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 a 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 carbon footprint Tesco – Greenerliving Tesco – Greenerliving 50% energy use reduction, local sourcing50% energy use reduction, local sourcing Carbon emission labelling by 2012Carbon emission labelling by 2012 Marks & Spencer – Plan A Marks & Spencer – Plan A Setting targets to reduce food imported by airSetting targets to reduce food imported by air Labelling of all air-freighted foods as 'flown‘Labelling of all air-freighted foods as 'flown‘ Smaller initiatives by other EU retailers Smaller initiatives by other EU retailers  Organic box schemes – ‘We never air freight’  Initiatives by organic movement (IFOAM) and private organic standard setting bodies in the EU

3. Private organic standards and EU market access  Organic movement (IFOAM) influences EU regulation on organics  Private organic standards in excess of EU regulatory requirements are important UK – Soil Association: 70% of operators UK – Soil Association: 70% of operators Germany – Naturland & Bioland: 45% Germany – Naturland & Bioland: 45% Netherlands – Biologica: …% Netherlands – Biologica: …% Sweden – KRAV: …% Sweden – KRAV: …%  Private standards can de facto govern market access (intra-EU and imports into EU)

4. Organic standards and climate change: two main approaches 1) Include specific CC standards within organic standards Broad standards on CC (Bioland) Broad standards on CC (Bioland) Focus on a ‘climate killer’ Focus on a ‘climate killer’ Soil Association and Bio-Suisse: air freightSoil Association and Bio-Suisse: air freight Naturland: food milesNaturland: food miles 2) Develop independent, additional CC standards KRAV and Swedish Farmers’ Federation: both organic and conventional KRAV and Swedish Farmers’ Federation: both organic and conventional

5. The UK Soil Association proposal to ban air-freight of organic imports  Green paper & public consultation in 2007 Options for partial or complete ban? Options for partial or complete ban?  Critiques from UK industry and gov., DCs One-sided focus on air freight as the culprit One-sided focus on air freight as the culprit Protectionist of UK (and other EU) farmers Protectionist of UK (and other EU) farmers Skewed impact on developing countries Skewed impact on developing countries  What options do importers have in case of a ban? Shift from the SA to the EU standard or stop importing organic products flown by air Shift from the SA to the EU standard or stop importing organic products flown by air

6. Study on economic impact of the proposed air freight ban  Assumption: complete ban (vs. partial)  Foci: fresh produce, UK market, SSA producers  Questionnaire survey of importers (13 UK- based, 6 in Germany, 6 in Holland)  Interviews with UK retailers  Interviews with 5 organic standard-setting bodies and 8 organic certification bodies  Questionnaire survey of exporters in SSA  Case studies of 4 operations in Kenya & Ghana

7. UK organic fresh produce market  Large, dynamic, diversified, profitable More diversified product range More diversified product range More continuous supply (multi-seasonal) More continuous supply (multi-seasonal) High share of value added / processed High share of value added / processed Consumer focus on taste & health Consumer focus on taste & health High import growth and high premia High import growth and high premia  Competitive and efficient 5–6 supermarket chains dominate organic retail 5–6 supermarket chains dominate organic retail 15–20 large importers/wholesalers supply retailers 15–20 large importers/wholesalers supply retailers Mixed organic-conventional firms dominate imports Mixed organic-conventional firms dominate imports Importers backward integrated into production Importers backward integrated into production  Will mainland EU follow this pattern?

8. Fresh organic produce imported by air to the UK (2006)  1.9% of all organic imports (6278 tons) Beans and peas, other temp. vegs., salad vegetables, exotic fruits, temperate fruits, s.p. Beans and peas, other temp. vegs., salad vegetables, exotic fruits, temperate fruits, s.p.  4.1% of organic imports in these categories  8.1% of organic fresh produce retail value  A ban would immediately reduce retail sales by ₤42.6 million, indirectly affect demand for other organic products, stifle innovation, hence generally slowing growth in the sub-sector

9. Likely impacts of a ban in developing countries  50 – 60 exporters worldwide: de-certify (premia loss) or close the business!  Minimum 21,500 livelihoods compromised  Mainly in ‘low income’ and ‘lower middle income’ countries 79% of all air freighted organic imports 79% of all air freighted organic imports Egypt, Kenya, Morocco, Zambia Egypt, Kenya, Morocco, Zambia  Low income countries depend most strongly on air freight (vs. sea freight)

10. Detailed assessment of impacts in Sub Saharan Africa  Two dominant systems of operation Medium-to-large scale commercial farmer-exporters (ex: Kenya, partly organic) Medium-to-large scale commercial farmer-exporters (ex: Kenya, partly organic) Exporters relying wholly or partly on small-to-medium scale outgrowers (ex: Ghana, partly organic) Exporters relying wholly or partly on small-to-medium scale outgrowers (ex: Ghana, partly organic)  Economic impacts on: Export firms Export firms Workers and outgrowers and their dependents Workers and outgrowers and their dependents Input suppliers and local communities (multipliers) Input suppliers and local communities (multipliers)  Related ‘social’ impacts – schooling, crime, etc.  Effects at the sector level (Kenya)

11. Likely impacts in SSA  11–15 exporters in South Africa, Zambia, Cameroon, Ghana, Gambia and Kenya Loss of 2000 tons/year of high-value exports Loss of 2000 tons/year of high-value exports Localized but significant economic and social impacts Localized but significant economic and social impacts Women, youth, casuals and smallholders hardest hit Women, youth, casuals and smallholders hardest hit Perverse effects on specialized organic operators Perverse effects on specialized organic operators  Ghana example (outgrower type) 4316 livelihoods 4316 livelihoods Smallholder revenue loss of $2860 / year Smallholder revenue loss of $2860 / year Organic premia, disincentive effects on yieldsOrganic premia, disincentive effects on yields Negative effects on planned investments in organics Negative effects on planned investments in organics

12. Broader issues  Private climate change standards may have significantly impacts on exporters, producers and workers in developing countries Reduction in de facto market access Reduction in de facto market access Loss of price premia (if linked to organic or FT) Loss of price premia (if linked to organic or FT) More demanding and costly standards compliance More demanding and costly standards compliance  Could potentially stifle innovation, investment and growth in organics in developing countries

13. Broader issues  Northern NGOs and movements were key actors in defining and promoting this CC standard General pattern for ‘sustainability’ standard setting General pattern for ‘sustainability’ standard setting External actors may strongly influence value chain governance (and not only lead firms) External actors may strongly influence value chain governance (and not only lead firms)  Retailers in this case did not quietly accept changes in the (sustainability) standard  Developing countries had little or no influence on standard setting in this case (except perhaps Kenyan-based exporters)