Strategies of investment in sps along the value chain
CONFERENCE OF MINISTERS OF AGRICULTURE OF WEST AND CENTRAL AFRICA (CMA/WCA) CAADP PILLAR II LEAD INSTITUTIONREGIONAL POLICY DIALOGUE ON MEETING REQUIREMENTS RELATING TO TECHNICAL REGULATIONS AND SANITARY AND PHYTOSANITARY(SPS) MEASURES ALONG THE AGRICULTURAL VALUE CHAIN IN AFRICA AU-AIBAR, NAIROBI 20-22 JULY, 2001Strategies For Prioritizing SPS Investment Along The Value Chain Abraham Sarfo-Value Chain Expert CMA/AOC - Conférence des Ministres de lAgriculture de lAfrique de lOuest et du Centre Lead institution for CAADP-Pilar II Tel: (221) 33 869 11 90 www.cmaoc.org
Principles of CAADP The principle of agriculture-led growth Allocation of 10% of nationalbudgets to the agricultural sector The implementation principles, which assign the roles and responsibilities of program 6% average annual sector growth rate at the national level Exploitation of regional complementarities and cooperation The principles of partnerships and alliances to include The principles of policy farmers, agribusiness, and civilefficiency, dialogue, review, and society communities accountability, shared by all NEPAD programs
CAADP PILLARS Pillar II: Pillar III Pillar IV: Pillar I: Improving rural Increasing food Improving Extending the infrastructure supply, reducing agricultural area under and trade- hunger and research, technosustainable land related improving logy and also Water capacities for responses to dissemination Management market access food emergency and adoption crises
Conceptual Framework for Implementing Pillar 2 PILLAR 2 FRAMEW ORK OUTLINE JK INFRASTRUCTURE DEVELOPMENT I Harmonization, Advocacy, Benchmarking, Impact Evaluation DEVELOPMENT DOMAINS ACTION TOOLS: PPP, B2B, Regulatory Measures, Policy H G INFRASTRUCT URE AGRIC. GROW TH CORRIDORS POLES B A • COMME RCIAL PRODUCTS REG. MARKETS • MARKET OPPORT UNITIES TRAD. EXP. Mkt • STRATEGIC COMMODITIES EMERGI NG. Mkt F VALUE CHAIN DEVELOPMENT AND FINANCING E FO & TA AS CREDIBLE BUSINESS PARTNERS C D SMALL SCALE LARGE SCALE FARMERS FARMERS 4
Why Value Chain Approach To SPS Food safety are affected by events that occur throughout the valuechain -from input supply to consumer. Therefore, the development andenforcement of SPS standards needs to reflect risk along the wholeValue Chain. FAO acknowledges the relevance of a Value Chainapproach to food safety:• “…recognition that the responsibility for the supply of food that is safe, healthy and nutritious is shared along the entire food chain - by all involved with the production, processing, trade and consumption of food. This approach encompasses the whole food chain from primary production to final consumption. Stakeholders include farmers, fishermen, slaughterhouse operators, food processors, transport operators, distributors (wholesale and retail) and consumers, as well as governments obliged to protect public health. The holistic approach to food safety along the food chain differs from previous models in which responsibility for safe food tended to concentrate on the food processing sector.”
Value chain definitionsDefinitions….USAID 2010: “Series of actors and activities needed to bring a productfrom production to the final consumer”. “Value chains are a chain ofactors but they operate like a system. … We can’t just focus onproduction without ensuring that there is sufficient processingcapacity to absorb increases or w/o ensuring that there is marketdemand and access to markets”.FAO 2007: “we use the term value chain to characterize a systemcomposed by different actors, activities and institutions, all functioninginterrelatedly, so as to enable the accomplishment of a common goal”.
A generic definition of value chain“Value chain” means…. the sequence of related business activities (functions) from theprovision of specific inputs for a particular product to primaryproduction, transformation, marketing and up to final consumption the set of enterprises that performs these functions i.e. theproducers, processors, traders and distributors of a particular product
The “value chain map”Basic sequence of functions in an agribusiness value chain Specific Trans- Final product Inputs Production formation TradeProvide Grow, harvest Classify Transport- equipment Produce the Process Distribute- inputs primary stage etc. Pack SellCategories of operators in value chains and their relations Specific Farmers, Packers, Consumers of Input (primary Agro- Traders pineapple juice providers producers) industry (sales pt.) (the market)
Cattle Meat: Generic overview of VC mapsVeterinary Cattle Live animal Slaughter Meat trade Retailservices rearing trade Meat Importers High-value Super Domestic markets markets Vets & Cattle Beef processors & packers / pharma Ranches High class butcheries Communal slabs Low-value Local butchers rural markets Meat Individual Urban Beef traders Low-value shops & group Live animal slaughter- urban pastoralists houses Urban markets traders Butchers Trekking & Trucking Regional Other cattle Export rearers (dairy) market This VC map is a simplified overview map, showing only major actors and their relations
Fields of Investment In Value Chain Overview of investments into VC developmentVC Development Strategies Investment Topics Fields of InvestmentImproving market efficiency and Market infrastructure Public investment inmarket access Village storage, assembly market facilitiesreducing marketing cost and Roads Public investment in feeder road rehabilitation along theenhancing the market access of supply lines and rural focal pointsfarmers Business linkages Brokering market linkages Contract farming FBO development Support to farmer groups and co-operatives: Management capacity of business associationsImproving productivity Agricultural input supply Seed value chain developmentenhancing use of inputs and Fertilizer value chain developmentimproving technology Services Public technical research and extension services Private advisory services Market information servicesIncreasing productive capacity and VC finance Warehouse receipt financeproduction volumes supporting Prefinancing of productionfinancing solutionsFacilitating Marketing And Market Grades And StandardsTradeIntroducing Market RegulationRegulations
Evolution Of Marketing Standards And Associated Conformity Assessment Systems For Agricultural Produce• Market requirements in the most recent years and going into the future: (EU/USA Markets, Emerging Markets, Regional Markets and Domestic Markets) Emphasis on GAP implementation in the field – Correct use of agrochemicals and storage thereof – Proper recordkeeping – Personnel hygiene – Traceability system, etc. HACCP in processing plants Third party certification (GLOBALGAP, BRC and ISO 22000) also known as voluntary or private standards New, sophisticated method of sampling procedures in food business operators in order to monitor safety and quality. Modern methods of traceability (e.g. e-trace) on cards
Value Chain and SPS • Formal, regulated, complying with SPS SPS standards, long and vertically integrated, including an international dimension;Investment • Formal, regulated, complying with national in Value standards; vertically integrated national; concentrated national, e.g. Co-operatives; Chain are • Informal, unregulated, standards set by agreement between producer and typified as consumer • Many of the poor sell to and buy from follows: informal markets.
Key Challenges in Small Holder Farmer Competing in Global MarketsKey challenge is compliance with current legal, trade and industry standards in theUS, Europe and some emerging markets.Unless countries are able to adopt and implement the required standards effectively, theiropportunities for accessing market for the small holder farmer will be increasinglydiminished.Often, the challenge is to integrate small-scale farmers and micro-entrepreneurs into globalvalue chains as competitive and reliable partners.At the same time, quality improvement and certification can be actively used to achieve acompetitive edge. Markets reward high-quality products with better market access andhigher prices. Hence, quality improvement is part of a strategy of product differentiation.
Implementing Investment in SPS Along the Value Chain• 3 Key Question What system of Coordination is in Place to meet commercial objectives relating to Quality, Quantity and Consistency and ensures compliance to standard What are the rules of standards both official and commercial that actors involve in the value chain must comply before participating What are the effect of these rules on the poor and their production activities
Prioritization Of Appropriate Food Safety Standards.• Setting Appropriate Standards. – Food safety is linked to food security, is beneficial to the poor when it is provided at an appropriate level, and deserves a higher priority on national agendas. – International agencies can assist, but national governments ultimately determine their own priorities – It is necessary to promote standards that are appropriate for the risk management situation and can actually be enforced. – Risk management measures to create food safety, including standards, vary with value chains and situations
Tools For Analysis of Investing in SPS Along the Chain It is important that all • To what standards do we wish to protect consumers and cost? governments • Do they wish to export/trade? , Chain • How important is the export market? Upgraders and • What standards for exports?Decision Makers • Will it be economically viable to introduce heightened standards? use standards • Are they prepared for variable standards? setting as part • What food safety problems will need to be addressed? of a risk • What animal diseases need to be tackled? • Are their current standards appropriate? management • Can they meet obligations? system, by • How can they demonstrate they have met the obligations? asking • Who will negotiate on their behalf? questions like:
Support To Small Producers And Processors To Encourage Good Practice• Assisting small farmers, traders and processors to enter formal (regulated) or vertically integrated markets will include, (but not be restricted to) helping them to comply with standards.• It may involve quite wide ranging changes to management practice.• Involvement of a wide range of players• Greater input of good science into risk assessment, evaluation and communication is needed.• Agricultural Research Institutions other research institutions have an important role to play.• Involvement of the private sector can produce beneficial• Policy change must embrace more than agriculture. It must be about creating conditions to encourage investment, e.g. education, information, credit.
Concept: Coordinated SPS Management Along The Chain Seed Production Trans- Commerce End provision formation Trade ProductSeed Farmers 1producers Companies Traders 1 Market GAP GAP GMP GTP GDP GHP GHP GHP GAP-Good Agricultural Practices GMP-Good Manufacturing Quality Management System Practices Eg HACCP, Product Traceability etc GTP-Good Trading Practices GHP-Good Hygiene Practice GDP-Good Distribution Practice
Upgrading Quality System in Value ChainsThis includes interventions at the macro and meso levels in the first place, i.e.the agreement between operators, public interest groups and government onstandards and legal regulations.Production and product quality will only improve if chain operators and serviceproviders are able to actually apply the necessary technology and procedures.Upgrading is required in the fields of enterprise capacity, qualityinfrastructure, quality-related services, and the collaboration along the valuechain.Finally, it has to be made sure that all parties play by the rules. This is achieved by astandard verification system. Accordingly, the main tasks of value chain facilitatorsrelate to ensuring that all parties respect the standards agreed upon.
PILLAR 2THANK YOU FOR YOUR ATTENTION ME DAASE MERCI ASANTE SANA