South Africa secured a good beef export deal with the EU
In 1975, a more innocent time, the European Union signed the beef and veal protocol, which granted what became of its former African colonies access to the EU beef market.
That was before the Europeans gave the world mad cow disease by feeding their cattle the remains of other cattle and then obliging everyone trading with them to trace every step a cow has taken from “farm to fork”.
But since 1975 Swaziland, Kenya, Madagascar and Zimbabwe have ceased exporting beef to the EU, either voluntarily or after being compelled by the union’s rules.
In 2011 EU inspectors found that Botswana’s programme of tracing beef from “farm to fork” did not conform to its standards and halted the country’s exports, although they are expected to be resumed sometime this month. Only Namibia still remains in the EU market.
Botswana has been dependent on its exports to the EU and they remain the bulwark of the nation’s international trade policy.
European access meant that, for the first time, Botswana’s main agricultural export was free of market dependence on South Africa.
What is not widely known is that long before DF Malan had dreamt of apartheid for people, the South African government practised a system of apartheid for cattle. Botswana cattle weighing less than 340kg could not be exported to South Africa for slaughter. These were invariably cattle raised by Batswana and therefore destined for the local market and low prices. To reach that weight meant the cattle had been raised on a white-owned farm where feed was available. This system protected white farmers in South Africa from competition from their black South African Customs Union neighbours.
High tariffs
The high prices paid by the EU have raised rural incomes and alleviated poverty.
But the arrangement is facing ever more serious internal strains. The high prices for beef were based on both high tariffs and massive export subsidies under the EU’s common agricultural policy. In 1990, export subsidies for EU beef were €10-billion, but as the EU underwent one agricultural policy reform after another, export subsidies went down to a mere €1-billion by 2010.
But if the Doha round of trade negotiations at the World Trade Organisation (WTO) ever come to a close, a relatively unlikely prospect at this point, the EU will have to cut its beef import duties by 50% from current levels of €3 a kilogram plus 12.5% for chilled meat.
The EU will reform its agricultural sector after 2013 and demand and production are expected to be stagnant until 2020, but the price of beef in the EU market could fall by 15% to 33% by the end of the decade if the WTO negotiations come to an end. Of all the EU sectors, beef will experience the sharpest downward price adjustment because it still remains heavily protected by high tariffs.
But just as EU prices may decline, the EU is also imposing ever more serious sanitary, health and animal standards on the trade, making it more expensive and difficult for Batswana farmers and policymakers to comply with its standards.
Higher standards
The global standards for the beef trade are established by the International Office of Epizootics, but there is little stopping countries or regions from setting higher standards. And this is precisely what the EU does. For example, the union does not accept animals from a foot-and-mouth disease area, even if an animal is certified as disease-free. The Botswana Meat Commission is still forced to debone the meat to decrease the (nonexistent) risk of foot-and-mouth disease. This is not required by international standards, only by the EU.
It is possible to protect cattle by vaccinating them. But, until recently, cattle injected with the vaccine were banned in the EU.
To protect cattle from the disease, which is rampant among wild buffalo, extremely long fences have been built in Botswana and Namibia. They stretch thousands of kilometres across the Kalahari and cost millions to maintain each year. After the Great Wall of China, they are the only man-made structures on Earth that are visible to astronauts from outer space.
The EU also forces Botswana to test cattle, at a very high cost, for mad cow disease, although there has never been an outbreak of it in the country and the union’s members are the main source of the disease.
The EU standards on animal welfare, transport, cleanliness and a host of other issues, including labour standards, become higher and higher each year.
The obvious
Few doubt that the cost of complying with the EU’s ever higher standards may be higher than the benefit in terms of higher prices – but union access is such a bedrock of Botswana’s external relations and its agricultural policy that no one dares to say the obvious.
A new threat to Botswana and Namibia’s access to the EU market is now emerging. It comes from the almost never-ending free-trade negotiations with Europe, the economic partnership agreement negotiations. Several Southern African Development Community (SADC) states have had close to a decade of negotiations with the EU and, as yet, no final closure.
In late 2007 and 2008, Botswana, Swaziland, Lesotho and Mozambique – and Namibia, reluctantly – initialled the interim agreement to maintain their market access to the EU for their beef, fish, sugar textiles and table grapes. Now the union has threatened 18 countries, including Botswana, that it will withdraw its concessions if they have not started ratification by the end of next year. This will mean no more duty- and quota-free access for beef.
The problem is that the negotiations have expanded in scope and now include South Africa, which, as a member of the Southern African Customs Union, has joined, although it already has a relatively generous free-trade agreement that was negotiated with the EU when Nelson Mandela was president. This unusual generosity by the EU is frequently referred to among negotiators as the “Mandela effect”.
Satisfied
Unfortunately, the rest of SADC has no one of the stature of the former South African president and hence the Europeans have been less than kind in the economic partnership agreement negotiations. South Africa is also in no hurry to sign the agreement unless it means improvements in its market access to the EU.
Botswana has not ratified the interim agreement and will do so only once the final agreement is completed and all Southern African Customs members are satisfied.
But what if South Africa is unable to reach a deal with the EU by the end of this year when the negotiations are supposed to come to an end, according to the union-imposed deadline? In theory, Botswana could act alone and ratify the interim agreement and continue to have access to the EU. But the problem is that, under the terms of a 2002 customs union agreement, Botswana cannot act alone without the other members.
Perhaps it is time for Botswana to openly ask whether beef access to the EU is really worth the cost, or should it focus its relatively small exports on national, South African and possibly Asian or Middle Eastern markets? Given the history and the economics, this seems unlikely.
These are the views of Professor Roman Grynberg and not necessarily those of the Botswana Institute for Development Policy Analysis where he is employed