The economic impact of EU’s Green Deal on farmers in Eastern Africa
Saturday May 27 2023
The European Commission is adopting intermediate proposals in its international climate policy as outlined in the European Green Deal.
The Green Deal provides a road map for a socioecological transition to a low-carbon future and the building blocks for a green economic growth strategy to address climate change, energy, and biodiversity.
However, the implications of the EU Green Deal (EU GD) for Africa are multifaceted.
Most prominently, the stringent policies outlined in the Farm to Fork (F2F) and Chemical Sustainability Strategies will greatly affect global trade in agricultural inputs and outputs and, by extension, the economies of African countries that greatly depend on agriculture.
Implementing this EU GD will increase costs on the already overburdened farmers who are now buying inputs at an all-time high price precipitated by the Russian-Ukraine war and high inflation rates, which have not only impacted farm productivity and profitability but also increased other costs like freight and local logistics.
Economic evaluations show an introduction of a unique array of “sustainability” requirements whose compliance costs will be borne by the farmers as implementation gets underway.
The new additional requirements threaten the livelihoods of many small producers and may significantly reduce the export earnings of East African countries such as Uganda, which is the second largest horticulture exporter in the region.
Horticultural exports from East Africa to the EU are valued at more than $2.3 billion, with smallholder farmers contributing up to 70 percent of the export volumes. The study revealed that farmers would be overburdened by the new regulations because substantial costs will be introduced with the new specifications on standards, certifications, logistics, and carbon border adjustment mechanisms (CBAM).
The climate change/ green funds from the West to developing countries have not increased significantly from the $6.7 billion set aside annually since 2018, and while a significant amount has gone to mitigation, Africa needs funds for “Adaptation”, hence these developing countries are yet to adopt adaptation and resilience approaches to climate change.
This may lead to farmers significantly pulling out from export-oriented horticultural production if not adequately and affordably financed or subsidised by their governments or by any other bilateral arrangements to achieve the EU GD requirements. The drop in horticultural exports, and in essence, household incomes, is likely to impact food security within their specific countries.
Climate change has increased the resistance of emerging and re-emerging pests and diseases, which calls for the use of strong plant protection products (PPP). The requirements to lean towards organic farming, as enshrined in the EU GD, is thus likely to be a tall order to achieve, with increased pest pressure.
Without adequate research in more effective Integrated Pest Management (IPM), development, distribution and up-take of IPM products by farmers and the intended withdrawal of at least 50 percent of the conventional pest control products as required by the EU GD, it will be a huge challenge addressing emerging and re-emerging pests and diseases. This will result in declining production for exported horticulture.
The study established that in most East African countries,’ regulators have yet to embrace the EU Green Deal fully. There is a need to strengthen the already weak institutional governance and regulatory frameworks to support smallholder farmers at national and regional levels.
With the major impact that the EU GD is likely to pose to these economies, there is an urgent need for quick interventions to encourage consultations on how to implement these regulations.
Since EU GD is a government-driven policy, the private sector can only await government directions and guidance. One recommendation is for individual countries in the East African region to conduct impact assessments of the European Green Deal and its impact - an agenda for reducing production and supply risk based on objective scientific facts, not perceptions.
Technological innovations based on the Total Factor Productivity (TFP), coupled with a mix of technologies that are novel and technically effective, would address innovation in the agricultural sector within the EA community. This will require negotiations for the gradual adoption of policies to address trade-offs and maximise synergies.
The EAC Governments (bloc) support through subsidies and trade negotiations with the EU bloc would be imperative for regional farmers’ access to the European market. Adopting a global approach will help foster sustainable production and address safety along the supply chain.
In summary, the implementation of the EU GD in its current form falls short in support of progressive and sustainable export-oriented farming for most East African smallholder farmers as it will introduce additional constraints that will impact the region’s competitiveness, sustainability and livelihoods negatively, so whereas the EU will achieve its goals, the countries of export will be reeling from significant production and compliance challenges.
Study by Eastern Africa Farmers Federation (EAFF)