Global Food Safety Drive Hitting Smaller Companies, Developing Nations – UN
Written by National Health Federation
Published: 09 July 2010
Food companies in developing countries may face being squeezed out of the market by the proliferation of public and private food safety standards, a report by the United Nations will spell out this week.
The joint paper by the Food and Agriculture Organization and the World Health Organization will say food producers, processors and exporters in these countries are struggling to meet overlapping rules set not just by national and international governmental bodies but also by powerful private companies and associations.
The wide-ranging study, due to be presented at the Codex Alimentarius Commission on Thursday, will also examine the role of private standards. While acknowledging their value in terms of providing a detailed road map in response to broad public regulations, it questions their “legitimacy” in terms of access and which companies have the opportunity to influence them.
The report also admits that private standard setting bodies – quicker and more nimble in their response to food safety concerns than governmental organizations – present a challenge to Codex and the body raises questions about the need to streamline its decision-making processes.
Food safety drivers
The report outlines the increase in safety regulations over the past decade as a result of a number of high-profile food crisis has not just triggered heightened consumer awareness of the issue but also driven companies to develop competitive strategies to highlight the quality and safety of their products. The globalization of the food supply has created new challenges and risk for co-ordination of the value chain. The paper also claims “responsibility for ensuring food safety has been devolved from the state towards the private sector”.
These factors “combine to create an environment in which businesses are under more pressure to deliver food safety and to maintain the integrity of their brands”, said the report authors. “They need to do this in the face of increasingly globalized and complex food supply chains that cut across multiple regulatory jurisdictions.”
Challenges to developing nations
The above factors have played an important role in the rise in prominence of private standard setting systems. However, the trend has prompted concern on their impact in developing countries – particularly when applied to producers of food crops. These costs are proportionally higher when applied to economies with a larger number of smaller producers, “stimulating debates about whether the distribution of costs along value chains is ‘fair’,” says the paper.
Compliance with private and public standards in developing countries can have “profound impacts on the value chain”, and could hasten a trend towards consolidation, continue the authors. “To the extent that there are economies of scale in compliance and/or larger firms are better able to access finance and other resources, compliance processes are likely to induce processes of consolidation and concentration”.
The adoption of private standards is felt most keenly further down the supply chain “away from standard adopters and towards their suppliers…notably developing country exporters and producers”, it says. “In turn, this prevents developing country producers from reaping the full benefits of implementing standards, reducing the returns to related investments and diminishing the incentives for growers to adopt these standards”.
It added smaller players in poorer nations could need help to avoid being pushed out of the market by the drive to raise the bar on globalized food safety standards.
The report says: “Exporters of fresh fruit and vegetables, meat, dairy and seafood must comply with multi-tiered requirements including quality grades and standards, traceability requirements, labels of origin, phytosanitary controls and food safety standards, of both a regulatory and private nature,”.
“It is evident that a number of developing countries, and exporters and producers therein, face challenges in complying.”
The study adds the rise of private standards also “raises challenges for Codex in terms of the speed and complexity of standard setting process”. While efforts are already being made to streamline its often laborious decision-making process, the report concedes “private standards organizations are certainly more able to elaborate standards in a timely manner, reflecting their narrower remit and greater confluence of the interests of the standards adopters they serve.” Codex admits it is “unrealistic” that it would ever be able to match private standard setting in this respect.
However, the body stresses it would work to develop better relations with private standard setting organizations, as “there would appear to be much to gain”.