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)
Emergence of climate change
standards in agro-food sector

UK Retailer initiatives to reduce carbon footprint

Tesco – Greenerliving
• 50% energy use reduction, local sourcing
• Carbon emission labelling by 2012

Marks & Spencer – Plan A
• Setting targets to reduce food imported by air
• Labelling of all air-freighted foods as 'flown‘

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

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
Germany – Naturland & Bioland: 45%
Netherlands – Biologica: …%
Sweden – KRAV: …%
Private standards can de facto govern market
access (intra-EU and imports into EU)
Organic standards and climate
change: two main approaches
1)
Include specific CC standards within organic
standards


2)
Broad standards on CC (Bioland)
Focus on a ‘climate killer’
• Soil Association and Bio-Suisse: air freight
• Naturland: food miles
Develop independent, additional CC standards

KRAV and Swedish Farmers’ Federation: both
organic and conventional
The UK Soil Association proposal
to ban air-freight of organic imports

Green paper & public consultation in 2007


Critiques from UK industry and gov., DCs




Options for partial or complete ban?
One-sided focus on air freight as the culprit
Protectionist of UK (and other EU) farmers
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
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 UKbased, 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
UK organic fresh produce market

Large, dynamic, diversified, profitable






Competitive and efficient





More diversified product range
More continuous supply (multi-seasonal)
High share of value added / processed
Consumer focus on taste & health
High import growth and high premia
5–6 supermarket chains dominate organic retail
15–20 large importers/wholesalers supply retailers
Mixed organic-conventional firms dominate imports
Importers backward integrated into production
Will mainland EU follow this pattern?
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.

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
Likely impacts of a ban in
developing countries
– 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
 50


79% of all air freighted organic imports
Egypt, Kenya, Morocco, Zambia
 Low
income countries depend most
strongly on air freight (vs. sea freight)
Detailed assessment of impacts
in Sub Saharan Africa

Two dominant systems of operation



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)
Economic impacts on:



Export firms
Workers and outgrowers and their dependents
Input suppliers and local communities (multipliers)
Related ‘social’ impacts – schooling, crime, etc.
 Effects at the sector level (Kenya)

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
Localized but significant economic and social impacts
Women, youth, casuals and smallholders hardest hit
Perverse effects on specialized organic operators
Ghana example (outgrower type)



4316 livelihoods
Smallholder revenue loss of $2860 / year
• Organic premia, disincentive effects on yields
Negative effects on planned investments in organics
Broader issues


Private climate change standards may have
significantly impacts on exporters, producers
and workers in developing countries

Reduction in de facto market access

Loss of price premia (if linked to organic or FT)

More demanding and costly standards compliance
Could potentially stifle innovation, investment
and growth in organics in developing countries
Broader issues

Northern NGOs and movements were key actors
in defining and promoting this CC standard



General pattern for ‘sustainability’ standard setting
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)