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Managing food safety, plant health and animal health in informal markets

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Title: Managing food safety, plant health and animal health in informal markets


1
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

2
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

3
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

4
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?

5
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

6
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

7
SPS control informal markets and small-scale
farmingRisks 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.

8
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

9
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

10
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

11
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

12
Expenditure on food processing and marketing
2000-2006 (through SAPARD program)
(Million EUR)
  • Source SAPARD Programme 2000-2006, Poland
    Lithuania
  • National Agriculture and Rural Development Plan
    2000-2006 Romania

13
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 Romanias
    accession to the EU planned for January 2007
  • Only 9 of 1400 meat processing plants have
    received EU license by May 2006

14
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

15
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

16
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/OIEs joint initiative of GF-TADs
  • Surveillance and rapid alert of risks in food and
    feed
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