TradeStandards.org: Barrier, Catalyst or Distraction: Standards, Competitiveness, and Africa’s Groundnut Exports to Europe

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Barrier, Catalyst or Distraction: Standards, Competitiveness, and Africa’s Groundnut Exports to Europe

Analysis of trade and regulatory data, country experiences, and interviews with groundnut exporters and importers provides valuable insights into the factors affecting the region's competitiveness

This paper relates to the trade impacts of food safety standards with a specific focus on the the impacts of the EU aflatoxin standards on Africa's groundnut trade. In part due to some earlier World Bank research on this subject, the aflatoxin issue has been frequently cited as an illustration of how standards serve as 'trade barriers' for developing countries. Trade economists and African policy-makers frequently cite this case as an example of how non-scientifically based standards have resulted in large 'losses' of developing country trade. This paper draws upon trade and regulatory data, country experiences, and interviews with groundnut exporting and importing companies. It draws conclusions that differ sharply from the 'standards as barrier' hypothesis.

Specifically, the paper below demonstrates that:

Africa's groundnut trade was marginalized long prior to the EU 's adoption and enforcement of more stringent standards;
Because of this and other factors, the aggregate effects of the EU regulation for the region, in terms of intercepted trade, are small and vastly overstated by prior research; yet, for the companies involved in the notifications, the EU regulations have had more profound effects, as the economic implications of returned consignments or discounted product may be significant;
There are sharp differences in standards response and overall competitiveness among countries, in large part due to differences in industry leadership and the efficacy of public-private collaborations;
Major competitors from Latin America and Asia have substantially upgraded their export-oriented groundnut supply chains, meeting market and regulatory requirements and taking market share and customer loyalty from earlier African suppliers. The EU standards have thus catalyzed regulatory, technological, administrative, and other changes in certain developing countries although not in others;
It is these competitors rather than African suppliers who would have benefited had the EU adopted a less stringent harmonized standard (such as that of Codex). Most of the African groundnuts trade that has been intercepted by the EU authorities since 2000 would have failed the Codex (or any other prevailing) standards; and
African industries need to catch up with their competitors in terms of productivity, product quality, and supply reliability in order to effectively service any growing international market for groundnuts, let alone the more discerning EU (confectionary) market. There are ample examples of 'good practice' that could be replicated to achieve this that involve efforts of research, extension, seed supply and supply chain coordination.