PROMOTING INTERNATIONAL TRADE - The Grain and Feed Trade ...
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P R O M O T I N G I N T E R N AT I O N A L T R A D E
Issue 244 / July 2020
Gafta London Grains
Week brings trade
President together – in an
addresses online format
members London Grains Week 2020 kicked
off on Monday 8 June in a format
that no one expected when
As the Gafta Dinner could not
planning first began. The global
take place, due to social
Covid-19 outbreak meant that
distancing rules, Gafta’s President,
instead of the industry all gathering
Gavin Millar, addressed members
in London, the four partners had to
via video link on the day of the Gafta President, utilise and embrace the digital
intended Dinner, 10 June. Gavin Millar
alternatives in order to continue the
Gavin paid tribute to all those involved in the ePhyto Solution (see page 9). “With Mexico and vital work that takes place over
vital role of moving food and feed around the Colombia soon to be operational, there will be even these five days.
world, and described how the mammoth efforts more opportunities for our members to be
of his own colleagues at his company Gemcom involved in case studies to test this facility in What was going to be an intense succession of
had helped to ensure they didn’t let their several trade flows.” strategy sessions including a 2-day conference
customers down during lockdown. “It is without and a black-tie dinner, morphed into a series of
a doubt a privilege to be part of an industry that Gafta, together with the Global Pulse video meetings and online presentations. AHDB,
is so fundamental, and never felt more than at a Confederation, also reached out to the WTO on IGC, IGTC and Gafta came together to ensure
time like this. I am sure I am not alone in saying the need to promote open trade and to avoid that all essential issues were still discussed so
this experience has given all of us an even export restrictions which negatively impact that business can continue to move forward, and
greater sense of purpose to the work we do.” food prices, hamper trade and impact on food adjusted timings as far as possible for the many
security. “We very much welcomed the WTO time zones that would be affected by the change.
Gafta has worked hard to keep trade flowing, pledge and the G20 Agriculture Ministers’ The events that took place were the IGC
said Gavin; the Association supported IAFN at statement supporting the role of international Conference, IGTC’s strategy session, Council
the very start of the pandemic in raising private trade,” said Gavin, who also expressed his session of IGC and meetings of Gafta’s
sector concerns on the need to ensure food and concern about the forecast increase in the Arbitration Committee, International Contracts
feed chains are not disrupted. Advocacy at the number of people facing food insecurity in the Committee and Council.
EU, in conjunction with CELCAA and world to around 265 million. Gafta supports the
In the middle of the week, the IGC Conference
COCERAL, to maintain trade flows was also UN Committee on World Food Security which
merged two days of sessions into one day of
very successful. will discuss this issue at its next session.
online releases, covering issues such as
"Closely monitoring stocks and exports will be
globalisation, climate change, supply chain and
“There have certainly been challenges with important in the months ahead as food security
major commodity market developments.
additional quarantine measures in the dispatch remains a priority."
Attracting over 350 registrations from over 50
and receipt of shipping documents,” said
countries, the event was a great success and
Gavin. “Covid-19 has demonstrated how the Nearly all Gafta services have been maintained
definitely didn’t suffer from having to go online.
global trade needs to be more flexible, and in recent months, with online training fully
embrace technology.” Gafta has helped to available (page 12), remote auditing in place for London Grains Week next year will take place
promote initiatives taken by exporting the Approved Registers (page 13) and online on 7-11 June 2021, and we look forward to
governments around the world with regard to arbitration procedures. “We are all playing our seeing you all in person then.
electronic submission of copies of documents part in helping to keep the world fed,” said
and will continue to encourage these positive Gavin. “I am very proud, as your President, to
changes. In particular, Gafta supports the raise a toast to you all, until we meet again,
IGTC’s efforts in raising awareness of the IPPC which we will.”
To see the video, go to:
https://www.gafta.com/events/London-Grains-Week-l-8-12-June-2020-l-London-UK/72822
Have you seen our lockdown interviews?
Visit our LinkedIn page to see how Gafta Council members and
Arbitrators have been dealing with the new work and trade environment:
https://www.linkedin.com/company/1028987/admin/
“All Supporting Documents” in demurrage
claims – analysis of recent English Law
By Darren Wall, Partner, and Amy Walmsley, Associate, Hill Dickinson
There are a number of historic law reports addressing time-bars in the context of
demurrage claims and, in particular, what is meant by the term “all supporting
documents”. Recently, three judgments issued across four months have
led to further scrutiny of this phrase that is often contained in bespoke
laytime/demurrage provisions in sale contracts and voyage
charterparties.
The first report to touch on this issue was the within 90 days of completion of discharge of the supporting documents were presented within the
Tiger Shanghai1, an appeal against an Arbitration final parcel. There then followed an itemised list 90-day period, charterers argued that since
Award wherein the tribunal had held that of what supporting documents were required, copies of the bills of lading were missing, owners
charterers’ claim for return of advanced hire and including vessel and/or terminal time logs; NOR; had failed to provide all supporting documents
bunkers paid for2 was time-barred. Whilst this Pumping Logs and Letters of Protest. (the argument being that the charterparty
was a time charterparty, the relevant clause that provisions required demurrage to be calculated
took centre stage on appeal was one that Owners had omitted the vessel’s pumping log at against the bill of lading quantities). Owners took
required charterers to notify all claims “in detail” load port and a letter of protest from the Master the view that the phrase required only
and “in writing accompanied by all available with the submitted claim, although such presentation of essential documents, which as a
supporting documents” and appoint an arbitrator documents had earlier been supplied to charterers. general rule was confined to the statement of
within twelve months from redelivery of the facts (SOF). The arbitral tribunal agreed that the
vessel. Wording that could equally be at home In his judgment the judge preferred a construction SOF was sufficient for charterers to understand
within a demurrage/time-bar clause and so the requiring documents to be submitted that are owners’ claim because it recorded the figures
principles can be applied by way of analogy. relied on in support of a demurrage claim, or one from the bills of lading. The judge disagreed with
that at face value established the validity of the owners, ruling that the failure to produce bills of
Charterers had indeed appointed an arbitrator claim. However, given the subsequent lading in support of the demurrage claim barred
and notified owners of a claim within this time. mandatory wording itemising four categories of the entire claim.
Owners however contended that charterers had documentation, it was ultimately decided that
failed to provide “all available supporting this second part of the clause required those By way of summary, it is clear that importing “all
documents”. In particular, would charterers have documents to be provided in support of the claim available” within a requirement for supporting
fallen foul of this requirement when attaching a – even if they were not relevant. Owners’ claim documents in a demurrage claim opens up a
document in its Claim Submissions that did not was allowed to proceed on a finding that it was more expansive requirement of what one should
form part of the initial claim notification, even not necessary for all supporting documents to append to a laytime calculation. The authorities
where it had provided other evidence sufficient accompany the demurrage claim itself – it was are clear that factual corrections can be made at
to particularise liability and quantum at the time sufficient if some of the required documents had a later date, but the intention of such wording
of notification? Charterers’ appeal was dismissed, already been passed to charterers previously. requires owners (or a fob buyer/cif seller) to
and it was found that indeed in these provide all available documents within the time
circumstances owners were able to successfully In the MTM Hong Kong4, the relevant provision prescribed5.
rely on time-bar – emphasis was placed on the contained a 90-day period after completion of
requirement that Charterers provide all discharge for presentation by owners of a claim Given that the recent line of authorities
supporting evidence. or invoice and “all supporting documents”, demonstrates that a time bar argument can be
failing which “any claim/invoice … shall be raised rather late in the day (as in the first case
In the Amalie Essberger3, charterers contended waived and absolutely barred”... The charterparty above), the old adage that one needs to pay close
that owners had not submitted the demurrage also contained a provision regarding prorating of attention to the wording of applicable time bar
claim in accordance with the requirements of the demurrage against bill of lading quantities where clauses has never been truer. The addition of
charterparty and within the 90-day period set loading or discharging operations were carried particular words such as “available” and “all”
down for such claims. In this case, the time-bar out at the same time as other parcels. has the ability to import stricter requirements on
clause obliged owners to make a written claim documentary obligations. In short, one should
with “all supporting calculations and documents” Whilst owners’ demurrage invoice and always err on the side of caution.
Gafta and HFW webinar on force majeure
Gafta held a successful webinar with Gafta members HFW on 11 June, discussing force majeure in relation to the coronavirus pandemic. Chaired by
Director General Jaine Chisholm Caunt, the session started with Gafta’s General Counsel Jonathan Waters taking attendees through the principles
behind force majeure and the related clauses in Gafta contracts. HFW Partner Adam Richardson then spoke about current trends in force majeure
claims and how the industry is responding to the disruption that the outbreak has caused.
The two presentations were then followed up with a busy Q&A session, which focused on some practical scenarios, plus the potential impact on Gafta
arbitration in the future.
Thank you to HFW and everyone who attended for a really interesting morning.
1 MUR Shipping v. Louis Dreyfus Company Suisse SA [2019] EWHC 3240 (Comm). 2 The underlying dispute involved the early termination of the charter due to owners’ alleged unreasonable behaviour in
refusing permission to cut new cement feeder holes into the hatch covers. 3 Amalie Essberger Tankreederei GmbH & Co KG v. Marubeni Corporation [2019] EWHC 3402 (Comm). 4 MTM Trading LLC v. Tricon
Energy Ltd [2020] EWHC 700 (Comm). 5 Such principle can be traced back to The Oltenia [1982] 1 Lloyd’s Rep.448.
The views and opinions expressed in Gaftaworld are those of the individual authors and do not necessarily reflect the official policy or position of Gafta
2 CONTRACTS & ARBITRATION
Argentina – exports
continue despite COVID
disruptions and problems
on the Paraná River
By Gustavo Idigoras, President, CIARA-CEC
Argentina has been affected by the global pandemic like the rest of the world. Based on the early measures taken by the
Argentine government, the contagion curve is low and the health situation is under control. From 16 March a National
Emergency was declared and therefore sanitary authorities were requested to direct their best efforts at avoiding the
spread of Covid-19. From 20 March Argentina set up National Mandatory Isolation and the national government has
now extended these measures until 28 June. Although the national regulation stipulated that agriculture and food value
chains, as well as foreign trade activities, are excluded from the isolation measures, with all of our ports remaining
operative, these measures are affecting and may affect the normal operations to our trade.
All plants and ports have taken preventive sanitary measures to safeguard exceeding 50M tonnes. Marketing of maize by farmers is fluid. In the case
the health of workers, and no positive cases of Covid-19 have been of soybeans, the farmers' sales prospects are more limited, taking into
registered at this stage. There have been constant changes with respect to account the low international prices and high tax burden for exporting soy
Covid-19 requirements applicable to our trade. Here is a brief recap of the and its by-products.
most important news and drawbacks up to now:
Until the end of April, Argentina had exported 28M tonnes of grains from
• SENASA (National Food Safety Authority) has established an online this campaign (wheat, corn, soybeans, soy by-products, sunflower and by-
validation for copies of phytosanitary certificates products, barley, sorghum), reaching an approximate value of 7.7 billion
• Official entities and Chamber of Commerce and Chamber of Exporters dollars. The total projection is for the Argentine agri-business to reach a
are working with reduced staff and shorter timeframes total export value of close to 24 billion dollars for this agricultural
• Banks are reopening slowly, and presentation of CAD documents in campaign.
Buenos Aires have to be dealt with on a case by case basis between
counterparts The global pandemic of Covid-19 should not promote greater barriers to
• Also, release of original Bills of Lading has to be dealt with by maritime international trade, but rather promote food trade flows to respond to the
agents on a case by case basis world's greatest food security needs. We must work in a coordinated way so
• Embassies are showing restrictions for legalising documents that no country applies new border measures that are not based on science.
• Truck arrivals at loadport have been normalised
• Recent labour agreement with grain receivers’ union has been reached
and they have complied with full working hours from May
• Additional isolation requirements are implemented at Port of Bahia
Blanca for ships arriving from neighbouring countries with less than 14
days of sea travel
Depth of water in Paraná River (7th day of each month) (metres)
5
4.5
4
Source: Argentine Ministry of Transport
3.5
3
2.5
2
1.5
1
0.5
0
Jan Feb Mar Apr May Jun
2019 2020 • The historic downpipe of Paraná River affects intake of vessels
upriver. The height of the Paraná River in the port of Rosario has
Furthermore, the historic downpipe of Paraná River affects intake of vessels dropped to a depth of 0.40 meters, a level that has not been
upriver. The height of the Paraná River in the port of Rosario has dropped to recorded for almost 50 years.
a depth of 0.40 meters, a level that has not been recorded for almost 50 • This implies logistical, transport and industrialisation problems in
years. This implies logistical, transport and industrialisation problems in the the first four-month period of 2020
first five-month period of 2020, affecting the navigation and maximum load
of ships and barges at the port terminals of Gran Rosario, the epicenter of • Rosario Cluster: 80% of Argentina's theoretical daily soy and
the Argentine agri-business. sunflower processing capacity. 67% of grains, 96% of meal and
93% of vegetable oils exported were dispatched from these port
The soybean harvest has seen a reduction of 5M tonnes due to weather terminals in 2019.
conditions, reaching 50M tonnes production. The corn campaign is
TRADE UPDATE 3
Q & As with Ted
McKinney, U.S. Under
Secretary of Agriculture
Ted McKinney, U.S. Under Secretary of Agriculture for Trade and Foreign
Agricultural Affairs, kindly agreed to answer some questions on the key
trade issues facing Gafta and its members in these challenging times. Mr
McKinney, who grew up on a family farm in Indiana, previously served
as Director of the Indiana State Department of Agriculture from 2014 to
2017, following a career in the agri-sciences industry.
ANSWER: I am glad you’re following the study.
QUESTION: Covid-19: As the world adjusts you see the impact of the non-science based The U.S. International Trade Commission (USITC)
to the realities of Covid-19 risks and post- and non-aligned policies impacting on U.S. is an independent agency that is known for high-
pandemic precautions, Gafta has been exports to key trading blocs such as EU but quality analysis. The United States has long
advocating to encourage governments to now also mirrored in other regions such as supported science and evidence-based
avoid imposing new restrictions on Asia? Do you see a greater role for regulations, and we have been concerned at
agricultural commodities so that trade can international standards in addressing these several countries’ moves toward the
flow. How do you see your priorities for U.S. challenges? precautionary principle instead of following
agricultural trade changing in the months/ science. Of course, every country has the right to
years ahead as a result of the coronavirus protect its citizens’ health, but countries should
outbreak? ANSWER: The move away from World Trade not set up non-scientific barriers to trade under
Organization principles, and the proliferation of the guise of food safety, and the precautionary
non-tariff barriers to trade, is damaging to principle is vulnerable to abuse in that way.
ANSWER: After the critical importance of international trade and domestic economies. Given the complexity of our agriculture and food
ensuring human and employee health, our When trade restrictions are imposed for systems, it’s difficult to pull together all the strings
number one priority at the U.S. Department of protectionist reasons, producers find themselves of cause-and-effect of missing or low pesticide
Agriculture (USDA) is making sure everyone has unfairly unable to export, and importers in more MRLs. To date, there has not been a global review
enough safe and nutritious food during this crisis. restrictive markets are denied the capacity not of what happens when access is lost through too
This is a national and global responsibility. That is only to consume, but also to improve their own low or missing MRLs. No one had told that story,
why it is so important that our trading partners agricultural production. In short, when countries and I very much look forward to reading what
not impose new restrictions on trade in food and restrict trade, it distorts the market and consumers USITC has discovered.
agricultural products. As many before me have bear higher costs. To feed the world’s growing
said, the world’s food supply is ample, but food population, it is critical for the world’s economies While I can’t speculate on future discussions in
distribution is more fragile. So, we have to work to make science-based decisions about Geneva, I can assure you that there is a big role
harder than ever to ensure that our customers agricultural trade. The United States invites our for the private sector to play in supporting MRLs
around the world have access to U.S. products trading partners to continue working with us to based on robust risk assessments. We’ve seen a
and do not become victims of reactionary trade promote science-based, data-driven standards lot of misinformation in the public sphere – both
policy of importing countries. That means diligent through international standard setting bodies, in locally and internationally – about pesticides and
monitoring and enforcement of existing trade order to set the base for regulations that can other agricultural technologies. It’s a false
obligations and calling out bad measures when adequately provide safety, while also facilitating narrative, but one with such power that many
we see them. But beyond the trade policy space, trade. farmers around the world are afraid to speak up.
our job at USDA is also to help our farmers I tell all the U.S. commodity groups, growers, and
connect with customers around the world, and exporters I engage with to please speak up and
certainly that task is complicated by the QUESTION: Specifically, on MRLs: We were tell their stories. American farmers provide
pandemic. However, we continue working to pleased to learn of the U.S. ITC study which diverse, safe, healthy, and affordable products to
identify new market opportunities as we see shifts is examining the global economic impact of consumers and contribute greatly to our larger
in consumer behavior, and we are pursuing missing or low pesticide maximum residue economy – all while being good stewards of the
innovative approaches to remaining engaged levels on the agricultural commodity trade environment. They can’t be afraid to share that
with current and potential customers even when and are awaiting the results at the end of message.
travel is not feasible. June. Global MRL policies and their impact
on trade and food security is gaining At their core, farmers are innovators, and that
momentum in WTO. What are your views creativity and innovation has made U.S.
QUESTION: Non-tariff barriers and the on the future direction of these discussions agriculture successful. Embracing innovative
move away from science-based policies are in Geneva? Do you see a role for the private technologies allows farmers to become more
on the increase and they have significant sector to be more involved? efficient, which ultimately improves their bottom
impacts on the global food trade. How do lines by keeping costs low and productivity high.
4 TRADE POLICY NEWS
The United States’ open-arms approach to innovation enables
American farmers to produce more with fewer resources.
China imposes punitive tariffs
Our motto at USDA is to “Do Right and Feed Everyone,” and
innovation is the key to doing that. That’s why, earlier this year, U.S,
Secretary of Agriculture Sonny Perdue launched the Agriculture
on Australian barley and bans
Innovation Agenda, with the overall goal being that USDA will
stimulate innovation so that American agriculture can achieve the hog imports from India
shared goal of increasing production by 40 percent while cutting the
environmental footprint of U.S. agriculture in half by 2050. We will
do this by prioritizing both productivity and conservation of
resources. Following an anti-dumping investigation started in November
2018, the Chinese government imposed an 80.5% tariff on
Australian barley imports, starting from 19 May 2020, due to stay
QUESTION: FTAs have been on the rise and the United States in effect for five years. The tariff is composed of a 73.6% dumping
is an active negotiator on this front: what are priority FTAs for margin and a 6.9% subsidy margin. China has been a significant importer of
the U.S. administration over the next few months? Australian barley for some years; between July 2019 and March 2020, China
imported 837,000t of barley from Australia (accounting for 45% of total
barley shipments in that period) and in the same period of the previous
ANSWER: Bilateral trade agreements are important to the United season, Australia accounted for 73% of all China’s barley imports. Benjamin
States. We currently have 14 FTAs with 20 countries and are actively Tiller, Head of Trading at CBH Group commented:
pursuing more. Right now, the United States is engaged in trade
negotiations with China, the UK, Japan, Kenya, and the EU. We are “CBH is deeply disappointed with the implementation of the tariffs by
also thrilled about the new United States-Mexico-Canada MOFCOM and their impact on the Australian barley market. The loss in
Agreement, which enters into force in July. Our ultimate goal in all value to Australian growers, and in particular Western Australian growers, is
of these cases is to secure a level playing field for our producers and significant. In addition, our longstanding customer relationships in China,
exporters by securing free, fair, and reciprocal trade deals. particularly in the malting barley market, forged over many years of supply
have been disrupted. These are customers that have invested in Australian
product over many years but now face significant change in processes to
QUESTION: China: How is the implementation of the Phase 1 accommodate alternate origin barley and maintain consistency of product.
U.S.-China agreement going? Do you foresee further
de-escalation of trade tensions and reduction of tariffs between Since MOFCOM launched its anti-dumping investigation into Australian
China and United States this year? barley in late 2018, CBH and industry has been co-operating with the
Chinese Government to provide comprehensive and complete information
to counter allegations of dumping and continue our longstanding and valued
ANSWER: Implementation of the Phase One U.S.-China Economic trade relationship with the Chinese barley market. Unfortunately to no avail.
and Trade Agreement has been a real bright spot during this
otherwise difficult time. We at USDA are pleased to see that China However, we will continue to develop and strengthen relationships with
continues to make progress on implementing its obligations under alternative customers and markets to ensure maximum value is returned to
the Agreement, and we have highlighted this progress in a series of Western Australian barley growers in the future.”
press releases over the past few months. We understand that
purchases are behind, but there is still time to catch up. For now, we At the end of May, China also announced a ban on imports of pigs, wild
are continuing to promote U.S. products and encourage China to boar and their products from India, citing its continuing effort to prevent
live up to its purchase obligations. As for the reduction of tariffs, African Swine Fever, which
China’s tariff exclusion process seems to be operating effectively for had recently been reported in
U.S. agricultural exports and we are optimistic this trend will the border state of Assam.
continue. Alan Ding, of Gafta’s Beijing
office told Gaftaworld, “China
QUESTION: Africa: We note that U.S.-Kenya negotiations is the biggest pork consumer
towards an FTA are due to start. How compatible are these in the world, but due to
bilateral discussions with the obligations of Kenya under the African Swine Fever, China
East Africa Community Customs Union and the AfCFTA? What lost 40% of its live hogs last
are your negotiating objectives for agricultural trade with Africa? year. In the first four months of
2020, China imported 1.77M
ANSWER: Kenya is a recognized leader on the continent and an tonnes of pigmeat, an increase
important strategic partner of the United States. In 2019, total U.S- of 121% compared to the
Kenyan bilateral agricultural trade was $179 million, and we want same period last year. While
that value to grow. The U.S.-Kenya FTA will serve as a model for the main exporters to China
other sub-Saharan African nations and will advance the U.S.-Africa are USA and Canada, this ban
economic relationship while preserving the benefits African is important to India, as the
countries have traditionally enjoyed through one-way trade country has been aiming to
preference programs like the African Growth and Opportunity Act, open the Chinese meat market
which is set to expire in 2025. The United States applauds the efforts for years.”
of the African Union and Regional Economic Communities to
strengthen intraregional trade and development and we
enthusiastically support the landmark African Continental Free Trade
agreement. The agreement negotiating objectives were published on The Chinese malting and
May 22, and the objective for the negotiations is to secure a brewing industry was a
comprehensive, high-quality agreement with Kenya that will expand growing market for
U.S. market access to East Africa while ensuring a mutual benefit for Australian barley
both our agriculture industries.
TRADE POLICY NEWS 5
SACOTA and its role in the
South African grain industry
By Dirk Kok, SA Cereals and Oilseeds Trade Association, South Africa
South Africa is a country on the southernmost tip of the African continent. It
is a fairly large country covering a total area of 1.220 million km2 or
471,000 square miles with a total population of 57 million. It is about
the size of western Europe.
There are 11 official
Source: International Trade Centre, 2020
languages in South SA Agricultural Trade
3,500,000
Africa with English, 3,000,000
Afrikaans, Xhosa US Dollars ('000) 2,500,000
and Zulu being 2,000,000
1,500,000
the most
1,000,000
spoken. 500,000
0
4 1 2 3 4 1 2 3 4 1
South Africa is 17
-Q
18
-Q
18
-Q
18
-Q
18
-Q
19
-Q
19
-Q
19
-Q
19
-Q
20
-Q
20 20 20 20 20 20 20 20 20 20
often called a
"World in One Imports Exports Trade Balance
Country." It is one of
the few countries in the Figure 1: SA Agricultural Trade Performance (2017 to 2020)
world which can delight visitors
with everything from unspoilt sandy Agro-processing has particularly strong linkages both up- and downstream:
beaches, snow-blanketed mountain the sector links to agriculture across a wide variety of farming models and
ranges, ancient deserts teeming with products; while downstream the sector’s products are marketed across
fascinating wildlife and incredible wholesale and retail chains, as well as through restaurants, pubs, shebeens
succulents, subtropical rainforests, and fast-food franchises.
castles and forts, and world-renowned
conservation areas. Big emphasis is placed on food security to ensure the availability,
accessibility and affordability of safe and nutritious food at national and
The country offers an investor-friendly household levels.
environment and the exchange rate is
particularly favourable. And if you are South African grains and oilseeds sector
doing business anywhere in Africa, this is the The major crops planted are maize (white and yellow), wheat, soybeans and
gateway to the continent. sunflower seed. The maize industry plays a very important role in the economy
in Southern Africa. It is the largest locally produced field crop for human
South African agricultural sector and animal consumption in the Southern African Customs Union (SACU).
While 12% of South Africa’s land can be used for crop production, only
22% of this is high-potential arable land. The greatest limitation is the The primary products derived from white maize, through dry milling, are
availability of water, with uneven and unreliable rainfall. Around 1.3M ha maize meal, flour and maize grits. Maize meal is a staple food in South
are under irrigation, and around 50% of South Africa’s water is used for Africa and SACU countries, because of its ability to be stored without
agriculture. refrigeration, it is cheap and abundant in all shops and markets and is a high
energy-giving food, containing carbohydrates, protein, fat and fibre. Over
Agricultural activities range from intensive crop production and mixed the past five years white maize production averaged 6.9M tonnes compared
farming in winter rainfall and high summer rainfall areas to cattle and sheep to the average local demand of 5.8M tonnes. White maize exports averaged
farming. Maize is most widely grown, followed by wheat, sugarcane, 735,000 tonnes over the past four years with the bulk exported to African
soybean and sunflower seed. countries. It is projected that 1.2M tonnes of white maize are destined for
exports during the 2020/21 season.
South Africa is not only self-sufficient in virtually all major agricultural products
but is also a net food exporter. In the first quarter of the year, which is a period Yellow maize production averaged 5.9M tonnes over the past five years
before the coronavirus lockdowns were implemented across the globe, South whilst local demand averaged 5.1M tonnes. For the 2020/21 marketing
Africa’s agricultural trade was vibrant. The country recorded an agricultural season South Africa expects the second-largest maize harvest on record,
trade surplus of US$749 million as illustrated in Figure 1. This is up by 17% about 15.6M tonnes (white and yellow maize at 9.1M and 6.5M tonnes,
y/y, with exports having increased at a much higher rate than imports. respectively). Therefore, any dynamics on the global maize market will have
Exports were underpinned by grapes, maize, wine, wool, pears, apples, minimal implications on South Africa as the country remains a net exporter.
plums, lemons and macadamia nuts, amongst other agricultural products. During the 2017/18 and 2019/20 marketing years yellow maize exports
averaged 1.5M tonnes, of which deep sea exports to mainly Japan, South
While the primary agricultural sector contributes about 2-3% to the Korea and Vietnam accounted for 85% of the total. According to the South
country’s gross domestic product (GDP), it represents about 7% of formal African Supply and Demand Estimates Committee, yellow maize exports for
employment. If the entire value chain of agriculture is considered, its the 2020/21 season are projected at 1.2M tonnes. A 41,337 tonnes cargo of
contribution to GDP reaches about 12%. yellow maize departed from the port of Durban to South Korea in the week
4
6 CROP UPDATES
ending 29 May, marking the first bulk cargo export of the grain for 18 • We are currently not aware of any barriers that are affecting the trading
months. The outbreak of African Swine Fever in South Africa makes it highly of grains. Hick-ups have been resolved as soon as SACOTA was made
unlikely that yellow maize will be exported to Japan, that accounted for aware of them.
60% of deep-sea exports during the 2017/18 season.
SACOTA’s role in the Southern African grains and
Crop Estimates - Maize oilseeds industries
12,000 SACOTA was established in 1930. SACOTA’s vision is to be a significant
Source: RSA Crop Estimates Committee
10,000
and respected force in South African agriculture and regional trade.
SACOTA’s vision is underpinned by its mission to:
8,000
‘000 tonnes
6,000 • As the leading trade body, address all commercial issues related to
4,000
agriculture in South Africa;
• Advocate and strive for an efficient, equitable and free trading
2,000 environment; and
0 • Pro-actively engage all industry stakeholders to promote its vision.
2016 2017 2018 2019 2020
White maize Yellow maize SACOTA currently has 21 members that include local trading companies,
brokers and local offices of international trading houses such as Bunge,
Figure 2: Crop estimates for maize
Cargill, Cofco, ETG, Louis Dreyfus, Olam and Seaboard. SACOTA’s
members are collectively engaged in the trade of more than 60% of the
South Africa’s winter rainfall regions have faced weather-related challenges
domestic consumption (maize, wheat, sunflower seed and soybeans) and
in recent years, particularly in 2017 when the drought in the Western Cape
dominate regional and deep-sea exports.
was so severe that it raised concerns regarding the city of Cape Town’s water
supply. South Africa’s 2020/21 wheat production season is underway, and
The SACOTA organisational structure is as follows:
the outlook is not encouraging. Preliminary forecasts indicate a crop of
1.4M tonnes, well below the 5-year average of 1.7M tonnes. South Africa SACOTA Structure
remains a net importer of wheat to satisfy local demand.
South Africa has over the past 10 years seen an increase in the area planted Board of Directors Secretariat
to soybeans. The introduction of better yielding cultivars contributed to
increased soybean production, and subsequently meant that South Africa is
now able to satisfy demand for the local soybean processing (crushing and
full fat) capacity. Due to favourable logistical costs, imports of soymeal will Trade Marketing &
continue to coastal areas. The 2020 crop is estimated at 1.29M tonnes, 10% Regulatory
Environment Promotion
higher than the previous year.
Sunflower seed is another major oilseed that saw its production forecast The matters handled by the Trade Environment Committee and the
lifted by 5% from last month to 765,960 tonnes because of relatively higher Marketing & Promotion Committee were combined and deal primarily with
yields. This crop is now estimated 13% higher than the 2018/19 harvest. trade-related matters, membership and the strategic marketing and branding
of SACOTA.
Crop Estimates - Soybeans, Sunflower Seed and Wheat
The Regulatory Committee focuses on regulatory matters that need to be
2,500
Source: RSA Crop Estimates Committee
addressed to ensure an even trading environment for all SACOTA’s members.
2,000
SACOTA is represented in all the grains and oilseeds fora that deal primarily
‘000 tonnes
1,500
with matters that may impact on the relevant grains and oilseeds industries.
1,000 SACOTA is officially represented in the Agricultural Derivatives Advisory
500 Committee of the Johannesburg Stock Exchange that deals with matters to
ensure the effective functioning of the Futures Exchange for agricultural
0 commodities.
2016 2017 2018 2019 2020
Soybeans Sunflower Wheat Some successes of SACOTA’s involvement in grain trading in South Africa
include:
Figure 3: Crop Estimates for soybeans, sunflower seed, and wheat
• Establishment of the Agricultural Derivatives Division on the SA Futures
South Africa grain trade and Covid-19 Exchange in 1995.
South Africa has been in lockdown since 26 March 2020. The current • Development of a Standard Contract for the Purchase and Sale of Grain
situation is as follows: and Oilseeds, that incorporated a mandatory arbitration clause. SAGOS 1
• The food and feed industries have been classified as essential services Version 9 is the current version.
and operations at storage providers, traders and processing facilities are • Development of a generic Grain Commodity Passport System to ensure
continuing taking health measures of personnel into account. compliance to food safety regulations in the total value chain.
• All ports are open for both imports and exports and the trading of grains • Development of a guideline document for dealing with grain quality
in the domestic market is continuing. disputes in grain trading.
• Cross-border exports are also continuing. Zimbabwe has waived the
phytosanitary requirements for exports of maize from South Africa. SACOTA is a member of the International Grains Trade Coalition and relies
• Transporters of grains and oilseeds need to comply with certain permit heavily on the outcomes of activities such as the Global Low-Level Presence
conditions when transporting grain. Initiative, Plant Breeding Innovation, Cartagena Protocol on Biosafety,
• Overall, the current situation is status quo, as was before the lockdown ePhyto electronic trading documentation, maximum residue limits and IPPC
period. ISPM for the movement of grain.
SACOTA, this year, marks its 90th year of existence. We trust that the achievements of the organisation through the combined
efforts and active participation of its members and member representatives will continue for the foreseeable future.
CROP UPDATES 7
Covantis - Bringing
efficiency to global trade
By Petya Sechanova, CEO, Covantis
Covantis (www.covantis.io) emerged as an industry initiative
founded by six commodity trading companies (ADM, Bunge,
Cargill, COFCO, Louis Dreyfus Company and Glencore Agriculture)
to connect and transform the agri industry by gradually moving
from manual paper-based processes towards full digitalisation.
We are committed to work together with other provider to build the platform, to identify the provider - a market-leading Ethereum blockchain
industry players to create a digital platform that geographical rollout plan. technology company ConsenSys who is developing
will utilise emerging technologies such as our transformational platform. We are completing
blockchain to significantly reduce operating risks the development of the first platform release (a
and increase market efficiency for agri bulk subset of the scope). The release was tested with
international trade flows, all while ensuring market participants in May 2020 and we received
privacy and data integrity. very positive feedback on its functionalities and
the value it will bring to the industry.
Even as technology has advanced, the post-trade
execution process for agri bulk international
shipping has remained massively labour intensive
and highly manual; it is consequently a natural
focus for our initiative.
Our current scope envisions a two-phase approach:
Phase 1 is about optimising our current processes
aiming to:
• Maximise adoption and rollout
Gathering market and user feedback
• Connect the industry We believe that the key success factor for this
• Improve communication (including off platform) platform will be adoption; the more people who
• Increase visibility, help prioritisation. use it, the greater the benefits for all the parties
involved in the agricultural bulk commodities
shipping.
Geographical roll out
The first export trade lane in our roll out plan is the
By discussing with different stakeholders how they export of soybeans and corn from Brazil (port of
would use the platform, we aim to build trust Santos) to various destinations. We are preparing a
around our proposed functionalities and enable pilot release in July involving exporters, shippers
the development of an industry solution that will and charterers on that trade lane. The pilot release
be beneficial to everyone. To that end, we have: will enable us to gather important feedback on the
Phase 2 is about transforming our current platform performance, its functionality, technical
processes aiming to: 4 Completed a series of workshops in Geneva, security and stability to prepare for the operational
• More Standardisation
Brazil, USA and China to identify the pain launch later in 2020.
• Process automation (DIs and document points and the needs of the industry participants.
verification)
• Digitalisation and presentation 4 Attended numerous industry events and Contact us
• Integrations completed 80+ interviews with stakeholders
We want to create a solution by the agri
from the entire agri industry and even beyond
industry and for the agri industry. Your input is
to ensure that our vision and approach to the
important to promote, help design, test and
market was the right one for the entire industry.
adopt the future platform to create more value
This outreach helped us to better understand and efficiency for the entire industry.
market reaction to our value proposition and adapt
Visit www.covantis.io to subscribe to our
our ideas accordingly to deliver a product the
newsletter and receive regular news about the
industry needs and wants.
progress of the Covantis initiative.
Our key achievements to date
Technology partner Send us your questions or requests at:
Over the past year, we have worked hard to gather
info@covantis.io
market and user feedback, to select a technology We have formally selected our technology
8 TRADE INNOVATION
Electronic trading documentation
– now more than ever!
ePhyto Solution clocks up
90 countries, and more than
320,000 certificates exchanged
By Alejandra Danielson Castillo, Chair of the ePhyto Industry Advisory
Group (IAG) on behalf of the International Grain Trade Coalition (IGTC)
Covid-19 has led to disruptions of global supply chains and highlighted the
need to have systems and processes in place that allow for the safe and efficient
exchange of trade documents.
Now more than ever, work is underway to ePhyto Solution, champion the global discussion efficiency and ease of export/import”. No major
implement the ePhyto Solution which we hope on the Solution, and shared the learnings and best unintended consequences have been identified.
will be an accessible way for all governments to practices from industry case studies.
exchange phytosanitary certificates electronically Additionally, the grain trade has for several years
via a global Hub. It originally brought together 10 Today, the ePhyto Solution has been adopted by been promoting the need for interoperability of
countries and now around 90 are registered with around 90 countries and we are embarking on ePhyto with other digital platforms. This is
over 320,000 certificates exchanged as of 31 May. case studies with countries that will currently important for use alongside government-led
The work is being led and supported by the enable us to do so, meaning Mexico, Argentina, platforms such as single window automated
International Plant Protection Convention (IPPC), Chile, the USA, the Netherlands and New Zealand. systems. The World Customs Organisation (WCO)
the Standards and Trade Development Facility is fully supportive of this effort and a “Channel” has
(STDF) and government funders. The United IAG representatives are working to provide already been built and has been fully operational
Nations Food and Agriculture Organisation (FAO) expertise in the next phase of the ePhyto Solution with the EU TRACES system since May 2020.
is a supporter of this work and in June 2020, the by organising case studies. The purpose of the Efforts are underway to use the channel for other
new Deputy Director General (DDG) of FAO Beth industry case studies is to identify issues – Single Windows users, such as Mexico and Brazil.
Bechdol convened an audience with the global technical, regulatory, business flow, or otherwise –
industry trade associations that are leading on the and to provide clarity to all parties regarding the Equally important for smooth trade is
work, including IGTC. ePhyto process and how it can benefit suppliers interoperability with industry digital platforms.
and end users. Results from these industry case That’s why we have volunteered to coordinate tests
Our work as the grain trade on the ePhyto file is studies will inform best practices for trade to move of an ePhyto “Channel” that will link up with the
growing as more and more countries adopt the forward with electronic documents, and eventually private sector. In June 2020 six companies have
Solution, and there is an increasing focus on paperless execution. expressed an interest in testing, and the door is
interoperability with the private sector. In 2018, open for more to be involved if they meet the
IGTC was elected Chair of the International Plant Since 2018, 13 case studies have been conducted, baseline technical specifications.
Protection Convention (IPPC)’s global Industry mainly in the grains sector (Argentina-USA,
Advisory Group (IAG), bringing together industry Argentina-Chile, USA-New Zealand) but there This is a strictly non-competitive environment for
representatives from sectors including grains, have also been a limited number in cotton and private sector actors to “test” whether their digital
seeds, cut flowers, fresh produce, cotton, wood seeds. Now there is significant anticipation for case platforms can interact with the ePhyto Solution and
products and hay and forage. Observers of the IAG studies between USA and Mexico following it is important to remember that access to ePhytos,
include the Global Alliance on Trade Facilitation SENASICA’s efforts to bring the country online, with just like access to paper phytos, will be
(GATF) that is resourced by the World Economic six grain trade corporate stakeholders volunteering administered by governmental National Plant
Forum (WEF). and preparing for this effort. The opportunity for Protection Organisations (NPPOs). The final
case studies with the European Union (EU) should objective is to ensure a Channel component that
In the last five years, the IAG with great support not be overlooked given that all EU member states can serve not only the whole grains industry, but
from IGTC, has been able to successfully recruit, can now interface with ePhyto through the all plant product sectors that use phytos – this
organise, increase presence at several industry TRACES mechanism. IGTC has also been asked to should be a public good!
meetings, capture data and present findings to volunteer for case studies in other countries that
bodies such as the IPPC, FAO, industry, have recently come online such as Morocco. In the face of this global pandemic, we are seeing
governments and trade associations. The IAG also true advantages and real time benefits that a fully
assisted in the creation of marketing materials to Up to now, there are positive indications from the functional and accessible ePhyto Solution has
promote and increase country adoption of the case studies that “ePhyto contributes to greater brought for our industries and international trade.
To know which countries are sending and receiving on the IPPC ePhyto Solution, go to the following website and click on
“registered entities”: https://hub.ephytoexchange.org/AdminConsole/index.html
TRADE INNOVATION 9
Gafta has updated and improved its
distance learning programme (DLP)
More flexibility for online learning in times of social distancing
During a time of uncertainty and pressure on the agricultural industry, Gafta is committed to
finding ways to help our members maintain a sense of normality as well as looking at ways
we can ensure that learning and training are still accessible. Because of this, Gafta’s September semester now
Distance Learning Programme has recently undergone a revamp in order to streamline and
open for bookings
enhance the student experience.
Gafta’s Distance
Learning Programme
The visual representation of the DLP features more interactive and dynamic elements for
(DLP) is an alternative to Gafta
presenting course information as well as design improvements to enhance learning retention. Professional Development (GPD), designed
The principal change from this upgrade is the way we assess students. Assignments have for students who prefer flexible e-learning
been transformed into a mixture of self-marking exams, as well as a final written assessment, opportunities. It currently consists of six modules:
meaning that students can take charge of their learning much more easily. Introduction to Contracts
Fulfilling Contractual Obligations
These new assessment formats give students more flexibility to complete course assessments Payment and Risk
and the ability to balance the courses with their other commitments. Students are also able Charterparties and International
to download the training platform app to allow them to complete their training in any place Carriage Regimes
at any time, giving them greater freedom and flexibility in their learning. What to do in Exceptional
Circumstances
Gafta is continuously committed to offering our members the highest quality training and Problems and How to
will continue to improve upon the current training available, as well as developing new Resolve Them
content on a regular basis.
For further information on Gafta online training, please visit For more information visit our website today
https://www.gafta.com/Distance-Learning-Programme
www.gafta.com/Online-Learning-Agribility
Ukraine restores VAT refund on
rapeseed and soybean exports
This follows 2.5 years of continuous lobbying
By Anna Golodova, Director of Gafta’s Kiev office
Starting from December 2017, the Ukrainian level the playing field for all market participants. President and other state authorities, looking for
Parliament adopted the so-called “soya edits,” clarification on this issue to clear up the
which canceled VAT reimbursement for soybean In December 2019, the President of Ukraine uncertainty for the trade.
exports from 1 September 2018 to 31 December called on the Government and Parliament to
2021, and for rapeseed exports from 1 January adopt a law supporting domestic producers of Finally, on 21 May 2020, after 2.5 years of
2020 to 31 December 2021. agricultural products and to abolish the so- continuous lobbying the President of Ukraine
called "soya edits." The required legislation went signed the long expected legislation which
The Ukrainian Regional Trade Committee, for through two readings and was adopted by cancels the discriminatory rules, the so called
the past two and a half years, has been actively Parliament on 16 January 2020. But since then, “soya edits” which had resulted in the loss of
involved in lobbying against the unequal the trade had to wait for a long time for the hundreds of hryvnias per tonne of soybeans sold
conditions for market participants through letters President to finally sign it. annually by Ukrainian small and medium
addressed to the President and state authorities, agricultural producers. Now, that change in the
and via joint meetings with state authorities, At the meeting which was held on 10 April 2020 legislation means that ALL exporters from
expressing our position and claiming the the members of the Ukrainian Regional Trade Ukraine can receive VAT refund on soybeans
necessity to reinstate the VAT reimbursement to Committee decided once again to address the and rapeseed.
Members of Ukraine's Regional Trade Committee who lobbied hard against the "soya edits"
Yevgen Morgunov, Elena Zyrianova, Ivan Kasynyuk, Natalia Pylyptseva, Ruben Beliaev, Yelena Zamiatina,
Viking Trading OÜ Engelhart CTP AGA Partners SE Suntrade (Bunge) ADM Ukraine LLC Glencore Agriculture
(Ukraine) LLC Ukraine
10 GAFTA NEWSLivestreaming technology implemented
for Gafta Standard Audits
Gafta and NSF International have launched online communications technology for livestreamed
audits to enable new applicants for the Gafta Standards to be assessed, and current members to
retain their status throughout the coronavirus pandemic.
Gafta’s key priority through the current crisis is to keep instruments, all labelling, temperature monitoring and so on.
agricultural commodities, feedstuffs and general produce Analysts must be
moving to ensure food security now and minimise any long “The screen share facility was especially useful which approved to either the
term effects. Gafta Approved members are crucial to allowed me to guide the auditor through our LIMS and all Gafta Standard or
supporting the trade of these essential food and feedstuffs documentation as if he was sat beside me. The reality is that ISO17025 by
and those using the services of the Approved Registers need it was very similar to an audit in person except I couldn’t 31 May 2021
reassurance that standards are being upheld despite the offer the auditor a cup of tea!”
considerable disruption we are all experiencing.
It is felt that this audit regime is sufficiently robust to replace
All physical on-site audits were stopped at the end of March on-site audits where physical presence is not possible and
as borders closed and overseas travel was halted. Gafta therefore provides a longer-term solution while the future
audits continued through the existing remote audit protocol remains uncertain. The cost of a remote audit is also
used for renewal audits, though these are intended as a reduced - £900 as compared to £1,900 for on-site – thus
follow up to the initial on-site audit. It is likely that travel providing some financial relief for members at this difficult
will continue to be problematic for some months to come; time. Whilst it is early days for Gafta audits, those who have
different quarantine and self-isolation rules could impact the trialled the approach in other schemes believe this could
availability of auditors, and additional time added to air become another approach to auditing long after the impact of
travel could result in increasing audit costs. Furthermore, coronavirus, delivering financial and sustainability benefits.
social distancing measures make face-to-face audits difficult.
Therefore, Gafta and NSF have been working together to
develop a longer-term solution to allow audits to continue How will it work? Closing date for 2020
without the need for auditors to travel. The audit will include ‘livestreaming’ using technology such Gafta Ring Test
as BlueJeans, Skype, Zoom, Teams, Whatsapp or any other Round 2:
NSF is one of the certification bodies providing audits for the technology which works well for the member. A strong and 1 July 2020
UK’s largest food and farming assurance scheme – Red consistent internet connection is required, however there are
Tractor – carrying out 30,000 audits per year on farm, often solutions for poor internet issues on the site or on the day.
within the farmer’s home. Within 72 hours of lockdown in The livestream will be used to include elements which are
the UK, NSF restarted on-farm audits using livestreaming normally covered by an on-site visit such as a site tour,
technology through secure video conferencing software, observing tasks being carried out or speaking to an
BlueJeans. This innovative solution is being used by NSF for employee about their training. Superintendents must
UKAS accredited certification audits during the Covid-19 be approved to either
pandemic where auditors are unable to conduct on-site Documentation will be shared securely both on the day and the Gafta Standard or
assessments. possibly ahead of the audit; members will be given clear ISO17020 by
instructions when their audit date is agreed. Video calls will 31 May 2021
NSF approached Gafta to offer this solution for audits to the be used to discuss findings and agree outcomes, in the same
Gafta Standards. Agriculture Director Anita Roberts said way as the auditor would discuss this in the member’s office
“We recognise that technology is not something everyone is on site.
comfortable with and we have therefore trained our auditors
and team members to help Gafta members through the If a member cannot complete a remote audit for any reason,
process. Members can be reassured that the NSF discussions with Gafta and NSF will help to determine
International team will help them through this new process.” possible solutions but at this current time, the member may
Since agreeing to proceed, NSF and Gafta have reviewed have to wait until travel restrictions are eased sufficiently for
audit protocols, trained auditors (using online an on-site audit to take place.
communications technology) and piloted the scheme with
members who were willing to help. Full support will be available. Gafta has published guidance
on its website: www.gafta.com/approved-registers and staff
Abigail MacCartney, Analyst member from LiveLab based in at Gafta and NSF will be on hand to help.
the UK was one of the first to undergo a livestream audit.
Despite being sceptical about how an online audit might Members who are preparing to proceed with audit to the ISO9001 will not
work, she was pleasantly surprised at how well the process Gafta Standards should apply by email to be accepted for
went, saying “I found the process remarkably easy. I took the ApprovedRegisters@gafta.com. Audits are normally
Approved
opportunity to bring the auditor into the building as they arranged within 6-8 weeks of payment; however, we expect
demand for audits to increase as we approach the deadline
Superintendents
would if they were here in person, allowing them to see the
reception, security and sign-in process and then we took a for compliance with the new requirements. Applying early - transfer before
tour of the lab using the rear facing camera. It was very easy will enable us to work within your timescales and meet 31 May 2021
to guide the auditor around the lab showing them the your objectives.
APPROVED REGISTERS 11You can also read
