are forced to switch to more expensive (in the short-term) renewable sources. The EU’s renewable energy directive was modified in 2018 to establish a 32% renewable energy target for 2030, which will likely keep energy prices high as more investments are needed to help develop renewable sources such as solar, wave and wind energy ‘farms’.  

Logical efforts to change building materials and styles to improve the ambient temperatures for residents are near impossible to implement in established cities in Europe. Traditional building styles that are intended to save on heating costs by trapping air inside often exacerbate heat waves since these buildings cannot effectively cool. New materials and building styles in the suburbs offer energy-efficient solutions to newer areas, but traditional architectural areas in downtown Prague, Rome and Paris are poorly positioned to embrace these options. It is inevitable that air conditioning use will increase (currently only 5% of European buildings are equipped with air conditioning, compared to 90% in the U.S.) but based on electricity costs and emission reduction goals in the EU, it is only a partial answer to the extreme weather problem.  Europe must find its own solution, and this search for alternatives will open up new opportunities for innovative companies.

What business opportunities appear as Europe combats climate change?

How will consumer habits change in the face of public concern over emissions and fears over ever-worsening extreme weather? What new business opportunities can we expect to see in Europe as Green-leaning governments and climate-conscious voters bring wholesale changes to the regulatory structure of the European Union in an attempt to combat climate change? Three areas of interest jump out: new government and venture capital funding for innovation, sharply increased transportation costs which will change logistics patterns and purchasing habits, and dramatic shifts to the land use and building traditions which should open up opportunities to U.S. companies.

Innovation will be valued and funded as never before

According to the Global Innovation Index for this year, seven of the top ten most innovative nations are located in Europe, and yet the U.S. (number three on the Index) outspent Europe on research and development by 20%. That is not to say that Europe is not investing in climate change innovation. On the contrary, in 2018, the European Investment Bank committed over 16 billion Euros to combating climate change, a number which has increased each year for a decade. Over $23 billion (US) was invested in innovative new European companies through venture capitalism last year alone.  These numbers will shoot up in the years to come as governments scramble to support new solutions to extreme weather challenges and climate change. 

The EU has already announced plans to focus on battery innovation and production, and will legislate an increasing use of renewables; supporting wind, wave and solar power projects to reduce oil, gas and coal use. Cleantech and Greentech projects are surging in clusters such as Cambridge, Copenhagen and Rotterdam. But there is a need for even more venture capital, and a growing recognition that governments will have to step in and add to research and start-up funding, as well as help scale up successful companies to compete regionally and globally.

A dramatic increase in transportation costs will shift production and consumer habits

Much like in the U.S., many European companies have a tendency to source materials and production overseas to lower costs. Unlike the U.S., they have generally been able to avoid the impact of the U.S.-China trade war. However, this breather is short-lived, as the EU seems to recognize the cost of transportation to society in the way of pollution and congestion and is likely going to be forced to ramp up emissions taxes in the near future, which will impact both the external and internal movement of goods. This, in turn, will force companies to recalibrate their logistics and likely move production closer to the point of sale. 

Companies will find that supporting local production becomes more reasonable as transportation costs go up, and EU member states with lower labor costs (under 10 euros an hour) such as Latvia, Lithuania, Romania, and Bulgaria should begin to see production facilities become more competitive compared to Asia as shipping costs increase in the face of emission taxes. Companies that were previously exporting goods into Europe will find that shifting production to Europe in support of EU clients is going to become substantially more cost-friendly (with the added advantage of avoiding import tariffs, should the global trade war broaden).

Land use and building codes are going to shift dramatically

A recent international climate change report supported what European farmers already have experienced: drought and extreme heat are forcing a rethink as to what is produced in Europe and how.  Climate change activists and consumer groups are also dragging EU trade agreements into the spotlight as countries like Brazil are accused of dramatically harming the global environment through wasteful agricultural practices – in part to increase beef sales to Europe. Increasing focus on how land is used and food produced in Europe will open up opportunities for innovative producers and new products (such as meat alternatives) in the European market. At the same time, European builders of new developments are being forced by regulations and consumer sentiment to use more environmentally-friendly materials and styles. 

The U.S. Green Building Council’s LEED certification has become a benchmark in Europe as well, and U.S. companies with know-how in this area of construction and building design can find robust new markets and development and construction partners throughout the EU who will be challenged by new regulations and public scrutiny to ‘green’ up their building projects.

Environmental challenges mean new opportunities for savvy companies

Changes in consumer demands and regulations imposed from the EU to the local level will open doors for companies that can bring in new, efficient and effective products. Governments attempting to be responsive to extreme weather challenges without taxing their voting population too directly (which is what sparked the ‘Yellow Vest’ protests in France) will demand more energy-efficient products and processes from businesses. Innovative companies, ready to expand and take on new challenges, will find it relatively quick and painless to register in the European market to take advantage of the possibilities that are manifesting due to environmental and consumer changes.   

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Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company which offers market research, political risk assessment, and international negotiations assistance.  Mr. Samson is a former U.S. diplomat and international law advisor who lived and worked in ten different countries.

Apricot Market in Eastern Europe – The Growth of Russian Imports Is Losing Momentum

IndexBox has just published a new report: ‘Eastern Europe – Apricots – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The revenue of the apricot market in Eastern Europe amounted to $318M in 2018, reducing by -5.8% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +3.5% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded in certain years. The pace of growth appeared the most rapid in 2013, when the market value increased by 32% year-to-year. In that year, the apricot market reached its peak level of $361M. From 2014 to 2018, the growth of the apricot market remained at a lower figure.

Production in Eastern Europe

In 2018, the amount of apricots produced in Eastern Europe stood at 245K tonnes, picking up by 2.6% against the previous year. The total output volume increased at an average annual rate of +2.4% from 2007 to 2018; however, the trend pattern indicated some noticeable fluctuations being recorded throughout the analyzed period. The growth pace was the most rapid in 2013, when the output figure increased by 56% year-to-year. In that year, apricot production reached its peak volume of 281K tonnes. From 2014 to 2018, apricot production growth failed to regain its momentum. The general positive trend in terms of apricot output was largely conditioned by a temperate expansion of the harvested area and a noticeable growth in yield figures.

Exports in Eastern Europe

In 2018, exports of apricots in Eastern Europe amounted to 9.6K tonnes, shrinking by -17% against the previous year. The total exports indicated a slight growth from 2007 to 2018: its volume increased at an average annual rate of +1.3% over the last eleven years. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, the apricot exports decreased by -36.3% against 2016 indices. The growth pace was the most rapid in 2016, when exports increased by 51% y-o-y. In that year, apricot exports attained their peak of 15K tonnes. From 2017 to 2018, the growth of apricot exports remained at a lower figure.

In value terms, apricot exports stood at $9.2M (IndexBox estimates) in 2018. In general, apricot exports, however, continue to indicate a slight drop. The growth pace was the most rapid in 2016, when exports increased by 44% y-o-y. Over the period under review, apricot exports reached their peak figure at $17M in 2013; however, from 2014 to 2018, exports stood at a somewhat lower figure.

Exports by Country

In 2018, Bulgaria (2.4K tonnes), Hungary (2.3K tonnes) and Moldova (1.9K tonnes) represented the largest exporters of apricots in Eastern Europe, constituting 68% of total export. It was distantly followed by Lithuania (1K tonnes), Poland (548 tonnes) and the Czech Republic (502 tonnes), together generating 22% share of total exports. Belarus (424 tonnes) followed a long way behind the leaders.

From 2007 to 2018, the most notable rate of growth in terms of exports, amongst the main exporting countries, was attained by Bulgaria, while the other leaders experienced more modest paces of growth.

In value terms, the largest apricot markets in Eastern Europe were Hungary ($2.9M), Bulgaria ($1.5M) and Moldova ($1.4M), together accounting for 62% of total exports.

Export Prices by Country

The apricot export price in Eastern Europe stood at $962 per tonne in 2018, declining by -4.3% against the previous year. Over the period under review, the apricot export price continues to indicate a measured downturn. There were significant differences in the average export prices amongst the major exporting countries. In 2018, the country with the highest export price was the Czech Republic ($1,550 per tonne), while Belarus ($363 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of export prices was attained by the Czech Republic, while the other leaders experienced mixed trends in the export price figures.

Imports in Eastern Europe

In 2018, imports of apricots in Eastern Europe amounted to 95K tonnes, shrinking by -10.7% against the previous year. The total imports indicated a prominent growth from 2007 to 2018: its volume increased at an average annual rate of +5.8% over the last eleven year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on 2018 figures, the apricot imports increased by +45.9% against 2016 indices. In value terms, apricot imports amounted to $92M (IndexBox estimates) in 2018.

Imports by Country

Russia was the key importer of apricots in Eastern Europe, with the volume of imports resulting at 53K tonnes, which was near 56% of total imports in 2018. Poland (9.9K tonnes) ranks second in terms of the total imports with a 10% share, followed by the Czech Republic (8.2%), Romania (8.1%) and Bulgaria (5%). The following importers – Belarus (2.4K tonnes), Slovakia (2.2K tonnes) and Ukraine (2.1K tonnes) – together made up 7% of total imports.

From 2007 to 2018, average annual rates of growth with regard to apricot imports into Russia stood at +3.8%. At the same time, the Czech Republic (+10.9%), Romania (+10.6%), Slovakia (+10.2%), Bulgaria (+10.2%), Belarus (+8.5%), Poland (+7.7%) and Ukraine (+3.1%) displayed positive paces of growth. Moreover, the Czech Republic emerged as the fastest growing importer in Eastern Europe, with a CAGR of +10.9% from 2007-2018. Slovakia (-1.5%), Bulgaria (-3.3%), Romania (-5.4%), the Czech Republic (-5.6%), Poland (-5.8%) and Russia (-19%) significantly weakened its position in terms of the global imports, while the shares of the other countries remained relatively stable throughout the analyzed period.

In value terms, Russia ($42M) constitutes the largest market for imported apricots in Eastern Europe, comprising 46% of total apricot imports. The second position in the ranking was occupied by Poland ($14M), with a 15% share of total imports. It was followed by the Czech Republic, with a 12% share.

Import Prices by Country

The apricot import price in Eastern Europe stood at $964 per tonne in 2018, rising by 3.8% against the previous year. In general, the apricot import price, however, continues to indicate a slight slump. The growth pace was the most rapid in 2010, when the import price increased by 30% y-o-y. In that year, the import prices for apricots reached their peak level of $1,258 per tonne. From 2011 to 2018, the growth in terms of the import prices for apricots remained at a somewhat lower figure.

Import prices varied noticeably by the country of destination; the country with the highest import price was Slovakia ($1,530 per tonne), while Bulgaria ($358 per tonne) was amongst the lowest.

From 2007 to 2018, the most notable rate of growth in terms of import prices was attained by Slovakia, while the other leaders experienced mixed trends in the import price figures.

Source: IndexBox AI Platform