“Gafta is an international trade association representing over 1800 member companies in 95 countries across the world who trade in Agri-commodities. Gafta awards can be enforced globally in 157 countries under the 1958 New York Convention on the Enforcement of Foreign Arbitral Awards. All governments should support and work with all the international technical standard-setting bodies that provide references for world trade.”
Jaine Chisholm Caunt
GAFTA (The Grain and Feed Trade Association)
Interview by: Cemalettin KANAŞ – Kemal PARLAK
We met with Jaine Chisholm Caunt, Director General of Gafta (Grain and Feed Trade Association), which sets the generally accepted standards for the international feed and grain trade, at the President’s Reception program given at the Ritz-Carlton Hotel in Istanbul. After the Reception, we had the chance to make a candid interview with Ms. Caunt. Along with many topics related to Gafta, we also talked about international feed and grain trade, market conditions and so on. Holding office as the Director General at Gafta for five years and knowing the institution very well, Ms. Caunt stated that the organization had 1,800 members across 95 countries worldwide and that they aim to reach 2000 members. Gafta, which designs and maintains the standard forms of contract on which it is estimated that 80% of the world’s trade in grain is shipped, provides arbitration services in case of dispute by experienced experts in international trade. Highlighting that Gafta awards can be enforced globally in 157 countries under the 1958 New York Convention on the Enforcement of Foreign Arbitral Awards, the experienced manager said that Gafta promotes free trade in agricultural commodities and works with international governments to promote the reduction of tariffs and the removal of non-tariff barriers to trade. The interview questions and corresponding answers given by Ms. Jaine Chisholm Caunt about the impact of political issues such as trade wars on international trade, the rising success rate of the Black Sea basin in the grain trade and on many other issues are as follows:
We, as the journalists working within the sector, may witness that some actors are not aware of the significance of Gafta standards in international grain and feed trade adequately. Could you tell us about the role and importance of Gafta in the global feed and grain trade for our readers?
Gafta is an international trade association representing over 1800 member companies in 95 countries across the world who trade in Agri-commodities. Gafta carries out six main services for its members:
• We design and maintain the standard forms of contract on which it is estimated that 80% of the world’s trade in grain is shipped.
• Gafta runs an independent, international arbitration service to deal with disputes. Gafta awards can be enforced globally in 157 countries under the 1958 New York Convention on the Enforcement of Foreign Arbitral Awards.
• Training and education: Gafta run face-to-face training courses on contracts, law, shipping and arbitration around the world for members and non-members alike. We have an 18-month online Distance Learning Programme, and have also just launched a platform of ‘bite-size’ online training modules – Agribility
• Approved Registers: We maintain approved registers of Superintendents, Fumigators and Analysts who have been externally audited to meet the Gafta standard. The fumigators standard is the first ever international standard for fumigators, and by the end of 2019 it will be compulsory to use a Gafta-approved Superintendent, Analyst or Fumigator to stay in compliance with Gafta contracts.
• Trade Policy: Gafta promotes free trade in Agri-commodities and promotes global reduction in tariff and non-tariff barriers to trade. Gafta represents members’ views to authorities by providing informed opinions on legislative and policy developments and publishes key industry news and updates on trade issues. Gafta members can raise issues and influence policy with Gafta’s dedicated in-house expert.
• Events & Networking: Gafta organizes many networking receptions and seminars around the world including the annual black-tie Gafta dinner in London. Gafta members have exclusive access to the Gafta database of member contacts as well as the ‘Defaulters List’, receive a bi-monthly newsletter – Gaftaworld, and discounts on many Gafta services.
GAFTA’S ROOTS DATES BACK TO THE 19TH CENTURY
I want to talk about the history of Gafta shortly. How did the idea of establishing an international grain and feed trade association come about? Could you tell us a bit about the history of Gafta?
Gafta’s roots go back to 1878 when a group of London corn traders, and latterly cattle food traders, wanted to establish standard forms of contract to facilitate trade.
Gafta now has over 80 standard forms of contract which are freely available for anyone (member or non-member) to use: https://www.gafta.com/All-Contracts
Gafta has an International Contracts Committee (ICC) made up of Gafta members whose role it is to design and maintain contracts.
What are the prerequisites for being a Gafta Qualified Arbitrator? What are the requirements for being an impartial and fair arbitrator? How do you ensure these?
Gafta has a pool of over 75 arbitrators who can hear disputes. Most of our arbitrators are currently active, or recently retired from the trade. The principle is that Gafta arbitration should be ‘For the Trade by the Trade,’ and we do not allow lawyers in private practice to become arbitrators. The only exception is for retired lawyers, and those lawyers working in-house for a Gafta member. In summary to become an arbitrator, an individual has to have a minimum of ten years’ experience in the trade, have passed all the Gafta face-to-face courses (GPD) or the Distance Learning Programme (DLP), and pass the Gafta arbitrators’examination.
Gafta arbitration is governed by the 1996 Arbitration Act which places an explicit obligation on arbitrators to be fair and impartial. Gafta also monitors this through a series of policies and practices to ensure impartiality. Further information about becoming a Gafta arbitrator and the principles an arbitrator has to abide by, can be found here: https://www.gafta.com/Arbitration
Would you give some brief information about Gafta Arbitration Committee? How do you ensure the transparency of the Committee?
Gafta has a number of committees that oversee key Gafta services and ultimately report into Gafta Council. The Arbitration Committee is made up of equal numbers of Gafta arbitrators and Gafta members who represent users of the service. It meets three times a year. Its role is to review Gafta arbitration rules 125 and 126 and make recommendations on policies and procedures for the effective operation of the Gafta arbitration service and ‘conduct’ of arbitrators. The Chairman of the Arbitration Committee is always a member of Gafta Council to ensure transparency and good communication.
Can you tell us about Gafta Presidency and the duties of the President? This evening we witnessed a frank speech of Mr. Swithun Still who is a very well-known person in this sector with his experience and knowledge and the new president of the association. What will his presidency bring?
The Gafta President only serves a one year term, from mid-January to mid-January with the election taking place after the Annual General Meeting, but one might say that it is a four-year learning curve as there are four-year-long stages.
A new Gafta ‘officer’ is appointed each year from Gafta Council as ‘Vice-President’. They then become (annually) Deputy President, then President and then finally Immediate Past President. This cycle ensures that the Gafta President has had an opportunity to learn more about the operational activities of Gafta, and the 1-year tenure as President itself, means that it is less onerous on Employers to allow their staff the time to carry out the many ceremonial duties as President of Gafta.
We wish Swithun a successful year as GAFTA President and we hope that he manages to promote the Association to the best of his ability and encourage more companies and individuals to join and reach 2,000 members.
THE EFFECT OF POLITICS ON FEED AND GRAIN TRADE IS INCONTROVERTIBLE
What do you think are the most important factors affecting global grain trade?
Let me list them;
• Geo-political uncertainty
• Increased regulatory compliance issues including financial regulation
• Changing consumer demand and preferences
• Increased global population growth coupled with climate change
• Opportunities presented by technology (eg electronic trading) coupled with political nervousness of new technology (eg. gene editing)
• Increased role of regulators affecting many aspects of trade and supply chains plus role of international sanctions
• Labelling requirements on food, increased pressures for traceability throughout the supply chain
• Increasingly complex and legalized environment for arbitration
What kinds of changes have been experienced in global grain trade recently? Could you share your observations with us?
The rise in the importance of the Black Sea as a supplier of grains to world markets especially Russian wheat & Ukrainian corn, but also barley.
The disruptions in world grain flows due to politics notably soybeans flowing from Brazil to China rather than from USA.
ORGANIZATIONS PROMOTING INTERNATIONAL TRADE SHOULD BE SUPPORTED
Stable grain trade is crucial in terms of global food security. However, the trade war between the US and China showed that this trade was quite open to threats and is at risk. What do you think can be done for protecting the grain trade from such risks?
Gafta promotes free trade in agricultural commodities and works with international governments to promote the reduction of tariffs and the removal of non-tariff barriers to trade, as well as a science and evidence-based approach to international trade policy and regulatory decision making. For this reason, Gafta supports multilateral agreements and recognizes the indispensable role played by the WTO in facilitating and safeguarding trade and in giving a sense of predictability and certainty for business to operate, backed by a credible dispute settlement system to resolve trade disputes.
Global trade rules ensure a level playing field, promoting open and free trade. Furthermore, in many areas the WTO rules set out the basic principles but leave the details to each member country and those details, particularly rules relating to health, safety and the environment vary a lot from one country to another.
The international standard-setting bodies such as Codex Alimentarius, IPPC and OIE are recognized by WTO under the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement). Gafta works in close conjunction with Codex and the IPPC, and these bodies, who have access to the best scientific, technical and government advice, are the most appropriate bodies for agreeing sanitary and phytosanitary standards. All governments should support and work with all the international technical standard-setting bodies that provide references for world trade.
THE IMPORTANCE OF BLACK SEA IS UNDENIABLE
There is an undeniable Black Sea phenomenon in world grain trade. How has the increasing impact of the Black Sea region affected the global grain industry? Do you think that Black Sea region’s leadership on grain trade is sustainable?
The rise in importance of the Black Sea is indeed undeniable & the impact has been significant for competing origins. It’s not a coincidence that the USA has recently had lowest planted area for winter wheat in 110 years. Whether or not this is sustainable remains to be seen as much will depend on the known unknowns of weather & politics! The trade still remembers the grain export ban from Russia in 2010 after all. The grain trade always adapts to supply and demand and this will not change!
We also suggest you to read our previous article titled "“We are overcoming the drought in Germany thanks to open market conditions”".