AG 9000: Quality Management System for Grain Production

1. AG 9000: Quality Management System for Grain Production Chad Laux 12/13/04

2. Overview • Background • Attitudes about Biotech • Customer/consumer importance • Satisfy needs through differentiation • Customer focused systems – QMS • ISO 9000 • Implementation issues • AG 9000 • Standards process

3. Background • Increased usage of biotechnology in agriculture • Grower benefits including pesticide reduction, increased profit • As a result, current use of GM modified food products widespread • 95% of Argentinean soybeans GM modified (Millis, 2001)

4. Customer Attitudes • Concerns about use biotechnology in US and abroad range from little concern to outright opposition • Poll of US citizens of GM food safety: (Hoban, 2001) • Result: strong consumer resistance to GM in many countries

5. Customer Focused Markets • There are more open, transparent, market-oriented economic systems today than ever before. • Customer choice on food preferences or traits results get back to producer • South Korea buys a majority of soybeans from Brazil rather than US due to non-GM soybeans Brazil supplies (Harl, 2002) • Consumer/customer dominates the debate (Harl, 2002)

6. Market Conditions Today • Increased customer demand for product information • Result: Global markets moving from homogenous foodstuffs to differentiated foodstuffs • Food products increasingly defined by product differentiation rather than as commodities categorized by grades (Reardon, 2002)

7. Product Differentiation • Products defined by product attributes, traits, verification by testing, or process defined by auditable or certified production system (Clause, 2003) • Separation of product w/ testing doesn’t address how Agriculture does business (blend and send)

8. Prescriptive Approach • Approach that relies on organizational change, and customer focus to adapt to the changing marketplace.

9. Customer Focused Systems-QMS • A quality management system (QMS) is a system that defines operations to achieve consistency and creditability with customers (Weigers, 2001) • Also, it refers to what the organization does to manage its processes, or activities in order that the products or services that it produces meet the objectives it has set itself (ISO, 2004) • ISO 9000 series (International Standards Organization standard on quality management)

10. ISO 9000 • ISO 9000 is a generic standard - means that the standard can be applied to any organization, large or small, whatever its product in any sector of activity • ISO is an auditable system – organization may be certified to a market standard by outside agency (Weigers, 2001) • ISO 9000 predominant QMS today – adopted by 149 countries/economies (ISO, 2004)

11. Growth of ISO 9000 • Almost 350,000 companies registered to ISO 9000 series (ISO, 2003) • Top 10 countries for registrations: • China (approx. 27%) • Italy • UK • Japan • Spain • USA (approx. 9%) • Germany • Australia • France • South Korea

12. ISO 9000 Characteristics • Leadership demonstrates commitment to customer requirements. • Policy and measurable quality objectives are set and renewed. • Processes are identified, analyzed, and managed. • Customer satisfaction is measured. • Data are collected, analyzed, and used. • System effectiveness is continually improved. (Bloomfield, 2004)

13. ISO Process Approach • Company must identify and manage numerous linked activities. • An activity uses resources, is managed in order to enable the transformation of inputs into outputs.

14. ISO 9000 and Agriculture • ISO compels process control, traceability of product information, and continuous improvement practices in Agriculture. (Clause, 2002) • Operational discipline resulting in improved efficiencies such as a 2:1 payback ratio. (Hurburgh and Lawrence, 2002) • Rigor and profit-based model is attractive to Agriculture dominated by low-margin products

15. Implementation Issues • Limited adoption of ISO in Agriculture thus far • ISO not explicitly written to Agriculture • ISO a general quality management system document • ISO is applicable to all industries and sectors • Fiscal impacts of ISO not explicit • Focused on operations, not on accounting • Picture of fiscal impact of ISO mixed • Create an ISO Guidance standard for Agriculture

16. AG 9000: ISO 9000:2000: Quality Management System for Grain Production Draft Document • Scope: This standard will encompass all quality aspects of grain production from planning to the delivery of the product. • AG 9000 guideline for ISO 9001:2000 and ISO 9004 will clarify implementation issues for farmers.

17. Ag Core Processes • Planning • Land Allocation • Procure Inputs • Field Preparation • Planting • Field Activities • Pre-Harvest • Harvest • Grain Management • Storage • Distribution and Delivery

18. Timeline and Standards Process • Written 1st draft document for adoption by ISO. • Initial response from international community very positive. (EU) • Will become New Work Item under ISO/TC 34/Working Group • Handles Food Products

19. TC 34 Structure (AOCS, 2004)

20. 1 PROPOSAL New Work Item NWIP 2 PREPARATORY Working Draft WD 3 COMMITTEE Committee Draft CD 4 ENQUIRY Draft International Standard DIS 5 APPROVAL Final Draft International Standard FDIS 6 PUBLICATION Publication-International Standard IS Timeline (AOCS, 2004)

21. Key Aspects of ISO Participation • Timely – prompt response to enquiries within the accepted timeline • Consensus – all points of view are accepted in forming the TAG position, majority support for the position • Transparent – activities of the committee are open and may be inspected by all interested parties • Traceable – all items must be accompanied by a voting record (AOCS, 2004)

22. Considerations from ISO/TC 34/WG 8 Food Safety Systems • What would the ideal standard look like? • How can different national standards be integrated together? • How can we ensure consistency between different interests? • How far is the current draft from ideal? - guidance document or auditable standard • Compromise: Guidance document with annex containing auditing plan (AOCS, 2004)

23. Questions?