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COSTS AND BENEFITS OF COMPLIANCE WITH FOOD SAFETY STANDARDS IN NILE PERCH INDUSTRY IN TANZANIA

COSTS AND BENEFITS OF COMPLIANCE WITH FOOD SAFETY STANDARDS IN NILE PERCH INDUSTRY IN TANZANIA. By Z. Mpenda, N.S.Y Mdoe, R. Kadigi and E. Senkondo. Introduction. High value food products as new opportunity for developing exporting countries Fish is a new opportunity worldwide:

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COSTS AND BENEFITS OF COMPLIANCE WITH FOOD SAFETY STANDARDS IN NILE PERCH INDUSTRY IN TANZANIA

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  1. COSTS AND BENEFITS OF COMPLIANCE WITH FOOD SAFETY STANDARDS IN NILE PERCH INDUSTRY IN TANZANIA By Z. Mpenda, N.S.Y Mdoe, R. Kadigi and E. Senkondo

  2. Introduction • High value food products as new opportunity for developing exporting countries • Fish is a new opportunity worldwide: • net exports from developing countries reached 18.3 billion US$ in 2003, which compares positively to commodities such as coffee, cocoa, rubber, etc. (Josupeit, 2005). • Over the last decade, developing country exports of fish and fishery products have increased at an average rate of 6 percent per annum.

  3. Introduction: Nile Perch in East Africa Value of Nile perch exports to the EU by the riparian states (000’€)

  4. Introduction: Nile perch in Tanzania • In 2008 the Nile perch exports amounted to US$ 153 million (equivalent to 1.1% of the GDP) • Direct employment to about 80000 fishermen • Seven processing plants in Mwanza in 2006 employed 2825 casual and 1195 fulltime • Nile perch mongers: daily cash flow estimates in 2009 were TSH 600 million • About 119 000 families depend on lake Victoria for their livelihoods

  5. Introduction cont’ed • three intermittent EU import bans referenced to failed compliance with the EU food safety standards • Low volumes were consumed by other markets in Asia (Japan, UEA) • exacerbated pressure for reform adopting EU fishery regulations on food safety and hygiene. • At national and processing levels

  6. Literature on compliance • Costs: • High production, compliance and transaction costs • Non-conformity costs is enormous • Benefits: • Market access, • Premium price, • Firms’ image, • competitive edge

  7. Study objectives • General Objective • To assess benefits and costs associated with conformity to food safety standards in the Nile perch export supply chain. • Specific Objectives • To assess levels of compliance with standards at each stage of the Nile perch export supply chain • To identify and assess costs and benefits associated with conformity to food safety standards at various stages in the Nile perch export supply chain

  8. Methodology • Both secondary and primary data were used • Primary data were collected from a total of 239 actors including • 5 processing plants, • 58 traders (ajenti), • 109 boat owners (matajiri) • 67 fishers (wajeshi) • Data analysis • descriptive statistics, • accounting method and

  9. Obj. 1: Level of compliance with standards • Fishing : Non compliance with use of mashed ice, boat partitioning, training and license renewal was found amongst small and medium scale boat owners • Trading: non-compliance with keeping the 3 days maximum limit of mashed ice use. Only 45% of traders spent less than 3 days • Processing: complied with standards; continuous improvement due to proliferation of new standards

  10. Obj. 2: Compliance costs • Capital investment costs (1) Boat owners: Nile perch costs three times higher than that of dagaa (2) Traders: • Dealers’ costs increased by 45% • Trucks traders’ costs increased by 109% • Boat traders’ costs increased by 50% (3) Processors: the costs increased by 16%

  11. Obj. 2: Compliance costs cont’d • Recurrent costs (1) Boat owners: • costs increased by 17.4% compared to 0.2% for dagaa • Highest cost is in fuel and oil (65%) (2) Traders: (3) Processors: high costs on quality supervisors (27.2%), lab testing (25.2%) and training (11.0%)

  12. Obj. 2: Compliance Benefits (1) Boat owners • Market access • Significant in annual net revenue • Premium price (67%) (2) Traders • Market access • Price premium (84%) • Net revenue increased by 153% when compared to dagaa (3) Processors • Market access

  13. Conclusions • High levels of compliance have been achieved by downstream chain actors (processors) who are closely integrated to fish buyers than upstream actors (fishers) • Compliance is constrained not only by the standards but also depletion of fish resources (distance from the shore line, days stayed at landing sites to collect fish) • standards are associated with high costs but also higher benefits

  14. Major recommendations • it is worth supporting the continuation of efforts to maintain compliance • encourage development partners and non-governmental institutions to finance chain improvement trainings to all players in the Nile perch supply chain • Ensure sustainability of fish resources

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