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The economic impact of a ban on imports of air freighted organic products to the UK

The economic impact of a ban on imports of air freighted organic products to the UK. Simon Bolwig Danish Institute for International Studies

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The economic impact of a ban on imports of air freighted organic products to the UK

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  1. The economic impact of a ban on imports of air freighted organic products to the UK Simon Bolwig Danish Institute for International Studies Based on study commissioned to DIIS by the International Trade Centre, Geneva, carried out by P. Gibbon, S. Bolwig, L. Riisgaard and N. Grunth (DIIS Working Paper 2007/23)

  2. Emergence of ‘climate change’ standards in agro-food sector • UK retailer initiatives to reduce CO2 emissions (‘carbon footprint’) • Reduce energy use • CO2 labelling of products • Reduce amount of food imported by air • Label air-freighted foods as 'flown‘ • Initiatives by private organic standard setting bodies in the EU (my focus today) • Emerging focus is on CO2 emissions from food transportation - especially air freight

  3. Private organic standards important for EU market access • Organic movement influences the EU regulation of organic production and trade • Private organic standards in excess of EU regulatory requirements often dominate – e.g. • UK – Soil Association: 70% of operators • Germany – Naturland & Bioland: 45% • Sweden – KRAV: 100% • Private standards de facto govern conditions for accessing organic food markets in the EU

  4. Organic standards and climate change: two main approaches • Include specific CC standards within organic standards • Broad standards on CC (Bioland) • Focus on a single ‘climate killer’ • Soil Association and Bio-Suisse: air freight • Develop independent, additional CC standards • KRAV and Swedish Farmers’ Federation: both organic and conventional products

  5. The UK Soil Association proposal to ban air-freight of organic imports • Green paper & public consultation in 2007 • Critiques from within UK and developing countr. • One-sided focus on air freight as the CO2 source • Protectionist of UK and other EU farmers • Skewed impact on developing countries • Options for importers in case of a ban? • Shift from the SA to the EU standard or stop importing organic products flown by air

  6. UK organic fresh produce market • Large, diversified, profitable and growing • More diversified and value added products • More continuous supply (multi-seasonal) • High premia and high import growth • Competitive and efficient • 5–6 supermarket chains dominate organic retail • 15–20 large importers/wholesalers supply retailers

  7. Fresh organic produce imported by air to the UK (2006) • 1.9% of all organic imports (6278 tons) • Beans & peas, vegetables, exotic & temperate fruits • 8.1% of organic fresh produce retail value • Virtually no sea freight alternatives in medium term • A ban would immediately reduce retail sales in the UK by ₤42.6 million, indirectly affect demand for other organic products and generally slow growth in the sub-sector

  8. Likely impacts of a ban in developing countries • 60 exporters worldwide: de-certify or close the business! • Specialized organic firms will suffer most • Minimum 21,500 livelihoods compromised • Women, youth and smallholders hardest hit • Biggest impact in LI and LMI countries • Account for 79% of all air freighted organic imports • Egypt, Kenya, Morocco, Zambia, …, Ghana, … • LI countries most dependent on air freight

  9. So what did the SA decide? • Air freight is allowed on condition of additional certification to Fair Trade or Ethical Trade ‘to ensure that food is only air freighted if it delivers genuine development benefits’ • Importers must ‘plan for reducing any remaining dependence on air freight’ • SA will ‘consider implementing carbon labeling for all organic goods …’ when feasible • Standard in effect from January 2009

  10. Broader issues • Private climate change standards can have significant effects on exporters, producers and workers in developing countries • Loss of market access • Loss of price premia (if linked to organic or FT) • More demanding and costly standards compliance

  11. Broader issues (2) • Northern NGOs and movements were key actors in developing and promoting the ‘air freight’ standard – a general pattern for ‘sustainability standards’ • Developing countries had little or no influence on standard setting in this case and did not raise their voice (except for Kenyan-based exporters)

  12. Lessons for developing countries • Strengthen national industry organizations (improve ability to defend business interests) • Get a voice in the end markets where standard setting takes place • Dialogue with EU private standard setters and the IFOAM EU group • Lobbying work in EU institutions • Mobilization of sympathetic international organizations

  13. Lessons for developing countries (2) • Strengthen capacity to follow developments and potential threats in international standards • Accept the fact that it may be necessary to have ‘ORGANIC +’ standards in order to maintain / maximise the benefits of market access

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