Reducing poverty among smallholder farmers through enhanced trade regimes and value chains for coffee in Uganda

Alice Turinawe, Makerere University, Uganda; Rosemary Emegu Isoto, Makerere University, Uganda; Irene Nakamatte, Makerere University, Uganda; John Sumelius, University of Helsinki, Finland; Qiuzhen Chen, University of Helsinki, Finland | 20 June 2024

Coffee is Uganda’s traditional and largest export commodity contributing about 15 percent to the country’s total annual export earnings. In 2023, the country’s coffee exports amounted to as high as 743,517 60-kilo bags, worth US$ 121.64 million. Robusta and Arabica are the main coffee varieties in Uganda, with Robusta dominating production and export. From the 2022 statistics, Robusta made 92.7% of the total shipments, at a growth rate of 50.9% with an increase in value of 84.8%. Exports for the higher-value Arabica increased by 20.3% although its value fell 6.6% compared to 2023. Robusta coffee is grown across the low altitude areas of Central, Eastern, Western and Southeastern Uganda up to 1,200 meters above sea level, whereas arabica coffee is grown in the highland areas on the slopes of Mount Elgon in the East, Mt. Rwenzori and Mt. Muhabura in the Southwestern Region (1500-2,300 m above sea level). Over the years, coffee production in the EAC has been increasing with Uganda being the leading producer followed by Tanzania and Kenya. A substantial amount of coffee produced in Uganda is exported with only about three percent consumed domestically (citation needed here). Europe is the main destination for Ugandan coffee, accounting for over 60% of its total shipments leveraging on her historical ties to European markets from colonialism to date.

To examine the country’s ability to reduce smallholder farmers’ poverty through enhanced coffee trade regimes and its value chains, our case study employed a mixed methods approach. Qualitative data were collected from value chain actors through in-depth and focused group discussions in Wakiso district, central region. A total of 16 key informant interviews were conducted with government bodies in charge of research initiatives, extension, policy making and implementation as well as the private sector involved in the input supply, farming, aggregation, processing and trading of coffee. Two (2) focused group discussions of mixed gender were conducted with coffee smallholders at district level, from the sub counties of Namayumba and Kakiri. Data were used to examine domestic governance measures as well as international standard regimes and practices; assess adoption of fair trade and consideration of human rights perspective for attaining SDGs 1, 2, 3, 5 and 13; and examine the extent and role of actor transparency and digitalization on poverty reduction among smallholder farmers and along the coffee value chain in Uganda. Quantitative data from the Uganda National Panel Surveys (UNPS) 2010/11, 2015/16 and 2019/20 were used to assess profitability of coffee value chain and its effects on the incomes of smallholder farmers and on poverty reduction in Uganda.

Overall, the coffee sub sector holds enormous potential to substantially increase government earnings and alleviate poverty among value chain actors. In-depth discussions with stakeholders indicated that liberalization of the coffee sub sector has continuously attracted private sector efforts from advocating for a favourable policy environment to supporting trade expansion, value addition and processing. In line with the National Coffee Act (2021), the Uganda government, through its ministries including Ministry of Agriculture, Animal Industry and Fisheries (MAAIF), Ministry of Trade Industry and Cooperatives (MTIC) and agencies such as the Uganda Coffee Development Authority (UCDA) and National Coffee Resources Research Institute (NACORI) remains fundamental at supporting the increase in production, productivity and quality as well as negotiating and developing markets for Uganda’s coffee within the country and beyond. However, the growth of Uganda’s coffee export business continues to be obstructed by its insufficient and bureaucratic quality control processes but also the delays in adoption of emerging coffee export grades for the increasingly expanding specialty coffee markets. These inefficiencies tend to reduce smallholder farmers’ share of economic benefits from the coffee sub sector. At international level, the EU stringent non-tariff measures in respect to sanitary and phytosanitary (SPS) measures and Technical Barriers to Trade (TBT) have become Non-tariff Barriers (NTBs) for coffee farmers since Europe is still the main destination of Uganda’s Coffee. These measures continue to distort trade of value-added coffee with the EU while promoting export of green coffee through the Multinational Corporations (MNCs). Besides, misinterpretation of the National Coffee Act (2021) clauses to the public especially smallholder farmers and the absence of regulations to implement the Act derails the smoothness of country compliance to both domestic and international standards. This does not only deprive actors the opportunity to participate in competitive international coffee markets but also the advantage of earning fair values through trade to the upstream value chain actors. In Uganda, smallholders dominate coffee production with opportunity to participate and benefit from the downstream value chain activities. Women are more involved at the downstream value chain nodes while men dominate upstream nodes of the coffee value chain.  Individual farmers with as low as 100 kg of dried coffee cherries are able to hull their produce to Fair Average Quality (FAQ) coffee for better earnings from value addition. However, farmer participation at the successive levels of the coffee value chain remains very low, and this is partly explained by the limitations in transparency of information amidst slow digitization and weak institutional governance measures. Majority of the small holder farmers therefore, individually sell low coffee volumes within informal spot market arrangements that are typical of low farmer bargaining ability, use of unstandardized scales and the influence to sell standing crops. While downstream work environments are healthy and safe, driven by minimum operating standards required by law, occupational health and safety remains deprived mainly due to the lack of knowledge about potential hazards and impact of particular labour activities. Besides, Uganda’s coffee production techniques are augmented with adaptation and sustainability measures such as coffee shading, mulching, manure application and irrigation practices. The interplay of these aspects, together with long certification process of fair trade limit the associated benefits to the very few value chain actors who have linkages with MNCs.

Using secondary data sources, the results from the profitability analysis showed that small scale farmers obtain higher returns compared to medium scale producers who tend to face labour deficits to undertake good management practices. More so, coffee producers are better off with comparably higher returns compared to non-coffee producers.

The study therefore recommends that more government efforts should orient towards promoting domestic and international trade of value-added coffee along its agro-industrialization agenda. Such enabling environment can be achieved through increased efficiency of the national quality control and assurance process, adoption of emerging coffee export grades and harmonization of the tax levies imposed on Uganda’s coffee value-added exports to enable increased participation of domestic players into downstream activities of coffee value chain. The upgrade, together with increasing public awareness and sensitization about compliance benefits to the National Coffee Act (2021),  is likely to expedite adoption of fair trade, consideration of human rights and other relevant principles as value chain actors attach economic value to increased access of fair paying market trade. There is need for concerted efforts to rebuild trust among smallholder farmers for collective action, not only focused on production but on also value addition development and marketing activities. To benefit from the UCDA’s immense efforts of improving the coffee sub sector, involvement of the private sector for technological development and circulation to enhance information transparency and digitization remains a priority. This is fundamental at increasing transmission of information from input access, production to investment, pricing as well as access to productive resources especially finance and markets. As a result, leveraging the current developments in coffee research and government efforts to increase production, and access to higher value coffee markets is bound to fetch more commodity earnings for not only the government but also the different value chain actors, even at the upstream end.

Novel Approaches in Sustainable Food Trade

Christian Häberli | 6 June, 2024

What’s this?

On 24 May 2024, a Joint Webinar on the evaluation and possibilities for more sustainable agri-food trade took place at the Environment House in Geneva. The three organisers (two EU Horizon2020-funded projets Making Agricultural Trade Sustainable (MATS) and Trade for Sustainable Development (Trade4SD) and the International Institute for Sustainable Development (IISD)) shared and discussed several new topical databases and modeling approaches. They also noted that SDG 2 (“End Hunger”) was failing, and that the two last Ministerial Conferences on Trade (WTO MC 13) and on Climate (UNFCC COP 28) had concluded without tangible progress. In a Joint Statement, the participating experts agreed that the new techniques and insights into agricultural trade policy analysis allow a more realistic impact assessment of trade and investment policies on sustainable development, and that our projects can better inform and interact with policy-makers, operators and stakeholders.

My Questions

My contribution tried to answer the following questions: Are we really committed to working for a more sustainable and equitable food system? Do we recognize the vital role of agri-food trade in global food security and economic growth? Do we agree that SDG2 (“End Hunger”) shows dismal progress? And that Global Food Security is regressing, and famine increasing? Is this so mainly because of the new, existential threat added by Climate Stress especially for the Food Value Chain? Can our Case Studies, data modelling and research results say something about the adequacy of the climate and the trade treaty rules, commitments, and policies? Or do we have to recognize that governments and international organisations fail to address the problems by revisiting the present rules and engaging in multilateral negotiations?

My Sad Analysis of the Multilateral Stalemate

The ground impact of international governance failures, especially with regard to food security, appears in our MATS Case Studies now being published on our website. Virtually all 15 found non-sustainable food trade in their products and countries, and SDG getting out of reach for small producers and poor consumers.

In the short and medium term, no multilateral or unilateral improvements look possible or even wanted. In fact, both trade and climate rules are inadequate. Nevertheless, governments still fiddle on the roof while New York, Geneva and Paris are burning.

The SDG Mid-Tem Review in the UNGA, in September 2023, found general failure to achieve any SDG by 2030. Moreover:

• COP28 for the Climate Agreement was a further step back from the standard-setting task called Koronivia Joint Work on Agriculture (KJWA), initiated in 2017 in Fiji. Climate ministers still refuse to set binding climate footprint reduction standards and procedures.

• MC13 was yet another result-free WTO event. Trade ministers claiming “mutual supportiveness” with non-trade rules balk at a negotiation to define WTO-compatible, climate-friendly energy or food subsidies.

In short, governments refuse to engage in multilateral negotiations, especially about global food security. It seems they will ‘talk the talks’ for many more years, and in many international fora. (Just for once, agriculture is in good company with many other progress blockers – not least with fossil fuel subsidy addicts.)

Agricultural policy reforms and market access improvements for more climate and trade friendly food security have become a remote target. Investors also need standards – not guarantees like Bilateral Investment Treaties condoning land grabbing and contracts with “stabilisation clauses” against higher environmental regulations or minimum wage increases.

In 2023, the number of people on the brink of famine almost doubled to over 700’000. The symbol of the winner is the big tractor rolling in the streets of Brussels, Paris, Berlin, and Amsterdam – and not only in Europe. Farmer protection, ‘green’ subsidies and trade restrictions such as ‘mirror clauses’ for imports of ‘like’ products topple the cake – and thus upset the multilateral apple cart. Ministers refuse to switch into negotiation mode for production subsidies, price support, stockpile management, safeguards, and dumping rules – let alone in-built climate footprint and mutual recognition of equivalent production and processing methods.

Year-long ‘conversations’ failed to take on board the views of NGOs, scholars, stakeholders, traders, and investors in more food secure ventures. Policymakers ignore sustainability impact assessments of the various tools at hand in the light of new challenges to global food security and global warming.

Making a list of what all others should do has not brought progress. The double intergovernmental impasse in this rapidly warming world clearly requires novel approaches. Inaction discourages operators and investors; it is simply not a defendable option.

In my view, collective governance failures are the main reason for the impasse of the multilateral rules framework today. Both for trade and climate rules, especially those contradicting each other. I see the main challenge as navigating the abyss between the differentiation obligation of the Climate Agreement and the non-discrimination mantra of the multilateral trading scheme enshrined under WTO Law.

Any Way Forward out of the Impasse?

Today, multilateralism is deadlocked and formal agri-food trade and climate negotiations are indefinitely suspended. This seems to preclude binding multilateral standards or plurilateral agreements. It also impairs unilateral measures protecting green producers at home and thus discriminating foreign competitors. Who wants to lose market shares when foreign e-vehicles, solar panels and cows and soybeans from deforested areas are cheaper?

True, we can see many governments starting to act at the national level – for whatever reason and never mind their climate commitments or multilateral and regional trade obligations. Some such reforms are more than greenwashing. But unilateralism and industrial policies fail to reassure small and big producers, investors and traders. Instead, they bring about carbon leakage and market share losses for greener food.

Is there a novel and beneficial approach for ‘climate pioneers’? Allowing domestic greening with carbon taxation including imports à la CBAM? When not everybody goes greener at the same time and for the same products? Without new climate-friendly multilateral rules and SDG changes?

Personally, I posit that unilateral reforms, reciprocally agreed and WTO-guaranteed, can bring about “Greener and Freer Trade” for climate pioneers. Put in technical speak, a safe way out of this complex stalemate is to endow the often heard ‘climate club’ proposals with reciprocal, scheduled trade preferences and investment guarantees, secured and based on mutually agreed equivalent, sustainable climate footprint reduction schemes, and new rules of origin – including even agriculture. Regrettably, reciprocity is a big step back from the Voie Royale of multilateral rulemaking. Only ‘climate pioneers’ will benefit from this proposal. But when the multilateral road is closed – and its rules are not enforceable – this second best option is perhaps the only way forward. Better than fiddling on the roof, anyway. Or playing the blame game, again and again.

Christian Häberli is a Fellow of the World Trade Institute (WTI). The WTI is one of the 14 MATS partners and plays a key role in producing deliverables such as discussion paper on the political economy on trade regimes and discussion paper on the feasibility of changes in trade regimes.

Reducing poverty among smallholder farmers through enhanced trade regimes and value chains for coffee in Tanzania

Neema Kumburu, Moshi Co-operative University, Tanzania, John Sumelius, University of Helsinki, Finland & Qiuzhen Chen, University of Helsinki, Finland | 27 May 2024

Tanzania is one of the largest coffee growing countries in Africa, with an annual production of 66,042.0 tons according to 2020/2021 data. Coffee accounts for nearly 5% of Tanzania’s total exports with an average annual export value of 100 million USD. Statistics show that most of the coffee produced in Tanzania is exported and local consumption is estimated to be only 7% of total production.

In order to examine how to reduce smallholder farmers poverty through enhanced coffee trade regimes and its value chains in Tanzania, our case study has surveyed a total of 150 coffee smallholders in the Kilimanjaro, Mbeya and Songwe regions of Tanzania, which are the traditional coffee growing areas (Kilimanjaro, Mbeya) and emerging coffee growing area (Songwe), as well as 15 officials from the Ministry of Agriculture, Tanzania Coffee Board, Farmers Kilimanjaro Coffee Company Limited (FAKICO), Ministry of Industry and Trade, farmers, exporters and processors as key informants, and conducted five focus group discussions with representatives from the surveyed primary co-operative societies, namely Mruwia and Mamsera in Kilimanjaro, and Makandara and Isansa in Mbeya, and Songwe regions, respectively.

Using content analysis and narratives for qualitative data and descriptive statistics and gross margin analysis for quantitative data, the study explored the roles, interests and responsibilities of key actors, their involvement in pricing,  and how they respond to the risks and impacts of power inequalities, participation and public interest, and assessed the profitability of coffee value chain and its effects on smallholder income and poverty reduction, and also analysed domestic government measures and international standard regimes and practices that have a bearing on reducing poverty among coffee smallholder farmers. Meanwhile, the study evaluated the adoption of Fair-trade Schemes and consideration of human rights perspective in the Tanzania coffee value chain and strategies to attain SDG1, 2, 3, 5 and 13, and examined the transparency and roles of coffee value chain actors in agri-food chains and the impact of digitalization on poverty reduction among smallholders in Tanzania.

The main findings suggested that there is a lack of integration and synergy among actors in the coffee value chain to participate in decision-making. Small-scale farmers are the least privileged because of their passive position in major decision-making. The study also found that although small-scale farmers have positive operating margins, such margins are still not competitive enough to compensate for the farmers’ efforts. Each actor in the value chain appears to maximize its own interests at the expense of smallholder farmers, who continue to be mistreated and thus unable to improve gains from the coffee sector. The national and supranational legal and policy frameworks are also complex and they have failed to create a conducive environment for small holder farmers to realize better returns, although much has been done at the national level including the establishment of the coffee industry stabilization fund, coffee research institute, the production and distribution of free coffee seedling, the promotion of co-operative institutions and public-private partnerships in the coffee industry, the creation of political will for the development of the coffee industry, and other efforts including ensuring laws and regulations that govern coffee production, processing, transportation, marketing, and other related activities in Tanzania. However, these efforts have not been sufficient to bring the desired benefits to smallholder farmers. Coupled with the complexity of international coffee trade standards and marketing procedures, smallholder farmers are unable to realize the potential benefits from the international coffee market. In addition, the study also indicated that fair-trade schemes are expected to lead to, and ultimately benefit, smallholder farmers by making consumers pay a premium for social and economic change and environmental sustainability. However, the schemes are often based on a lack of understanding of production realities, leading to a gap between producer and consumer countries. Lack of transparency and information asymmetry are some of the factors that inhibiting smallholders from benefiting from fair-trade schemes and, as a result, they have limited access to human rights considerations at the lower end of the coffee value chain and are unable to enjoy the benefits of digitization in the modern world.

Therefore, based on the above key findings, it is recommended that the government establish farmer profiles to identify the various information and advisory needs of smallholder farmers in order to provide tailored services. Public-Private Partnerships (PPPs) can be established to revitalize the coffee industry through improved recommended agricultural practices, marketing efficiencies, and technological changes to promote production growth in order to address the constraints affecting the effective participation of smallholder farmers in Global Value Chains (GVCs). Certification organizations should provide opportunities for producing and consuming countries to establish the necessary supportive environment for producers in international value chains to operate in a more sustainable manner. Governments and other actors should ensure that standards are tailored to local realities (“institutional adaptation”) and prioritize this for the adoption of global sustainability standards. This also includes measures to level the playing field between international players and local farmers, such as fair pricing mechanisms and market access. In addition, local government and other actors should strengthen farmers’ digital innovation capacity and make farmers aware of available digital services to obtain information on coffee prices and international market trade, while improving the physical infrastructure for digital access and lowering costs associated with access to the internet and digital devices to increase participation by smallholders. Digital services providers should integrate digital communication into multimodal services to expand inclusive activities such as financing, inputs, weather, pricing and international trade opportunities.

For more information, click here to view the full case study

Continued high food inflation a result of Egypt’s failed food security policy

By Saker El Nour, Mohamed Ramadan, and Sylvia Kay | 24 May 2024

Egypt made international headlines when the official inflation rate reached highs of over 40% in September 2023, driven primarily by inflation in food prices. To address these challenges, the Egyptian government announced decisions to ban the export of a number of agricultural commodities, including onions and potatoes, following on from an earlier ban on the export of rice.

These measures did not work: inflation for some commodities, such as onions, exceeded 423.1% on an annual basis. Food inflation rates stood at 63.9% on an annual basis, reaching 71.1% in October 2023, placing Egypt first among the ten countries in the world most affected by food price inflation. According to the World Bank‘s recently published Food Security Update report (table below), from April 2023 to March 2024, Egypt’s food inflation rates showcased a turbulent economic landscape, with significant monthly fluctuations.

Apr 23	May 23	Jun 23	Jul 23	Aug 23	Sep 23	Oct 23	Nov 23	Dec 23	Jan 24	Feb 24	Mar 24
54.8	60.0	65.8	68.3	71.4	73.6	71.3	64.5	60.5	47.9	50.9	44.9

In the latest update, Egypt remains among the top ten most affected countries, ranking fifth in April 2024 with a real food inflation rate of 12%.

A structural agricultural trade deficit

Egyptian officials maintain that a combination of local and global factors have exacerbated the country’s economic difficulties. However, record food inflation is indicative of a more profound systemic problem with the country’s agricultural and food policy.

For over four decades, Egypt, with the support of major institutions like the International Monetary Fund, the World Bank, and the United States Agency for International Development, has been resolutely pursuing a programme of agricultural liberalization with production geared towards the export of high-demand crops such as fruits and vegetables to consumer markets in Europe and the Gulf region. This strategy, aimed at enhancing the country’s hard currency reserves, placed Egyptian agriculture at the forefront of national development.

However, this export-led growth model has yet to yield a trade surplus with agricultural exports lagging behind since the 1980s and currently not exceeding 30% of the country’s import needs. Egypt faces an enduring deficit in its food trade balance, with self-sufficiency rates for critical crops such as grains progressively diminishing. The focus on shipping out raw, unprocessed goods has not kept up with the substantial grain imports needed for food security. Consequently, Egypt has become the largest importer of wheat globally, underscoring its deepening reliance on international markets to feed its population—a reliance that persists despite the contributions of local, small-scale farmers.

Egyptian small famers lose out

This export led policy was touted as a means to enhance farmer incomes and improve agricultural production and sustainability via international trade agreements. However, as a recent study published by the Transnational Institute shows, rather than delivering for the vast majority of Egyptian small farmers, the current agricultural trade model has only worsened their situation.

This is exemplified in the case of potatoes – Egypt’s second largest export crop to the EU. With rising input prices since the beginning of 2022 resulting from the liberalisation of the exchange rate and the devaluation of the local currency, many farmers have been forced to sell their potato crops at a loss. According to field work with Egyptian potato farmers carried out for the study, a farmer can earn an estimated maximum profit of EGP 2,375 per feddan (an Egyptian agricultural land unit equivalent to about 0.42 hectares): below the minimum wage of EGP 3,000 per month. According to farmers, the cost of production per feddan in the old lands and the Delta was almost EGP 40,000 in 2020 and has increased in recent years. These additional costs are passed on to the consumer, leading to higher prices of potatoes in urban areas.

All of this has resulted in significant food security challenges for both the urban poor and for over half (57%) of the Egyptians that live in rural areas. Egypt is a food-insecure country ranking 77 out of 113 countries on the 2022 Global Food Security Index.  Inflation of grain prices has affected the living standards of most Egyptians who rely on bread and grains to meet 35–39% of their daily caloric intake. From 2014 to 2020, about a third of the population suffered from malnutrition and 20-25% of under-fives were affected by stunting. Poverty increased from 16.7% in 2000 to 29.7% in 2020, and undernutrition also grew from 14% in 2009 to 25% in 2018.

A new approach is needed

The intricate interplay between economic policy and food security is particularly pronounced in developing nations, where strategies often intertwine neoliberal tenets with localized forms of crony capitalism. In Egypt’s case, this combination has exacerbated both the broader economic fragility and the specific vulnerability to debt crises. This is attributed to the country’s dependency on imports to meet its basic food security needs.

This situation underlines the urgency of revitalizing local food systems that are resilient, sustainable, and inclusive, particularly for marginalized and vulnerable populations. There’s a growing need for Egypt to re-evaluate its approach to agriculture, shifting away from large-scale exports that offer minimal added value to the economy or its people. Instead, a pivot towards bolstering small-scale farming and shortening supply chains could enhance self-sufficiency and ensure food sovereignty.

Saker El Nour is Program Director at the Action Network for a Just Transition in North Africa and the Middle East (RESEAU TANMO).

Mohamed Ramadan is an independent economic researcher and financial analyst. His research interests focus on inequality and poverty and processes of financialization in Egypt and the Global South.

Sylvia Kay is a Project Officer at the Transnational Institute.

When Sustainable Agriculture Ends: Can MATS Help Substituting Cash Crops with Mining?

Christian Häberli, WTI | 4 March 2024

In many countries, small farmers cannot feed themselves. The 2023 mid-term review of the Global Indicator Framework for the SDGs showed that the world is not on track to achieve Zero Hunger by 2030. MATS Case Studies show insufficient progress in reaching sustainability: present production and market conditions, regulators and trade restrictions, operator size and stakeholder involvement, fail to provide food security to small farmers in Ghana, Tanzania, or Brazil. In such cases, will a shift away from food and cash crops to sustainable forest management, mining, manufacturing, or tourism provide equitable trade and sustainable income of poor producers? This at least is a finding made in a 2023 field study by Suresh Babu and colleagues: “Towards sustainable food crop production: Drivers of shift from crop production to mining activities in Ghana’s Arable Lands”

MATS, at any rate, will be well advised not to rule out non-farm solutions where sustainable food production ends. However, the transition to and activities around forests, mining and tourism should be managed sustainably, too.

Christian Häberli is a Fellow of the World Trade Institute (WTI). The WTI is one of the 14 MATS partners and plays a key role in producing deliverables such as discussion paper on the political economy on trade regimes and discussion paper on the feasibility of changes in trade regimes. In addition, WTI has conducted the MATS/Ukraine project “Repairing Broken Food Trade Routes Ukraine – Africa”. For more info about WTI activities here.

Expansion of soy in Matopiba: Cerrado’s last agriculture frontier

Technical University of Madrid | January, 2024

With a changed political context after the 2022 elections of Brazil, achieved with the electoral winning of the centre-left and more sustainability-prone government coalition, there is renewed momentum to discuss policy options that could influence food system pathways towards more inclusive and sustainable outcomes. 

The Matopiba region of Brazil is an area composed of parts of four States in the Northeast of the country. The region contains the largest areas of preserved Cerrado biome and it has witnessed significant agricultural expansion since the latter part of the 1980s, particularly soy. An expansion in the “last agriculture frontier” which has placed the region in the spotlight of debates around trajectories of global agri-food systems. Soy from Matopiba is mostly produced to feed world’s growing appetite for meat in developing countries such as Brazil and China – and developed countries such as those in Europe. Despite the economic dynamism that it generates to a historically poor region of Brazil, this food system pathway has been highly contested due to its profound impacts on local water resources, biodiversity and carbon stocks, by fostering land conflicts, and for being associated with land and green grabbing severely affecting the livelihoods of family farming communities. Many have pointed out that the soy production model in the region generates large quantities of wealth to a few privileged non-residents, a relative economic dynamic concentrated in a few regional hubs, and very few jobs for the bottom strata of the society. 

Imbalances of the soybean-meat complex

For a large number of actors in the region, the soybean-meat expansion is clearly a winner in terms of a preferred development model. Even for family farmers who had their traditional territorial management systems broken by the expansion of industrial agriculture, the narrative of progress brought by soy is deeply entrenched in their development imaginaries. There are clear calls that progress is not reaching the margins of these communities, but instead of questioning the model, some suggest the solution would go through better “distributing the benefits of soy” to a larger share of the society. 

Expansion of soybean-meat complex has also been associated with several reported cases of land grabbing. A classic procedure in land grabbing is corrupting local decision-making and authorities (such as notaries, judges, etc.), which can facilitate the eviction of traditional communities of their traditional lands. 

More recently, and associated with legislative reforms of land protection, one observes increased cases of green grabbing. Brazilian legislation requires that 20-35% of preserved Cerrado land must be maintained inside properties. Mostly to comply with this Legal Reserve requirements, farmers that grow crops in the plateau areas declare beyond their production areas, normally valleys, as their own land. Green grabbing occurs when these assertions register valleys traditionally occupied by rural communities – generally in non-titled traditional occupation – as Legal Reserves of soy farms Imprecision in land titling and land governance overall only plays in favours of those who have access to power and political decisions. 

Another issue is the value and effectiveness of traceability of soy for ensuring more sustainable and inclusive production systems in the region. Soy is generally aggregated from different suppliers before being embarked for exports. That means it might be extremely difficult to separate soy from risk areas from potential “contamination”. Methodologies to differentiate and ensure deforestation-free products are still being tested, which brings one additional layer of complexity for ensuring the sustainability of soy production in the region. 

What measures should be taken?

Given the relevance of the problematic described above for the future of the Cerrado ecoregion in Brasil, MATS proposes in the CS14 to explore seven potential measures to use trade regimes to influence the pathways of the soybeans-meat complex in the Matopiba region to be more sustainable.

SEVEN POTENTIAL MEASURES TO GOVERN SOY-MEAT COMPLEX TRADE IN MATOPIBA
1	Expand the Amazon Soy Moratorium to the Cerrado
2	Include “Natural Grassland” and “Other Wooded Land” in the European Regulation on imported deforestation
3	Substantially increase private sustainability certification, e.g., RTRS
4	Require strong socio and environmental measures to implement the MS-EU trade agreement
5	Eradicate all illegal deforestation
6	Develop multi-actor territorial agreements
7	Apply similar standards by China as those currently being formulated by the EU Regulation on imported deforestation

These measures have been explored collectively with key stakeholders at national and regional level, gaining valuable insights on their time convenience, potential impacts and effectiveness, and political feasibility. 

The Technical University of Madrid is a partner of the MATS project and leads case study 5. The UPM research team brings a food systems and system thinking approach to the MATS project, to guide the implementation of the 15 case studies. Their research experience combines systems thinking ideas and practices, with participatory methods and tools to inform food systems transformation. 

The distorted price of a chicken

Technical University of Madrid | December, 2023

In MATS’ case study 5, we explore three potential pathways for improving the competitiveness of domestic poultry products in Ghana and thus contribute to food sovereignty in terms of animal protein. Our study of possible interventions with the help of Causal Loop Diagrams (CLDs) allowed us to develop a feasibility participatory analysis with farmers and other stakeholders involved.  

The CLD illustrates elements that explain the current situation in the poultry sector and its behavior over time. By visualizing the interrelationships between elements, the CLD allowed identifying levers for change to make the domestic poultry sector more competitive, which in addition to contributing to food sovereignty within the country, would improve the household’s economy and food security of the agents involved in it. 

High import reliance and high production costs 

Ghana relies heavily on imports to meet domestic demand for animal protein. One reason is that poultry value chains in the country cannot compete with imports, either in quality or prices. As a result, there is a missed opportunity to enhance and support local markets to improve the livelihoods of small farmers and others who are part of domestic poultry value chains.  

70% of the costs for poultry farming in Ghana are allocated to feed the birds. Poultry feed – such as maize and other cereals – is mostly imported, making farmers subject to price volatility in international markets, driven e.g., by the Russian war in Ukraine. Thus, the production costs of national poultry products end up being very high weakening their competitiveness with imported products.  

Enforcement of regulations along the poultry value chain  

The CLD shows how the enforcement of regulations along the poultry value chain – subsidies for poultry feed – could, first of all, improve the farmers access to quality feed, but also their adoption of better practices and technologies. This would make their practices more sustainable and more competitive. It would also give them access to quality health services and products, including day-old chicks with better health and more resistant genetics to possible illness. 

Increase selling prices 

As a second way of intervention, we analysed the impact of increasing the selling prices of national poultry products. These would allow farmers to access better markets to sell their products. But in order to raise their selling prices (see in figure 3). they would need to comply with national quality standards; Their products should be differentiated, meaning, the chicken should be sold in pieces, frozen, and so on. Chickens with an adequate and healthy growth rate, raised under good sanitary and genetic conditions, would also allow farmers to raise prices, since they would be able to sell the chickens with less time in production process, meaning less costs; and the fowl will normally also weight more at the moment of the sell, increasing its price. 

Farmers’ membership in associations 

Our third recommendations (analysed in Figure 4) is for farmers to be part of associations. As a group, instead of being individual smallholders, farmers will have access to low interest loans, which will facilitate their access to all the  “privileges” such as adoption of better practices, access to quality feed, and health services. Associations also have access to knowledge and technology services, which can help them to adopt more sustainable practices. 

The Technical University of Madrid is a partner of the MATS project and leads case study 5. The UPM research team brings a food systems and system thinking approach to the MATS project, to guide the implementation of the 15 case studies. Their research experience combines systems thinking ideas and practices, with participatory methods and tools to inform food systems transformation. 

Enhancing farmers’ gains from the EU Africa coffee trade

SEATINI | November 14, 2023

When it comes to coffee, it’s important to talk about where it comes from and ensure its sourced ethically treating everyone involved fairly. Coffee is a major global commodity worth US$495.5 billion annually making it second only to oil. Africa that accounts for 12% of the world’s coffee beans earns about US$ 2.8 Billion (0.6%) which is very small compared to the top large-scale coffee chains and commercial roasters from North America and Europe such as Starbucks with an annual revenue $32.25 billion. Therefore, most of the wealth in the coffee sector is concentrated in major consuming markets of Europe and US.

The inequality in the global coffee value chain raises concerns that coffee production and productivity in African countries will remain persistently low, earning the continent with less than it deserves. This is because trade between the Africa and with the rest of the world, especially Europe is largely based on primary goods (raw coffee bean), and this challenge of primary commodity dependence is inherently fostered by treaties and agreements regulating Africa’s trade on the global stage.

EU and Africa coffee trade governance

EU Africa coffee trade is mainly governed by the Cotonou Partnership agreement that was launched between the EU and ACP Group Members under different configurations known as the Economic Partnership Agreements (EPAs) in 2000. In addition is the EU’s General Scheme of Preferences Everything but Arms (GSP/ EBA).

Europe’s coffee consumption is estimated at 55.09 million bags in 2019/20 making the EU by far one of the largest consumer globally. Within the EU, Germany, France, and Italy are the three largest consuming countries accounting for 45% of total consumption in the bloc. Europe meets its demand for coffee by importing around 68% green coffee bean which are not subject to tariffs. About 19% roasted coffee and 13% soluble coffee are also imported, which are subject to tariffs. Coffee too is subject to the phenomenon of tariff escalation: the practice of applying higher tariffs on products that have been processed in order to protect the domestic processing industry.

The EU imports some of its coffee from Africa. Over 65% of Uganda’s green coffee bean exports go to the EU while Kenya is the largest external partner for roasted coffee to EU. On the other hand, Europe is the world’s largest exporter of roasted and ground coffee accounting to 85% of the total global volume of roasted coffee exports in 2021 and the largest external buyers of soluble coffee from EU are the Russian Federation, Ukraine, Australia, and South Africa.

Major Obstacles in EU-Africa coffee trade

Product certification measures amount to non-tariff barriers meant to deny market access to goods originating from African countries. Entering the EU markets requires meeting the General Food Law (Regulation (EC) 178/2002), General Rules on Food Hygiene (Regulation (EU) 2017/625) among other social and environmental requirements under the Emissions Trading System and more recently CBAM.

The General Food Law emphasizes the need for traceability and compels coffee buyers and roasters operating within the   and EU bloc to purchase coffee beans bearing documentation that includes the geographical source, producer name, quality indicators, source of farm labour and a summary of the farm inputs applied to them. However, small holder farmers who make the majority in Africa lack means to meet the necessary requirements to certify their coffee.

Making EU Africa coffee trade work for farmers

The EU needs to work on a mechanism that grant unconditional market access to allows for importation of value-added coffee and not only green coffee. There is need to significantly reduce non-tariff barriers to facilitate trading of value added coffee products between EU and Africa.

The EU also needs to provide technical assistance and adequate transition periods to African partners to meet the requirements and new quality standards introduced by Green Deal legislation as well as new liability obligations for companies which refer to environmental and social standards. These require investments which some countries lack and need to be supported. In that sense, companies must also be prohibited from cut-and-run behavior when human rights abuses are detected in specific value chains, as it might negatively affect producer organizations most in need of financial and technical assistance.

African nations should promote domestic consumption to expand the local market with the objectives of providing a safety net for coffee farmers against unfair or falling world prices. This will make them more resilient to external shocks and ensure farmers earn a fair share. The EU on its side could ensure that buying coffee products below their cost of sustainable production is banned through its upcoming review of the Unfair Trading Practices directive.

The EU and the African Union (AU) need to work together to support the Intra-Africa Coffee Organization and the African Continental Free Trade Area (AfCFTA), adhering to the long-term vision of a continent-to-continent free trade agreement. It can be a means of promoting regional integration and stability as well as creating a win-win situation for Africa and the EU, as opposed to the balkanization of African markets through interim EPAs trading with a single EU market.

In conclusion, coffee is vital for Africa and it is necessary to comply with the above and develop fair, inclusive and transparent policies to overcome common challenges and cooperate closely with the EU and African countries to transform coffee sector benefiting both continents and their populations.

Navigating the world of crises for a more hopeful and sustainable tomorrow

Mari Carlson | November 1, 2023

Setting the scene

When proposing changes to agri-food trade policies, we need to start by capturing and understanding the existing structures that form the trade policy sphere. However, it is not enough to describe the current state, but we must be aware of the historical developments and path-dependences that mark these structures. Especially when we enter the foreign policy space where international relations are formed through historical power relations, such as economic or military power. And let’s not forget about normative power – how someone wants the world to be.

Trade policy, agricultural policy, and sustainable development policies all have their own history and most of the time, they have developed in siloes. Each country has their own history, attitudes, values, and priorities when it comes to those (and pretty much any other) policies. This raises the question of whose history, values, or vision should guide us, and whether there are universally shared priorities. In today’s global landscape, it appears there are few (think of SDGs), and while these questions are contemplated, urgent issues such as environmental degradation and hunger persist.

Crises and more crises

Crises are potential moments for dislocating existing societal structures. What if a crisis quietly evolves, almost imperceptibly, or endures for an extended period, ultimately becoming an accepted norm? Only few years ago, environmental crisis was seemingly penetrating each policy arena. Even a great share of WTO members took it seriously and drove environmental sustainability into trade politics. The environmental triple crisis threatens the life of each species on this planet, but the neoliberal system continues to neglect, ignore, and deny it (yes, it does). Everybody should know by now that food production is particularly vulnerable to climate change (we’ve just had a consortium meeting in Tanzania – just speak to farmers there). Nevertheless, new trade measures aimed at promoting environmental benefits or endeavoring to integrate environmental values into the neoliberal system encounter strong opposition.

Then we have acute crises that overrun other persisting crises, which is why ‘polycrisis’ may be a useful way of looking at the world right now. The COVID-19 pandemic shook the world in many ways – on the one hand, it recalled the importance of multilateral cooperation and free flow of goods and services (just think about food and medicine) while on the other hand, it revealed the vulnerabilities in critical supply chains that made many countries rethink their value chains. This finalized the rise of unilateralism. Then we saw the vulgar aggression of Russia towards Ukraine, and most lately the war that broke out between Israel and Hamas (Palestine). Unfortunately, the list of armed conflicts is longer, but the point here is that Russia’s war against Ukraine sealed the fragmentation of the international order. Geopoliticisation is everywhere and it is all about taking sides. The determination of sides will be based on which narrative resonates most with your own perspective – emotions, values, beliefs.

Food and war

The acute crises reminded us how food is used as a strategic weapon and that food shortages – even famine – are integral parts of (armed) conflicts (think about WWII and its aftermath that led to the creation of the EU Common Agricultural Policy). But what happens when world’s breadbasket, Ukraine, and Russia, are at war? They are major grain exporters, in particular to Africa, and Russia has exploited the “opportunity” to weaponize grain trade (go check another MATS/Ukraine project “Repairing Broken Food Trade Routes Ukraine – Africa” by World Trade Institute (WTI) here). Despite Russia’s practices on threatening food security has been widely deemed, the weaponization continues. The weaponization of food supplies occurs also in the case of Israeli-Hamas war (and in many others). Starving civilians is a war crime.

Breaking the illusion

While food security has been an integral part of local, regional, and global (trade) policymaking for years the relatively peaceful times since WWII have made people (in the rich world) numb to the value of the current stability and prosperity, and numb to implications from potential disruptions: war, diseases (animal, plant, or human health threatening – don’t forget about COVID-19), climate change (droughts, decertification, floods, extreme temperatures (high and low), or trade restrictions, to name few.

Some have been privileged to live in the illusion that food falls from the sky and nothing can disrupt its supply. International trade will always guarantee the availability of food. But think about the other side of the coin: environmental and social degradation as well as climate change are affecting your survival and economic base. Even if food was available, you live in poverty and cannot afford it. Perhaps international trade is not guaranteeing anything for you personally, but looming disruptions to it concern you every day, in terms of affordability, equity, and health. Or imagine you being a small farmer relying on export-oriented cash-crops, you likely fear for more trade related regulations that depress your economic viability.

Having provided a very simplistic example of two sides of the coin, let’s go back to the beginning of this post. Are there commonly agreed-upon priorities in the current global system? Can there even be? United Nations Secretary-General António Guterres outlined priorities for the UN for 2023 in his speech to the General Assembly. He said: “we have started 2023 staring down the barrel of a confluence of challenges unlike any other in our lifetimes” listing wars, the climate crisis, extreme poverty, and geopolitical divisions as major challenges. However, we need to acknowledge that these challenges are not commonly shared – not even believed.  Many times what is out of sight, remains out of mind. Many crises become normalized. Think about food and nutrition insecurity or environmental catastrophes which are being visible on our TVs but not in our own neighborhoods. When are these close enough for us to care? Is there something wrong if we don’t?

Mind your own business?

The global trading environment has changed radically in just the past few years. For that reason, MATS must consider, and is considering it: the geopoliticisation of trade, rising unilateralism, and different positions that countries hold. As an EU project, we are not only “path-dependent” on our own trade policy, which determines the leeway for our agri-food trade policies. We should also be reminded by our own norms how path-dependence can be addressed for the sake of a more inclusive and societally legitimate sustainability transition pathways. Recall that the EU has its own set of values, including a strong environmental sustainability agenda. The question is: How do we create sustainable transition pathways in a mutually beneficial and realistic way that are based on ‘societal’ legitimacy? Understanding only ourselves is not, however, the solution.

Mari Carlson is the co-coordinator for the MATS project. She is also a doctoral researcher in the doctoral programme in Sustainable Use of Renewable Natural Resources at the University of Helsinki. Her research combines trade policy, environmental sustainability, and agriculture.

The Kenya-EU Free Trade Αgreement is exemplary for Waning Power Europe

This article appeared in its first form as Op-Ed on the euobserver website.

Authors: Blandina Bobson (Director Programmes, Oxfam Kenya), Andrew Gogo (Fiscal Justice Strategist, Oxfam Kenya), Herbert Kafeero (Programs and Communications Manager, SEATINI), Jonathan Matthysen (Advocacy Advisor, Oxfam België/Belgique), Emily Ngolo (Just Economies Programme Officer, Oxfam Kenya) | October 27, 2023

EU Commissioner for Trade Mr. Valdis Dombrovskis popped a bottle of champagne in his office early June 2023. After the failed ratification of an Economic Partnership Agreement (EPA) with the East African Community (EAC) in 2016, he finally could declare success. The Republic of Kenya, which belongs to the EAC, and the European Union found a compromise for a bilateral free trade agreement. However, there is little to celebrate.

An agreement long in the making

Trade has always been a central tenant of European external policy. Whereas for most of the 20^th and 21^st century European countries trade policy was outright imperialistic, the narrative around trade started changing with the beginning of the European integration and the process of decolonization.

Under de veil of development policy Europe and countries from Africa, the Caribbean, and the Pacific (ACP) signed the Lomé-agreements. This entailed non-reciprocal access to European markets which would help the ACPs countries exporting industries.

It also locked in postcolonial trade relationships between European countries and ACP countries, much to the dissatisfaction of the US. With the US increasingly shaping the world order, they successfully challenged the arrangement under the World Trade Organization.

The subsequent Cotonou and post-Cotonou agreements kept the preferential market access for Least-Developed Countries (LDCs) and made it conditional for others under the Generalised System of Preferences (GSP). Those outside of this preferential treatment were asked to sign reciprocal free trade agreements called Economic Partnership Agreements (EPA).

Unity in diversity: only for the EU?

Continuing to shape the world in its image, the European Union aims “to collaborate in support of regional and continental integration”[1] with its post-Cotonou agreement. For that reason, the idea was that the EPAs would be signed en block with Regional Economic Communities (REC). These are regional groupings of African states which are intended to form the building blocks for the African Continental Free Trade Area.

The EPA with the East African Community, which is one of the RECs, was already dead and gone in 2016, with EAC member states recognizing that local industries would not be able to withstand competitive pressures from EU firms, locking in the region even further in its role of provider of low-value-added primary commodities. It was calculated that the welfare in the EAC would decrease while the EU would register a welfare gain of $212 million.[2]

This posed a problem for Kenya as the only non-LDC in the region. While its neighboring countries would remain in the most preferential trade arrangement as LDCs, the EU threatened to withdraw the remaining preferential market access to Kenya if it did not negotiate and enter into an EPA. With other EAC countries not willing to sign the regional EPA, Kenya decided to make use of the variable geometry principle of the bloc, which allows a member state to move forward without the others[3].

This again created a problem for the EAC on its turn. Considering Kenya is part of the customs union of the EAC which ensures the free flow of goods between the countries, the enforcement of the agreement would lead to a free flow of European goods to all EAC countries through Kenya, given the difficulty of enforcing rules of origin, in a process called trade diversion. Intra-EAC imports would decline by $42 million[4]. Conversely, the EU would never allow its member states to sign bilateral trade agreements.

Indeed, Kenya’s move is in breach of the Customs Union Protocol and the Common Market Protocol of the EAC. On top of that, its interpretation of the variable geometry principle might be flawed on two levels. Firstly, the principle is intended to be evoked only between members of the community and not third parties, like the EU. Secondly, EAC heads of state decided in February 2021 that Kenya was allowed to invoke the principle to implement the standing EPA, but not necessarily to open new negotiations.[5]

The Kenya-EU FTA effectively undermines the efforts of EAC states towards regional integration. The European Union is to blame for undermining the region’s successful integration efforts[6].

Brussels effect or boomerang effect

One may suspect the European Union is applying a cunning divide and rule strategy. Indeed, the bloc is known for being able to export its legislative framework towards other parts of the world, dubbed the Brussels’ effect. If the deal with Kenya gets ratified, it is likely that rules enshrined in the agreement would be taken over de facto or de jure by other EAC states and ultimately find their way in the African Continental Free Trade Area.

This becomes apparent in the chapter on trade and sustainable development, which contains binding provisions on the environment and climate. While binding environmental provisions should be welcomed, the fact that the agreement does not recognize the differentiated responsibility of countries to combat climate change is unbalanced to say the least. Binding environmental provisions should be supplemented with effective financial support, given the difference in both partners’ resources.

The EU’s intentions also become clear reading the rendezvous clauses that are introduced in the agreement. These oblige Kenya to continue to negotiate in the areas of investment, government procurement, services, sustainable development, intellectual property rights and competition policy after the entry into force. The contentiousness of these issues were part of the reason why the latest multilateral trade negotiations failed.  Now that the Kenyan government will have to negotiate the topics of the rendezvous clauses without the support of its EAC partner countries, its ability to stand its ground against EU pressure might be reduced[7], and historical power asymmetries might be deepened.

While the Brussels effect is certainly at play, the truth is that Europe’s influence is waning. The EU was unsuccessful in finalizing different EPAs. Its postcolonial attempts to close unbalanced trade deals are challenged more and more by its trade partners. As long as the EU misuses trade to further its own interests at the detriment of the interests of other countries, the Brussels effect might well become a boomerang effect.

What should the EU do?   The European Commission must refrain from negotiating bilateral free trade agreements with individual countries that are part of Regional Economic Communities, as to avoid undermining the regional integration. The Commission must also refrain from using direct or indirect pressure to negotiate, sign and ratify agreements that are detrimental to the development of other countries. The European Parliament must see to it that trade agreements are negotiated freely, fairly, and balanced, and reject any trade agreements that are not. The Council of the EU must refrain from applying standstill clauses in its negotiation mandates as they limit the policy space of countries to adapt their trade policy following changing development challenges and opportunities. When adding sustainability requirements to trade agreements, the European Commission and the Council should recognize Europe’s (historical) contribution to climate change, poverty and war and provide additional unbound financial support to APC countries to implement such sustainability requirements. On the basis of the WTO’s enabling clause, the European Union and its member states should work towards an OECD unified preference scheme for Least Developed Countries and their Customs Unions that grants full tariff-free and quota free product coverage. Technical assistance must be provided to comply with standards and non-tariff barriers. Such assistance should also focus on high value-added products as to support the industrial base of LDCs. This scheme should be set up in line with the African Union proposal for such a common scheme[8].

What should Kenya do?   Kenya could explore the alternative option available i.e., the Generalized System of Preferences Plus (GSP+) where her top 27 exports to the EU including the much-cited flower and horticulture exports will access duty free and quota free. This is already being used by countries like Peru, Paraguay, Mongolia, Cape Verde, Ecuador among others.

The European Union does not apply the above-described strategy only to the EAC. Upcoming Case study #7 on the impacts of EU policies on local dairy value chains in West Africa explores how the interim EPA with Ghana and Côte d’Ivoire might impact the West-African dairy industry, although many ECOWAS countries and Mauritania decided to not go forward with the conclusion of the EPA.

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[1] https://international-partnerships.ec.europa.eu/system/files/2021-04/negotiated-agreement-text-initialled-by-eu-oacps-chief-negotiators-20210415_en.pdf

[2] https://www.tralac.org/news/article/11545-un-body-warns-region-against-signing-trade-deal-with-eu.html

[3] https://seatiniuganda.org/download/press-statement-on-the-inherent-danger-of-the-eu-kenya-economic-partnership-agreement-epa-on-the-eac-regional-integraton-and-afcfta-implementation/

[4] https://www.tralac.org/news/article/11545-un-body-warns-region-against-signing-trade-deal-with-eu.html

[5] https://www.eac.int/communique/1942-communiqué-of-the-21st-ordinary-summit-of-the-east-african-community-heads-of-state

[6] https://seatiniuganda.org/download/press-statement-on-the-inherent-danger-of-the-eu-kenya-economic-partnership-agreement-epa-on-the-eac-regional-integraton-and-afcfta-implementation/

[7] https://www.bilaterals.org/?kenya-eu-economic-partnership&lang=en

[8] https://www.tralac.org/documents/resources/african-union/1576-proposal-for-a-common-and-enhanced-trade-preference-system-for-ldcs-and-low-income-countries-may-2012/file.html