Murray HunterUniversity Malaysia Perlis (UniMAP)

World Food Shortage Conference – Series IIKuala Lumpur, 9-10th July 2009

• The Importance of EurepGAP, GMP and HACCP• The Organic Food market• The Halal Market• Present Status of farming, processing and Supply chain• The search for competitive advantage for Malaysian agriculture sector• The principals of HalalGAP• Why it is necessary to create unfair competitive advantage for the Malaysian Agricultural Sector

The Importance of EUROGAP, GMP and HACCP

EU is approximately 30% of the World Market for foodIt has great regulatory influence on the rest of the World

Risk Assessment

Hazard Identification Hazard Characterization Exposure Assessment Risk Characteristics

Risk Management

Risk Evaluation Option Assessment Option Implementation Monitoring and Review

Risk Communication Improve quality of consumer information To facilitate healthier food choice

Declaration of GMO Materials Nutritional Information Eliminate Misinformation Scientifically Substantiate

Claims

Good Manufacturing Practice (GMP)

Good Manufacturing Practice (GMP) is a system for the management, quality control, testing of manufacturing

facilities for food, pharmaceutical, medical devices, cosmetics and herbicide (in some cases) production. GMP

is a total management approach to the operation of manufacturing facilities and laboratories which require documentation practices and procedures to maximize traceability, as a safeguard of the event of any future

problems.

GMP requires that all equipment be suitable for use according to specific specifications, operated according to certain procedures

which would include pre-operational, operational and post-operational practices. Under a GMP system, raw materials utilized in the manufacturing process have set guidelines

concerning sourcing, preparation, use and testing. Personnel deployment and standard of training is also defined in GMP, as is

the documenting of each operational step in the facility.

Hazard Analysis and Critical Control Points (HACCP)

HACCP is a preventative method of food and pharmaceutical safety assurance, taking a holistic or “soil to table” approach. HACCP analysis

assesses the biological, chemical and physical hazards involved in production. Although primarily relating to the food industry, HACCP is also applied to the pharmaceutical industry in some jurisdictions and

finding a role in the cosmetic industry, on a voluntary basis. The HACCP approach seeks to identify and evaluate potential hazards in

the production and supply chain and develop solutions or protocols to deal with each potential hazard, in contrast to traditional quality assurance methods which rely upon post production inspection.

The basic process of the HACCP framework involves;

•The conduction of a hazard analysis of biological, chemical and physical aspects along the production chain that may render food or products unsafe for human consumption and determine the preventative measures that can control these hazards.•Identify the critical control points in the production process where particular measures can be taken to prevent, eliminate or reduce any hazard to an acceptable level.•Establish a critical control points monitoring process with maximum and minimum tolerance limits at each control point and specify the monitoring procedure.•Establish the critical control point monitoring methods necessary to ensure the production process is under control. •Establish what corrective actions are required when monitoring a critical point detects a deviation from the accepted critical limits. •Establish the necessary record keeping procedures to maintain documentation of the monitoring of critical points, limits the process reach, and handling of process deviations, and•Establish a system to ensure that the HACCP system is working as intended. The verification of the total system requires a plan to continually review hazards, critical points and preventative measures, so that the system will remain intact and work effectively.

ISO Number Name PurposeISO 65 Fairtrade: Process and

ComplianceUsed for certification of Fairtrade producers and traders.

ISO 9001:2000 (2008)

Quality management system Usually used by manufacturing and trading based companies. Focus on seven principals: Customer focus, leadership, involvement of people, process approach, systems approach, continual improvement, factual approach to decision making, and mutually beneficial supplier relationships. Some pharmaceutical manufacturers may certify under PS 9000.

ISO: 9235:1997 Aromatic Natural Raw Materials - Vocabulary

Defines natural

ISO 14001:2004 Environmental Management System

A standard that provides a framework for environmental management covering development of environmental policy, implementation, monitoring and evaluation of policy effect and continual improvement of environmental performance.

ISO/IEC 17025:2005 Testing and Calibration Laboratories

The certification required for operating a laboratory. Covers the scope of the laboratory, normative references, terms and definitions, and both management and technical requirements.

ISO 21149:2006 Cosmetics-Microbiology-Enumeration and detection of aerobic mesophilic bacteria

Standard intended to reduce human infection from cosmetic products through a series of microbiological examination standards.

HACCP/ISO 22000:2005

HACCP Food Safety Management System

The ISO standard for HACCP certification.

ISO 22715:2006 Cosmetics-Packaging and Labeling

ISO 22716:2007 Good Manufacturing Practice (GMP) – Guidelines on Good Manufacturing Practice

Sets out GMP requirements and specifications.

Good Agricultural Practice (GAP)

Good Agricultural Practice (GAP) originated around a decade ago as consumers developed a concern for safety issues, environmental and

labour standards along the supply chain, by European Retailers, and standards bodies. This

led to the formation of EurepGAP, which is a private sector body comprising of retailers,

farmers, and relevant people from the service side of agriculture, in what is espoused as a

partnership of agricultural producers and retailers for the setting of voluntary standards for the certification of agricultural products.

• GAP is basically a number of agreed principals set in agreed and certifiable terms applying to farm production processes

that result in safe and healthy food and non-food agricultural products. These principals take into account

economic, social and environmental sustainability, as well as social and community cultural practices, with the

objective of developing natural resources. These principals set out a framework understanding production issues from a sustainability viewpoint, planning, reviewing, monitoring,

and record keeping for each stage of the production process. This framework should provide farmers with the

ability to identify problems and issues and modify practices, according to changes in conditions.

EurepGAP

1. General Provisions•GAP guidelines apply both to conventional and organic agricultural practices,•All farm production should avoid harmful environmental disturbances, which involves good crop rotation, developing buffers and hedge zones, avoidance of damage to existing wildlife habitats, and within the framework of enhancing the biodiversity of the farm. •Required to follow the critical steps that are needed to comply with good quality, with good hygiene,•Reduce potential microbiological contamination to a minimum during the production process,•Documentation should be kept to allow traceability of the entire production process, and•Encourage their suppliers to comply with GAP guidelines.

2. Personnel and Facilities•Personnel should be fully trained and educated in what is required in the cultivation, harvesting, processing, drying and conservation processes, as a way to ensure the best quality.•The education process should be documented,•Personnel involved in the production process should have a high degree of personal hygiene, and understand their hygiene responsibilities.•People with infectious diseases or open wounds and cuts should not be involved in the production process (complying with EU-Guidelines on food hygiene and European Directive on Good Manufacturing Practice).

3. Seeds and Propagation Materials•Seed and other propagation materials must be identified botanically, indicating plant variety, cultivar, chemotype and origin. The material should be traceable.•Starting materials used in organic production should be certified as organic.•Starting materials should be pure and free of any pests and diseases and contaminating plants controlled during the cultivation, harvesting and packaging processes. •Seed and plant materials of or derived from genetically modified organisms (GMO) must be in accordance with National and European regulations.

4. Cultivation, Soil and Fertilization, Irrigation •Plants should not be grown in soils that are contaminated by sludge, heavy metals and residues of plant protection products and other synthetically derived chemicals.•Farms should aim for effective minimum input of chemicals, and comply with European Union minimum residue limits.•Manure should be free of human faeces and thoroughly composted before application•Irrigation should be minimized as much as possible, according to the needs of the plant.•Irrigation water should comply with quality standards and free of contaminants such as faeces, heavy metals, pesticides, herbicides and other toxicologically hazardous substances.•Tillage should be adapted to plant growth and requirements.

5. Harvest•Harvests should take place when plants are of the best quality and take place under the best conditions i.e., in terms of soil, field and weather conditions).•Harvest equipment should be in the best order and should be clean. •Care should be taken during harvest not to collect contaminating weeds.•Time between harvests, drying and/or processing should be very short and in accordance with the methods that will result in the best quality.

6. Primary Processing •All primary steps of processing whether for food or medicinal use should conform with the relevant National and European regulations.•Buildings used in the processing of harvested crops should be clean, thoroughly aerated, dedicated and protect the crop from birds, insects, rodents, and domestic animals, etc.•In the case where drying is required, the crop must be spread out in a thin layer to secure unlimited air circulation and all attempts made to prevent mould formation. Where heat is used, correct temperatures should be adhered to, according to the requirements of the specific plant.

7. Packaging•After control and elimination of low quality and contaminating materials, the product should be packaged in clean and dry conditions with the label fixed clearly and permanently. •Re-useable containers should be thoroughly cleaned and dry before reuse.

8. Storage and Transport•Stored materials and products should be stored in dry, clean locations where daily temperature does not fluctuate and good aeration is available. •Essential oil storage must conform to the appropriate chemical storage and transport standards concerning risks and labelling requirements with national regulations and EU Council Directive 94/55/EEC.•Storage area must be protected from pests, birds, rodents, domestic animals through windows and door openings. •Organic products must be stored with national organic regulations and EU Directive 209/91.

9. Equipment•Equipment used in plant cultivation should be easy to clean to assist in the elimination of contamination.•All equipment should be in continual good order and calibrated.•Preferably non-wooden equipment should be used unless traditional methods require this.

10. DocumentationDocumentation required to enable traceability, includes;•field records•pesticide, herbicide, fertilizer usage•Special situations due to weather, etc.•Product batch numbering, and•Any processes that can affect the quality of the product.

11. Quality AssuranceActive ingredient levels, optical and sensoric properties, limit values of germ numbers, chemical residues and heavy metals must be based on internationally recognized specifications.

12. Self Inspection•Should be conducted to monitor the implementation and compliance with Good Agricultural Practice principals and identify corrective measures required•Documents should be examined periodically to ensure adherence to quality assurance principals, and•Self inspections should be recorded.

There are a number of certification schemes in operation. The Food and Agricultural

Organisation of the United Nations (FAO) adopted a set of GAP

principals in 2002.Good Agricultural Practice (GAP) is growing in countries like Australia ,

New Zealand, Vietnam and especially in Thailand, where it is claimed some 60% of rice

production is under GAP standards. In countries like Indonesia and Malaysia, GAP is

still in its infancy of awareness by producers,

although schemes exist .

The Organic Food market

Approximate Size of the World Organic Market 2008 (USD Billion) Fruit &

Vegetables, 12.9, 35%

Meat and Poultry, 1.5,

4%Dairy, 3.6, 10%

Bread & Grains, 4.5,

12%

Beverages, 3.6, 10%

Cosmetics, 6.5, 18%

Processed Foods, 3.9,

11%

The Halal Market

Recent reports indicate that

halal sales in the US are increasing around 80%

per year, where a number of

new retail outlets specializing

in halal products are opening

up. A&P, Loblaws, Food Basics

and Wal Mart are allocating

space for halal products in

their stores

Rank

Country Total Population

% Muslim Population

Muslim Population

Muslim GDP USD

(PPP)

GDP Per Capita USD

(PPP)1 Turkey 71,892,808 99% 71,173,879 879.12 B 12,9002 Indonesia 237,512,352 88% 207,000,105 771.075B 3,7253 Iran 65,875,224 98% 64,557,719 737.94 B 10,6244 Saudi Arabia 28,146,656 100% 28,146,656 564.6 B 23,2435 Pakistan 172,800,08 97% 167,616,046 397.7 B 2,6006 Egypt 81,713,520 90% 73,542,168 363.6 B 5,5007 Algeria 33,769,668 99% 33,431,871 222.5 B 6,5008 Malaysia 25,274,132 60.4% 15,265,575 215.9 B 13,3169 Bangladesh 153,546,896 90% 138,192,206 186 B 1,300

10 U.A.E. 4,621,399 96% 4,436,543 160.6 B 37,30011 Nigeria 146,255,312 50% 73,127,656 146.3 B 2,-3512 Morocco 34,343,220 99% 33,999,787 124 B 4,10013 Kuwait 2,596,799 85% 2,207,279 110.5 B 39,30514 Albania 19,747,586 70% 2,533,845 13.94 B 6,30015 Iraq 28,383,577 97% 27,374,544 99.23 B 3,60016 Kazakhstan 15,340,533 57% 8,744,103 95.5 B 11,10017 Syria 19,383,577 90% 17,772,827 78.3 B 4,50018 Tunisia 10,383,577 98% 10,175,905 75.4 B 7,50019 Libya 6,173,579 97% 5,98,371 72.5 B 12,30020 Azerbaijan 8,177,717 95% 7.768,831 62.6 B 7,700

(Ranked by Muslim contribution to GDP at Purchasing Price Parity)

Markets Where the Islamic Population is the Dominant Group

Rank

Country Total Population

% Muslim Population

Muslim Population

Muslim GDP USD

(PPP)

GDP Per Capita USD

(PPP)1 USA 303,824,640 3.5% 10,633,862 487 B 45,8002 India 1,147,995,9

0413.4% 153,831,451 415.3 B 2,700

3 Russia 140,702,096 10.5% 14,633,017 215.1 B 14,7004 China 1,330,044,5

443.0% 39,901,336 211.5 B 5,300

5 France 64,057,792 7.5% 4,804,334 159.5 B 33,2006 Germany 82,369,552 3.7% 3,047,673 104.2 B 34,2007 Thailand 58,851,357 14.0% 8,239,190 65 B 7,9008 UK 60,943,912 2.7% 1,645,485 57.75 B 35,1009 Japan 125,449,703 1.0% 1,254,497 42.1 B 33,600

10 Italy 57,460,274 2.4% 1,379,047 41.92 B 30,40011 Philippines 74,480,848 14.0% 10,427,319 35.4 B 3,40012 Netherlands 15,568,034 5.4% 840,674 32.4 B 38,50013 Singapore 3,396,121 17.0% 577,477 28.7 B 49,70014 Canada 33,212,696 1.9% 631,041 24.2 B 38,40015 Israel 5,421,995 14.0% 759,079 19.58 B 25,80016 Spain 40,491,052 1.5% 607,365 18.3 B 30,10017 Angola 10,366,031 25% 2,591,508 14.5 B 5,60018 Austria 8,205,533 4.5% 369,248 14.2 B 38,40019 Kenya 28,176,686 29.5% 8,312,122 14.13 B 1,70020 Belgium 10,258,762 3.6% 369,315 13 B 35,300

Markets Where the Islamic Population is a Minority Group(Ranked by Muslim contribution to GDP at Purchasing Price Parity)

Global Economic Activity Shifts to the East

Innovation Drives Global Competition

Muslim World Demographic Changes

Muslim Consumer Market Segment Grows

Present Status of farming, processing

and Supply chain

The Muslim living as a minority in a non-Islamic society will have a

number of problems identifying what items are halal and haram

(forbidden in Islam), without product certification. For example,

gelatine, lard and tallow can be either in a halal or non-halal,

depending upon their source and method of processing. Cross

contamination is a major problem in stores and particularly

restaurants, where pork is also served.

“He hath subjected to you all that there is in the heavens and all that there is in the earth: All is from Him. Verily, herein are signs for those who reflect.” Al-Jathiyah 45:12

Halal, but is it Toyyibaan?

From the Muslim consumer standpoint; 1.Products must be produced without any forbidden ingredients, 2.Products must be proved to be in the interests of the consumers’ health and wellbeing, 3. Products must be clean and hygienic, have supply chain integrity, 4. Products must benefit those who produced them, 5. Products must benefit the community they came from and 6. Products and the materials that make up these products must be traceable from the origin, to have total confidence. The halal certification system must be widened to verify these issues

Although widely respected internationally

The present Halal Certification is only related to ingredients and processing environment

The search for competitive advantage

for Malaysian agriculture sector

Economies of scale –commodity crops

Beautiful Infrastructure

New infrastructure is not enough to Move Malaysia to a new paradigm in

Agribusiness

Infrastructure is easily replicated

The principals of HalalGAP

Toyyibaan & Halal

• This day are (all) things good and pure made lawful unto you. The food of the people of the Book is lawful unto you and yours is lawful unto them. … If anyone rejects Faith, fruitless is his work, and in the Hereafter he will be in the ranks of those who have lost (all spiritual good).

Al-Ma’idah5:5

• O you people! Eat of what is on earth, lawful and good; and do not follow the footsteps of the evil one, for he is to you an avowed enemy.

Al-Baqarah 2:168

• From the land that is clean and good, by the Will of its Cherisher, springs up produce, (rich) after its kind; but from the land that is bad, springs up nothing but that which is niggardly: thus do we explain the Signs by various (symbols) to those who are grateful.

Al-A’raf 7:58

• O ye who believe! Eat of the good things that We have provided for you, and be grateful to God, if it is Him ye worship.

Al-Baqarah 2:172

• O ye who believe! Eat of the good things that We have provided for you, and be grateful to God, if it is Him ye worship.

Al-Baqarah 2:172

Halal means what is permitted under Islam and is important to a Muslim’s life and spiritualism, a concept that is much wider than just issues of food.

The guiding laws of Islam are the Syar’iah. Central to the syar’iah are the concepts of halal and Toyyibaan, which govern all the economic activities of man in wealth production and consumption of wealth, where certain means of gaining a livelihood are declared unlawful

Toyyibaan would also mean that agriculture must be undertaken

within sustainable practices, and in business, where things

should be done with good intentions.

Green/Biological/Natural Minimum interventionalist

Linear/Industrial/Chemical Wild Harvest

Biodynamic Farming

Organic Farming

Chemical Free

Reduced Pesticide

Low Input

Sustainable Minimum Till

Conventional

High Input Chemical Intensive

Natural Farming

Traditional Farming

Biological Farming

HalalGAP should mean “Sustainable Production”

Soil Surface

Rainfall (Moisture Source)

Organic Materials Phosphorous (P)

Sulfur (S)

Nitrogen (N)

Nitrogen fixing bacteria In root system

Water (H2O)

Mineral Based Materials (Amphibole & Feldspar)

Calcium (Ca)

Potassium (K)

Magnesium (Mg)

Iron (Fe)

Carbon (C) Oxygen (O2) Hydrogen (H) Through

air in pores

Haram (Those things prohibited by

Allah in the Al Qu’ran)

HACCP

GMP

Sustainable environment, community

& business

Community Benefit

Toyyibaan

Clean Healthy

Non-exploitive

Traceable

Supply Chain

Ethical

Ad-Din

Al-Ilm

Al-Iman

Al-Amal

Syar’iah

Fard’ain

Fard Kifayah

Halal Toyyibat

Tahwid

Ibadah

Amanah Al-Falah Ummah

Musharakah Al-Ta’awun

Al-Fasad

Shu’ra

Adab

Faith in one God and a commitment in the teachings revealed by God and His Messengers. Iman affects

our world view and daily practices.

Knowledge. Three sources based on Iman, a) intellect (‘aql), experiences and revelations (wahy). Guided by

Iman. Work and deeds, pious practice, orientated to Allah,

turning away from all weakness and evil. Amal is based and guided by Iman and Ilmu.

The path shown by Allah (SWT). The divine law.

A holistic life where one looks after worldly comforts and also prepare for the hereafter. An individual’s obligation to

perform one’s religious duties.

A collective responsibility for both social and spiritual development

Ad-Din

Al-Ilm

Al-Iman

Al-Amal

Syar’iah

Fard’ain

Fard Kifayah

Halal Toyyibat

Tahwid

Ibadah

Amanah Al-Falah Ummah

Musharakah Al-Ta’awun

Al-Fasad

Shu’ra

Adab

Mutual consent

A business partnership;a) Shirkah: where two or more individuals pool financial

resources and share profit and loss on an agreed ratio and held liable to the extent of their capital,b) Syari’ah: each partner is able to operate other businesses, independent of

the principal businessc) Mudarabah:Partnership where one manages

the partnership and another supplies the financial resources.

Worship. Relates man to Allah through spiritual acts. The

manifestation of Amal salih (pious actions).

Piety

Recognition of the right and proper place and station, condition in life and to self discipline in

positive and willing participation in enacting one’s role in accordance with that recognition and

acknowledgement. Its occurrence in one and society as a whole reflects the condition of justice.

Trust by God in man in the all encompassing concept of nature (tabi’ah)

Inclination towards destruction

The concept of Al-Falah requires Muslims to win and be successful in both this

world and the hereafter. Islamic community

Production Processes

Farm size & layout

Organisation & methods

Propagation

Cultivation

Processing

Marketing

Climate

Weather Rainfall Wind

Sunshine UV radiation Temperature

Humidity

Conducive weather Or

Floods, droughts, etc

Physical Environment

Soil Topography Atmosphere

Natural flora & fauna habitat Urbanisation

Suitability of conditions Pollution (air, land & water)

Labour sources Water resources

(create hinterland where farm part of)

Human Habitisation

Knowledge Suppliers & contractors

Pollution Attitudes and concerns

Resource inputs, fertilizers, herbicides, insecticides, machinery, research capabilities

Positive Inputs Water

Sunshine Nitrogen

Agricultural inputs Fertilizers etc Knowledge

Labour

Negative Inputs

Adverse physical conditions

Pests & diseases Pollution

Heavy metals

Business Environment

Markets Finance

Trade environment

Customers Financing &

various kinds of capital

Competition Low prices

Changing demand patterns

Government Infrastructure Regulation Taxes & subsidies

Trade environment

Research

Negative Outputs

Runoffs, wastes, carbon

Some recycling back to system

Positive Outputs

Products

Revenue flow back to system

An Agricultural Enterprise as a System

HalalGAPEurepGAP

Integrity and audit trails for :a)Pork and bi-productsb)Animals dead prior to slaughterc)Blood and blood bi-productsd)Carnivorous animalse) birds of preyf)Land animals without external earsg)Alcohol, andh)Animals killed in the name of anything other than Allah.

Company Ethics, i.e., follow principals of

Tawhid

Current Halal

Certification

Scope of Tawhid

Why it is necessary to create unfair competitive advantage for the Malaysian Agricultural

Sector

There is more affinity to faith and spirituality in relation to the purchase

of goods and services today

Islamic Finance is growing at 15% and tipped to grow at 50% p.a,

The Halal market is growing at 36%

There is also some desire to change and adhere to Islamic management Practices

•Be proactive as this will develop the ability to control one’s environment, rather than be controlled by it, as is generally the case.•Begin tasks with the end result in mind, avoid distractions and concentrate only on relevant activities, which will make you much more productive,•Organise correctly and undertake the most important tasks first in a step by step approach,•Look for win-win strategies so that all benefit,•Listen to people first and understand them before you try to make them understand you, which will assist in maintaining positive relationships with people,•Look to develop synergy between people which will develop a better outcome, greater than what individuals can achieve working by themselves, and•Continually seek self-renewal, spiritually, mentally, emotionally, socially and physically.

Aveda The Body Shop

Sureco Hain Celestial

GroupEst. Sales USD120million

(1996)[58]USD619mil

(2006)

USD1.5Billion (2006)[59]

USD40Mil [60]

USD738Mil [61] (2006)

LocationEstablished 1978 1976 1999 1926Products Personal Care Personal Care Herbs Organic food

and cosmetics

Basic Philosophy To sustain the environment and

give back to communities

Social humanitarianism activism on many issues

Halal & Toyyibaan

Free of artificial

ingredients, Kosher foods

Ethics YesGreen Yes YesNatural Yes Yes YesOrganic Yes Yes YesCommunity Yes Yes

CulturalReligious/Spiritual Yes YesMode of Distribution Direct

Marketing/SalonRetail and e-Commerce

Direct Marketing

General distribution

Owner Estée Lauder Companies Inc.

L’Oreal Private Ownership

Listed company

Healthy foodArguably the fastest growing sector of the food market.

Ethnic Foods

Ethical & Environmental

Safety Issues

Mad Cow Disease and Avian Flu

Halal food Assurance

auditing to verify halal compliance from the farm to the plate

Islam is a way of life based on modesty, justice and religious practices, whichCreates a unique set ofProduct and service needs

Society’s (R)Evolution

1. Political (R)Evolution

2. Economic (R)Evolution

3. Spiritual (R)Evolution

How Quickly can a

Turn into a red ocean strategy?

The opportunity exists for Malaysia to develop what Dr. Dan Herman Calls

“Unfair Competitive Advantage”

Unfair Advantage means:

1 You have a wildly successful differentiation 2 Your customers adore you, and3 Your competitors do not imitate you.

Opportunties are created rather than found and HalalGAP can be seen as creative market

segmentation

Malaysia must use it’s incumbency to develop itself as the premier producer of Halal products, taking the first mover advantage by pushing the boundaries of

competition to new paradigms