Paul Clayton - Traceability Impacts on Future Meat Trade Opportunities

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Traceability Impacts on Future Trade Opportunities - Paul Clayton, Senior Vice President of Export Services, U.S. Meat Export Federation, from the 2012 Annual Conference of the National Institute for Animal Agriculture, March 26 - 29, Denver, CO, USA.

More presentations at: http://www.trufflemedia.com/agmedia/conference/2012-decreasing-resources-increasing-regulation-advance-animal-agriculture

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  • What comes to mind?
    Foreign Business in the US, massive mergers – Packers Pharmaceuticals (many are foreign based – manufacturing in EU)
    US holdings in Foreign Markets (Grains) Sources of economical labor
    Sustainability/Technology
    Negotiations/FTAs
    Genetic Suppliers
  • There are world standards:
    The World Trade Organization (WTO) requires that traceability measures be scientifically justified based on a risk assessment and not be restrictive of trade between the country imposing the measure and other countries. Thus, an importing country cannot enforce more rigorous standards for imported meat than those applied to the domestic industry or use these standards as trade barriers.
    Example: National Treatment; Japan and BSE This will be a challenge for us in our largest International Market. Australia is already telling Japan the will and can comply.
    Office International des Epizooties (OIE) is to agree international codes and standards that will provide better guarantees and facilitate trade in animals and animal products. Traceability is a key element in regard to such guarantees and yet, until recently, international interest in this subject has been relatively limited in regard to animals and animal products for international trade. Individual methodologies have evolved both at sector and national levels for the identification and registration of animals, the recording of animal movements, and the subsequent correlation with products of animal origin. To date, little attention has been given to the introduction of standardized systems that will be widely accepted and thereby facilitate a level of harmonization between trading countries.
    2007 Chapeter Adopted.
    EU is compliant in full traceability, they have large influence over countries, i.e. South America
  • European Programs
    2004 TRACES computer based system to control movement of live animals and food product within and into the EU.
  • Technology is available,
    How Expensive
    Can we ever track cuts? Do we need to?
    Ability to trace forward and back.
    EU: ear tag to retail package
    Consumers have an interest in knowing about the products. Huge access to product knowledge through the web.
  • Private companies setting the standards
    Increasingly, market participants, rather that governments agencies, are influencing the determination of acceptable; levels of health and food safety. The leading global food retail chains establish acceptable thresholds based on their home nation’s legal standards and cultural experience, as well as those pertaining to the country within which they are operating.
    Processors and manufacturers supplying these retails chains must meet public and private standards established for procurement, even though they may differ significantly from those prevailing in the country of origin.
  • The Retail Influence is worldwide. The US industry needs to work more closely with this group.
    The market place may have more influence that governments. International Standards Bodies (OIE, CODEX etc) are concerned that Private companies may have more control on trade standards than governments and may not be scientifically based only market based.
    Are we seeing this with Animal Welfare Standards = Whole Foods 5 Animal Welfare Level?
    Wal-Mart recently is making moves to acquire the largest food retailer in Africa. Alerted food manufacturers to prepare for competing to supply it systems , procedures and food relationships with products suited for Africa.
  • Part of the Trust Factor, 3rd Party over-site. Checking to be sure you are doing what you said you would do. Does not necessary need to be government. ISO is internationally recognized.
    The foreign markets are large participants – EV programs
    EV, PVP, Where Food Comes From
    Umbrellas, Date Cert. NHTC
    Minimizes some risk
    Is this too costly?
  • Good comparison of traceability programs throughout the world showing which have mandatory programs vs. voluntary programs.
    Traceability as a Trade Requirement
    Currently
    USDA AMS PVP programs with an animal Traceability component
    Japan: Date Verified: cattle less than 21 months of age
    Must be determined utilizing physiological evaluation (A40) or age verification through documentation
    EU: Birth Origin for the PFEU and NHTC program
    Hong Kong: Slaughter companies must maintain records that are sufficient to initiate a trace back to the previous location for all livestock included in the program.
  • Book Keeping System
    ID Cattle at Birth
    Verify Birth ID at Death or Slaughter
    Verify BSE Test is performed on each animal at death or slaughter
    JAS Requires disclosure of feed and antibiotic use
  • The distrust in government food safety certification can be viewed in the attached two slides prepared by Jianwen.  Although these supposed safety certs are not just about traceability, they imply that authorities are knowledgeable of the product's provenance.    Obviously, there is low trust in such certifications.    Interestingly, for many meat exports, importing countries (e.g. HK and Japan) require full traceability, and to my knowledge, AQSIQ provides such certification (in the case of HK, all meat imports from China must come from approved plants and farms, although the production info is not shown at the point of sale).  
     
    In the second slide "venue' refers to the point of sale (i.e. trust in the point of sale or retailer selling the product).
  • This week at China's large Congressional meeting (National People's Congress), the Government vowed to set up a China Food Net that will connect supermarkets, traditional markets, restaurants and hospitals.   The purpose of the Food net is to be able to trace back & identify the source of foodborne illness outbreaks.   But at the current time, the PRC government admits that less than 5% of foodborne illness outbreaks are reported, and of these, few can be traced back to a source. 
     
    In short, consumer demand will lead traceability initiatives in the short run, and these will be developed by enterprises not governments.  Given the huge number of livestock operations (40 - 80 million hog producers), it will take a very long time to set up a national system.    
     
  • Based on our understanding, Taiwan Government started to promote and establish TAP (Traceable Agricultural Product) in 2007, the agricultural products includes: livestock (pork), poultry (chicken and duck), farm produce (vegetable, fruit and rice), seafood (fish, shrimp and clams) and so on. Please refer to http://taft.coa.gov.tw/welcome.asp?mp=8&role=C&mpap=A for more information (information is in Chinese).
    The production cost of the products (pork, chicken, fish, vegetables and etc.) being certified through TAP are higher, in order to continue to produce TAP certified products and maintain their profit, the businessmen either have to depend on government subsidies or to charge at a higher price. Because TAP certified products are 40% more expensive or double price than non-TAP certified products, their sales are not doing very well, even though TAP products are being marketed in organic stores, supermarkets and hypermarkets through government’s assistance. We estimate the market share of TAP certified products are less than 10%.
    As in regards to imported products, we understand that Carrefour asked its Australian beef supplier to provide evidence that their cattle came from the same ranch, and Carrefour used this as its marketing subject. However, the sales result was not what they were expecting. Currently, we have not seen situations of traceable imported products being promoted in the retail, and foodservices outlets.
    According to some of the operators, under the situation that the food safety issues emerge in an endless stream, the consumers begin to focus on the origins of their food, and this is the future trend. But, how do you find a balance between food safety and price? It will take a while to reach to a balance. For example, hybrid cars are all about being environmentally friendly and energy efficiency, but the price is not accepted by the general consumers, which leads to its sales not doing so well. In addition, the TAP is giving a “perfectionist” image to the products, if anything goes wrong in the chain, the consumers will have difficulties to trust these types of products again, and such negativity will create greater impact than the regular products.
  • For ASEAN, I think only Betagro group from Thailand is highlighting on traceability on local pork and also poultry item.
    This is the company website: www.betagro.com.  They do have a English translation button on the middle left side  of the page.
    The rest of the countries did not highlight on beef area.
  • Used for animal disease tracking: all the logos impy ther is a traceability component whether regulated or commercail
    Negotiating access
    Providing information to consumers.
    Columbia Certified
    Changes to Brazil’s cattle traceability system
    After making countless adjustments to its national cattle traceability system known as SISBOV since 2002, Brazil’s Agriculture Ministry has announced it will turn the system over to the private sector by the end of this year. The reorganisation aims at streamlining SISBOV and cutting through the tangle of interrelated public sector certification and compliance requirements. The latest changes to SISBOV will reduce the requirements down to two, namely that the animal must be located on a registered property for 90-days prior to processing as required by the EU and secondly that the animal must remain on a single registered property for the previous 40-days in compliance with quarantine requirements. Getting the EU to accept the simplified system will be a challenge, sources say.
  • Trade Full page ad
    Traceability: Aust. MLA
    Relieve Emotional and Factual Anxiety, Set Austrailia apart form competition
    Tagging, scanning database process
  • Selling your Brand
    Getting information to the consumers
    Traceability the other story in regulatory animals disease (next slide)
    Animal Traceability
    Non-infectious disease (BSE): Feeding cohort proof
    Infectious disease: track animals that were transferred out of the zone of control
    What if?
    KSU Study
  • QR codes, or “quick response”
  • Paul Clayton - Traceability Impacts on Future Meat Trade Opportunities

    1. 1. Traceability Impacts on Future Trade Opportunities NIAA Annual Conference Global Animal Health, Food Security & Trade Council Paul Clayton – U.S. Meat Export Federation March 27, 2012
    2. 2. Market Globalization Trans Pacific Partnership KORUS FTA American cattlemen are finding homes on a new range — the steppes of Russia
    3. 3. How is Animal Traceability Used inHow is Animal Traceability Used in International MarketsInternational Markets  RegulatoryRegulatory  Animal Disease ControlAnimal Disease Control  Recall CapabilitiesRecall Capabilities  Private StandardsPrivate Standards  Animal WelfareAnimal Welfare  Food SafetyFood Safety  Product Quality and SpecificationsProduct Quality and Specifications  SustainabilitySustainability  CommercialCommercial  MarketingMarketing  Production StandardsProduction Standards
    4. 4. World Standards  World Trade Organization  Scientifically Based on Risk Assessment  Not Trade Restrictive  Importing country cannot enforce more rigorous standards for imported meat than those applied to the domestic industry or use these standards as trade barriers.  Office International des Epizooties (OIE)  Chapter 4.1 General Principles on Identification and Traceability of Live Animals  Chapter 4.2 Design And Implementation Of Identification Systems To Achieve Animal Traceability  Codex Committee on Food Import and Export Inspection and Certification Systems  TRACEABILITY: The ability to trace the history application or location of an entity by means of recorded identifications. (ISO 8402:1994)  Origin of food products and ingredients  Product processing history  Distribution and location of the product after delivery  TRACEABILITY/PRODUCT TRACING: The ability of a food business to identify for any food product under their control, where it came from, how it was changed by the producer (if appropriate) and where it was sent to. This is achieved by means of paper or electronic records, and implies a forwards and backwards tracing of the all relevant information regarding a food product. Records should be kept in a format allowing ready linkage and access by the appropriate authorities. (CCFICS)
    5. 5. Europe Passport 1999: Mandated every EU Member State maintain a database with records of all livestock and their movements
    6. 6. Global Data SynchronizationGlobal Data Synchronization NetworkNetwork GS1-128 (UCC-UPC)GS1-128 (UCC-UPC)
    7. 7. Private StandardsPrivate Standards  Major US manufacturers and retail competitors areMajor US manufacturers and retail competitors are moving towards establishing certification protocolsmoving towards establishing certification protocols that incorporate food safety (HACCP) and assurancethat incorporate food safety (HACCP) and assurance (ISO) protocols including animal welfare standards.(ISO) protocols including animal welfare standards.  This suggests that the US public and private sectorsThis suggests that the US public and private sectors need to be exploring methods that effectively andneed to be exploring methods that effectively and efficiently achieve traceability and assurance standardsefficiently achieve traceability and assurance standards as a strategy for maintaining global marketas a strategy for maintaining global market competitiveness. In this context, there needs to becompetitiveness. In this context, there needs to be cooperative government to government interchange, incooperative government to government interchange, in addition to business to business.addition to business to business. Source: Farm Foundation, 2004, Food Traceability & Assurance in the Global Food System
    8. 8. Top Global Supermarket CompaniesTop Global Supermarket Companies CompanyCompany StoresStores OwnedOwned SalesSales ($Bill.)($Bill.) Countries of OperationCountries of Operation Wal-Mart (US)Wal-Mart (US) 5,1645,164 244244 AR, BR, CA, CH, GR, JP, MX, SG, SK,AR, BR, CA, CH, GR, JP, MX, SG, SK, IK, VNIK, VN,, USUS Carrefour (FR)Carrefour (FR) 10,70410,704 6565 AR, BL, BR, CL, CH, CO, CZ, DR, EG,AR, BL, BR, CL, CH, CO, CZ, DR, EG, FR, GC, IN, IT, JP, ML, MX, OM, PO,FR, GC, IN, IT, JP, ML, MX, OM, PO, PT, QT, RO, SG, SV, SK, SP, SW, TW,PT, QT, RO, SG, SV, SK, SP, SW, TW, TH, TU, TKTH, TU, TK,, USUS Ahold (NE)Ahold (NE) 9,4079,407 5959 AR, BZ, CL, CR, CZ, DM, EC, ES, ET,AR, BZ, CL, CR, CZ, DM, EC, ES, ET, HN, IN, LT, LN, ML, NE, NC, NW, PG,HN, IN, LT, LN, ML, NE, NC, NW, PG, PR, PO, PT, SV, SP, SW, THPR, PO, PT, SV, SP, SW, TH,, USUS Kroger (US)Kroger (US) 3,6673,667 5252 USUS Metro (GR)Metro (GR) 2,4112,411 4949 ASAS,, BL, BU, CH, CR, CZ, DM, FR, GR,BL, BU, CH, CR, CZ, DM, FR, GR, GC, HU, ID, IT, JP, LX, MC. NE, PO, PT,GC, HU, ID, IT, JP, LX, MC. NE, PO, PT, RO, RU, SV, SP, SW, TU, UK, UR, VNRO, RU, SV, SP, SW, TU, UK, UR, VN Tesco (UK)Tesco (UK) 2,2942,294 4040 CZ, HU, IR, ML, PO, SV, SK, TW, TH,CZ, HU, IR, ML, PO, SV, SK, TW, TH, UK,UK, USUS Costco (US)Costco (US) 400400 3838 CA, JP, MX, SK, TW, UKCA, JP, MX, SK, TW, UK,, USUS Albertsons (US)Albertsons (US) 1,6881,688 3636 USUS Source: Farm Foundation, 2004, Food Traceability & Assurance in the Global Food System
    9. 9. Audit, Review and Compliance BranchAudit, Review and Compliance Branch Provides services for Quality System Verification Programs http://processverified.usda.gov/
    10. 10. ID/Traceability as a Trade Requirement  Currently  USDA AMS PVP programs with an animal ID/Traceability component  Japan: Date Verified: cattle less then 21 months of age  Must be determined utilizing physiological evaluation (A40) or age verification through documentation  EU: Birth Origin for the PFEU and NHTC program  Hong Kong: Slaughter companies must maintain records that are sufficient to initiate a trace back to the previous location for all livestock included in the program.
    11. 11. Comparison of Cattle Population and Identification and Traceability
    12. 12. Beef Trading Partner Requirements ECONOMIC ASSESSMENT OF EVOLVING RED MEAT EXPORT MARKET ACCESS REQUIREMENTS FOR TRACEABILITY OF LIVESTOCK AND MEAT, Market Economics LLC, Manhattan KS 66503 March 2011.
    13. 13. Beef Competitor's Advantages
    14. 14. ECONOMIC ASSESSMENT OF EVOLVING RED MEAT EXPORT MARKET ACCESS REQUIREMENTS FOR TRACEABILITY OF LIVESTOCK AND MEAT, Market Economics LLC, Manhattan KS 66503 March 2011. Beef Opportunity Limits
    15. 15. Pork Trading Partner’s Requirements (DRAFT) Country System Launch Date Mandatory National Individual or Group ID ID system Animal Movement Tracking Motivation South Korea National hog farm management system 2010 but Implementation in 2014 When implemented, yes Group ID Tattoo or ear Notch Each animal will be identified by a specific 5-digit farm Code Disease management; specifically Classical Swine Fever Mexico SINIGA http://www.siniiga.org.mx/ 2008 Yes Group for Swine Farm number and group number; method not specified Yes, by means of certificate of Mobilization Disease management and animal management Japan None N/A No N/A N/A N/A N/A Data needed on: Brazil, Russia, Taiwan, Thailand, Vietnam and Philippines
    16. 16. Pork Competitors Advantages (DRAFT) Country System Launch Date Mandatory National Individual or Group ID ID system Animal Movement Tracking Motivation U.S. Identification of Swine in Interstate commerce http://edocket.access.gpo.gov/cfr_ 2011/janqtr/9cfr71.19.htm 1988 Yes Individual ID unless not Mixed and moved as a group, then group is acceptable Ear tags, back tags, tattoo Only if crossing state lines and not For immediate slaughter. The ID has to indicate a premise ID Pseudorabies control And Brucellosis control EU Each member has own system name, but all must comply with the EU Directive:http://eur lex.europa.eu/LexUriServ/LexUriS erv.o?uri=CELEX:32008L0071:E N:NOT 1991Most recent Revision 2008 Yes Individual or group ID; must tie to premise Ear tags or tattoos Yes, each premise must maintain a record of animals on holding and Any animals shipped or received Entered into National database Animal disease control, specifically Foot and Mouth Disease, CSF, And ASF Canada Pig Trace Canada http://www.pigtrace.ca/index.php 2006 No, but Federal Regulations are being drafted Individual or group ID Ear tags, tattoo, or RFID tag Yes, identifies each premise Animal disease management, export competitiveness Chile Animal Health Traceability Program http://www.sag.cl/openDocs/as p/pagDefault.aspboton=Doc49 &argInstanciaId=49&argCarpet aId=379&argTreeNodosAbierto s=(379)(49)&argTreeNodoActua l=379&argTreeNodoSel=2 2005 No for swine Group ID if premise Decided to participate in the program Nothing Specified for swine Groups are identified as moving From locations to locations and why on a specific Animal Movement form For export markets
    17. 17. Japan
    18. 18. CHINA: Consumer Knowledge  Consumers lack knowledge about food safety certificates 0% 5% 10% 15% 20% 25% 30% Green food China top brand Quality safe No harm Inspection Exemption Organic food
    19. 19. CHINA: Consumers on Food Safety: 0.511.52 venue appear price brand cert date Most Important Factor in Determing Food Safety Meat Milk Vegetables Fruit Juice Source: Thomas Wahl, Junfei Bai, James Seale, Bryan Lohmar, Chinese Consumer Perceptions of the Determinants of Food Safety, 2011 (An FAS sponsored food consumption research project in China: findings of the study done in 6 major cities – BJ, Xi’an, NJ, ChD, XiaMen, Shenyang)
    20. 20. China
    21. 21. Taiwan
    22. 22. Thailand
    23. 23. South AmericaSouth America
    24. 24. Competitive Advertizing
    25. 25. To Trust!
    26. 26. Access to InformationAccess to Information
    27. 27. QR Codes
    28. 28. Summary  Traceability can be a regulatory program but there may be growth in private standards  Most trading partners have mandatory domestic traceability programs Some countries impose these requirements on imports  Most competitors have mandatory programs Some competitors competitively advertize

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