Research in developing countries food safety systems

1. Research in developing countries food safety systems Australian Agricultural and Resource Economics Society Annual Conference Mini Symposium on Agribusiness and Food Safety

2. Topic for presentation • What is driving the current research agenda linking food safety and value chain approaches • What does research for development have to offer – an ACIAR perspective • What are the roles of public, private and aid sectors

3. Linking value chain approaches and food safety • Food safety issues arise throughout the food chainfrom the point of production, transport, storage, wholesaling, processing to retailing. • Agricultural practices contribute chemical and microbiological agents into the food chain. • Intensive management systems are difficult to sustain without chemical use • There is a greater distance between the point of production and the point of consumption. • More processing occurs as a ‘value-add’

4. Traditional and modernisation • Traditional supply chain were very short • Protective measures, such as cooking foods shortly after harvesting with few intermediate handlers, and the use of spices in cooking, mitigated the risk. • Urbanization means populations rely on much longer food chains arising from fewer but larger scale producers • This may mean agreater opportunity for microbial and chemical hazards to be expressed and affect large numbers of people.

5. The stick and the carrot • Developing countries trying to drive food safety through regulation • In developed countries, food safety is driven by consumer and producer demand, supported by government. • Modernised sectors within developing countries have desire, but lack capacity

6. Developing countries • “wet” market situation the daily routine of purchase of food for consumption on the same day limits the extent of some problems, especially for the most common microbiological contaminants • There is also likely to be an underlying level of intestinal disease in the village or urban situation from wet market purchases that is considered normal.

7. Changing consumers in developing countries • more affluent individuals are increasingly shopping at supermarkets (the “supermarket revolution”) • perception that food is cleaner and safer, the shopping is more convenient and refrigeration is available.

8. Fast Growth of Market1 Asian food markets • growing 5-7 times faster than food markets in US and Western Europe • modernizing faster in Asia than anywhere in world, including: • supermarkets • food service • large processors 1. Reardon, 2009

9. ….meaning1 • rapid competitive investment by suppliers • creating sourcing networks – nationally, intra-Asia regionally, globally • …trade liberalization and infrastructure investment “de-protecting” farmers nationally and regionally (while helping access to markets) • Rising quality and emerging safety standards With one outcome being improved quality and traceability – but who pays 1. Reardon, 2009

10. Transformation comments “Our company reputation will be damaged if food safety is not secured. Food safety relates to consumers’ safety. Consumers will not buy foods with safety problems.” Hotel Managing Director, China “Food safety is assumed by consumers, but is still important. If problems occurred consumer confidence would fall.” Industry body, Australia “There is low awareness generally. A small sub-sector of consumers are aware, but the broad market is not concerned. The general impression is of greater concern for price.” Food retailer, India “If products are available at retailers, consumers in Japan believe the products must meet the standardsset out by the Japanese Government ... so other factors such as quality, functionality, or prices become the deciding factors in which product they will choose.” Food retailer, Japan Comments from Beyond Price and Quality, 2004

11. Evolving Food Demand Characteristics Food Attributes & Characteristics North America, Japan, Western Europe, Australia Income Levels Eastern Europe Latin America, China, Middle East, India Sub- Saharan Africa

12. Diets change as income rises • As income rises, people eat less cereals and more meat • Rising incomes place more stress on ag commodities because it takes 7 kg of feed to product 1 kg of meat • Grains, sugars and vegetable oils consumption also increase with income

14. Meat Consumption and Income Estimate: 1% Increase in PCI Increases PCC 0.6%

15. New approaches in development • Agro-entreprise at the center • More comprehensive and holistic approaches (value chain, competitiveness) • Complementary of public and private roles: investment, regulation, PPPs • Interventions more strategic and reactive: • Global challenges/initiatives: climate change, food security, large-scale commercial agriculture • Responses to short-term crisis: food price crisis , animal epizooties (avian flu)

16. Disjointed Food Supply Chain Farmer Village Commission Agent District Commission Agent Wholesaler Sub Wholesaler Retailer Consumer Farmer • Low yield / non-standard quality • Price de-linkedfrom market Processor • No control on quantity / quality of raw material • Unscientific and unhygienic handling • Poor market access • Loss in trade passed onto farmer Village Commission Agent Distributor • Lack of infrastructure leading to loss of quality • Lack of infrastructure leading to loss of quality Mandi / Local agents Retailer • No infrastructure for handling / grading • Price quality correlation not assured Transportation • High prices • Limited choice Consumer • Unscientific method leading to loss of quality / damages • Inadequate infrastructure • Rampant wastage • Opportunistic profiteering Wholesale mandi Non value adding players

17. Emerging New Supply Chain • New agriculture supply chain is emerging removing non-value adding intermediaries • Partnership with value adding intermediaries of the supply chain • Technology transfer • Streamline processes • Maintain Quality

18. Private Sector ActionImproving Infrastructure

19. Drivers • Enforced regulations in importing countries such as Europe and Japan have created strong economic drivers for high food safety standards (especially control of antimicrobial residues) • Within developing countries there is little demand for safe food products. While supermarkets are perceived as a place to purchase safe food there is little underlying substance to that perception. • Supermarkets do not appear willing to pay a premium for a safe product as defined by independent audits. • Australia’s red meat sector • the incentives to develop and implement an approach to food safety have arisen from domestic and international (regulatory and commercial) market demand for food safety. • Underpinning this approach is a commitment to research in areas identified by a systematic risk assessment, relying on an exhaustive and rigorous risk management review of the red meat supply chain (Pointon et al, 2005).

20. Shrimp in Indonesia • Processors export about 95% of production, with the small balance sold to domestic retail markets. • The export market is regulated by both public standards and by private standards concerning quality, safety, and traceability.

21. Indonesian food safety • Demand drivers for food safety in Indonesia currently originate from either government regulation or from market forces operating through market chain participants such as food processors and major retail organizations such as supermarket chains. • Consumer awareness of food safety risks is not very well developed amongst the majority of the Indonesian population. • Market forces operate to enhance food safety only in a few sectors of the food supply market, such as supermarkets, fast food chains, hotels and major restaurants.

22. Shocked to change • There were three key “shocks” that affected the farmed-shrimp sector in Indonesia in the past decade: • The emergence of disease that struck monodon in the late 1990s/early 2000s, doubling crop failure rates among small farmers from 20% to 40-50%, concomitantly reducing yields; • The emergence of an alternative to monodon with the allowance by GOI of imports of vannameibroodstock in 2004; • The emergence of stricter export requirements by foreign importers in 2004 from increased standards of shrimp food safety and traceability.

23. Enabling a change • The drivers for adoption of practices to minimise food safety risks are not clear or present in many of the partner countries in which ACIAR operates. • These drivers can include: • regulatory or commercial demand for minimum food safety standards (domestic or export demand), • adequate legislation and enforcement, • connections through and within the food supply chains, • adequate capacity to identify risks and manage risks, • adequate reporting of human health events.

24. Donor activity • There have been a number of donor-funded activities that aim to improve the institutional frameworks for food safety. • Success of these initiatives has mainly been limited by institutional constraints or poor policy.

25. Future • ‘it is difficult to contemplate how research will assist smallholder producers that mainly supply wet markets’ • The scale of food safety problems is largely unknown, • the critical points in the supply chain are largely unknown • Urban populations rely on much longer food chains, and this provides greater opportunity for microbial and chemical risks to be increased and affect large numbers of people. • highest priority for research should be to obtain a better understanding of the risks within the supply chains

26. an issue is identified as part of the wider research needs for a specific commodity • the demand for food safety standards is present or is likely to emerge and as part of an overall strategy to gain greater value for a commodity • the connections between smallholders, industry and government are present or can be developed in order to facilitate the uptake and adoption of new practices • smallholders can or are likely to derive a benefit from research

27. The research should: • include a thorough assessment of the hazards and where they may occur along the food chain • include identification of the most cost-effective points of interventions and not just those that can be implemented by the grower or producer • be part of larger activity that seeks to improve overall the benefit from a commodity either as stand alone projects or integrated • include specialist skill sets to conduct the research especially hazard analysis and quantification • address policy or institutional issues, particularly the relationship between commodity supply chains, customers and government and notably audit and compliance regimes • facilitate development of communication and education material on food safety relevant to the identified activities in the food supply chain.