GAFTA: Acronym for success

by Emily Wilson
Share This:

Acronyms — the abbreviation of a group or organization's name by using the first letter of each word — are used "only when it refers to something really well known," an English high court judge said several years ago, "such as GAFTA."

Those involved in the international grain industry would likely recognize the acronym GAFTA as the Grain and Feed Trade Association, a London-based organization that promotes international trade in grains, animal feedstuffs, pulses and rice.

GAFTA was formed in 1971 with the merger of two long-established trade bodies — the London Corn Trade Association (founded in 1878) and the Cattle Food Trade Association (founded in 1906). The acronym also is the association's trademark, and is recognized and used worldwide.

GAFTA's main objectives are to promote free trade and to protect its members, which currently totals more than 800 in 76 countries. The group's diverse membership is made up of importers, exporters, brokers, dealers, manufacturers, processors of raw materials for human and animal consumption, brewers, distillers, analysts, superintendents, forwarding agents, arbitrators, banks and lawyers.

The new president of GAFTA, elected at the group's annual meeting in January in London, is John Vose. Mr. Vose has over 30 years experience in the commodities trade and is the sales director for FF-Man Feed Products, Liverpool, U.K., a part of the E.D.&F. Man Group which specializes in vegetable oil blends for the animal feed industry.

Werner Meyer, trade manager of Avena Nordic Grain Oy, Helsinki, Finland, was elected deputy president of the association. Wayne Bacon, vice-president and general manager of Oriac Overseas Inc., a Canadian company based in Cairo, Egypt, was elected GAFTA vice-president.

While GAFTA's policies are determined by committees of members, the day-to-day operations of the trade association is overseen by Pamela Kirby Johnson, chief executive officer, and a largely female staff of 19.

Ms. Kirby Johnson said the worldwide grain and feed industry faces today — at more than any other time — increased challenges in meeting consumers' new and increasing demands for additional warranties, guarantees and traceability of goods. "As the only international trade association encompassing most countries of production and consumption, GAFTA is well suited to bring together all trade interests in this respect," she said.

GAFTA provides factual information on current trade practices, including regimes and controls already in place, and enters into dialogue on new developments to help its members understand the issues affecting food and feed, she added.

Ms. Kirby Johnson said GAFTA would continue to call upon members of the World Trade Organization to reduce what the organization believes are trade- distorting management of markets while bearing in mind the needs of poorer countries, where food production and security is derived from trade in agricultural produce, as the world moves to a free and open economy.

Most of GAFTA's member services are concentrated in three main areas: contracts and arbitration, trade policy and legislation issues and training and education.

DISPUTE RESOLUTION. More than 80% of the world's trade in cereals and a significant proportion of the trade in animal feeds is conducted under the terms of GAFTA contracts.

The range of GAFTA contracts — currently numbering about 80 — cover Cost, Insurance and Freight (CIF), Free On Board (FOB) and delivered terms. These contracts are constantly reviewed and altered as necessary to follow trade practices and requirements.

The contracts provide for trade in different commodities — including those covered by generic terms such as "grain" and "feed," but principally wheat, barley, maize (corn), oilseeds, cakes and meals, fishmeal, pulses and rice — from different origins worldwide, for different methods of transportation and for different terms of trade.

GAFTA contracts reflect trade requirements, but do not impose trade practices and methods on the commodities trade or on the membership. Any amendments or proposed new contracts are considered by the International Contracts Policy Committee, which meets quarterly in a European city.

GAFTA contracts include quality and condition parameters, sampling rules and, more recently, a scheme under which all superintendance companies or organizations must abide by a strict code of practice. GAFTA assists in providing the successful execution of a vast number of contracts entered into around the world. In most of those contracts, the parties will never meet.

The old adage, "My word is my bond," and the importance of certainty cannot be stressed strongly enough in the international grains trade. GAFTA provides these trading platforms.

ARBITRATION. This well-respected and well-used service has been developed so that trading companies are willing to be judged by their peers rather than have disputes referred to the courts. English Law is the determining jurisdiction in GAFTA contracts. GAFTA's arbitration rules are printed in booklet No. 125, but by virtue of the Arbitration Clause are deemed to be part of every contract.

Arbitrators must be GAFTA members who are registered, qualified arbitrators. Arbitrators are normally appointed by the parties, but can be appointed by the association in a situation where one of the parties fails or refuses to do so.

For the first arbitration, a two-tier system provides for one or three arbitrators who usually deal with a dispute on documents only and an appeal heard by a Board of Appeal. At an appeal with an oral hearing, each party is usually represented by an agent. GAFTA arbitration rules provide that arbitrations may be held wherever the parties determine, and not necessarily in London.

Recently, many arbitrations have been heard in Hong Kong, as parties from Singapore to Japan have begun to use this venue in their contracts.

Nearly 400 disputes are referred to GAFTA annually, of which about 25% go to appeal. An appeal decision is seldom referred to the courts, which will hear the case only if the claim is that the arbitrators failed to adequately interpret the law. The courts will not take an appeal on the grounds that the arbitrators came to the wrong decision.

In addition to arbitration, GAFTA offers an alternative dispute resolution service using mediation.

TRADE POLICIES. GAFTA's trade policies are designed to protect the interests of the membership. The association has contacts with government departments and many other international authorities and organizations concerned with agriculture, to whom representation is made on members' behalf.

The Trade Policy Department covers international trade policies of the W.T.O., Common Agricultural Policy of the European Union, trade legislation, plant and animal health regulations, customs regulations or any issue with a bearing on world trade. In general, support is given to any issue, providing it falls within the general remit of "liberalization of trade."

Information circulars are sent out weekly, highlighting matters affecting agricultural commodities. The monthly GAFTA Newsletter reports on trade, contractual matters, member news and upcoming international events.

TRAINING & EDUCATION. A continuing professional development (CPD) program provides GAFTA members a wide range of training and educational activities. The Foundation Course, held every January at a college in Cambridge, U.K., as well as this October in South Africa, draws 80 students from around the world, many of whom forge lasting commercial and personal ties.

Other CPD events for 2000 are to be held in Brazil, Argentina, Singapore, China, Switzerland and the U.K.. Contact GAFTA for a schedule.

Peter Brown is a U.K.-based commodities consultant, specializing in international contracts and dispute resolution. He is a qualified chartered arbitrator and a member of the GAFTA appeals board.

How to reach GAFTA
The Grain and Feed Trade Association is located at Gafta House, 6 Chapel Place, Rivington Street, London EC2A 3SH, U.K. Tel: 44-20-7814-9666. Fax: 44-20-7814-8383. Email: Internet:

‘We all have to pull together in 2000'

Excerpted from the GAFTA newsletter, February 2000, Issue 122:

The animal feedstuffs sector is facing a momentous challenge, particularly in Europe, where every food scare or GMO controversy produces "an overreaction, not least with supermarkets, each competing for a greater market share, all of them wanting to be first in achieving a public relations victory," said John Vose, newly elected president of the Grain and Feed Trade Association, in his opening address at the Council's annual general meeting on Jan. 27 in London.

"Consequently, their suppliers and therefore GAFTA members are being called on to provide, at great expense, additional quality, health and safety guarantees for food or feed ingredients we supply. Members are also being asked to give more information about the origins, transport, sampling and storage of bulk raw materials imported into Europe. GAFTA already has well-regulated disciplines in place for the international market and the good business efficacy of using and complying with these contracts, rules and codes has to be made known to a wider audience.

"Care, of course, must be taken. Consumers must have confidence in the food they eat, but many of the demands arising from assurance schemes, with calls for traceability, are unnecessary and not based on sound science. If these demands cannot be met, it could be that the trade, certainly on straight feed to farmers, will be killed off at a time when industry and farmers can ill-afford any greater constraints and costs.

"However, we have to be optimistic at such times, and although costly, there will be opportunities for our members, certainly in a number of markets, to meet the demands and give the greater guarantees being sought."