The Bulk Grain Trade in a Complex Policy Environment: Lessons from NAEGA and the IGTC

Dry Bulk Terminals Group Fall Operational and Technical Seminar

Ryan Olson Director of Operations North American Export Grain Association

Working Together to Make Trade Work

CGC NAEGA, NCGA, NGFA, USGC,

USW, CRA, USSEC

ANIAME, APPAMEX

COCERAL

GAFTA

Eastern Africa Grain

Council

CIARA-CEC

GTA, AGEA

CNFA, CNAGS, CGBA

SOPA, SEA

CAPECO

Geneva, Switzerland

ANEC

RGU

SACOTA

UGA

26 associations, 8000 businesses, 85 countries

71,411

57,889

2011-16 Annual Average International Trade of Grains and Oilseeds

Canadanet38,577U.S.net114,638

Mexiconet(22,139)

1,397

Caribbean&CentralAmerica

Regionnet(11,978)

RegionalExportsRegionalImports 270,615

36,372

SouthAmericaBrazilnet130,106

Argentinanet109,440Othersnet(5,302)

1,375

49,550

NorthAfricaRegionnet(48,175)

EURegionnet57,095

6,336

39,571

Sub-SaharanAfrica

SouthAfricanet(2,547)Othersnet(30,688)

4,780

3,503

Non-EURegionnet(1,277)

Valuesin1000MTSource:TheU.S.DepartmentofAgricultureForeignAgricultureServiceProduction,Supply,andDistributionDatabase.Updated10/11/2016VLM.Valuesdonotincludeintra-regionaltradewithintheEuropeanUnion.Totalsinclude:grains–barley,corn,millet,mixedgrain,oats,milledrice,rye,sorghum,wheat;meal–copra,cottonseed,fish,palmkernel,peanut,rapeseed,soybean,soybean(local),sunflowerseed;oil–coconut,cottonseed,olive,palm,palmkernel,peanut,rapeseed,soybean,soybean(local),sunflowerseed;andoilseed–copra,cottonseed,palmkernel,peanut,rapeseed,soybean,soybean(local),sunflowerseed.

6,521

70,566

MiddleEastRegionnet(64,045)

27,520

26,895

SouthAsiaIndianet11,178

Othersnet(10,452)

4,419

30,518

OceaniaAustralianet28,480Othersnet(2,380)

SoutheastAsiaRegionnet13,522

13,214

70,309

159,372

4,733

EastAsiaChinanet(92,137)Japannet(32,730)Koreanet(19,467)Othersnet(10,305)

FormerSovietUnionRussianet20,760Ukrainenet35,090Othersnet1,246

13,375

54,785

68,337(44,417)

175,493

2.5BMTGlobalProduction

InternationalTrade

Local/Regional

Bruinsma,Jell.“TheResourceOutlookto2050”

FAOExpertMeetingonHowtoFeedtheWorldin2050

•  Roughly300millionmetrictons–about12percentoftotaldemand–enterintoworldcereal&oilseedtrade,improvingdiversityoffoods,improvingnutrition&fillingfoodneedsindeficitareas

•  Worldfoodtradehelpsassureadequacyofdietfornearlyabillionpeopletodaybycomplementinglocal&regionalsupplies

Today – 7 billion rely on 2.5 BMT (cereals and oilseeds)

4.0BMTGlobalProduction

InternationalTrade

Local/Regional

•  Trade’scomplementaryrolegrowsmorecrucial,&willoutplacemarketgrowth

•  1.5BMTmorefromtheworld’sbreadbaskets&otherareasisneeded

•  Areasofoptimalland/watermaycontributemostwithleastenvironmentalstress

•  Anestimated600MMTofgrains&oilseedsfromareasofsurplus–about15percentoftotalproduction–willbetransformed&deliveredforconsumerneeds.

InternationaltradewillplayalargerroleCarryingfoodtoamoreurbanpopulation

Bruinsma,Jell.“TheResourceOutlookto2050”FAOExpertMeetingonHowtoFeedtheWorldin2050

Tomorrow = Much More

Key Industry Objectives

7

BenefittingallfromProducertoConsumer

MoreTrade,IncreasedDemandforSafety,SustainabilityandSystemReliability,ResponsibilityandResilienceBESTCOMMERCIALandOFFICIALPRACTICES

•  System integrity, predictability, and reliability. •  Consistent and understandable requirements that enable markets to trade products and

provide for proportionate and effective risk mitigation and management. •  Appropriate measures that allow grain systems to maximize the value of the grain

product and minimize cost inefficiencies and handling costs associated with the supply chain, while meeting plant protection needs.

•  Respecting private contract terms and commitments

Aim: to achieve a market and regulatory environment supportive of trade that avoids

disruptions in the international trade of grain, oilseeds, pulses and derived products.

8

International Grain Trade Coalition (IGTC)

www.igtcglobal.org Secretariat@igtcglobal.org +41 78 932 96 18

IGTC’s work with international partners

UN FAO 194 governments International Plant Protection Convention 183 governments World Customs Organization 180 governments World Trade Organization 162 governments International Grains Council 55 governments Global Low Level Presence Initiative 15 governments

1) Crop protection product approvals & residue measures

Policy opportunities in 2018

4) Harmonisation of phytosanitary control methods; UN International Plant Protection Convention (IPPC)

2) Innovation in electronic trading documentation

3) Plant Breeding Innovation

5) Cartagena Biosafety Protocol

6) Low Level Presence

11

Maximum Residue Limits (MRLs) Why now?

Decision makers

Governments, Codex Alimentarius Commission through the Codex Commission on Pesticide Residues (CCPR) and Joint Meeting on Pesticide Residues (JMPR), World Health Organization, Food and Agriculture Organisation (FAO)

Initiative Enabling more effective use of standard-setting focused on science- and risk-based approaches for the facilitation of the global grain trade

Issues At present, non-alignment is more common than alignment •  Zero or near-zero default tolerances •  Application of different levels of MRLs in exporting and importing Missing MRLs

resulting from misaligned policies

IGTC action

•  IGTC position paper established for global advocacy (June 2017) •  IGTC global MRL survey (May 2018) •  Collaboration with other agri-food value chain partners (e.g., Coalition for an

Enhanced Codex)

MRLs: why and how IGTC engages

There is already widespread use of electronic trading documents…

13

IGTC survey, 2016: digitization of trading documentation

…but companies do not currently use electronic documents for all

transactions

An increasing number of industry players are aiming for at least

50% of transactions to move to electronic documentation by 2018

Industry planning for wholescale adoption by 2025: 75-100% of

electronic trade documentation for all documents in one transaction

Current state of play The look ahead

14

Electronic trading documentation: IGTC fostering an enabling environment

IGTC chairs the ‘Industry Advisory Group’ of ePhyto Solution

IGTC attends the biennial ePhyto Symposia

Above all, IGTC is continually seeking more efficient, fast and flexible solutions to facilitate trade documentation

Grain trading companies are ready to assist in ‘testing’ of the ePhyto exchange ASAP as acceptable for ESG and NPPOs

IGTC has deployed a network of ePhyto focal points (Argentina, Australia, China, Europe, Kenya, USA)

✓

✓

✓

✓

✓

IGTC is committed to promoting

innovation

Decision makers Governments: national and regional approaches to regulation are already diverging

Initiative Strategic approach on achieving alignment in regulatory approaches and information sharing along the value chain

Issues Regulatory coherence, predictability and stability for the trade, transparency, responsibility across the supply chain

IGTC action

1.  IGTC position paper established for global advocacy (Nov. 2017) 2.  Oversight of updates of global innovation status sheet on eight groups of tools 3.  Engagement with partners, e.g., International Seed Federation, Grocery

Manufacturers’ Association, etc. 4.  Emphasis on information-sharing of products in the commercial pipeline and

supply chain management

Plant breeding innovation: why and how IGTC engages

Decision makers

UN International Plant Protection Convention (IPPC): IPPC recognized in WTO SPS agreement as the only international plant health standard setting organization

Initiative Development of an International Standard on Phytosanitary Measures (ISPM) on the International Movement of Grain; 41 existing ISPMs, including on pest risk analysis, phytosanitary certification, and sampling methods

Issues (examples include)

Scope: phytosanitary measures only to be included in the standard – this is not a place for foreign material and associated tolerances; traceability, etc. Transparency: The current lack of access to information about the phytosanitary requirements of importing countries is a major hurdle to trade

IGTC action

1. Advocacy tools established, e.g., position paper, letters to national and regional authorities 2. IGTC leading grain trade input on the standard, convening significant expertise and

representation 3. Coordination of one global voice to secure a trade facilitative ISPM 4. Global outreach effort coordinated, reaching government members of the IPPC’s Standards

Committee; in total, more than half of the SC was reached

International Standard Phytosanitary Measures (ISPMs) for grain: why and how IGTC engages

Decision makers

Convention on Biological Diversity Contracting parties (governments) to the CBP

Initiative 171 parties (governments) have signed up to the Protocol, covering more than 85% of the world’s grain trade

Issues

•  Transboundary movement of Living Modified Organisms (LMOs) •  Risk management •  Socio-economic considerations •  Precautionary principle as advocated by certain governments

IGTC action

•  IGTC aim: provide evidence to support sound decisions that do not undermine the cost-effective worldwide movement of grains, oilseeds, pulses and other agri-bulks

•  Convening of representation and expertise to respond to issues as they emerge among governments

•  Next government summit: November 2018, Egypt (so-called “COP14” and “COP-MOP 9”)

Cartagena Biosafety Protocol (CBP): why and how IGTC engages

Decision makers

Governments: The Global LLP Initiative (GLI) of 15 “like-minded” countries UN Food and Agriculture Organization (FAO), Codex Alimentarius

Initiative The accommodation of safety-assessed GM events in the supply chain: encourage countries to introduce LLP policies

Issues

Raise awareness that detection of low levels in an importing country of an event authorized in one or more countries is not a food safety issue, but a legal compliance issue. Trade stops, thereby adversely impacting importing and exporting countries and threatening global food security.

IGTC action

•  Awareness raising along the value chain of the importance of process controls •  Advocacy with governments to maintain momentum at the Global Low Level

Policy Initiative •  Support governments in future initiatives, e.g. practical approaches in

regulatory frameworks

Low level presence: why and how IGTC engages

Improve Predictability and Transparency

•  Impossibletoreduceregulatoryorphytosanitaryriskcompletely.

•  Impossibleforgovernmentstobecompletelytransparent,reliableandpredictable.

•  Globalruleandstandardgetuscloser

Improve Predictability and Transparency

Results in Improving Predictability

ThankYou!

Contact: Ryan Olson Director of Operations

Email: rolson@naega.org Phone: 202-682-4030 Website: naega.org

ThankYou!