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Agri-food competitiveness strategy: Agri-food competitiveness strategy: Environmental Environmental & & Health requirements Health requirements
by Daniele Giovannucciby Daniele Giovannucci
for UNESCAP Bangkok, October 20006
3 challenges3 challenges
1. Strategies to enhance export competitiveness and environmental sustainability.
2. How can small producers be effectively integrated?
3. Required institutional arrangements and policy frameworks.
3 challenges3 challenges
1. Strategies to enhance export competitiveness and environmental sustainability = Private Sector
2. How can small producers be effectively integrated
3. Required institutional arrangements and policy frameworks
Standards are new global trade paradigmStandards are new global trade paradigm
• New consumer environmentHealth, food safety, social, and environmental concerns
• New business environmentCompetitiveness, efficiency, reputation, new technologies, & risk mgt.
• New public sector (gov) environmentAvian flu, bioterror rules, GMO, MRLs, mad cow, … less able to keep up with > private standards
new global trade paradigmnew global trade paradigm
Standards pre-requisite for CompetitivenessStandards pre-requisite for Competitiveness
StandardsStandards
• Beyond basic food safety - increasing pressure JAS, USDA, EU MRLs for traceability and accredited certification
• Volatile public & private standards – hundreds blur the boundaries between environmental, safety, social
Some key private-public standardsSome key private-public standards
SAFETY
ISO 22000HACCP SOCIAL
FTSA
ISO 26000
ENVIRONMENT
ISO 14000 Organic R.A.
OTHER
EUREP & ASEAN-
GAP
Standards EvolvingStandards Evolving
Organic Fair Trade
Eco-friendly
Corporate & Private standards
CCommittee OOn SStandards AAssessment (COSA)
4 Myths4 Myths of Socio-Environmental Standards of Socio-Environmental Standards
1. Labor
2. Certification cost
3. Premiums or access
4. Yields and Domestic Food Security
3 challenges3 challenges
1. Strategies to enhance export competitiveness and environmental sustainability
2. How can small producers be effectively integrated
3. Required institutional arrangements and policy frameworks
MARKET REALITIES: MARKET REALITIES: Domestic vs. ExportDomestic vs. Export
Distinction disappearing
between global and local markets
Distribution channels concentrating i.e. supermarkets
Spot & wholesale markets decreasing - contracts increasing
As mkts open, supply chains compete at global not local level with safety and SPS costs increasing
Local institutions - Training
Green Food Development in ChinaGreen Food Development in China
1996 1998 2000 2002 2003
3.6
4.7
6.7
9.9
11.9
0
2
4
6
8
10
12
14U
S$ B
illi
on
Source: Giovannucci calculations for retail prices adapted from OFDC data
Rmb 100 billion
MARKET REALITIES: MARKET REALITIES: Consolidation of procurementConsolidation of procurement
Big challenges for smaller producer: demanding private standards: size, color, safety,
consistency, volume, packaging, labels,…
implied investments: drip irrigation, greenhouses, advanced storage, hygienic services…
Lower prices & payment delays
Knowledge systems – Assns.
Technology – Credit - Funds
Group negotiation – Working capital
Supermarket Development in ChinaSupermarket Development in China
10,000
21,000
32,000
53,100
3.61
12.05
26.51
55.13
0
10,000
20,000
30,000
40,000
50,000
60,000
1996 1998 2000 2002
0
10
20
30
40
50
60
US
$ B
illi
on
units
value
Source: Adaptedby Giovannucci from data in Hu, Reardon, Rozelle, Timmer &Wang 2004.
3 challenges3 challenges
1. Strategies to enhance export competitiveness and environmental sustainability
2. How can small producers be effectively integrated
3. Institutional arrangements and policy
To achieve sustainable standardsTo achieve sustainable standards
Knowledge intensive & condition-sensitive learning processes
& so they require adequate time
& institutional support
Implications for producers Implications for producers in developing countriesin developing countries
• Public Goods or not?
• Who pays? Private systems want to offload compliance costs
• Role of policy, regs. & gov capacity to assess & disseminate standards
KEY POLICY POINT SUMMARYKEY POLICY POINT SUMMARY
Public good aspect is the rationale for:
1. Eliminate bias in public expenditures i.e. R&D, subsidies
2. Build government & public sector capacity– Investment in a knowledgeable research & extension services– Provide user-friendly standards knowledge bases – Credibility systems & lower compliance costs (certification, accreditation,
right regulations
3. Fund for farmers to access initial financing required for certification and initial investments i.e. biopesticide production.
4. Incentives in the form of limited temporary tax benefits or incentives for certification, inputs development, or transition.
