REGIONAL POLICY DIALOGUE ON MEETING REQUIREMENTS RELATING TO TECHNICAL REGULATIONS AND SANITARY AND PHYTOSANITARY

(SPS) MEASURES ALONG THE AGRICULTURAL VALUE CHAIN IN AFRICAAU-AIBAR, NAIROBI

20-22 JULY, 2001

Strategies For Prioritizing SPS Investment Along The Value Chain

Abraham Sarfo-Value Chain ExpertCMA/AOC - Conférence des Ministres de l'Agriculture de l'Afrique de l'Ouest et du CentreLead institution for CAADP-Pilar IITel: (221) 33 869 11 90www.cmaoc.org

CONFERENCE OF MINISTERS OF AGRICULTURE OF WEST AND CENTRAL AFRICA (CMA/WCA)

CAADP PILLAR II LEAD INSTITUTION

Principles of CAADP

Allocation of 10% of national budgets to the agricultural sector

The principle of agriculture-led growth The implementation principles, which assign the roles and responsibilities of program

Exploitation of regional complementarities and cooperationThe principles of policy efficiency, dialogue, review, and accountability, shared by all NEPAD programs

The principles of partnerships and alliances to include farmers, agribusiness, and civil society communities

6% average annual sector growth rate at

the national level

CAADP PILLARS

Pillar I: Extending the

area under sustainable land and also Water Management

Pillar II: Improving rural infrastructure

and trade-related

capacities for market access

Pillar IV: Improving

agricultural research,

technology dissemination and adoption

Conceptual Framework for Implementing Pillar 2

4

SMALL SCALEFARMERS

AGRIC. GROWTH POLES

INFRASTRUCTURE DEVELOPMENT

DEVELOPMENT DOMAINS

INFRASTRUCTURE CORRIDORS

• COMMERCIAL PRODUCTS

• MARKET OPPORTUNITIES

• STRATEGIC COMMODITIES

REG. MARKETS

TRAD. EXP. Mkt

EMERGING. Mkt

FO & TA AS CREDIBLEBUSINESS PARTNERS

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nPILLAR 2 FRAMEWORK OUTLINE

LARGE SCALEFARMERS

VALUE CHAIN DEVELOPMENT AND FINANCING

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Why Value Chain Approach To SPS

Animal health and food safety are affected by events that occur throughout the food chain -from input supply to consumer. Therefore, the development and enforcement of SPS standards needs to reflect risk along the whole food chain. FAO acknowledges the relevance of a food chain approach to food safety:

• “…recognition that the responsibility for the supply of food that is safe, healthy and nutritious is shared along the entire food chain - by all involved with the production, processing, trade and consumption of food. This approach encompasses the whole food chain from primary production to final consumption. Stakeholders include farmers, fishermen, slaughterhouse operators, food processors, transport operators, distributors (wholesale and retail) and consumers, as well as governments obliged to protect public health. The holistic approach to food safety along the food chain differs from previous models in which responsibility for safe food tended to concentrate on the food processing sector.”

FAO 2007: “we use the term value chain to characterize a system composed by different actors, activities and institutions, all functioning interrelatedly, so as to enable the accomplishment of a common goal”.

Definitions….

USAID 2010: “Series of actors and activities needed to bring a product from production to the final consumer”. “Value chains are a chain of actors but they operate like a system. … We can’t just focus on production without ensuring that there is sufficient processing capacity to absorb increases or w/o ensuring that there is market demand and access to markets”.

Value chain definitions

the sequence of related business activities (functions) from the provision of specific inputs for a particular product to primary production, transformation, marketing and up to final consumption

“Value chain” means….

the set of enterprises that performs these functions i.e. the producers, processors, traders and distributors of a particular product

A generic definition of value chain

Categories of operators in value chains and their relations

SpecificInputproviders

Farmers,(primaryproducers)

Packers,Agro-industry

Traders(sales pt.)

Basic sequence of functions in an agribusiness value chain

Trade

TransportDistributeSell

Final productSpecificInputs

Provide- equipment- inputs

Production

Grow, harvestProduce theprimary stage etc.

Trans-formation

ClassifyProcessPack

Consumers ofpineapple juice(the market)

The “value chain map”

Cattle Meat: Generic overview of VC maps

Cattlerearing Slaughter Meat trade

Live animal trade

Individual & group pastoralists

Retail

Other cattle rearers (dairy)

Low-valueurban

markets

Urbanslaughter-

houses

Communal slabsLocal butchers

This VC map is a simplified overview map, showing only major actors and their relations

Meatshops

Supermarkets

High-valueDomestic markets

Meat Importers

Regional Export market

Live animaltraders

Trekking &Trucking

Beef processors & packers / High class butcheries

CattleRanches

Beef traders

Urban Butchers

Low-valuerural

markets

Veterinaryservices

Vets &pharma

Fields of Investment In Value Chain

VC Development Strategies Investment Topics Fields of Investment

Improving market efficiency and market accessreducing marketing cost and enhancing the market access of farmers

Market infrastructure Public investment inVillage storage, assembly market facilities

Roads Public investment in feeder road rehabilitation along the supply lines and rural focal points

Business linkages Brokering market linkagesContract farming

FBO development Support to farmer groups and co-operatives:Management capacity of business associations

Improving productivityenhancing use of inputs and improving technology

Agricultural input supply Seed value chain developmentFertilizer value chain development

Services Public technical research and extension servicesPrivate advisory servicesMarket information services

Increasing productive capacity and production volumes supporting financing solutions

VC finance Warehouse receipt financePrefinancing of production

Facilitating Marketing And Trade Introducing Market Regulations

Market Regulation

Grades And Standards

Overview of investments into VC development

Evolution Of Marketing Standards And Associated Conformity Assessment Systems For Agricultural

Produce• Market requirements in the most recent years and going into the future:

(EU/USA Markets, Emerging Markets, Regional Markets and Domestic Markets)

Emphasis on GAP implementation in the field – Correct use of agrochemicals and storage thereof– Proper recordkeeping– Personnel hygiene– Traceability system, etc.

HACCP in processing plants Third party certification (GLOBALGAP, BRC and ISO 22000) also known as

voluntary or private standards New, sophisticated method of sampling procedures in food business

operators in order to monitor safety and quality. Modern methods of traceability (e.g. e-trace) on cards

Value Chain and SPS•Formal, regulated, complying

with SPS standards, long and vertically integrated, including an international dimension;

•Formal, regulated, complying with national standards; vertically integrated national; concentrated national, e.g. Co-operatives;

•Informal, unregulated, standards set by agreement between producer and consumer: many of the poor sell to and buy from informal markets.

SPS Investment

in Value Chain are typified as

follows:

Key Challenges in Small Holder Farmer Competing in Global Markets

Key challenge is compliance with current legal, trade and industry standards in the US, Europe and some emerging markets.

Unless exporting countries are able to adopt and implement the required standards effectively, their export opportunities will be increasingly diminished.

Often, the challenge is to integrate small-scale farmers and micro-entrepreneurs into global value chains as competitive and reliable partners.

At the same time, quality improvement and certification can be actively used to achieve a competitive edge. Markets reward high-quality products with better market access and higher prices. Hence, quality improvement is part of a strategy of product differentiation.

Implementing Investment in SPS Along the Value Chain

• 3 Key QuestionWhat system of Coordination is in Place to meet

commercial objectives relating to Quality, Quantity and Consistency and ensures compliance to standard

What are the rules of standards both official and commercial that actors involve in the value chain must comply before participating

What are the effect of these rules on the poor and their production activities

Prioritization Of Appropriate Food Safety Standards.

• Setting Appropriate Standards.– Food safety is linked to food security, is beneficial to the

poor when it is provided at an appropriate level, and deserves a higher priority on national agendas.

– International agencies can assist, but national governments ultimately determine their own priorities

– It is necessary to promote standards that are appropriate for the risk management situation and can actually be enforced.

– Risk management measures to create food safety, including standards, vary with value chains and situations

Tools For Analysis of Investing in SPS Along the Chain•To what standards do they wish to

protect consumers and cost? •Do they wish to export/trade? •How important is the export market? •What standards for exports? •Will it be economically viable to

introduce heightened standards? •Are they prepared for variable

standards? •What food safety problems will need to

be addressed? •What animal diseases need to be

tackled? •Are their current standards appropriate? •Can they meet obligations? •How can they demonstrate they have

met the obligations? •Who will negotiate on their behalf?

It is important that all governments , Chain Upgraders

and Decision Makers use

standards setting as part of a risk management

system, by asking questions like:

Support To Small Producers And Processors To Encourage Good Practice

• Assisting small farmers, traders and processors to enter formal (regulated) or vertically integrated markets will include, (but not be restricted to) helping them to comply with standards.

• It may involve quite wide ranging changes to management practice.• Involvement of a wide range of players• Greater input of good science into risk assessment, evaluation and

communication is needed.• Agricultural Research Institutions other research institutions have

an important role to play.• Involvement of the private sector can produce beneficial• Policy change must embrace more than agriculture. It must be about

creating conditions to encourage investment, e.g. education, information, credit.

Seed provision

Production Trans-formation

CommerceTrade

Seed producers

Farmers 1 Companies Traders 1 Market

EndProduct

Concept: Coordinated SPS Management Along The Chain

GAP GAP GMP GTP

GHP GHPGDP

GHP

Quality Management SystemEg HACCP, Product Traceability etc

GAP-Good Agricultural Practices GMP-Good Manufacturing

PracticesGTP-Good Trading PracticesGHP-Good Hygiene Practice

GDP-Good Distribution Practice

Upgrading Quality System in Value Chains

This includes interventions at the macro and meso levels in the first place, i.e. the agreement between operators, public interest groups and government on standards and legal regulations.

Production and product quality will only improve if chain operators and service providers are able to actually apply the necessary technology and procedures.

Upgrading is required in the fields of enterprise capacity, quality infrastructure, quality-related services, and the collaboration along the value chain.

Finally, it has to be made sure that all parties play by the rules. This is achieved by a standard verification system. Accordingly, the main tasks of value chain facilitators relate to ensuring that all parties respect the standards agreed upon.

THANK YOU FOR YOUR ATTENTIONME DAASE

MERCIASANTE SANA