Download Managing Food Safety, Plant Health and Animal

Managing food safety, plant
health and animal health in
informal markets
by
Cornelis van der Meer
WB/BFA Workshop
Hainan, China, June 26-27, 2006
Overview
• WTO-SPS “principles” and implementation
issues
• Risks and costs of implementation in
informal markets and informal border trade
• Experiences from full implementation of
EU requirements in new member countries
• Implications and way forward for
Southeast Asian countries
SPS requirements, formal and
informal markets
• Formal SPS principles: transparency,
equivalence, non-discrimination, harmonization,
etc.
• Capacity building: training, inspection services,
laboratories
• Realities for less developed economies:
 Large informal sector
 Large scale informal border trade
 Weak human, technical and financial resources
 Governance problems
Important questions
• Should same requirements apply for informal as
for formal sector?
 Because of non-discrimination between controls on
imports and domestic markets?
• Should informal border trade be brought under
control?
• Should poor consumers in developing countries
have “same protection” as consumers in OECD
countries?
Relevant issues (1)
• Emerging three tier market segmentation in
developing countries:
 traditional local, emerging modern urban, export
markets
• Different risks, pathways etc.
 Traditional food processing often safe
• Different market requirements
 Range of standards applied, certification
• Different interventions needed
 Different cost benefits of interventions
Relevant issues (2)
• Informal market products may not compete with
imported products
 Perhaps no losses from discrimination, no ground for
legal complaints
• Food safety controls in informal markets may
have small health benefits and can raise cost of
food for the poor
 Trade-off poverty reduction and food safety promotion
• Controls may enhance black market and illegal
activities
 Smuggling, hiding incidence of diseases
 Governance issues, rent-seeking
SPS control informal markets and small-scale farming
Risks and costs
Need to identify risks arising from informal markets and small-scale farming
Major requirement
• Collection and analysis of data on human and agricultural health hazards
With status quo
• Potential losses (medical expenses, reduced productivity, lost income)
With interventions
• Cost of enforcement, including rent seeking
• Costs of implementation for small-scale producers, traders, consumers
• Potential economic losses for enterprises unable to comply
• Increased risk of smuggling, illegal activities
• Potential benefit from intervention – reduction of risks and losses
Control of informal markets and traditional small-scale farming
• can be very difficult and costly
• can result in large-scale closures of small enterprises.
SPS control of border trade
Risks and costs
Need to understand epidemiology and pathways of spread of diseases
Major requirement
• Data on epidemiology and pathways of animal and plant pests and diseases
With status quo
• Potential losses from destroyed crops and livestock
• Medical expenses from illnesses due to unsafe imported food
• Losses from unsafe local food from use of illegal agrochemicals
With control of border
• Cost of facilities, equipment, human resources to enforce border control
• Higher transaction costs for traders from more border requirements
• Possibility of corruption with inadequate governance
• Risk of smuggling and illegal activities
• Potential benefit from intervention – reduction in risks and losses
Control of border trade can be very expensive and yet ineffective.
Regional cooperation can be much more cost-effective
Experience of Central Europe
• EU accession
– based on broad political decisions from EU and
new members
– implies participation in common market
Candidate countries need to adopt and
implement the EU Acquis Communautaire
– the complete body of laws and
regulations of the EU, including those on
food safety and SPS
Tremendous challenges for
EU candidate countries
– National standards and regulations to be harmonized with
those of EU
– Food safety management and control agencies to be
strengthened
– Food and drink industries to bring their factories up to EU
quality and hygiene requirements – big investments in
facilities, equipment, technology and training
– Failure of compliance?
closure of factory
Expenditure on institution strengthening and
capacity building (through PHARE program)
Example: Lithuania
• € 30 million EU funding (out of a total 40 million
on agriculture) was used for SPS-related projects*
– Veterinary and phytosanitary control, 1.7 million
– Veterinary and phytosanitary border control measures, 3.5
million
– Strengthening and enforcement of EU food control system, 3
million
– Strengthening of control on infectious animal diseases, 6.11
million
– Strengthening of food safety control, food control laboratories,
2.9 million
* Equal amounts matched from national sources
Expenditure on food processing and marketing
2000-2006 (through SAPARD program)
(Million EUR)
Total
Public
EU contribution Private
expenditure expenditure (75% of public participation
expenditure)
Poland
1196
598
448
598
Lithuania
129
58
44
71
Romania
722
366
275
356
Source: SAPARD Programme 2000-2006, Poland & Lithuania;
National Agriculture and Rural Development Plan 2000-2006: Romania
In spite of the support and efforts, many food
factories have been shut down
Poland
•
2600 slaughter houses in 1999; 1200 now
Lithuania
•
60 dairy processors before 2000; 11 now
Romania is still struggling
• Food safety is a “serious concern” of the European
Commission that could postpone Romania’s accession to
the EU – planned for January 2007
• Only 9% of 1400 meat processing plants have received
EU license by May 2006
Lessons and Implications for
Southeast Asian Countries
• EU show huge benefits of economic and
political cooperation in common market
• Differences with countries of central Europe
– Political integration less intensive
– Lower level of development
– Bigger gap in SPS standards with EU and Japan
– Less resources available
– More time available
What strategies, what priorities?
• Adopt strategies based on assessment of risks, costs,
and benefits (opportunities)
• Priority setting within a long-term perspective
 Selective efforts, sequencing
• Active surveillance needed to identify risks and to guide
inspection and containment efforts
• Regional cooperation
 Coordinated active surveillance
 Use of costly infrastructure
 Periodic bilateral, sub-regional consultation
Regional cooperation in
food safety, and animal and plant health
Rationale for cooperation
• Countries share same ecosystems and long porous borders (Lao PDR has
5083 km of borders with Vietnam, Thailand, Cambodia, China, Myanmar)
• Trans-boundary animal and plant pests and diseases
• Large volumes of informal border trade
• AFTA and WTO will open new opportunities for trade
• Neighbor's problems are shared problems
A few examples:
• Coconut leaf beetle (affected Vietnam, Thailand, Cambodia, Hainan
province of China and Lao PDR)
• Fruit fly affecting Vietnam, Malaysia, Thailand, Philippines
• Foot and Mouth Disease (SEAFMD, EUFMD, Panaftosa)
• FAO/OIE’s joint initiative of GF-TADs
• Surveillance and rapid alert of risks in food and feed