Exporting Agricultural Commodities: Challenges before the Producers & Exporters

1. Exporting Agricultural Commodities:Challenges before the Producers & Exporters Dr.K.M.Singh Professor & Head, Deptt. Of Dairy Economics, S.G.I.D.T., Patna-14 m.krishna.singh@gmail.com Workshop on WTO Issues, Codex Standards and SPS Measures: Implications for Agricultural Producers and Exporters, June 24-25th, 2008, DNS RICM, Patna Organized by NCAP, New Delhi and State Farmers Commission, Bihar

2. Challenges before the Producers and Exporters • In a global environment, to be players in exporting our agri produce and processed foods, meeting or not meeting international standards is not an option. • People all over the world are becoming far more Quality conscious, and governments are laying down rigid Quality standards for all food items and fresh agri products. • We, in India, are increasingly becoming aware of Quality. • It is imperative that the highest attention be given to ensure quality of all agri produce, meeting domestic and international standards. • Massive communication to farmers, aggregators, exporters, food processors, sorters and graders will need to be carried out by government and the private sector, to ensure Quality is never compromised. • The Western world is fighting to reduce subsidies in their own countries, as required by WTO, as and when WTO agreements are reached, some countries may levy non-tariff barriers by quoting Quality as the reason for not importing.

3. Contd. • Controversies like over usage of pesticide or fertilizers could become reasons for importing non-tariff barriers. • Agri managers, governments, exporters and domestic marketers will have to have a total passion to ensure Quality and never compromise on Quality. • For the past few years there has been a considerable concern to accelerate agricultural exports. • The share of agricultural exports in total national exports has witnessed a secular decline from 17.8 per cent in the early Nineties to almost 11.2 per cent in 2004-05, which is a cause of concern. • A recent report by the Agricultural Products Export Development Agency (APEDA) also indicates difficulty in doubling agri exports primarily due to increasing domestic demand for many products. • The export basket, which primarily included rice, tea, spices, cashew nut, wheat and coffee has been shifting significantly to rice, oil, marine products and horticultural products. • An increase in exportable products other than wheat and oilseeds is a welcome change as India is already diversifying into cultivation of fruits and vegetables on a large scale. • The export value of fresh fruits and vegetables has almost got doubled from 2001-02 to 2004-05.

4. Indian Scenario • India has been competitive in many horticultural products and has already made a niche in the global markets for fresh and processed fruits and vegetables. • However, knowing that India is the second largest producer of horticultural products in the world, hardly two per cent of the produce gets exported. • Several reasons have been given for low exports of horticultural products, some of which include • Poor Quality/substandard products • Minimal processing and value addition • Weak infrastructural facilities • High domestic demand for horticultural produce, preferably fresh produce, which is increasing due to changing food habits and increasing per capita incomes of the masses. • Lack of infrastructure to airlift fresh agri produce or refrigerated containers and port facilities for transportation by sea.

5. Indian Scenario(contd.) • The extent of value addition of horticultural products in India is hardly 2 per cent and the post-harvest losses are high at almost 30 per cent. • These statistics present a grim picture when compared with the developed countries, like USA and France, which have value-addition to the extent of 70 and 50 per cent, respectively with minimal wastages. • Even the developing countries such as Malaysia and Brazil encourage value-addition of horticultural exports, which at present stand at 83 and 70 per cent, respectively.

6. Indian horticulture produce suffers from low processing rate due to: • Preferential demand for fresh fruits and vegetables than the processed products by a majority of population and hence little availability for processing. • Low market surplus due to sustenance farming rather than market-driven farming. • Lack of awareness about primary and minimal processing • Small size of land holdings are unable to support the industry with suitable raw material • Tendency of the industry to procure from mandi where there is no control over the grades and quality, which reduces the processing efficiency. • Poor infrastructure takes its toll in maintaining quality of produce.

7. (contd.) • Absence or near-zero availability of cold storages, refrigerated vans, cargoes and proper roads a major handicap in promoting horticulture growth. • FICCI estimates, a total sum of Rs 65000 crore is required for development of agriculture marketing infrastructure in India. • Doubling agri exports would require increasing investments in R & D to increase productivity and quality, and extension services to communicate technology to the farmers. • Sustained efforts towards cultivation of fruits and vegetables on a large scale, • Quality preservation and food safety, promotion of food processing and infrastructure development. • A disciplined approach needed to examine the problem of the agri sector and plan coordinated efforts to solve them in a time frame. • Process should start right at the farm gate, followed by monitoring at every stage of processing up to the final stage of marketing.

8. But India is a strategic player in the world in the Food Sector • Is the second largest producer of fruits and vegetables in the world next only to China • The processing of fruits and vegetables is only 2 to 3% in India as against 83% in Malaysia 72% in Thailand and 70% in Brazil • Second largest producer of wheat • Accounts for about 31% of the world production of raw cashew and nearly 48% of the world's export of cashew kernels • Is one of the largest agrarian economies of the world with 51% arable land compared with world average of 11% • Its Agriculture contribution to GDP is 20% and its output value is $ 100 bn • Is bestowed with moderate climate, abundant sunshine, more irrigated land and adequate trained man power

9. Reasons for low export share Main reason is lack of confidence in the safety of our fruits and vegetables due to: • High pesticidal and other chemical residues • Micro-biological contamination • Comparatively poor and inconsistent quality in produce. • Short shelf life Product safety can be addressed by implementing quality standards

10. Influence of the global environment • International trade – food safety requirements • Importing country requirements • WTO Agreements • Sanitary and Phytosanitary Agreement(SPS) • Technical Barriers to Trade (TBT) • Codex Alimentarius – reference standards

11. Standards as a ’trade passport’? • Standards define whether a good is fit for trade • Key issues for developing countries: • Who defines standards? • Who decides the content? • Who sets the measurement methods? • Who pays for the costs of compliance, monitoring and verification? • Who captures the benefits?

12. Why quality assurance programmes (GAP, GHP, HACCP)? • Consumer protection • Prevention (less end-product testing) • Reduce food losses • Reduce inspection/certification • Systematic documented programme • Sufficient record keeping – traceability

13. Agro-food standards: simplified typology • Mandatory • Import regulation (i.e. food safety, geographic indications, labelling) • Voluntary • International standards (ISO, Codex, SA8000) • Labels (organic, fair trade, eco-labels) • Model codes of conduct (EUREP-GAP, ETI) • Private • Defined and owned by a company (supermarket chain quality standards) • Considerable overlaps

14. Specialty and Sustainable agricultural standards • Issues of participation in the setting of standards • Who benefits? Who pays? • Different stories • Specialty • Fair trade • Organic • Shade-grown • Mainstream initiatives on sustainability

15. Consignment Detentions- reasons? • Presence of non-authorised pesticides • Exceed pesticide MRLs • Inadequate labelling and packaging • Contaminants exceeding regulatory levels • Microbiological contamination • Lack of nutritional information

16. Quality standards for Agricultural Produce In addition to safety, major buyers in Europe have established quality standards for each fresh farm produce which may cover the following aspects: • Size, Shape and Pattern • Defects • Gloss • Colour • Feel • Organoleptic qualities (sensory qualities)

17. Farm to Fork • Control at the most effective point

18. ..........or in other words Private sector input/ application Inspectorate GAP standards/ guidelines Certificate Scientific research Training/ advisory services Laboratory Analysis

19. FAO/WHO Guidelines Assuring food safety and quality: Guidelines for strengthening national food control systems

20. Good Agricultural Practices • Pre Harvest Care • Testing of soil and water for any possible contamination by heavy metals like, Lead, Arsenic, Cadmium or toxic chemicals etc. so as to ensure at least one time protection for crops to be grown in the field. • Farming equipment must be cleaned and washed with unpolluted water. • Use only certified seeds in order to avoid admixture and maintain quality. • Use recommended dose of fertilizers, pesticides and irrigation with unpolluted water only, avoidance of damage, immature and shriveled grains, pesticidal residues and attack of pests and fungus. • Pesticidal treatment, both prophylactic and control must be judicious and at right time. Sufficient gap between treatment and harvesting is necessary for minimizing the risk of pesticidal residual toxicity. • Follow the cultural practices to avoid the mixture of toxic weed seeds and seeds of plants of other crops and varieties. • Harvest the crops when all the grains are fully developed and attained maturity, luster and varietal colour for better realization of prices.

21. Good Practices contd… INTEGRATED  PEST  MANAGEMENT: The integrated pest management is a concept of environmentally sound and sustainable strategy of keeping the pest population below economically damaging level. Integrated pest management is based on keeping the pest population below the level at which no significant damage to the crop is done. This involves- • (a)    Good agronomic / Cultural practices or modifying agronomic practices. • (b)   Use of resistant varieties • (c)    Use of Bio-pesticides • (d)   Judicious use of necessary chemical pesticide to keep the pest population below the damaging level • Through integrated pest management practices, hazards of pesticide residue are minimised, ecological balance is maintained and cost effective way of mitigating the pest menace. • (For details contact- Central Integrated PestManagement Center, Directorate of Plant protection and Quarantine, Ministry of Agriculture, Department of Agriculture and Cooperation, Government of India. www.agricoop.nic.in)

22. Hazard Analysis and Critical Control Points (HACCP) • HACCP is a systematic preventive approach to food safety and pharmaceutical safety that addresses physical, chemical, and biological hazards as a means of prevention rather than finished product inspection. • HACCP is used in the food industry to identify potential food safety hazards, so that key actions, known as Critical Control Points (CCP's) can be taken to reduce or eliminate the risk of the hazards being realized. • The system is used at all stages of food production and preparation processes including packaging, distribution, etc. • The Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA) use mandatory juice, seafood, meat and poultry HACCP programs as an effective approach to food safety and protecting public health. • Meat and poultry HACCP systems are regulated by the USDA, while seafood and juice are regulated by the FDA. The use of HACCP is currently voluntary in other food industries.

23. Voluntary standards for the certification of agricultural products around the globe • EurepGAP is a private sector body that sets voluntary standards for the certification of agricultural products around the globe. • EurepGAP is an equal partnership of agricultural producers and retailers which want to establish certification standards and procedures for Good Agricultural Practices (GAP). • EurepGAP is a pre-farm-gate-standard that means the certificate covers the process of the certified product from before the seed is planted until it leaves the farm. EurepGAP is a business-to-business label and is therefore not directly visible for the consumers. • EurepGAP is a set of normative documents. • These documents cover the EurepGAP General Regulations, the EurepGAP Control Pointsand Compliance Criteria and the EurepGAP Checklist.

24. EUREOGAP What is EUREPGAP • A set of normative documents developed by EURO-Retailer Working Group (EUREP) for Good Agricultural Practices (GAP) for worldwide standards for the production of fresh fruits, vegetables and cut flowere. Why EUREPGAP • EUREPGAP standards came into being only on the increased awareness amongst consumers demanding about safe food. In this regard consumers are particular bout the way the fresh fruits and vegetables are produced. They are particular about the environment aspects as well. Who are involved in EUREPGAP? • FoodPlus based at Cologne, Germany, ats as the global body for EUREPGAP and hosts EUREPGAP Secretariat. It serves as the legal owner of EEUREPGAP standards EUREPGAP changed to GLOBALGAP

25. Who Administers EUREPGAP? FOODPLUS GmbH, a non-profit making organization located in Cologne, Germany is the global body for implementation of EUREPGAP activities. EUREPGAP membersEUREPGAP members include retailers / suppliers / growers and associate members from the input and service side of Agriculture. Coverage The scope of fresh fruits and vegetables are all those agricultural products of plant origin grown for human consumption.

26. EUREPGAP Certificate • EUREPGAP Certificate can be achieved under the following options Option (1): Individual grower applying for EUREPGAP Certificate Option (2): Primary Marketing Organisation (PMO) or any other type of producer organisation applying for EUREPGAP Certificate. PMO must have legal structure, contract with each grower, entry and exit requirements, stipulated sanctions agreement to comply with EUREPGAP for registered members.

28. Requirements of EUREPGAP Standards • Traceability • Record Keeping and Internal Self-Inspection • Varieties and Rootstocks • Site history and Site Management • Soil and substrate Management • Fertilizer use • Irrigation / Fertigation

29. Requirements of EUREPGAP Standards (contd.) • Crop Protection • Harvesting • Produce handling • Waste and Pollution Management, Recycling and Re-use • Worker health, Safety and Welfare • Environmental Issues • Complaint Form This standard is certifiable

30. Relevant Codex standards • Code of hygienic practice for FFV • Recommended International Code of Practice for packaging and transport of tropical fresh fruits and vegetables • General principles of food hygiene/HACCP • Approved MRLs to prevent the misuse of pesticides and promote the use of approved pesticides, etc.

31. Food industry/producer role • Responsible for supplying safe and wholesome products • Consumer information regarding product characteristics and associated cost and benefits (transparent and clear information) • Knowledge of trading environment • Implement GAPs, GHPs, HACCP (pre- and post harvest)

32. EUREPGAP Certification Process

33. Situation in India about Standards for Agricultural Produce • At present, no agreed quality standards for fresh agricultural produce are available. • Each buyer has got their own product specification based on which their agents in india procure their produce. Quality Scene in the Organized Retail markets in India • Very little check on product safety, as produce is collected from different sources and packed centrally. • No uniform system of grading. • No system of maintaining traceability. • Non-standardized packaging.

34. Export Procedure • Inspection of agricultural commodities meant for export as per the requirements of importing countries under International Plant Protection Convention (IPPC) 1951 of FAO as per the model certificates prescribed under IPPC and issue Phytosanitary Certificate: • The export inspections are carried out to facilitate certification of exportable plants and plant material as per the requirement of importing country in line with the above Convention. • The export inspections involves sampling and detailed laboratory tests in case of seeds and planting material for propagation whereas visual examination with hand lens and washing tests, etc are carried out for plant material meant for consumption. • The export inspections are conducted at exporters’ premises also to facilitate exports for agricultural commodities meant for consumption.

36. The areas that need special attention are: Documented traceability techniques • Installation and propagation of EUREPGAP and other similar quality assurance system. FICCI’s Quality cell has developed the expertise to certify Quality as per EU standards. • Knowledge dissemination about Good Agricultural Practices and HACCP (Hazard Analysis and Critical Control Points) at both pre and post harvest stages. • A Food Safety Board should be constituted jointly by the Ministry of Food Processing, APEDA and Quality Council of India to monitor and regulate the food certification activities in India relating to HACCP & EUREPGAP.

37. Infrastructure development • Foster Public-Private Partnerships for infrastructure creation and technology up gradation. • Strengthen the cool chain management and establish linkages with super markets. • Develop cold chain transportation system e.g. air-conditioned cargo, coaches in railways, roadways etc. and refrigerators/ insulated containers for perishables, processed products to minimize post-harvest losses at transportation stage and at retail level. • Develop specialised markets for fruits and vegetables. • Incentivise creation of facilities for collection, sorting, grading and transportation of agri produce to Processors/Markets.

38. Effective market promotion of Indian fruits and vegetables • Reduce airfreight charges. • Address and mitigate the issues like quota, tariff, SPS and pest risk analysis. • Clearances for export of fresh fruits, vegetables and other perishable commodities must be facilitated within 24 hours. • Establishing temperature-controlled warehouse and pack houses to facilitate the export of fresh fruits and other perishables at all international airports.