Market perspectives UE market for sustainable food Cesare Zanasi - Bologna University

1. SALSA Project Sustainability meeting Mexico city 14 November 2013 Market perspectives UE market for sustainable food Cesare Zanasi - Bologna University

2. Latin America beef exports to EU

3. Latin America export to EU Latin America: 2013 + 20% respect to 2012 Breakdown by country Brazil + 37% shipment of beef first quarter 2013 : Causes: Brazilian Real devaluated against Euro – increase in supply Uruguay : first quarter 2013 + 30% Shipments of Uruguayan beef to the EU. Increased product differentiation (Certified Natural Meat Program of Uruguay) Argentina : reduced Argentinian export in the first quarter(-18% shipment of beef). Government policy (high export taxes); reduced supply : substitution with soybeanclosure of many export plants

4. Mexico EXPORT of Beef NO EU

5. Demand for sustainable beef Not directly measurable since a “sustainable beef” definition does not exist Anyway in EU organic beef or other certified beef is still a very small niche

6. Driving forces Demand for imported sustainable food EU trade regulation Tariffs – quotas – Sanitary and Phytosanitary barriers Voluntary schemes Organic – Fair trade – SAN… The importers Retailers/processors Media/civil society Organizations (NGOs) Consumers Investors

7. Demand for imported meat - EU Key challenges influencing EU supply and import decisions i) Dependency on beef import from third countries to increase ii) Cost of production: the key challenge of the European meat sector iii) Food Safety: Recognize & implement high standards across the world iv) Animal welfare: a global responsibility – Alignment with OIE needs to be a priority Source: World Trade Organization, 2008 pp.42-43

8. Demand for imported meat v) Animal Transport: Enormous efforts made as cost of production skyrocket on animal transport; all the requirements that operators have to fulfill ….. lead to a considerable increase in the cost of production vi) No feed import – no livestock – no competitive EU meat industry in the future Source: World Trade Organization, 2008 pp.42-43

9. EU IMPORT MANAGEMENT The Import Scenario

10. IMPORT IN EU EU REGULATIONS AFFECTING BEEF IMPORT EU Tariff Barriers: duties

11. EU REGULATIONS AFFECTING BEEF IMPORT EU Barriers: import licenses Imports of some agricultural products must be accompanied by an import licence. Allow the EU authorities to monitor trade flows and administer tariff quotas and safeguard measures.

12. Demand for imported meat EU Quotas • The EU Commission may provide import tariff quotas • HILTON grass fed beef quota • Hormone-treated beef ban Quota • Import Tariff Quota for Grain Fed High Quality Beef • GATT Frozen beef quota etc.. • Specifically limits on the volume of goods which may be imported with a reduced customs duty.

13. Demand for imported meat Safeguard measures Exceptional market support applied to beef and veal, milk and milk products, pigmeat, sheepmeat and goat meat, eggs and poultry meat Related to or consequent upon health and veterinary measures adopted in order to combat the spread of disease. Or to avoid serious disruption on the markets concerned.

14. EU Regulations mostly related to Beef sustainability SPS requirements EU policiesregarding SPS requirements, foodsafety and agricultural product quality standards Animalwelfare and animal production methods couldwell gain increasingprominence in the comingyears, with potentiallyimportantconsequences for tradeflows. Environmental requirements

15. EU and Mexico and other Lat. Am. regulations compliance to Sustainability SALSA Results • Lack of regulation on sustainability issues • A greater focus on food safety, traceability and quality • Almost all legal regulations showed a very low association with environmental, social and economic issues • Only very few regulations (e.g. Mexican Regulation for Sustainable Rural Development) jointly consider the environmental social economic aspects. • Most of the regulations are associated with food safety, especially in countries such as Brazil and Mexico • Food traceability issues showed high values in Brazil and in the EU • Legal regulations for Mexico focused most on food quality issues

16. EU food Sustainability future strategy • Towardsa more resourceefficient and sustainablefoodsystem • Proposedareas for actionpresented for discussion: Bettertechnicalknowledge on the environmentalimpacts of food Stimulatingsustainablefood production Promotingsustainablefoodconsumption Reducingfoodwaste and losses Improvingfood policy coherence

17. EU food Sustainability future strategy The CAP post-2013: From challenges to reform objectives Source: DG Agriculture and Rural Development.

18. EU food Sustainability future strategy The new greening architecture of the CAP Source: DG Agriculture and Rural Development.

19. EU International Role It is in the interest of the EU, to act in favor of a global equitable governance of resources and of food exchanges, preserving both global availability of food and local access to food WHY? because of its dependence on external mineral resources, its position as a major player in the global food markets (both as importer and exporter) HOW? • identify coalitions for a better multilateral governance with all countries, and particularly with emerging countries • better analyze the consequences of domestic European policies on food security and the environment in the rest of the world

20. Demand for imported meat Private Standardsvs Regulations Private standards also play a large role, in that they are going beyond national legislation and are placing increased and in part undue pressure on suppliers. Credibility in governmental and WTO rules needs to be restored in order to arrest the multiplication of these expensive private standards, however these standards remain difficult to control and bring under legislation. https://mc9.wto.org/official-documents-bali-ministerial Source: World Trade Organization, 2008 p.44

21. Private Standards compliance to Sustainability dimensions SALSA Results • Most of the private standards regulate environmental aspects as well as social issue. • A majority of private standards have higher n. of requirements for food quality, traceability and food safety than the legal regulations examined. • Most of the private standards are based on the legal regulations and integrate legal food safety and traceability requirements.

22. Private Standards compliance to SAFA Sustainability dimensions SALSA Results

23. EU Animal Protection strategy and its impact on third countries Prof. Leonardo Nanni Costa

24. CONSEQUENCES Opportunities Potential for expansion of environmentally and ethically oriented food quality standards in EU and Latin America

25. Opportunities • Little room for the export of sustainable beef in EU at the moment • Potential to be exploited by • Improving a Country level strategy for valorizing the quality of • Beef according to the main players and Regulations’ expectations • Exploiting the internal market for sustainable products to build dimensions of scale able to support sustainability implementation • Building regional alliances and advocate for a global sustainability governance

26. Big Players’ increasingly dominant role or chance for a mainstream sustainability implementation? Sainsbury’s: “a sustainable supply chain is not just about sourcing with integrity, it’s about actively working with suppliers to educate them” “Unileverhas invested heavily in improving farming practices among tea farmers, building capacity to more than 170,000 tonnes of Rainforest Alliance certified tea for brands such as Liptons. Source: How to commercialise a sustainable supply chain By Claire Manuel

27. Big Players’ increasingly dominant role or chance for a mainstream sustainability implementation? Mcdonalds: There is no definition of what sustainable beef is “With some products [likebeef], there’snoteven a definition for whatsustainableis. Wewant to use oursize and influence to work with the industry and NGOs to come up with definitions of sustainablebeef. …….WhatI mean by thatisthatthere are no standards, measures, accountability and traceability to makethoseclaimstoday.”

28. Big Players’ increasingly dominant role or chance for a mainstream sustainability implementation? WALLMART and the Sustainability Consortium

29. Conclusions Sustainability as an opportunity Consumers and civil society pressure Investors’ pressure Latin American Sustainable development Big Players involvement in sustainability EU role (not fully Developed) Sustainability difficult to manage

30. THANKS!