Dialogue and information exchange on compliance…

1. Dialogue and information exchange on compliance… STDF Information Session on Private Standards, June 26 , 2008 John Lamb, Sr. Agribusiness Specialist Agriculture and Rural Development Department Sustainable Development Network Washington, DC

2. ..including… • Private standard holders • Suppliers • Certifiers

3. …other interested parties Community of Practice • Private standard holders • Suppliers • Certifiers • Buyers • Accreditation bodies • Regulatory agencies • Advocacy groups • WTO (both SPS and TBT) • International standard-setting bodies

4. TSPN: A GPP designed… To build a community of practice… …actively promoting the adoption of improved social, environmental, and food safety standards in developing countries… and committed to sharing learning and experiences associated with supporting those efforts

5. TSPN: Objectives Better enable developing countries to take advantage of, and participate more effectively in standards-based markets. Through research, policy dialogues, application of improved benchmarking and evaluation tools and the use of a standards information clearinghouse.. …the TSPN provides a platform for identifying and replicating better practices in development assistance related to standards management.

6. TSPN: Thematic Areas Knowledge sharing and dissemination (50%) Priority-setting and donor coordination (20%) Support for national policy, reform, and capacity-building (20%) Global advocacy (10%)

7. Premises: Agri-food standards matter greatly Commerce and trade Economic growth Social development Human health Agricultural health Environmental protection Poverty Reduction!

8. Premises: Agri-food standards can affect many different objectives Volume/value growth in commerce or trade Improved or sustained market share Higher unit values for products sold Higher value added Productivity increases Higher net returns to smallholders Improvement in food security Reduction in food-borne disease Preservation of biodiversity Prevention of environmental degradation Better quality of life

9. Premises: Private agri-food standards are here to stay, in fact gaining ground • Arguably as old as official standards • Boom started in the Nineties, even before WTO existed as such • Proliferation of schemes, often overlapping or contradictory, but never static • Most producers interviewed say they spend 90% of quality management effort on them • Major countries are benchmarking on them

10. Premise: Private standards can be seen as a problem… • Not always based on good science • Not always uniform in their application • They are not always transparent • Undeniable impact on field of standards • They seem to be gaining traction • They have tended to proliferate • They occupy a lot of time and attention among actors in productive chains • They tend to raise costs • They may crowd out some players

11. …or perhaps an opportunity, to be embraced • Bring attention to standards in general • Market forces provide impetus, discipline • Contribute to ultimate SPS concerns • Bridge to analogous domestic concerns • Better/greater implementation guidance • More holistic perspective • Self-regulation mean lowers public burden • More responsive to changing conditions • They can add economic value

12. Premise: Private standards are not inherently incompatible with SPS • Use of risk analysis • Scientific basis • Precautionary principle • MFN treatment • National Treatment • Fair competition ~ Transparency • Special & differential treatment …yet more work is needed

13. Premises: The community of practice needs a shared understanding • Not mandatory, yet sometimes indispensable • They are guidelines for acceptable or even best practices • Provide parameters for measuring compliance & performance • May cover not just primary production, but also processing, manufacture, distribution, marketing, and analytical services • Primarily about commerce, secondarily about trade

14. They cover more ground than either the SPS or TBT agreement Service Supply Chain Management Environ. Standards Social Standards Food safety and Animal/Plant Health (i.e. SPS) Standards Technical Requirements (identity, quality, condition, presentation, etc)

15. Examples of private schemes that focus on GAP, GMP, GLP, GDP

16. GlobalGAP seems to have the greatest momentum on the farm V4 2011 V3 2008

17. Private schemes that foster “ethical accountability”

18. Private schemes that focus onthe environment

19. What economic and social roles do private agri-food standards play? • Identify and differentiate products, processes and circumstances • Shape access to different domestic marketing channels or specific value/supply chains • Achieve markets that are more orderly in conduct, less volatile in pricing, more profitable to participants, yet more valuable to consumers • Manage risk to public health and food industry • Regulate food safety and agricultural health • Provide a uniform basis for tariffs or taxation

20. They start with tangible, measurable technical specifications… • Identity: name; label; other markings; country of origin • Physical dimensions:size; count; shape; weight • Maturity: soluble solids; color break; other indicators • Quality: sugar level; firmness; percentage of brokens, defects, foreign matter, or filth • Condition: freshness; firmness; percent decay; mechanical damage • Organoleptic traits:appearance; smell; taste; feel

21. “Beauty is in the eye of the beholder” Baby Bok Choy Giant Pumpkin Conventional Lettuce

22. Which tomato would you buy? Beefsteak Roma Yellow Grape Cherry Heirloom

23. Intangible standards are becoming more important as markets mature • Credence attributes: • Source area • Production methods • Impact on the environment • Uniqueness • Luxury • Food safety • Health effects onconsumers, workers • Distribution ofbenefits

24. Which tomato would you buy? Organic @$3.99/lb Cluster @$3.25/lb High lycopene @$4.25/lb Pesticide free @$3.79/lb Vine ripes @$2.99/lb

25. Let’s look at food safety challenge • Number of food-borne diseases • About 250 of concern to CDC • New or emerging diseases • More than 150 agents of zoonotic infection • Rise of vulnerable populations • % of young in developing countries • % of elders in developed countries • Immuno-suppressed individuals • Limits to treatment • Resistant strains • Lack of research to replace antibiotics

26. 76 million cases of foodborne illness each year in the U.S. alone • 5,200 deaths • 325,000 cases result in average of 5.8 days in hospital • 1,991,311 cases who visit physician and test positive for specific pathogen • 12,878,489 cases who visit a physician but have no test done • 60,800,000 cases who do not seek medical care • $5.6 billion in economic costs 2000 TACO BELL HEPATITIS A OUTBREAK TIED TO GREEN ONIONS

27. These illnesses have huge impacts on the individual… • Pain and suffering • Death and disability • Loss of wages • Reduced productivity • Medical expenses • Legal costs • Loss of leisure

28. …and on society • QALYs and DALYs • Reduced laborproductivity • Loss of work and leisure time by affected person and family 1,397, 187 cases of salmonella means $2,467,322, 866 (2006 dollars) in lost wages and medical costs (USDA/ERS Cost of Illness Calculator)

29. Regulatory agencies such as FDA have quite a challenge • Value of U.S. food imports exceeds $2 trillion (more than twice the size of the Brazilian economy) • U.S. alone has 825,000 sources of imported food, entering through 300 ports of entry • >3,000 trucks carrying food cross through Nogales, AZ border each day from Mexico • FDA can inspect only about 1% of shipments

30. …and try to respond accordingly • “I want to not only know where this was grown, I want to know who planted it, I want to know the nutrients that were fed to it, I want to know the quality of the water, I want to know who picked it, I want to know what they did after they picked it, I want to know who shipped it. • In other words, I want to know that quality was built in very step of the way. So that when it gets to the shelf of a retailer it was not dependent simply on some border protection person checking it as it comes through.”Michael Levitt, Secretary of Department of Health and Human Services, (i.e. FDA), November 2007 Traceability!

31. Cyclospora in red raspberries from Guatemala

32. Ripple effects spread far over time • Initial blame on California blackberries caused $20-$40 million in lost sales for all berries • US and Canada blocked red raspberry imports from Guatemala next two years, resulting in $10 million loss to producers there • Several major retailers cut off all produce imports from Guatemala • Current demand for Guate berries in US is one-third of earlier levels; Canada still closed. • Many brambleberry producers went out of business • Some growers moved to Southern Mexico • Guatemalan berry industry never recovered despite model plan of excellence developed jointly with FDA, CDC, PMA, FMI and supported by gov’t, donors

33. Even if we consider only the 10 most worrisome foodborne pathogens.. • Campylobacter • Clostridium botulinum • E. coli 0157:H7 • Listeria monocytogenes • Norovirus • Salmonella • Staphyloccus aureus • Shigella • Toxoplasma gondii • Vibrio vulnificus

34. ...they continue to affect major enterprises and a lot of individuals • Business interruption • Wasted time and effort • Loss of client • Loss of market • Damage to reputation

35. …categories and source countries can be severely affected

36. Effective prevention must start with top management…

37. …committed to a quality culture… embodied in a QMS…

38. …which depends on employees acting responsibly…

39. …and also a code of practice…

40. …that must be verified by third-party certification and audits...

41. ...who in turn may be accredited

42. Crisis response must be part of the plan

43. A culture of compliance at the industry level is also important • Vertical and horizontal cooperation • Public awareness • Benchmarking • Upgrading national and industry-specific standards • Training

44. ..as is public-private collaboration Within clear limits, which are predominantly defined by international and (as relevant) EU legislation, the Dutch and Australian [livestock] industries have the ability to shape their own future. The national animal health services are co-managed by government and industry, each with clearly defined roles and responsibilities. Non-regulatory animal health issues are primarily the responsibility of the private sector, in both countries with substantial technical support from appropriate organisations and people. Financial support for these activities is almost exclusively from industry, through compulsory levies. In these countries, industry structures facilitate whole-of-sector cooperation.

45. In the developing world, donor support is more critical • To raise awareness • To stimulate stakeholder dialogue • To improve regulatory impact analysis • To improve the public comment process for official standards • To support industry involvement in setting private standards within trading partners • To build capacity in both the public and private sectors

46. ..which is why the World Bank remains engaged in standards • Mainstreaming standards ESW • STDF co-funding and participation • E-learning series on agri-foood standards • Development Marketplace 2008 • SPS Action Plans • Workshops on agri-food standards, private standards, smallholder linkages • Regulatory impact analysis knowledge product • Trade Standards Practitioners Network

47. Main TSPN activities • Best practice conferences, preceded by a research/consultation phase and post-ceded by action plans for member organizations/partnerships to replicate/scale-up findings; • Refinement/field testing/dissemination of improved industry/company/project benchmarking and impact assessment diagnostic tools to support the identification/prioritization of interventions and gauge their effectiveness; • Continued support to the TradeStandards.org information clearinghouse, project database, and learning centre to be used as a resource by various stakeholders.

48. TSPN research/action priorities • Interface of the public and private sectors in the adoption of voluntary standards • Promoting good governance in standards development and implementation • Leveraging private finance to complement public funding for capacity-building efforts • Improving the effectiveness of technical assistance delivery to developing country stakeholders, and • Means of assessing impacts of standards within the frame of development and poverty reduction objectives.