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Export barometer: trade barriers continue to be felt
Germany: Export climate for fruits and vegetables quite stableThe export climate of the food industry improved again in December 2017. This is confirmed by the current BVE PwC export barometer. The balance of the current business situation and business expectations increased by 5 points to 46 points compared to the previous year. The mood for the export business brightened in almost all subsectors. Especially the manufacturers of delicatessen and ready meals, oils, soft drinks and sweets benefited. The decline continued with the beer exporters alone.
Of the world's top 18 target markets, France, the Netherlands, Switzerland, Austria, Italy, the United States and China currently have the greatest importance. The sales expectations for the next six months are largely constant for the most important target markets. The majority of food exporters expect to see a rise in sales concerning China, Japan, Norway, Russia and the United Arab Emirates.
Overall, in December 2017, however, fewer (-5 percentage points) food manufacturers announced that they were exporting to countries outside the single market compared to the previous year. Three quarters of companies are still active in non-EU countries. For export processing, the companies primarily use their own capacities or middlemen. Compared with previous years, the use of several different distribution channels in the single market is decreasing slightly. In non-EU countries, intermediaries as well as own subsidiaries, are somewhat gaining in importance.
Trade barriers for small and medium-sized enterprises are noticeable
In many food industry export markets outside the EU single market, trade barriers are hampering or preventing market access. For the majority of companies, these trade barriers account for up to 10 percent of export costs. The share of costs varies considerably by sub-sector: for just under every third exporter of baked goods, confectionery or dairy products, non-tariff trade barriers account for up to 25 percent of export costs. Since the number of non-EU export markets often increases as the size of a company increases, particularly high costs are attributable to trade barriers. Due to the high level of competition, even small price differences can be decisive for the export sales.
EU trade agreements are increasingly aimed at opening up new markets. Over the past few years, many agreements with trading partners have come to into force -although sometimes only provisionally- that could represent promising export markets for the food industry, such as Canada, South Korea, South Africa or the Ukraine. However, the latest survey found that the majority (60 percent) of food manufacturers currently do not export to these markets. Of the companies exporting to countries with applied trade agreements, less than 10 percent confirmed tariff or non-tariff relief.
“The food industry needs improved market access to compete internationally. Barriers to trade make exports more expensive and diminish competitiveness of small and medium-sized food exporters. The EU's trade policy must therefore be focussed even more on trade facilitation with strategically important outlets in the food industry and it must strive for practicable and sector-specific regulations,” commented Stefanie Sabet, Managing Director of the Confederation of the German Food Industry (BVE), on the latest results of the Export Barometer.
Gerd Bovensiepen, Head of Commerce and Consumer Goods at PwC in Germany and EMEA, explains: "The German food industry is heavily dependent on exports with an export ratio of one-third. While exports to EU-countries are stagnating, demand is increasing from well-funded third party countries. Export to countries outside the EU is therefore a growth opportunity for German exporters. Government support in accessing these markets can help unlock this potential.”
To the poll
The export barometer of the German food industry was compiled by auditing and consulting company PwC on behalf of the BVE, for the sixteenth time now. From October 17 to November 24 , 2017, PwC surveyed 400 exporters and export executives on their assessment of the current business climate and expectations for the coming six months.
Publication date: 1/2/2018
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