Joint UNCTAD / WTO Informal Information Session on Private Standards

1. Joint UNCTAD / WTO Informal Information Session on Private Standards Experiences in South East Asia By Christie F. Robert qa plus asia-pacific sdn. bhd WTO Headquarters, Geneva 25th June 2007

2. Scope of presentation To provide an overview of the experience in South East Asia on adjustment to private standards in key export markets and the National GAP programs based on the UNCTAD monograph synthesizing the country case studies on Malaysia, Thailand and Vietnam

3. “Major Tropical Fruits” – global production & trade • World production and trade of “major fresh tropical fruit” (mango, pineapples, papaya and avocado) is expected to expand over the next decade • Expected to increase from 46.5 million tonnes (1998-2000 average) to 62 million tonnes by 2010 • Developing countries should continue to account for 98% of global production, developed countries 2% • Asia and Pacific region –should account for more than 56% • Global imports are forecast to reach 4.3 million tonnes by 2010 with 87% or 3.8 million tonnes destined for developed country markets. EC is expected to remain world’s largest import market, followed by USA, together accounting for 70% of import demand Source: FAO Corporate Document Repository www.fao.org

4. Changing structure of global FFV trade Consumer Demographic growth Changing lifestyle/ Shopping habits Increased income /educated consumers Market Concentration Of suppliers and retailers Developing high value /added value and new products Stricter quality & Safety market requirements

5. Global supermarket sector • Supermarkets now dominate food sales and are rapidly expanding their global presence • Increased presence in South East Asia • International consolidation and aggressive pricing strategies • Increased market power on global power chains • ‘Global sourcing companies’-more exacting demands on quality

6. Fundamental shift in the role of standards today Standards are strategic tools for : • Market penetration • Management system coordination • Quality and Safety assurance • Addressing Social and Environmental issues • Product niche definition • Basis for continuous improvement

7. Standards and agri-food trade • Standards are becoming ‘mandatory’ requirements for market access • Has lead to the development of a plethora of standards: Retailer Standards Private Label Standards National Standards International Standards • Have to be addressed by the producers for whom they are becoming increasingly essential for business

8. Growth of Private sector standards

9. Private sector standard & National GAP Schemes • Increasing number of private sector standards • Compliance is not mandatory • However retailers and suppliers often require certification • Private sector standards often act as ‘defacto’ mandatory requirements • Has a profound influence on the development of National and regional schemes on GAP in ASEAN • Malaysia, Thailand and other ASEAN countries have developed national GAP schemes, mainly through government driven initiatives • Malaysia-SALM (National Farm Accreditation Scheme) • Thailand- ‘Q-GAP’ • Vietnam – GAP initiatives underway e.g. Ho Chi Minh City (HCMC) GAP Program, Tien Giang GAP Program • Asian initiatives based on EurepGAP

10. EurepGAP & National GAP Schemes

11. EurepGAP & National GAP Schemes • A notable omission in the Asean GAP Schemes is the lack of independent third party auditing - In Malaysia the Department of Agriculture provides training and advisory services and also conducts audit and certification.

12. FFV-intra regional trade FFV Exports Malaysia’s share in EU imports of FFV is small while Thailand’s and Vietnam’s share of exports to EU is much bigger. Exports from Vietnam largely comprises fresh vegetables

13. ASEAN FFV Exports • Directed principally at regional markets –particularly ASEAN, China, Japan Hong Kong, China, Taiwan and Republic of Korea. • In value terms they absorb Fresh Fruits – 81.5% Fresh Vegetables – 76.5% • EU market only takes Fresh Fruits – 3% Fresh vegetables – 12.8%

14. Implications of EurepGAP and other private sector standards which are relevant in EU on GAP initiatives for ASEAN Fresh Fruits & Vegetables • There is increasing role for GAP certification in regional trade • Government regulations to food safety becoming increasingly stringent e.g. Thailand, Malaysia • Countries like Singapore (net importer of FFV)-arrangements with key suppliers e.g. Malaysia, Indonesia, Thailand)-Quality and Food safety standards needed • Asean governments- Malaysia, Thailand: increased interest in good farming practices • Active promotion of National GAP schemes in Malaysia, Thailand, and Vietnam

15. Common obstacles to GAP implementation • Low levels of awareness – farmers/consumers • Poor understanding of GAP requirements • Small farms and rural locations • Lack of direct link with the market place- trade through middlemen • Lack of incentives to implement GAP-normally does not result in price premiums • Problem of land ownerships & tenure-e.g. Thailand-discourage investments required by GAP schemes • General unwillingness for supermarket chains in providing bridging finance

16. Potential and real gains/opportunities from GAP implementation • Reforming agricultural production systems – has significant socio-economic implications • Science-based use of fertilizer and application of crop protection chemicals – improved productivity & cost savings • Emphasis on worker welfare & safety – safe healthy environment, improved morale • Assured produce thru’ GAP Certification – consumer confidence and market acceptability

17. Need for supportive government policies for linking smallholders to global supply chains • Common feature of National GAP schemes in Malaysia & Thailand -it is government driven -Dept of Agriculture, Ministry of Agriculture and Agro-based Industries in Malaysia. -In Thailand the development of a national GAP schemes has been largely driven by the Government, in particular through the Ministry of Agriculture and Cooperatives (MOAC). • Both in Malaysia and Thailand the Government supports GAP certification costs by providing -training free of charge to farmers -free chemical residue analyses There is little support for other private sector standards • In Vietnam, development of national GAP schemes, government has adopted a public-private participatory approach -Donor funded projects and initiatives

18. Linking smallholders to the supply chain (Malaysia)-Role of FAMA • Federal Agricultural Marketing Authority (FAMA) in Malaysia is an independent subsidiary of the Ministry of Agriculture & Agro-based Industries -supervise, coordinate and regulate marketing of agricultural produce -to improve market access -to improve effectiveness and efficiency of supply chain management -to supervise and coordinate agricultural marketing activities -to promote market access through branding ‘Malaysia Best’

19. Core of the adjustment strategies in Malaysia and Thailand to comply with private sector standard and / or National GAP Schemes • GAP development is a national agenda • Gradual, step-wise approach-SALM in Malaysia and QGAP in Thailand • Reduced stringency on the specific control points and compliance criteria • Government provides extension services • Government support is provided to cover certification costs, laboratory, testing of pesticide residues

20. Recommendations • We suggest that regular Multi-stakeholder dialogues be conducted at national and regional levels - to enable exchange of experiences which would be useful in policy adjustments at National level - to facilitate a common “benchmark” in GAP standards to accommodate intra-regional trade - to harmonize local interpretations of GAP elements - to provide a forum to discuss implementation problems and solutions - to encourage realistic GAP standards and stepwise approach - to achieve consensus in ultimate target : EurepGAP

21. RecommendationsGAP Documentation • Documentation and record-keeping continues to be a major obstacle. -Suggest development of standard formats to aid farmers -Development of generic software platform for GAP documentation -Additionally, the generic software will assist in the conduct of auditsand simplify the process

22. Recommendations Capacity building on WTO’s SPS and TBT Agreements • It is suggested that nationwide workshops to explain and elaborate on SPS and TBT Agreements. - Protocols and mechanisms are still not fully appreciated, especially with the trading community. -Knowledge restricted to certain government levels

23. Recommendations • Auditing Suggest that regional workshops be organized for agricultural auditors -consistent auditing procedures -correct interpretations on compliance -eliminate ‘soft’ auditing -provides confidence in certification

24. Recommendations • Maximum Residue Levels (MRLs) A forum should be established to address issues on chemical residues - harmonize requirements on MRLs - sampling and testing procedures - regional reference laboratory

25. Thank You qa plus asia pacific sdn. bhd. No. 132 A, Jalan Kasah, Medan Damansara, 50490 Kuala Lumpur, MALAYSIA Email:qaplus@consultant.com