Barrera EurepGap in Africa 2009
Barrera EurepGap in Africa 2009
Barrera EurepGap in Africa 2009
Standard bearers
Horticultural exports and private standards in Africa
Adeline Borot de Battisti is an economist working on environmental economics issues and agrifood trade and policies, with a particular interest in Africa. She has worked for international organisations, global agrifood firms and research institutes. Her current work as a policy analyst within the Organisation for Economic Co-operation and Development (OECD) focuses upon the links between the financial crisis, commodity prices and food security in developed and developing countries. Contact [email protected] James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism. Contact [email protected] Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). Contact [email protected]
First published by the International Institute for Environment and Development (UK) in 2009 Copyright International Institute for Environment and Development All rights reserved ISBN: 978-1-84369-710-7 Tel: +44 (0)20 7388 2117 Fax: +44 (0)20 7388 2826 For a full list of publications please contact: International Institute for Environment and Development (IIED) 3 Endsleigh Street, London WC1H 0DD, United Kingdom [email protected] www.iied.org/pubs This publication may be purchased from: Earthprint, PO Box 119, Stevenage, Herts SG1 4TP [email protected] www.earthprint.com Design by: Eileen Higgins, email: [email protected] Printed by: Russell Press, UK on 80% recycled paper Cover photos: Front David Rose, Panos; Back Ina Porras, IIED Disclaimer: The views expressed in this publication are those of the authors and do not necessarily reect the views of IIED.
Contents
Acknowledgements Abbreviations and acronyms List of Fresh Perspectives briefing papers Foreword Introduction Section 1. Trends in private voluntary standards in the agrifood supply chain 1.1 Whos who in private standards? 1.2 The rise of GLOBALGAP and the African horticulture export story 1.3 Private standard spillovers into the domestic markets Section 2. Fresh fruit and vegetables exports from Africa to the UK 2.1 Who grows, who trades, who sells? 2.2 International opportunities for non-certified products Section 3. Learning from the GLOBALGAP experience 3.1 Benefits and costs of compliance with GLOBALGAP smallholder and exporter perspectives 3.2 Opportunities for cost reduction 3.3 What happens to smallholders who withdraw from GLOBALGAP? Section 4. Costs and risks in the wider sustainable development context 4.1 The air freight and food miles debate 4.2 Equitable ecological space ii iii v 1 2 5 5 22 29 39 39 45 51 51 82 88 97 97 107
Section 5. Recommendations 117 5.1 Diversify options for small-scale producers 117 5.2 Retailers and their associations: foster sector-wide collaboration 130 5.3 Adapt donor support to promote profitable options for smallholders 135 5.4 Researchers, standard-setters and service providers as tool providers to 153 assess alternatives Concluding remarks 168
Background: This book is an output of the project small-scale producers and standards in agrifood supply chains
The project explored ways to create opportunities and identify favourable outcomes for smallscale producers in developing countries to participate in international horticultural supply chains in particular those in the UK. The increase of private standards, as well as the current and changing public standards impacting the horticultural sector, bring concerns that the way these supply chains are managed are also a potential barrier to entry for smaller producers and enterprises. Over a three-year period, the project worked with food retailers, importers, standard-setting bodies, traders and producers to ensure that supply chain standards and other procurement practices do not discriminate against small-scale producers, with a focus on African export horticulture. The project was led by the International Institute for Environment and Development (IIED) and the Natural Resources Institute (NRI) with funding support from the Department for International Development (DFID) and the Swiss Agency for Development and Cooperation (SDC). www.agrifoodstandards.net
Acknowledgements
We are grateful for the dedication of the project team and partners who have worked on this three-year project. Special thanks are due to Bill Vorley, Ben Garside, Kate Lee, Frances Reynolds (all IIED) and Jeremy Cooper (NRI) for their contribution and dedication. A range of partners too numerous to list along the agrifood supply chains linking rural Africa with European retailers have graciously given their time to help inform our research and guide our thinking over the projects lifespan. Thanks are also due to the participants at the workshop Private agrifood standards and a sustainable future for African agriculture held on 27/28 March 2008 in London, for lively debate and ensuring our messages are focused. We would also like to thank Eileen Higgins for designing this publication, and Mel Kelly and Liz Paton for their editorial support. The project and this publication could not have been completed without the financial support of the UK Department for International Development (DFID) and the Swiss Agency for Development and Cooperation (SDC). However, the views expressed herein are those of the authors and should not be construed as those of funding partners, or of IIED and NRI. This book is a final output of a three-year project. All publications included in this book are downloadable at no charge from http://www.agrifoodstandards.net.
Every effort has been made by the authors to identify the sources of references cited in this book. We would be grateful to receive any information relating to incorrect or incomplete references in order that we can provide accurate information wherever possible in the future.
ii
iii
NZTT OIE PIP PVS SDC SPS SSG STDF TIPCEE UNCTAD UNFCCC USAID VAT WHO WRI WTO WWF
NRDC-ZEGA Training Trust The World Organisation for Animal Health Pesticides Initiative Program Private voluntary standard(s) Swiss Agency for Development and Cooperation Sanitary and phytosanitary Small-scale grower Standards and Trade Development Facility Trade and Investment Programme for Competitive Export Economy United Nations Conference on Trade and Development UN Framework Convention on Climate Change United States Agency for International Development Value added tax World Health Organization World Resources Institute World Trade Organization World Wide Fund for Nature
iv
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
Making GLOBALGAP smallholder-friendly: can GLOBALGAP be made simpler and less costly without compromising integrity? Andrew Graffham and Jerry Cooper An exploration of farmers decision-making and reasons for participation in and subsequent withdrawal from GLOBALGAP Andrew Graffham, Jerry Cooper, Henry Wainwright and James MacGregor Tackling the exclusion of smallholders from fresh produce markets: a personal view Ruth Nyagah Air-freighted fresh food: guilty pleasure or sustainable development champion? James MacGregor and Ben Groom Miles better? How fair miles stack up in the sustainable supermarket Ben Garside, James MacGregor and Bill Vorley African air freight of fresh produce: is transport of virtual water causing drought? Stuart Orr and Ashok Chapagain Room to move: ecological space and emissions equity James MacGregor and Muyeye Chambwera Linking smallholders to high-value crop markets: how does the group approach work? Dagmar Mithfer Private voluntary standards: placing small-scale growers on a different footing Mark Azaglo and Simon Derrick Smallholder compliance with international food safety standards is not a fantasy: evidence from African green bean producers Julius Okello, Clare Narrod and Devesh Roy Improving buyer awareness: developing guidelines to increase buyers knowledge of the people working in their supply chains Chris Anstey Donor responses to the challenge of GLOBALGAP in Kenya John Humphrey Proactively complying with private voluntary standards: key findings of country case studies in Ghana, Kenya and Uganda Ulrich Hoffmann and Rene Vossenaar Development practice, agrifood standards, and smallholder certification: the elusive quest for GLOBALGAP? Stefan Ouma Are private standards important to small-scale grower project sustainability? A personal view Steve Wright Private standards: a personal perspective from a training service provider Henry Wainwright and Louise Labuschagne Rethinking the value chain in the fruit and vegetables sub-sector Amos Waweru Mind the GAP. Why a user-friendly knowledge system is necessary to reconcile private standards and public responsibilities Peter S. Baker
vi
Foreword
Private voluntary standards (PVS) are set by the food-producing industry and retailers. There are now nearly 400 private standards governing food industry activities in operation in Europe and this recent proliferation is a major concern for industry participants struggling to comply. These standards are also proliferating globally and are increasingly defining trade with non-European suppliers to the food industry. Many of these countries and farmers are poor and operate in very different political and economic circumstances to European farmers. Indeed, some developing countries argue that the trade-restrictive impact of private standards set by powerful actors in global value chains is often greater than that of legal requirements set by governments. A critical problem associated with the growth of private standards in developing countries is the potential exclusion of small producers from the export markets, with subsequent negative effects on household incomes. In particular, the GLOBALGAP standard is regarded as too expensive to be run by smallholders in contrast to organic farming where a price premium for certified produce compensates for compliance costs incurred. For this reason GLOBALGAP operates Option 2, a specific certification scheme that enables farmers groups to attain compliance. But is there really no benefit for small producers from private standards? Several studies that have been conducted in sub-Saharan Africa and are reported in this volume offer contradictory observations from wide exclusion of smallholders to significant growth of business for smallholders. This book collates state-of-the-art research and analysis to explore the issues surrounding smallholders, private standards, and exports from Africa. It is built on a three-year research project conducted by the International Institute for Environment and Development (IIED) and the Natural Resources Institute (NRI), which culminated in a final workshop held in London on 27/28 March 2008. It looks at actual evidence of smallholder exclusion and the costs and benefits of inclusion in demanding export markets. It also explores opportunities to adapt requirements and develops approaches with lower costs for smallholders. My job, as the Africa Observer in the GLOBALGAP Sector Committees and as GLOBALGAP Smallholder Ambassador for Developing Countries, is to champion the interests of smallholders in the development and implementation of the GLOBALGAP standard. Given appropriate improvements to the standard, African small-scale producers should be able to make the best rational decision about participating in the highly demanding export standard-framed market (and therefore building commercially orientated skills) or supplying less demanding markets. The fact that the voice of poorer producers is now heard in the development of the standard is a genuine breakthrough in guiding efficient decisions within the food industry that are accountable to wider global concerns over sustained contributions to Africas rural economic development and poverty alleviation. The research, case studies and opinions in this book are the kind of material that my stakeholders and I require to make decisions informed by evidence, so that our markets can support the inclusion of good farmers. Dr Johannes Kern, August 2008. GLOBALGAP Sector Committees
Foreword 1
Introduction
Trade between developed and developing countries is at once curious and alluring. In agrifood, the matched incentives for relatively rich consumers and relatively poor growers in sustaining this trade appear to provide the foundations for genuine global winwins. At first sight, a downgraded risk of poverty through upgraded access to quality produce markets appears to be a sustainable solution, but there are considerable caveats to note. This book provides research that presents a first attempt at an in-depth, focused analysis of how new private standards are affecting the potential to realise this winwin, and reports on potential solutions. International trade of high-value crops from sub-Saharan Africa to the European Union (EU), especially fresh fruits and vegetables that fulfil a demand for exotic and out-of-season products, provides a lucrative marketing opening for growers in sub-Saharan Africa. At a micro level, this trade offers upgraded opportunities for small-scale producers market access and rural economic development. At a macro level, this trade offers foreign exchange earnings, balanceof-trade support and cross-subsidisation of other forms of less valuable but significant trades, and stimulates improvement in both rural transport infrastructure and services provision. Export horticulture from Africa has grown significantly during the past 20 years. To date it has been dominated by small-scale growers, with exporters providing an important link to the UK retail and wholesale markets. Today, the production and marketing systems are intimately linked with Kenyan farmers planting to a schedule that means UK supermarket shelves are stocked with green beans every week of the year. To growers, the market opportunities offered by the EU are some of the most financially attractive but most exacting, with access requiring compliance with a strict regulatory framework of measures designed to ensure human and plant health. Today, the measures go beyond the international requirements set under the sanitary, phytosanitary and technical barriers to trade agreements administered by the World Trade Organization. Although European legislation represents the minimum requirement for market access, many of the larger retailers and some wholesalers and food service companies also require suppliers to demonstrate compliance with independently verifiable private standards such as the European retailers protocol for good agricultural practice (GAP) for farms, GLOBALGAP.1 The British Retail Consortium Global Technical Standard applies to processors and the rest of the food supply chain. These so-called private voluntary standards (PVS) have extended the level of control by European retailers back along their supply chains to farmers worldwide.
1. In late 2007, EUREPGAP changed its title to GLOBALGAP to reflect the farm assurance standards expanding international role. To make reading easier, the GLOBALGAP name will be used systematically here, irrespective of whether reported findings and experiences have taken place under the former EUREPGAP standard or later on. For further information visit www.globalgap.org
Introduction
Such PVS both verify that producers and suppliers have the necessary management and control systems in place to ensure food safety, and stipulate a range of extra criteria relating to ethics and environmental issues. Apart from helping to demonstrate good agricultural practice and chain of custody, and ultimately minimising risk, PVS provide a framework for improved food trade access into high-value markets. By upgrading and governing controls during production, processing and transportation, buyer confidence is increased and market access enhanced. Often, PVS also yield a range of benefits along the supply chain, helping to maintain quality, improve farm management, and increase business efficiency. There are significant costs to be borne for such market access and these are usually paid by the supply chain participants rather than the retail organisations. PVS costs are per certification and the unit is usually the individual farm, regardless of size. African farmers, owing to their small average farm size (typically less than two hectares), find it difficult to afford the costs and fees associated with PVS compliance. These high per-farm costs reflect the fact that the standards were originally developed for much larger farms in Europe. The risks of smallholder market exclusion are well recognised, but there was little empirical evidence about the degree of rates of exclusion, the costs and benefits of compliance, and the opportunities to adapt PVS to the realities of smallholder production without compromising the standard. Neither was there much information on the importance of standards such as GLOBALGAP within the overall flow of horticulture trade from Africa to the UK. Filling these gaps has been the primary rationale for the International Institute for Environment and Development (IIED) and the Natural Resources Institute (NRI) to undertake an extensive study over the past three years, supported by the UK Department for International Development (DFID). The aim was to analyse the impacts of PVS on smallholders in developing countries and explore opportunities for more favourable outcomes from participation in international horticultural supply chains, given the rise of private standards.2 The project achieved this through dialogue with the various stakeholders along the supply chain, including private sector players and support partners in Europe and in sub-Saharan Africa. The project team aimed to understand agendas and priorities for each agent and work out best practices for improving trading relationships. During the course of the work, the project also encountered other major challenges to the wider sustainable development context of horticultural trade, especially the growing critique of air freight as an emblem of unsustainable consumption. A final workshop attended by stakeholder groups allowed the findings and outcomes to be summarised and shared.
2. The project outputs can be found in source papers in two series: the two-page summary Fresh Perspectives briefing papers and the full length Fresh Insights technical working papers, all available at www.agrifoodstandards.net.
Introduction
This book is primarily a broad collection of personal voices from sub-Saharan African producers, food retailers and manufacturers, buyers and exporters, public policymakers, donors, service providers and researchers, giving a nuanced and realistic flavour of private standard experiences. These are presented here in the form of the briefing paper case studies named Fresh Perspectives. Key findings are summarised for each section. Section 1 presents a brief overview of the recent trends in PVS in the agrifood supply chain. Section 2 documents the market features and opportunities for fresh fruit and vegetables exports from Africa. Section 3 analyses the learning from the GLOBALGAP experience, notably the costs and benefits of compliance for smallholders as well as alternative strategies. Section 4 discusses the costs and risks originating from the wider sustainable development context. Finally, Section 5 suggests a set of recommendations for all involved public and private actors. Building an extensive picture of factors influencing smallholder involvement in horticulture export markets requires analysis beyond PVS. Although some wider factors have been sketched out (e.g., the impacts of air freight and virtual water), this ambition largely exceeds the scope and timeframe of the project research. Therefore the findings and tentatively drafted recommendations should be understood within this remit, in which PVS are the dominant feature of the analysis.
Introduction
1
Trends in private voluntary standards in the agrifood supply chain
The expansion of private voluntary standards (PVS) into the developing worlds agrifood sectors has been matched by research, review and analysis of its impact. Our three-year project builds on this earlier work and examines the effect that PVS evolution is having on producers and rural development trends. International trade accounts for a small proportion of production and farms. The majority of African growers supply the domestic markets in their own countries. PVS directly affect the export chain but also indirectly influence the domestic market.3
3. Source papers for this section are the Fresh Perspectives briefing papers that all follow as case studies (Stanton and Wolff 2008; MacGregor 2008; Homer 2008; Garcia Martinez and Poole 2008; Cooper and Graffham 2008; Owuor 2008; Kinyua 2008; and Adu-Gyamfi 2008) as well as a full length Fresh Insights technical working paper (Cooper and Graffham 2007). All are available at www.agrifoodstandards.net.
Fresh Perspectives
Private voluntary standards and the World Trade Organization Committee on Sanitary and Phytosanitary Measures
Gretchen H. Stanton and Christiane Wolff Gretchen H. Stanton is a Senior Counsellor in the Agriculture and Commodities Division of the World Trade Organization (WTO), and Secretary of the WTO Committee on Sanitary and Phytosanitary Measures (WTO SPS Committee). Christiane Wolff is a Counsellor in the Agriculture and Commodities Division. The views expressed in this paper are those of the authors only and do not necessarily represent the views of the World Trade Organization or its members.
Steve Homer
The World Trade Organization (WTO) Committee on Sanitary and Phytosanitary Measures (the SPS Committee) deals with government regulations in the areas of food safety and animal and plant health. At its meetings, WTO member countries have the opportunity to raise specific trade concerns, e.g., if they believe that another countrys sanitary and phytosanitary measures are more trade-restrictive than necessary for health protection. In June 2005, St. Vincent and the Grenadines raised concerns about GLOBALGAP pesticide requirements for banana importation, and the relationship between GLOBALGAP and official European Union (EU) requirements. Other developing countries shared this concern, wondering what alternatives were available to affected developing countries. The EUs response was that GLOBALGAP standards were not official EU requirements and, even if they went beyond official EU regulations, they were not in conflict with EU legislation. This briefing paper seeks to explain how private standards have been debated at the WTO and what the concerns are.
Animal Health (OIE). The harmonisation of national requirements with these international standards facilitates trade through the reduction of the number of distinct national requirements. Alternatively, governments can justify national standards if they are based on an appropriate risk assessment, but the measures imposed must be no more trade restrictive than required to achieve the countrys desired level of health protection. The level of health protection sought by governments cannot be arbitrary and should be consistent in the face of similar health risks. Importantly, the SPS Agreement contains a number of provisions to ensure the transparency of sanitary and phytosanitary requirements. Not only must governments give advance notice of their intention to modify sanitary and phytosanitary measures, but they must take into consideration any comments submitted by trading partners, provide associated documents upon request (including risk assessments and the scientific evidence underpinning measures), and ensure that all measures are published promptly. Food safety requirements are subjected to a different set of WTO legal obligations than those applied to quality and environmental measures, or measures adopted to avoid misleading consumers. This, in addition to the notification requirements, pushes governments to identify objectives and to clearly separate and distinguish between requirements imposed for health protection and those imposed for other purposes. Finally, the SPS Agreement ensures that sanitary and phytosanitary requirements can be challenged by other trading partners, through the use of the WTOs unified dispute settlement procedures.
Agreement also requires that there be no unjustified costs in testing, certification or approval procedures, to ensure that these do not become barriers to trade. In contrast, private standard bodies have apparently not considered the effects of their standards on developing countries, or the degree of their trade restrictiveness. Suppliers in developing countries who produce for the export market in industrialised countries face difficulties in complying with private standards, such as those required by global retailers, and several studies show that many smaller exporters have dropped out of the market. Many developing countries find it difficult to produce goods that meet the internationally agreed food safety standards. However, meeting these standards is often insufficient to gain access to many markets, as the private standards set requirements well in excess of those of the Codex, IPPC or OIE. Private retailers have often imposed and modified their requirements without any advance notice, and with no opportunity for producers in other countries to comment or complain. Some recent efforts, including the smallholder taskforce at GLOBALGAP, have begun to move in a different direction. However, compared to the disciplines that the SPS Agreement places on government regulations, there is little transparency in the development of private standards, and there is no forum for challenging private standards comparable to the SPS Committee or the dispute settlement mechanism of the WTO.
Fresh Perspectives 2
Understanding stakeholder drivers for introducing and complying with private voluntary standards a fresh produce example
James MacGregor James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
Key messages
n PVS have provided industry leadership on the crucial food safety issue. n PVS have distinct economic advantages for the whole industry but only for those participants who can comply. n The financial and economic drivers underlying PVS are efficiency, willingness to pay, and public legislation compliance. n PVS in agrifood are helping accelerate a slow transformation of the industry from abiding by minimum public standards to one striving for maximum private standards. n Developing PVS that recognise the nuances of sustainable development in Africa will require new mechanisms of information sharing and knowledge generation. Today the range of PVS is extensive, covering all stages of the food supply chain: production, inputs, transport, trade, marketing, etc. They meet all kinds of concerns, from food safety to animal welfare, from the environment to quality or taste. With the globalisation of procurement networks, PVS are increasingly common in agrifood supply chains worldwide as supplier networks expand. This paper discusses the drivers of compliance with PVS, from the perspectives of both the food retailing industry and developing countries producers. The export horticulture trade linking the poorest continent with the richest consumers provides a good laboratory for examining these incentives. It also frames a considerable challenge: how to produce food safely and efficiently and simultaneously and equitably deliver sustainable development benefits to rural Africa. Public standards in the food industry have a specific public good objective food safety. Standards are also the typical way of conducting efficient business in all industrial production processes. In food supply chains, quality has been regulated for over 500 years. Greater prominence during the twentieth century included massive publicity concerning food-borne public health crises in the 1990s (e.g., BSE), which raised consumers concerns and reinforced the trend towards third-party certification and labelling. Legal responsibility for due diligence (doing all that is reasonably possible to ensure safety) has been increasingly imposed on the private sector through successive EU food safety legislation. In
order to achieve this efficiently, the industry has employed PVS to leverage private incentives within the supply chains and transform its trading systems. There are further motivators at work, including the trend for supermarkets to become both manufacturers and processors as they seek to increase profit through their own labels. Some of these private incentives are highly apparent, for example financial gain for the retailers and mitigation of their risks. Others are more subtle and relate to the slow transformation of the industry from one abiding by minimum public standards to one striving for maximum private standards. Niche market suppliers are better placed to adapt to the more complex requirements of a PVS than those supplying bulk commodities, since the former are quality and high-value orientated whereas the latter are governed by price and cost issues. With quality programmes already in place, there are elements of vertical coordination that can be leveraged. For bulk products, implementation of PVS requires network-wide coordination and the reorganisation from anonymous bulk products to more differentiated goods.
twentieth century. Problems generated by the fragmented nature of the industry were compounded by differing consumer perceptions of food safety between countries and segments. In sum, there was no industry leadership until retailers became powerful players in the early 1990s and filled this vacuum. The food retailers now collectively lead the setting of PVS within the food sector and have become the standard-setters. For private standard-setters, there is a financial and economic impetus to guaranteeing food safety. PVS can be wielded as broader instruments of supply chain management and control. Specifically, PVS can create an entry to the hidden information within a supply chain that not only unlocks guarantees of food safety and denotes responsibility along the supply chain but can also be exploited for either private or supply chain-wide benefits through lower risks, higher margins, greater flexibility and sharpened competitive edge.
Table 1. Drivers for PVS development for standard-setters the food retailers
Profit
Outsource
Communication
Business tools
Export horticulture tends to be high-value and niche and as such has a demand profile that is somewhat price inelastic. Consumers tend to be loyal and wealthier. All are ingredients to make sustainable profits. Successful firms seek to outsource non-core activities PVS enables outsourcing of food safety to suppliers, which frees valuable in-house resources to concentrate on core business. PVS helps distribute risks efficiently throughout the supply chain to those most able to both deal with and communicate food safety. PVS enables simplified, less risky decision-making and lower transactions costs owing to search and screening (less research on who you can rely on in new countries or regions is necessary), a smaller group of possible sellers, and enhanced compatibility between products by reducing variety. PVS upgrades the potential to message accurately to consumers (communicating quality management), suppliers (ensuring they supply appropriate and relevant information as well as product), and competitors (credibility as the originator of a successful industry standard). PVS are flexible, fully operationalised, hands-free, supply chain management tools that provide incentives to other participants to comply with conditions stipulated by the setter. These participants remain independent, eradicating the need for expensive ownership of the firms involved to achieve these goals. Furthermore, PVS are tools that can be flexibly enforced depending on market circumstances. For information generation, PVS are rich sources of information on the supply chain that facilitate decision-making (e.g., on who to buy from, when, and at what price). PVS can generate dependency for suppliers on the buyers by restricting exit for suppliers who have invested in sunk costs of compliance; these investments are often amortised over long periods. PVS ensures compliance with baseline legislation specifically the main provisions of the General Food Law Regulation (EC) 178/2002 that applies to food business operators. This includes Article 11 on imports and Article 18 on traceability.
other forms of less-valuable but important trades, and local economic development opportunities. It can also be a trade catalyst since internationally recognised standards provide a common language for trade, helping to harmonise national standards, remove invisible barriers to trade, and generate multipliers of higher-quality trade: better transport infrastructure and better services provision. At an industry level, while structures will exist for compliance with public standards, no consensual decision will be taken at an industry level to attempt compliance with a particular PVS. A range of agencies are involved including local and national government, relevant authorities, donors, and industry lobbies. The production unit complying with the PVS might be an individual smallholder, a collective of smallholders, a cooperative, an outgrower scheme, or a larger farm. For producers, incentives are mostly related to access to markets and the cascade of perceived benefits they will receive. In the export horticulture industry, rural smallholders were the traditional suppliers. Indeed, most smallholders get certified or comply with PVS not because of the perceived technical efficiencies, but because their buyer demands it. Thus it is primarily an issue of survival in the market, though several other motivations exist. PVS challenge smallholders in developing countries. Farmers are constrained by their exposure to regulations on production owing to (often) less stringent domestic public food safety regulation, and less experience of trading products that have formal PVS compliance requirements. Hence, the quality might be high, but communicating this remains a challenge. To be truly efficient sustainable development champions, PVS that include producers in developing countries must be designed in ways that incorporate information on the significance that the impact of this trade and compliance with these standards have on livelihoods, communities, and opportunities in rural areas.
Technical efficiencies
Fresh Perspectives 3
The GAP is getting wider: how private standards are filling the void between dynamic public opinion and food safety legislation
Steve Homer Steve Homer is experienced in writing, managing and implementing private standards for actors who supply supermarkets with fresh produce. After seven years as Group Corporate Social Responsibility Manager with Flamingo Holdings, he is currently involved with various projects (including the Ethical Trading Initiative Smallholders Project and the GLOBALGAP Africa Observer Project) to measure the impact of standards on livelihoods particularly in respect of smallholder farmers in sub-Saharan Africa. He is a former member of the GLOBALGAP Board of Directors and is a CMi Certification Governing Board Member.
Key messages
n Public legislation cannot keep up with fast-moving consumer concerns private standards fill the gap. n Food safety private standards have entered a competitive position with the enhancement of social, ethical and environmental attributes in brand strategy. n Under-resourced farmers from developing countries have to meet increasingly subjective and diverse customer demand if they want to sustain participation in certified chains.
based on proven scientific fact. The differential gap between public opinion and food law has always been there, and over time has expanded and contracted in reaction to food safety scares, farmers lobbies, trade talks, and national and international alliances. However, the rising demands of the supermarkets and brands combined with an increase in the number and diversity of influence vectors have accelerated the frequency of the change events and stretched still further the void between current legislation and PVS.
By contrast to the PVS entities, the food safety legislators during this period have been surrounded by the growing constraints of international treaties, political union enlargement, and increasingly combative trade negotiations. During these lengthy political processes any momentum and valuable common ground appear to be lost in the uncertainty of the negotiated political outcomes. As a consequence, the food safety legislative cycle becomes slower, and might in some cases be negotiated down to a lowest common denominator in order to reach a quicker conclusion. When finally agreed and adopted nationally, the legislation is often perceived as out of date. If a PVS has been in place in the industry for a number of years and the industry has already adapted to those market entry changes, then the legislation can be seen as irrelevant and just a rubber stamp to the PVS. A power imbalance between private and public actors can appear to develop. Over time, international legislation that can be understood and acted upon by developing countries and smaller farmers will fill the differential void, but in the interim period the PVS moves into the newly created space and provides a quick fix, but an imperfect and unbalanced solution for many. For a PVS to be developed there Marks & Spencer Fairtrade boost for farmers must be a space between public opinion and legislation, because The entire Marks & Spencer range of coffee and tea, totalling 38 mainstream PVS initiatives are lines, is switching to Fairtrade over the next few weeks. The prices costly to initiate from zero. If it were will remain the same because Marks & Spencer has been working with its suppliers for years to help them achieve Fairtrade status. as simple as proving compliance Daily Mail, 6 March 2006 with legislation to a sceptical consumer, then there would not be a need for the brand owners to incur substantial PVS development and initial implementation costs because the mechanisms of international accreditation and certification of food safety are already well established. Later in the process the business-to-business costs of adaptation to the new PVS, and continuing proof of compliance to that standard, are passed down the supply chain, but the decision to initially commit substantial brand resources to a project has to be backed by a strongly proven commercial need.
Invariably, those brands with a need to react quickly have the personnel resources and access to the technical expertise to develop a PVS quickly. Consultation, impact assessment, and regard for legislation are considered as unnecessary because the brand owners are able to cite public demand. When a space exists or is created, an entity that has invested enormous sums of money into a brand trust agenda will not hesitate to spend money and commit seemingly unlimited resources on measures that protect that investment. Unconstrained by legislation and any need for multilateral or multi-stakeholder consensus, the brand is free to move quickly and decisively to implement measures that will satisfy perceived or recently generated consumer demand.
Fairtrade schemes and potential price premiums for growers from organic production systems are often eroded or completely lost when these types of voluntary niche schemes are forced into mainstream categories, and are compelled to fulfil mandatory measures for entry into a particular mainstream category. What were once seen as PVS that were positive for change are simply a different barrier when used in the wrong way and the outcomes are coming under increased investigative media scrutiny. If this use of the subjective and objective measurement is to continue, then the outlook for the future is mixed. There is no doubt that the speed of the Internet, increasing access to 24-hour news, and the media-driven public agenda are creating an even more subjective mixture of recurring, single-issue campaigns. We have already seen the proliferation of sub-brands that are, in effect, de facto standards (Natures Choice at Tesco; Fair Partner at Marks & Spencer) and the rise of labels like Fairtrade in a mainstream context (Sainsburys), which enhance the supermarket brand but rarely scale up to significant levels of percentage of business.
Fresh Perspectives 4
Ethical consumerism: development of a global trend and its impact on development
Marian Garcia Martinez and Nigel Poole Dr Marian Garcia Martinez is a senior lecturer in agri-environmental economics at Kent Business School (University of Kent). Dr Nigel Poole is the Academic Programme Director at the School of Oriental and African Studies Centre for Development, Environment and Policy and the London International Development Centre (University of London).
Key messages
n Consumers increasingly wish to shop ethically, but require clearer navigation of the ethical categories. n Third-party accreditation systems are proving an effective mechanism to formulate and communicate ethical attributes to consumers. n Ethical issues are entering the mainstream, offering increased opportunities for developing countries. n Domestic and regional markets in developing countries for value-added and quality products are growing. Consumers are showing an increasing interest in ethical aspects of agrifood production and trade, including fair trade, safe working conditions for producers and employees, and sustainable and environmentally-friendly natural resources management. Ethical consumerism seeks to reaffirm the moral dimension of consumer choice by emphasising the links between production and consumption, locally and globally (Gabriel and Lang 1995). Ethical consumers have at the core of their agenda the desire to enhance their wellbeing through purchasing behaviour that avoids harming or exploiting humans, animals or the environment (Ethical Consumer 2003). Consumption has become a means by which peoples non-material views about the nature of society and the future of the environment can be manifested in a tangible and measurable way . (Howard 2005).
Retailer push on supply chains: there are higher retail margins on ethical lines; some retailers see a strong ethical stance as providing them with an advantage in a highly competitive business environment (e.g., Marks & Spencers Eco Plan A: 288m to be spent on becoming carbon neutral by 2012; sourcing more clothing and food from Fairtrade suppliers); shareholders and others exert pressure to deliver on the triple-bottom line; and an increasing ethical retailing stance may be compatible with a particular retailers stated values (e.g., a commitment to fairness in its treatment of staff, suppliers, etc.). Government policy: the role of government is two-fold. First, through the development of policies/ initiatives aimed at positively influencing consumer behaviour. This is pivotal in determining how the confused but willing group of consumers will polarise. However, consumer education is often seen as a weak instrument and is unlikely to be effective compared with the impact on choice of commercial pricing policies. Second, by stimulating the creation of green goods: consumers would purchase more ethical products if they were available. For instance, there are potential synergies between public standards for healthy eating and private ethical consumption patterns.
Eco crunch? Towards a more selective purchasing behaviour. Early evidence from analysis of the current downturn in UK retail spending and rising food, fuel and finance costs suggests that consumers are trading down to lower-value products. All consumer segments are unlikely to be affected in the same way and to the same extent. Sales of organic products, for instance, have not seen a dip in volume or value; in fact they grew 13.4 per cent in the past year across Europe, up from 9.3 per cent in 2007 (IGD Consumer Research 2008). However, there are early indicators of shifts within purchasing behaviour: demand for Sainsburys Basic range is growing while upmarket shoppers are now to be found in discount grocery retailers such as Lidl, rather than just Waitrose. Even so, consumers are buying more selectively rather than cutting back on green goods (Vallely 2008). Consumers are finding alternative, less guilt-inducing ways to economise. While the pace of development may be slow, the range and availability of ethical products will continue to expand as companies differentiate and build closer engagement with consumers, offering increasing trade opportunities for producers and workers in developing countries engaged in the production of ethical products. Increasing importance of credence attributes as a source of differentiation: in a highly competitive retail environment, private standards are very likely to increase in severity as firms attempt to out-compete each other on social/credence attributes associated with their food lines. One outcome of this is that it becomes increasingly challenging for producers, and particularly low-resourced small-scale producers from emerging/developing countries, to be able to meet the increasingly exacting standards (Garcia Martinez and Poole 2004). Organic and fairly traded produce has considerable potential for improving the welfare of communities (Browne et al. 2000). Nevertheless, it is an important empirical question whether, and to what extent, the price premiums paid by consumers are transmitted to primary producers and their communities. While improved prices are an important opportunity for smallholders, the costs of meeting accreditation standards are also considerable, such that the net benefits must be analysed. It may be that the primary benefit for smallholders is access to valuable export markets rather than better prices and that these benefits, according to a growing body of evidence, accrue mainly to better-off producers.
Conclusion
Knowledge of credence attributes is complex in itself and information generated by producers and public action is abundant and complex too. Consumers often find it difficult to understand the differences between various certifications or how to properly judge the reliability of a brand or a certification; no single label covers all green areas. This complexity is to be regarded not only as a matter of education: consumers are confused because of bounded rationality and time constraints where there are lots of alternative products and a superabundance of information. Ethical consumers want plausible guarantees about ethical attributes. Suppliers must address the quality challenges concerning certification and branding to promote their quality-assured products. Third-party accreditation and assurance systems may be a more efficient and effective mechanism to formulate and communicate ethical attributes to consumers than through retailer labelling.
1.2 The rise of GLOBALGAP and the African horticulture export story
We recognise that the GLOBALGAP scheme (or another PVS) is not the sole reason for structural change and does not fully explain the changing status and profile of smallholders or developing countries in fresh fruit and vegetable export supply chains. Other industry-wide factors such as innovation, fuel prices, wage rates, consumer preferences, and the quantity reaching the market from elsewhere also have attributable influence. Yet for successful, widely-applied PVS, impact and change are inevitable. GLOBALGAP provides an example which is explored by the four briefing papers that follow. Prior to 2003, the majority of African horticultural exports to the European market relied on spot purchases of vegetables from large numbers of small-scale growers via a system of brokers. But since then, the compliance framework for exports to Europe has increasingly been enforced and compliance criteria have been tightened. GLOBALGAP was rolled out in Kenya from 2003 onwards and in other sub-Saharan African countries subsequently. There have been growing indications of smallholders difficulties in obtaining and maintaining compliance. GLOBALGAP has become the most widely implemented and required private voluntary standard for primary production of agricultural products, with over 80,000 certified producers in 80 countries. In January 2005, GLOBALGAPs European supermarket members made certification obligatory for suppliers, including all small-scale suppliers of fresh fruit and vegetables from developing countries. The content of the Fruit and Vegetables Protocol in the GLOBALGAP standard (the All Farms Base, the Crops Base and the Fruit and Vegetables Module) was initially designed for largescale commercial growers and may not be fit for purpose for smallholders. Compliance criteria are divided into control points: major musts where 100 per cent compliance is required, and minor musts where 95 per cent compliance is required. To avoid the need for small farms to comply separately and bear subsequent higher costs, there is a collective certification scheme (GLOBALGAP Option 2) that allows a group of farmers to comply as a unit. Additionally, there are various national and regional standards in which the GLOBALGAP scheme has been adapted more specifically to the country in question. For example in Kenya, KenyaGAP has Option 3 and Option 4, which are locally tailored versions of GLOBALGAP Option 1 and Option 2 respectively. PVS are not fixed but evolve to take into account technological and market developments. GLOBALGAP is updated every three years. In September 2005, GLOBALGAP Version 2 included a new feature for Option 2 of the protocol in the form of a quality management system checklist. Introduced two years later, Version 3 of GLOBALGAP sets the bar even higher and presents greater challenges to growers, with additional criteria detailing record-keeping, labelling, water testing, facilities, certificated training for workers, and more hygienic working conditions and more stringent product recall systems. The single list of compliance criteria that comprised earlier versions of GLOBALGAP has now been split into three parts: growers must comply with the All Farms Base, the Crops Base and the Fruit and Vegetables Module. There are now additional major musts and minor musts too. Compliance under Version 3 becomes significantly more technically complicated and financially demanding for smallholders to comply with.
Fresh Perspectives 5
GLOBALGAP Version 3: threat or opportunity for small-scale African growers?
Jerry Cooper and Andrew Graffham Jerry Cooper is a pest management specialist with 30 years experience in crop protection, especially in control of major vegetable crop pests. He works in the Agriculture, Health and Environment Group at The Natural Resources Institute (NRI). Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at NRI.
Steve Homer
Section 1.2: The rise of GLOBALGAP and the African horticulture export story 23
Private standards compliance is becoming increasingly important for all fresh commodities produced in developing countries and sold in overseas markets. GLOBALGAP is one of the most widely recognised international standards. The standard was originally developed by (and for) European retailers to provide guidelines and monitor on-farm production. A new version Version 3 was published in August 2007 to meet the increased expectations of consumers and retailers in Europe. This paper discusses the implications of Version 3 for smallholders in Africa. Compliance with Version 2 was demonstrably difficult for smallholders; Version 3 does not make compliance easier and could accelerate smallholders departure from export markets. Of the 236 control points in Version 3, 40 are either new or require stricter compliance. For smallholders, some of these changes not only will mean increased costs but in fact may not be achievable at all even when allowing for the cost savings associated with group membership under Option 2 (see below). In the past, food safety requirements from the food industry to satisfy authorities and buyers were relatively relaxed and informal. However, demand for better control systems and management of food safety led to changes in legislation to reduce risk. In addition to these legal requirements, retailers in Europe have developed their own private standards to manage risk during farm production, processing and transportation. One such private standard, GLOBALGAP, was developed specifically for, and by, European retailers to monitor on-farm production. GLOBALGAP has now become widely recognised and, although some supermarket chains have their own even more stringent standards, GLOBALGAP has established an international reputation and is being stipulated as a requirement by an increasing number of companies in more than 20 countries.
Large farms in both Kenya and Europe find it easier than smaller ones to comply with PVS.This is mainly because of their financial capacity to invest in certification, rather than the technical requirements of production. To reduce costs for small farms, a collective certification scheme (GLOBALGAP Option 2) was set up to allow groups of farmers to comply as a unit. Estimates by Graffham et al. (2006) put the total cost of compliance for a smallholder via this collective route at 636 for establishment and 175 per annum for maintenance. Although these figures do not include support from outside sources, such as donor-funded programmes to assist certification compliance, the investment remains unaffordable for some. As a result, the general trend is for fewer smallholders to comply with GLOBALGAP, and hence for fewer farmers to be able to meet European market requirements. There are both strong incentives and considerable challenges for smallholders to comply with GLOBALGAP. Compliance is recognised by growers as having several practical advantages over and above the improvement of market access. It sets a management discipline that helps to focus business aims and enables growers to track many of the operational components more effectively. It clearly also gives farms a means of improving control of food safety. However, it presents significant financial and administrative challenges and these often preclude participation by smallholder farmers. Version 3 of GLOBALGAP sets standards higher than Version 2 and presents added challenges for smallholders. First, it is more complex: the single list of compliance criteria that comprised earlier versions has now been split into three parts. Growers must now comply with the All Farms Base, the Crops Base and the Fruit and Vegetables Module. There may be advantages to having the three separate modules for mixed farms; for instance, the All Farms Base will not need to be repeated for livestock certification. However, there are few obvious advantages for smallholders in developing countries engaged in single-crop cultivation, e.g., export horticulture. Version 3 is also
more demanding. Of a total of 256 control points, Version 3 includes 11 additional compulsory points and 21 new points requiring 95 per cent compliance. Significantly, many of the control points that in Version 2 were minor musts (meaning points requiring 95 per cent compliance) have now been upgraded to major musts, i.e., they must all be met (100 per cent compliance). In addition, many recommendations (formerly non-compulsory control points) have been upgraded to the category requiring 95 per cent compliance. In sum, to obtain a GLOBALGAP certificate, all farmers must comply 100 per cent with the 74 major musts and 95 per cent with the 125 minor musts in three separate modules (the remaining points are recommendations that will not fail the farm). The farmer can fail to comply with only six control points out of 199 in these two categories.
9 13 16 38
Moreover, the revised quality management system for Version 3 requires greater quality control from smallholders. Graffham et al. (2006) reported that the quality management system component was the most challenging part for smallholders in a previous version of the standard, the EUREPGAP Fruit and Vegetables Protocol 2.1, January 2004. In Version 3 the number of control points in the main quality management system checklist has increased from 94 to 141. A good example of this is the section on farmer/farm inspection (2.8.2), which had five control points in the old protocol but has 16 control points (QM9.2) in Version 3. Finally, where it was already difficult for smallholders to meet the challenges of Version 2 (as of mid-2006 in Kenya, 60 per cent of the estimated 45,000 smallholders supplying exporters in 2003 had already been dropped by their export company or had withdrawn from compliance schemes as a direct result of their inability to comply, or maintain compliance, with GLOBALGAP), Version 3 may even exacerbate the situation. The increased requirements are accompanied by the need for additional record-keeping, labelling, water testing, facilities, certificated training for workers, and more hygienic working conditions and more stringent product recall systems. Transaction costs for farmers are therefore increased.
Section 1.2: The rise of GLOBALGAP and the African horticulture export story 25
Fresh Perspectives 6
The Kenya Horticultural Exporters Ltd experience of private voluntary standards
Apollo Owuor Apollo Owuor is a Head Agronomist and Technical Manager at Kenya Horticultural Exporters (KHE) Ltd. He works with many independent producers exporting to the UK, France and The Netherlands
Steve Homer
Horticulture provides a key livelihood support to rural households in some parts of the Eastern and Rift Valley provinces of Kenya, and especially in the Central Province. PVS are now a basic requirement for entry into the export horticulture market. All importers require their suppliers to give them details of accreditation in order for them to export to the European Union. PVS had initially been viewed as a major barrier to trade in Kenya. However, the standards have also brought benefits improving the mechanisms of small-scale supplier management and increasing good agricultural practice. A typical smallholder runs a one acre farm and is a member of a self-help group. The self-help group plays a major part in the success that has been experienced in the countrys horticultural industry, providing the basis for farmers to pool produce and resources together as well as facilitate access to markets and increase knowledge of market requirements. Operational costs that would have been beyond the reach of a single grower are also shared amongst members within the group, further enabling the probability of success for smallholders in export markets. In Kenya, self-help groups are now used in the majority of green bean and pea export production. Considerable interest from various development partners has been extended to the self-help groups in order to strengthen their capacity to meet the requirements of PVS and to maintain their position in the export industry. As a major exporter, Kenya Horticultural Exporters values the role these organisations have played in keeping smallholders in business. The key to success is to understand the weak areas, risks and challenges faced by these producers, and to learn costeffective ways of managing them. PVS should be viewed not as challenges but as stepping stones to general good agricultural practice, hence improving integrity.
Section 1.2: The rise of GLOBALGAP and the African horticulture export story 27
required by Tesco on top of GLOBALGAP. In addition, most of the quality management systems are generic and owned by exporters, hence those systems are likely to fail in the event the relationship between the company and farmer group ceases.
Key lessons
n Smallholders can attain and sustain certification provided the major prohibitive costs such as residue, water and soil analyses are met or a system is put in place to monitor this from the risk assessment point of view. n The central management system allows several producers to access key services and quality produce thereby reducing the per capita cost of production. n All growers are able to access the required documentation, which should be centrally available. n Even smallholders can achieve high production standards as prescribed in the PVS.
Fresh Perspectives 7
How private standards designed for export produce also influence Kenyan domestic markets
Henry Kinyua Henry Kinyua is an agribusiness and private sector development professional specialising in value chain and project management. He is currently working as a senior business advisor with TechnoServe Kenya
Ina Porras
Key messages
n Producing fresh crops for the domestic market can yield higher returns than supplying the export market. n Growing African urbanisation offers a secure incentive for export farmers to diversify into domestic agrifood enterprises. n Private standards of export chains have brought agricultural practice improvements that also benefit domestic market-bound crops.
In the late 1990s, certification news on fresh exports from Kenya was received with apprehension across all of the horticulture industry. Some feared certification would exclude smallholders from the export market. In response the government, through the Ministry of Agriculture and the Horticultural Crops Development Authority (HCDA), launched an information campaign aimed at exporters and farmers but a lot still remains to be done. Several studies have shown a decline in the number of smallholders participating in the fresh produce export market in Kenya since the introduction of the GLOBALGAP standard in 2003. Some studies have estimated up to a 60 per cent decline. This paper gives a personal view on the impacts of private standards such as GLOBALGAP on smallholders in Kenya, in both export and domestic markets.
4.3 per cent. In total, this will be an urban increase of some 440 million people. Simultaneously, the rural population will grow at less than 1 per cent (TechnoServe 2004). This domestic market is yet to be regulated by standards like GLOBALGAP or KenyaGAP, but momentum built by GLOBALGAP in terms of information flow on good agricultural practices (GAP) is still sustainable. Farmers are more aware of the impact of their farming practices upon the environment than was the case before. Farmers such as those working with TechnoServe in central Kenya on banana production and marketing are now more conscious of the impact of chemicals, including inorganic fertilisers. This knowledge can, to some extent, be associated with the popularity of GLOBALGAP in the late 1990s and early 2000s.
Fresh Perspectives
The impact of private standards on West African growers producing for domestic and regional markets: a personal view based on the Afrique Link Ltd experience
Kwabena Adu-Gyamfi Kwabena Adu-Gyamfi co-founded and directs Afrique Link Ltd., a tomato production and processing company. Over the past five years the company has worked with five outgrowers (500 farmers) to supply fresh tomatoes and mangoes
Key messages
n PVS do not adversely affect the participation of rural African farmers in global trade. n A high percentage of rural African farmers are illiterate and do not have the knowledge or experience to appraise the impact of these standards on their businesses. n The fundamental agricultural practices (farming technologies, access to good-quality hybrid seeds, irrigation, etc.) need to improve. n Agriculture should be seen more as a commercial enterprise than as a subsistence activity. This makes it possible for farmers to look for opportunities (e.g., PVS for market access) and take advantage of them.
Kwabena Adu-Gyampi
Afrique Link Ltd., in conjunction with GTZ (Deutsche Gesellschaft fr Technische Zusammenarbeit), Unilever (Ghana) Ltd. and Ghanas Ministry of Food and Agriculture, launched the Wenchi Tomato Processing Project in 2003 to train 500 farmers in the production of quality fresh tomatoes to enable Afrique Link Ltd. achieve the private specifications of Unilever. n Out of the 500 farmers, only 80 per cent complied with the requirements of the production protocols. The remaining 20 per cent continued with old practices. n Of the successful 80 per cent, only 5 per cent respected the supply agreements, most of them side-sold to the fresh market. Drawing on the Afrique Link Ltd. experience, this paper gives a personal view on how private standards affect West African farmers producing for domestic and regional markets and it provides some key lessons for making the most of opportunities.
transfer is carried out through the central government (although even government staff needs training in most aspects of the staple food production). Consequently quality and yields are poor. Currently yields are about 10 to 20 per cent of world standards. A few international companies and local skilled entrepreneurs have established companies in Ghana and are working with farmers to take advantage of the opportunities. The relationship with the farmers is a typical suppliercustomer business relationship and little technical assistance or support is provided to farmers. It should be noted that there are quite a number of anti-globalisation and anti-private standard NGOs in Ghana and West Africa, which are running campaigns to inform farmers that private standards are attempts to introduce non-tariff restrictions to limit the African farmers access to European markets. There is assistance from donor agencies including the United States Agency for International Development (USAID) and the Trade and Investment Programme for Competitive Export Economy (TIPCEE) in Ghana, and GTZ and DFID in West Africa. Agencies provide technical assistance in farm production (e.g., irrigation, improved seed varieties, new technologies to control pests and diseases) and thereby help to increase yields. In addition, USAID and TIPCEE also assist in market linkages and increasing export market access. However, their support is not sufficient to make substantial or sustainable impact.
Major factors enabling the rural farmer to take advantage of the opportunities that private standards bring
n Commercialisation of agriculture: agriculture should move from being a subsistence activity to a commercial venture. For example, the few private agriculture-based companies should work with the few entrepreneurial rural farmers on a block land basis in order for the latter to appreciate how a commercial farming business is managed. Government financial support and market access through government agencies will also contribute to accelerated growth. Due to agricultural production inefficiencies already identified, farmers are not able to compete with imports, notably from Europe. n Establishment of good value chain support linkages: a conscious effort to establish linkages between the value chain actors is vital. n Access to timely provision of finance: for a commercial venture, access to capital in a creative and timely manner is vital. n Nucleus farmer/large block farming synergies: nucleus farmers must be available to pass on their commercial business skills to rural farmers. n Introduction of modern technologies: current manual cutlass and hoe agriculture, which is still commonplace, should give way to modern technologies, although these would only be economically viable on farms of 10 hectares or more.
n Concept of nucleus farmers (who have skills in management, etc.) to work with farmers on a block land basis. Services such as field irrigation or tractor hire are provided for them as a block unit. This introduces efficiency and reduces manual application. The farmer on a small unit within the block will benefit from improved technology and reduced unit costs, making him/her more competitive and profitable. n Payment of premium price for extra effort. For example, a trend of informal standardisation is emerging in the fresh tomato and mango sector. Large-sized (from 70g to 100g), hardy, firm, fresh tomatoes with a shelf life of five to 14 days attract a premium price of about US$1 per kilogram, whereas others are priced between 40 and 80 per cent lower. The same goes for firm, non-bruised, fibre-free mangoes. If the nucleus farmer shares the premium with the small-scale farmers there is the likelihood that they will pursue improved technologies for better quality and higher yields. n Nucleus farmers supported by large block farming farmers. The socio-cultural setting of the rural farmer can make his/her motivation and expectation less than optimal. There is a need for any nucleus farmer to target entrepreneurial lead farmers, who can employ the others and pay them wages to reduce their risks.
Section 1 references
Adu-Gyamfi, K. (2008), The impact of private voluntary standards on West African growers producing for domestic and regional markets: a personal view based on the Afrique Link Ltd experience. Fresh Perspectives series no. 31, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Browne, A.W., P.J.C. Harris, A.H. Hofny-Collins, N. Pasiecznik and R.R. Wallace (2000), Organic production and ethical trade: definition, practice and links. Food Policy 25(1): 69-89. Cooper, J. and A. Graffham (2007), EUREPGAP revisions 2007-2008: Implications of Version 3 for smallscale exporters of fresh fruit and vegetables in East Africa. Fresh Insights no. 14, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Cooper, J and A. Graffham (2008), GLOBALGAP Version 3: threat or opportunity for small-scale African growers? Fresh Perspectives series no. 10, DFID/IIED/NRI. Available at www.agrifoodstandards.net. The Cooperative Bank (2007), The Ethical Consumerism Report 2007. Available to download at www.goodwithmoney.co.uk/images/pdf/ethical_consumer_report_2007.pdf. Ethical Consumer (2003), Why buy ethically? An introduction to the philosophy behind ethical purchasing. Available at www.ethicalconsumer.org.
The European Parliament and the Council of the European Union (2002), Regulation (EC) No 178/2002 of the European Parliament and of the Council (usually referred to as the General Food Law Regulation). Available at http://eur-lex.europa.eu/pri/en/oj/dat/2002/l_031/l_03120020201en00010024.pdf. Fearne, A. (2008), Organic fruit and vegetables who buys what and why and do we have a clue? The dunnhumby Academy of Consumer Research, Kent Business School, University of Kent. Gabriel, Y. and T. Lang (1995), The Unmanageable Consumer. Sage Publications, London. Garcia Martinez, M. and N. Poole (2004), The development of private fresh produce safety standards: implications for developing Mediterranean exporting countries. Food Policy 29(3): 229-255. Garcia Martinez, M. and N. Poole (2008), Ethical consumerism: development of a global trend and its impact on development. Fresh Perspectives series no. 33, DFID/IIED/NRI. Available at www. agrifoodstandards.net. Government of Kenya (2007), 2005/6 Kenya Integrated Household Budget Survey. Ministry of Planning and National Development, Kenya National Bureau of Statistics, Nairobi, Kenya. Graffham, A., E. Karehu and J. MacGregor (2006), Impact of EurepGAP on small-scale growers of fruits and vegetables in Kenya. Available from the authors. Summarised at www.agrifoodstandards. net. Elaborated further at www.research4development.info/PDF/Outputs/mediabroad/ bridgethegapcasestudies.pdf. Homer, S. (2008), The GAP is getting wider: how private standards are filling the void between public opinion and legislation. Fresh Perspectives series no. 30, DFID/IIED/NRI. Available at www. agrifoodstandards.net. Howard, M. in The Cooperative Bank (2005), The Ethical Consumerism Report 2005 (p. 3). Available to download at www.goodwithmoney.co.uk/images/pdf/ coopEthicalConsumerismReport2005. Humphrey, J. (2008), Donor responses to the challenges of GlobalGAP in Kenya. Fresh Perspectives series no. 30, DFID/IIED/NRI. Available at www.agrifoodstandards.net. IGD Consumer Research (2008), Are UK shoppers turning green? Available at www.igd.com/CIR.asp?menuid=38&cirid=2548. Kinyua, H. (2008), How private standards designed for export produce also influence Kenyan domestic markets. Fresh Perspectives series no. 27, DFID/IIED/NRI. Available at www.agrifoodstandards.net. MacGregor, J. (2008), Understanding stakeholder drivers for introducing and complying with private voluntary standards a fresh produce example. Fresh Perspectives series no. 8, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Owuor, A. (2008), The Kenyan Horticultural Exports Ltd experience of private voluntary standards. Fresh Perspectives series no. 23, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Poole, N.D., F. Vidal Gimenez and L. Martinez-Carrasco Martinez. (2007), Quality perceptions under evolving information conditions: implications for diet, health and consumer satisfaction. Food Policy 32(2): 175-188. Stanton, G.H. and C. Wolff (2008), Private voluntary standards and the World Trade Organization Committee on Sanitary and Phytosanitary Measures. Fresh Perspectives series no. 16, DFID/IIED/NRI. Available at www.agrifoodstandards.net. TechnoServe (2004), Partnerships for Agribusiness Development, Agricultural Trade, and Market Access. A concept note for NEPAD. November 2004. Vallely, P. (2008), Stuff the planet? The Independent, Wednesday, 25 June, 2008, p. 2.
2
Fresh fruit and vegetables exports from Africa to the UK
Supported by their governments, private entrepreneurs and donor agencies, many subSaharan African smallholders have attempted to develop export horticulture over the past two decades. The lure for sub-Saharan Africa of this trade is the promise of high-value output delivering a cascade of jobs, incomes, rural multipliers, opportunities and skills for small-scale growers. In order to take full advantage of the opportunities arising from access to these high-value markets, it is crucial to understand the dynamics of the supply chain, from the production side in Africa to consumption in Europe. 4
Fresh Perspectives
Mapping different supply chains of fresh produce exports from Africa to the UK
Alan Legge, John Orchard, Andrew Graffham, Peter Greenhalgh, Ulrich Kleih and James MacGregor Alan Legge is a consultant on supply chain issues. John Orchard and Peter Greenhalgh are with the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at NRI. Ulrich Kleih is a Marketing Economist with the Enterprise, Trade and Food Management Group at the NRI. He specialises in value chain and livelihoods analyses with a commodity focus on fisheries, horticultural products, grains, and roots and tubers. James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
9
Key messages
n Over 1 million livelihoods of the rural poor are in part supported by the export trade of fruit and vegetables from sub-Saharan Africa to the UK. n The non-supermarket market is offering a haven for smallholders, with more than double the number of smallholders in sub-Saharan Africa accessing the non-retail market compared to the supermarket supply chains. n Supermarkets are increasingly primary drivers for imported fresh produce. n The export horticulture trade as a whole from sub-Saharan Africa to the UK is under competitive threat from Asia and North Africa.
Figure 1. All fresh fruit and vegetable (FFV) imports from Africa to the UK
Kenya is one of the worlds leading exporters of fresh green beans (French and runner beans) and peas (snow peas and sugar snaps), as well as a minor exporter of tropical fruits (e.g., avocado, papaya and passion fruit). Other vegetables exported include squash, aubergines, chilli peppers, and sweetcorn. Key factors behind Kenyas dominance include a dynamic private sector that has benefited from structural and macro-economic reforms, as well as an efficient transport hub. Approximately 75 per cent of exported produce is marketed through supermarkets, with the remainder entering the wholesale and food service sectors. Exports of fresh produce from Kenya have been associated with significant smallholder involvement. In the 1990s, researchers estimated that three-quarters of fruit and vegetable export production came from smallholders. However it is readily accepted that smallholder involvement has significantly declined due to pressures from GLOBALGAP compliance. The results of a recent survey confirm that the number of smallholder growers of vegetables has fallen over 50 per cent, from an estimated 11,600 in 2004 to about 5,500 in 2006. Ghana has a small range and volume of export vegetables (gourds/pumpkins, yams and chilli peppers), with a total annual value of 14.7 million from a volume of approximately 15,000 tons. All of the vegetables are sourced from smallholders by a relatively large number of vegetable exporting companies (via intermediaries), which supply mostly UK wholesale markets. Fruit exports
are bananas, pineapple, melons and papaya, although the volumes and values are relatively small (an average of 5,000 tons of pineapple in 2005 worth approximately 2.8 million). The producers of these fruits are both smallholders and large farmers/exporters. Tanzanias fruit and vegetable export production base has two large-scale farms and 2,070 smallholders supplying vegetables to the UK retail (dominant part) and wholesale markets. The number of dependants associated with the export sector is over 32,000 and opportunities for expansion exist. Green beans represent the major export by far (close to 1,200 tons, worth about 1.1 million in 2005). Other produce includes peas, chilli peppers, sweetcorn and gourds. Tanzania does not export any significant volumes of fruit. The production area is viewed positively by supermarkets as an alternative source to Kenya at certain times of the year due to different climatic conditions. It also possesses the potential for expansion. Uganda exports a relatively small volume of fresh produce to the UK (under 3,000 tons in 2005), dominated by okra but including chilli pepper, matooke and pineapple. Overall, levels of exports over the last three years have remained fairly constant, despite considerable donor-supported projects in the sector (although flower exports have increased significantly under the same programme). Of 2,060 Ugandan smallholders active in export production, 1,713 supply a relatively wide variety of produce to the UK market mainly the wholesale/catering sector. Nonetheless, an estimated 200 smallholders also supply chilli peppers and okra to UK retailers. Zambias exports of vegetables to the UK totalled 7.4 million in 2005, with peas (about 1,300 tons in 2005) and beans being the dominant products. Other vegetables include sweetcorn, chilli peppers, and courgettes. Currently, production and export of produce from Zambia have been reduced with the rise in the value of the Zambian kwacha against the pound sterling, making exports uncompetitive compared to other sources. The number of smallholders, workers and dependants involved in supplying the UK fruit and vegetable sector totals approximately 7,000 and the export production base is currently centred on two large producers/exporters.
Table 1. Livelihoods in the fresh fruit and vegetable export industry to the UK (sub-Saharan Africa excluding South Africa)
Market SSGs wholesale LSGs wholesale SSGs retail LSGs retail Dependants and ancillary workers Total livelihoods Ghana Kenya Tanzania Uganda Zambia Totals for the 5 countries Other SSA (excl. RSA) 10,193 216 4,502 205
3,438 10 160 10
2,070 1 2 0
1,860 12 200 2
10 2 0 2
70,433
171,237
30,330
29,963
6,948
308,911
74,051
178,574
32,403
32,037
6,962
324,027
392,165
716,192
As a result, between March 2005 and September 2006 over 50 per cent fewer smallholders in Africa accessed these high-value markets. Most of the decline has occurred in Kenya, despite the large amount of donor support provided. The smallholder decline reflects the increased costs and managerial burden associated with meeting private sector standards. This trend is emphasised by the decrease in external donor funds to maintain smallholder participation. Other (non-supermarket) markets remain a haven for smallholders wishing to export their products. More than double the number of smallholders in sub-Saharan Africa are accessing the non-retail market compared to the supermarket supply chains. The non-retail sector for fresh fruit and vegetables encompassing traditional wholesale markets, catering, and food service sectors may represent a significant opportunity for smallholders given the lower barriers to entry in relation to private sector standards and quality requirements. Nearly 25 per cent of the volume of produce imported from the five case study countries in sub-Saharan Africa now flows into the catering sector.
Future markets
UK market structures are evolving, and this is having an impact in sub-Saharan Africa. The wholesale sector, which has traditionally been a major supplier to the food service industry, is losing some of this business to larger food service suppliers. These food service suppliers are behaving more like supermarket category managers and have introduced a greater degree of governance to ensure higher quality, a reduced risk of contamination, and traceability. A few companies now dominate this sector, with consolidation taking place and private standards being introduced as has happened in the supermarket sector.
Thus the trend for private standards is moving from supermarket-only export markets into traditional wholesale and food service markets. The ability of smallholders to comply with these standards has the potential to increase their competitiveness and provide access to these lucrative markets. Non-compliance will further marginalise and exclude them. Competition from other parts of the world is also a threat to the sub-Saharan African export markets. The export horticulture trade as a whole from sub-Saharan Africa to the UK is under competitive threat from Asia and North Africa. Surveying UK category managers reveals that key factors able to influence future procurement are: production efficiencies, transport systems, overall carbon impact, and localised water supply. As such, procurement from sub-Saharan Africa is facing increasing competition and its security will be tested as UK importers continue to develop relationships with South and Southeast Asia and North Africa.
Fresh Perspectives 10
Markets for non-certified fresh produce in the UK. Limited options for sub-Saharan African small-scale exporters
Accord Associates LLP Andrew Sergeant, a senior partner of Accord Associates LLP, is an agribusiness specialist with many years experience of monitoring trade flows of horticultural and floricultural products from Africa to Europe.
Key messages
n The market for fresh fruit and vegetables in the UK that did not have private sector certification or even compliance was estimated to have a cost and freight value of about 760 million 76 per cent through retail outlets (mainly small corner shops) and 24 per cent via the food service sector. n Very little non-certified fresh fruit and vegetables produce is currently supplied by smallholders in sub-Saharan Africa probably no more than 30 million/year, and the opportunities for new suppliers are extremely limited. n Factors negatively affecting the demand for non-certified fresh fruit and vegetables outweigh those that positively affect demand, indicating a further decline in sales of noncertified fresh fruit and vegetables from sub-Saharan Africa.
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Introduction
In an effort to help reduce poverty in developing countries, many donors have promoted the international trade in horticultural produce grown by smallholders in the belief that it will deliver meaningful jobs, incomes, rural multipliers, opportunities and skills. This effort has continued in the face of rising food safety compliance standards that have eliminated many smallholders from the market. There are potential opportunities for smallholders in sub-Saharan Africa to supply fresh fruit and vegetables that have not met the certification standards demanded by the supermarkets. The main objective of this paper is to quantify the scale of the UK market for non-certified produce and to identify the main drivers of the fresh fruit and vegetables market in order to determine whether sub-Saharan African producers could increase their sales of non-certified produce.
Figure 1. Supply chains for imported fresh fruit and vegetables to the retail and food service outlets
Tesco Sainsburys Asda Morrisons Etc.
Household consumption
Convenience stores
imports
UK production
wholesale markets
uk consumers
Alternative channels
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Brake bros 3663 Etc. Mark Woolger Sherringhams Etc.
profit sector
cost sector
Whereas the first chain requires compliance with private standards, the markets for non-certified produce require compliance only with the legal regulations set by the government and the EU. The vast majority of this non-certified produce will therefore be sold through wholesale markets and will reach the consumer via independent convenience stores or will be used in the catering industry. Additionally, there is a small amount of produce that is imported directly by small supermarkets or by companies specialising in supplying to convenience stores. The UK market for non-certified fresh fruit and vegetables was estimated to be in the region of 1.71 billion (retail value). This was broken down into about 1.34 billion in the retail sector and 0.37 billion in the food service industry. The corresponding cost and freight value of these retail figures was estimated to be in excess of 750 million.
However, the research indicated that only about 30 million per year was supplied by smallholders from sub-Saharan Africa (i.e., about 4 per cent). The main products supplied by these farmers are fresh fruit and vegetables for ethnic markets such as yams, chilli peppers and mangoes (whereas the main fresh fruit and vegetables exports from sub-Saharan Africa are bananas, pineapples and citrus, which are mainly produced by estates that are large enough to have the certification required to market through supermarkets). Sub-Saharan Africa can therefore compete because of its cheap labour for the very labour-intensive crops and because its climate is well suited for tropical crop production.
Non-certified imports from other (excl. bananas, citrus, pineapples, stone fruit, grapes) 80m cost and freight
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Total UK imports of non-certified selected fresh produce 110m cost and freight
Non-certified fresh produce from other sources 650m cost and freight
24% to food service outlets 179m cost and freight 366mn retail
Note: the data on imports only covers lychees, mangoes, papaya, passion fruit and unspecified fruit; and beans, peas, mini-aubergines, chillies cassava, yams, sweet potatoes and unspecified vegetables Source: Accord Associates LLP 48 Section 2: Fresh fruit and vegetables exports from Africa to the UK
Factors affecting the demand for non-certified fresh fruit and vegetables from sub-Saharan Africa
As with all industries, there are a number of factors that impact upon the trade in fresh fruit and vegetables from sub-Saharan Africa; some are positive and some are negative. See Table 1.
Table 1. Positive and negative influences upon the trade in fresh fruit and vegetables (FFV) in sub-Saharan Africa
Positive influences Steady growth in the value of groceries, which includes fruit and vegetables. Negative influences The fruit and vegetable market in the UK is generally regarded as being mature and therefore not good for new entrants. Increasing strength of multiple retailers will result in more fresh fruit and vegetables having to be certified. Multiple retailers account for 84% of FFV sales an increase of 2.2% between 2000 and 2002. Increase in number of multiple convenience stores that demand certified products. Decrease in number of independent convenience stores that do not demand certified products which has led to a decrease in non-certified FFV sales. Outlet numbers fell by 5% and sales fell by 4% from 2005 to 2007.
Increase in popularity of ethnic restaurants (although much of the fresh produce that is used comprises temperate climate vegetables that can be grown locally). Promotion of FFV for healthy lifestyles but the FFV market is reaching its peak with consumption at about 2,300g/person/week. Steady increase in demand for ethnic food from 22 to 30g/person/week over last five years. Growth in food service sector.
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Promotion of local production in both retail and food service outlets. Environmental concerns regarding air freight of FFV. Preference of some restaurants to promote local and seasonal products. Increasing demands by food service industry for traceability as the industry consolidates. Even smaller food service companies are increasingly demanding the auditing of supply chain. Local government institutions wanting to support local production and reduce their carbon footprint. Consolidation in the food service industry will result in fewer, but larger, catering supply companies, which will demand higher standards of certification. Overall, sales in the wholesale markets are, at best, steady and there is a switch from supplying retail outlets to the food service sector much of which is very cost conscious.
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Section 2 references
Accord Associates (2008), Markets for non-certified fresh produce in the UK. Limited options for sub-Saharan African small-scale exporters. Fresh Perspectives series no. 13, DFID/IIED/NRI. Available at www.agrifoodstandards.net Accord Associates (2007), Opportunities for small-scale farmers in sub-Saharan Africa to supply the UK fresh fruit and vegetable markets. Fresh Insights no. 12, DFID/IIED/NRI. Available at www.agrifoodstandards.net Legge, A., J. Orchard, A. Graffham, P. Greenhalgh, U. Kleih and J. MacGregor (2008), Mapping different supply chains of fresh produce exports from African to the UK. Fresh Perspectives series no. 12, DFID/IIED/NRI. Available at www.agrifoodstandards.net Natural Resources Institute (NRI) (2006), Mapping different supply chains of fresh produce exports from Africa to the UK. Fresh Insights no. 7, DFID/IIED/NRI. Available at www. agrifoodstandards.net.
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Learning from the GLOBALGAP experience
There have been concerns that PVS would negatively affect the competitiveness of producers in developing countries. Economies of scale matter, with compliance being easier for larger firms and relatively more expensive for smaller participants in the market. The economics of the system are currently pushing African small-scale producers away from export markets that demand GLOBALGAP compliance. Assessing costs and benefits of compliance is key to understanding the viability of small-scale growers in export horticulture chains. Once difficulties faced by smallholders are identified, this can help point out opportunities for cost reductions and better prepare exit strategies.5
3.1 Benefits and costs of compliance with GLOBALGAP smallholder and exporter perspectives
In order to comprehend the range of impacts, surveys of smallholders in the GLOBALGAPcertified export crops chain were conducted in Zambia, Kenya and Uganda. Interviewees reported general satisfaction with GLOBALGAP, with the greatest perceived benefit being the cascade of opportunities generated by preferential market access. These include: access to produce markets, credit, trade credit, and quality inputs (high-germination seeds, high-nitrate fertiliser, etc.). In addition, respondents perceived considerable non-financial benefits, namely production of quality produce, improved field hygiene, better knowledge of pesticide use, and wider farm management benefits. This proves that the use of income or profit margin as an indicator of success or failure is partially misplaced. A survey of top exporters in Kenya found that in 2003, when GLOBALGAP implementation started, the exporters sourced produce from over 9,000 small farmers and this would have provided livelihoods for around 45,000 dependent family members and employees. By 2006, 60 per cent of these growers had been dropped or had excluded themselves from the GLOBALGAP scheme due to problems with implementation of the standard. The smallholder decline reflects in part the increased costs and managerial burden associated with meeting private sector standards and the decrease in external funds to maintain smallholder participation. The primary cause of failure is financial. GLOBALGAP compliance requires higher threshold levels of capitalisation than many smallholders can afford. In Kenya, average per-farm initial costs of compliance in 2006 were measured at around 1,200 and annual recurrent costs
5. Source papers for this section are the Fresh Perspectives briefing papers that all follow as case studies (Graffham et al. 2007a; Graffham and MacGregor 2007a; Kleih et al. 2007a; IIED and NRI 2008a; Asfaw et al. 2008; Luvai 2008; Mwangi 2008; Graffham and Cooper 2008a; Graffham et al. 2008; and Nyagah 2008) as well as the full length Fresh Insights technical working papers (Graffham et al. 2007b; Graffham and MacGregor 2007b; Kleih et al. 2007b; IIED and NRI 2008b; Graffham and Cooper 2008b; and Graffham et al. 2007). All are available at www.agrifoodstandards.net.
were 760 (with the farmer paying on average 36 and 14 per cent respectively, and exporters sometimes also donors paying the rest). With small-scale growers usually making less than 1,000 per annum, the average maintenance costs of compliance actually paid by a small-scale grower constitute a very significant proportion of net incomes. Implementing GLOBALGAP properly is a major investment for exporters. A survey of companies that control over 50 per cent of the Kenyan export horticulture market revealed that over 2.2 million has been invested in getting almost 2,000 farms to a position where they can be audited for GLOBALGAP compliance. Simultaneously, exporters are often key providers of both managerial and technical support for the growers, with large export companies being well staffed and resourced with outgrower management teams, comprehensive annual training programmes, internal auditors, and programmes for sampling and laboratory analysis. There is an economic threshold for the size of a smallholder scheme that exporters are willing to work with, related to the perceived high cost of technical support per farm. The total investment by the exporter is a predictor of the health of the GLOBALGAP-certified smallholders supplying it. Large export companies fulfil the role of primary marketing organisation for the growers and are capable not only of providing the necessary managerial, technical and logistical support, but also of representing the growers effectively during the certification audit. Donor support has also been a significant factor in encouraging attempts to comply with GLOBALGAP. This is especially true for smaller export companies, which have relied heavily on donor support amounting to 40 to 100 per cent of establishment costs (as compared to 15 to 28 per cent for the large companies). Smaller companies were more likely to push more of the costs of compliance onto the farmer, and to operate a cheaper system with many inefficient or technically unsustainable features, simply to reduce costs, e.g., small exporters can have very limited, or virtually nonexistent, outgrower management teams. In many cases, companies could not maintain the system once donor support was withdrawn. All of the failed and failing schemes are associated with smaller companies that lack the necessary resources to operate an efficient and sustainable GLOBALGAP-compliant scheme.
Fresh Perspectives 11
Impact of GLOBALGAP on small-scale vegetable growers in Kenya
Andrew Graffham, Esther Karehu and James MacGregor Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). Esther Karehu is an agrifood consultant living in Kenya. James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
Key messages
n The GLOBALGAP private retailer standard has been the main driver for change in producer and exporter practices in Kenyan horticulture since 2003. n Many Kenyan exporters have significantly reduced their involvement with small-scale growers since GLOBALGAP introduction. n For smallholders, costs of compliance are high and indicate significant co-investment from exporters. n Maintenance costs of GLOBALGAP compliance are very high relative to average smallholder margins, necessitating financial support from export companies. n Reducing recurrent costs is the chief reason for drop-out and hence key to sustaining smallholder inclusion. n There are advantages to standards. Standards have increased the demand for export horticulture, injected cash into rural areas, increased the value of skilled labour, and upgraded quality, productivity and technological know-how of smallholders. Production and processing of fresh produce for export to the EU is an attractive market opportunity, with ten sub-Saharan African countries exporting significant volumes of fresh fruit and vegetables to the EU. In Kenya, export horticulture is now the fastest-growing sector of the economy. Estimates indicate that over one million livelihoods in rural sub-Saharan Africa depend on UK consumption of imported fresh fruit and vegetables. In Kenya, small-scale growers play a significant part in this process, accounting for an estimated 50 per cent of production. Consumer pressure, protection of brand image, stricter food regulation in the EU during the 1990s, and the need for access to a due diligence defence drove retailers to develop strict commercial standards, culminating in the introduction of GLOBALGAP. Since its inception, GLOBALGAP has been the main driver for change in producer and exporter practices. Currently, 30 of the retailer members of the Euro-Retailer Produce Working Group control 85 per cent of fresh produce sales in the EU,
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and their standards go much further than the legal minimum specified under EU regulations for food of non-animal origin. Large-scale commercial growers have found it relatively easy to comply with GLOBALGAP as they already have access to the necessary financial, infrastructural and human capacity. In contrast, it is often reported that small-scale growers (farming from 0.1 to 1.0 hectares) find GLOBALGAP a major challenge as they lack the necessary infrastructure and trained personnel; nor do they have the finances to support adoption and maintenance of GLOBALGAP without external help.
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Three years later, 60 per cent of these small-scale growers are no longer directly supplying export markets. This apparent drop in market access is not solely attributable to the advent of GLOBALGAP. While it is true that some farmers have been dropped by their export company, or withdrawn from compliance schemes, as a direct result of an inability to either comply or retain compliance with GLOBALGAP, other farmers have taken personal decisions to drop out. Furthermore, the figure of 60 per cent should not be translated into total exclusion. All remain in farming, selling to local markets as they did before, and many continue to sell to exporters who sell to less stringent markets such as in South Africa. A small number have been absorbed into groups managed by other export companies and are still trying to achieve GLOBALGAP compliance. The potential turnover in nonexport markets will be lower, offset in part by lower initial and recurrent costs (since GLOBALGAP compliance is not required) and more immediate payments. Our research indicates that for small-scale growers the primary reason for exclusion is lack of financial viability rather than a technical inability to meet the standard. Feedback from companies management indicated that further reduction in smallholder involvement was planned for 2007.
Maintenance of GLOBALGAP for these small-scale growers cost at least 1,500,000, or 760 per grower, of which farmers paid 14 per cent (averaging 104 per farmer). Actual farmer contributions ranged between schemes from 1.10 to 175 per grower for smallholder (from 0.1 to 1.0 hectares) groups and 1,183 for ten larger individually certified farms (approximately 10 hectares). Smallholder incomes from export sales range from 98 to 1,250 per grower per annum, with most making 200 per annum.
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In conclusion
There are some positive impacts of standards. By expanding the potential markets for Kenyan produce, standards have increased the demand for export horticulture and injected cash into rural areas. Productivity (yield per hectare) has increased, input costs have been reduced through more prudent pesticide and fertiliser application, and the ties with export horticulture have increased the quality of the seeds. Standards provide incentives to upgrade, presenting positive incentives for farmers to improve their practices and for exporters to find and secure product from these farmers.
Farmers who had attained GLOBALGAP certification were clearly reaping benefits from adoption of good agricultural practice, record-keeping and improved hygiene. Many farmers said that they were using GLOBALGAP records to understand their financial viability and run their farms more commercially. The number of skilled agricultural technicians has risen and the value of skilled labour has risen too. Sustainable GLOBALGAP compliance by small-scale growers was found to be related to the level of commitment and resources of the export company. Only two of the schemes examined were running efficiently. Smaller export companies relied heavily on donor support, with some of them frankly saying they could not see how the system could be maintained once donor support was withdrawn. Reducing costs is the key to sustaining smallholder engagement. The private sector is quick to invest its own resources in a system that already exists and is functioning here contributing around 86 per cent of recurring costs. The research shows that initial costs are a barrier to entry for exporters and also farmers. Moreover, these costs are a barrier to exporters wishing to expand their supply base of small-scale growers in Kenya. It is difficult to see how, in Kenya or in other countries, these high costs will be surmounted other than through persistent donor intervention. Many options exist to ensure that these investments are not wasted, such as bonds or repayment schedules from imports. Investment in reducing the costs of infrastructure, especially irrigation, is justified by the argument that the control points for GLOBALGAP compliance for small-scale growers need to be made less costly. Donors have a key role to play in making this happen and championing the role of small-scale growers in export supply chains and in the standard-setting process.
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Fresh Perspectives 12
Impact of GLOBALGAP on small-scale vegetable growers in Zambia
Andrew Graffham and James MacGregor Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
Key messages
n The geographic position of Zambia makes export horticulture particularly expensive and necessitates accessing high-value markets, particularly those involving UK supermarkets where GLOBALGAP dictates market entry. n The experience of a smallholder group marketing organisation in Zambia showed that compliance with GLOBALGAP is technically feasible. n The Zambian smallholders had a very positive view of GLOBALGAP as a standard and are firmly convinced of the benefits of good agricultural practice. n The economics of the system are currently pushing these smallholders away from export, or at least away from exporting GLOBALGAP-compliant produce.
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Production and processing of fresh produce for export to the European Union (EU) is an attractive market opportunity, with ten sub-Saharan Africa countries exporting significant volumes of fresh fruit and vegetables to the EU. In Zambia, the agricultural sector is important for livelihoods and it is growing, with export horticulture growing the fastest. Smallholders play a significant role in agriculture and in export horticulture. In many of the countries in sub-Saharan Africa, small-scale growers make a major contribution to export production and derive significant levels of income in return. In Zambia, where rural household incomes are often less than 100 per annum, small-scale growers have made incomes of between 1,000 and 7,500 per annum from vegetable exports. Zambia is a double land-locked country, situated a long way from the lucrative European market. The Zambian export industry is small but well organised, with just two exporters (formerly three), a small number of large commercial growers, and one smallholder scheme. Lacking easy port access, the Zambian export industry has been able to compete internationally only by supplying high-value exotic and out-of-season fresh and minimally processed vegetables to EU retail markets. At present, Zambia is not an economically viable supplier for EU wholesale or other
lower-value export markets. Therefore it must rely on accessing retail markets (particularly those involving UK supermarkets) that demand compliance with the European retailers private standard for good agricultural practices (GLOBALGAP) as the absolute minimum for market entry. Much of the evidence for problems with GLOBALGAP is anecdotal. For this reason the decision was made to conduct a detailed costbenefit analysis of GLOBALGAP implementation by smallscale growers in Kenya, Uganda and Zambia. In Zambia the fieldwork was conducted by NRI and IIED, working in collaboration with the NRDC-ZEGA (Natural Resources Development College Zambia Export Growers Association) Training Trust (NZTT). The overall objective was to identify, quantify and assess the range of costs and benefits associated with compliance with the GLOBALGAP standard in order to design policies for donors and standard-setters that are propoor and sustainable (a costbenefit analysis was carried out in Kenya with a far larger survey, see Graffham et al. 2007). When the GLOBALGAP implementation process was started in 2003, nearly 500 smallholders were involved, organised in an independent marketing cooperative (Lubulima Commercial Cooperatives Unions, LACCU) to sell produce to both local and export markets. Income levels from exports varied from 1,000 to 7,500 per annum. Extensive support was received from the major exporter, Agriflora. During March 2006, managers and small-scale growers in the smallholder scheme were surveyed. The timing of the visits was important since the GLOBALGAP audit was planned for June 2006 and cooperative farmers were planting baby corn in accordance with an arrangement with the exporter, for harvest before June 2006 to comply with the requirements of the GLOBALGAP Protocol for Fresh Fruit and Vegetables Version 2.1, January 2004.
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contributions of 4,664 for initial investment, and 938 per annum for maintenance costs. These levels of cost were untenable given the low number of smallholders involved and the poor level of income achieved from export vegetable sales during the 2005 season. Smallholders cannot establish or maintain GLOBALGAP without sustained financial and technical support from external agencies. Continued improvements to the GLOBALGAP standard are raising costs and barriers to market entry. Cooperative management is one key element of compliance that requires investment of time and resources by all members. Key principles are that it remains democratic, it works proactively for its members, distribution of costs and benefits are equitable, and it develops and sticks to its business plan.
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Gross incomes of farmers interviewed in March 2006 varied from 555 to 2,462 per annum and net incomes from export sales varied from 37 to 1,317, with most making between 300 and 700 per annum at net income from sales of baby corn for export. This is a drastic reduction on the net income figures seen during the 20032004 season with Agriflora. The GLOBALGAP system implemented by the producers independent marketing cooperative cost 116,621 for initial investment and 23,453 per annum. This investment provided the farmer-led market organisation with relatively sophisticated produce-handling facilities and external technical support from NZTT to cover training, extension advice, farm inspection, and internal auditing and development and maintenance of the quality management system and documentation systems for GLOBALGAP. Given that 25 growers were participating in the GLOBALGAP scheme in 2005, the cost per individual grower would have been 4,664 for initial investment and 938 annually to maintain the system. However, if the ten growers who went for GLOBALGAP certification in June 2006 had met the cost it would have been 11,662 per grower for initial investment and 2,345 per grower to maintain the system. Given the farmers levels of income from export sales, these figures are obviously untenable. Massive levels of donor support made it possible to achieve GLOBALGAP but as donor support only has a limited duration it would not be possible to maintain GLOBALGAP certification unaided. Had the original system with 300 to 500 growers been sustained, the individual investment costs would be 974 and 584 per annum respectively and recurring costs would range from 463 to 225 per annum. In addition, savings could be made by removing some of the more extraneous components of the system. Overall, for GLOBALGAP to be viable for smallholders in Zambia there would be a need for a much larger group of certified growers with a considerably higher and more stable income, and ideally the exporter would play a role in managing the scheme. The economics of the system are currently pushing smallholders away from export or at least away from exporting GLOBALGAP-compliant produce. Other markets, such as South Africa, are becoming more attractive and the standards regime to enter these markets will be less severe. But without external help and patronage, accessing these opportunities is unlikely to reap decent returns or sustainable livelihoods.
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Fresh Perspectives 13
Impact of GLOBALGAP on small-scale vegetable growers in Uganda
Ulrich Kleih, Fred Ssango, Florence Kyazze, Andrew Graffham and James MacGregor Ulrich Kleih is a Marketing Economist with the Enterprise, Trade and Food Management Group of the Natural Resources Institute (NRI). He specialises in value chain and livelihoods analyses with a commodity focus on fisheries, horticultural products, grains, and roots and tubers. Fred Ssango is a senior consultant in rural agricultural development for Agribusiness Management Associates (AMA) Uganda Ltd. He has over ten years experience in agricultural research, agricultural extension, agribusiness and marketing development initiatives and an M.Sc. in crop science. Florence Kyazze holds a Ph.D. in agricultural education. She has previously been an agricultural lecturer at Makerere University and social scientist on the National Cereals Programme, Uganda. She is now a senior research associate for the Womens Initiative in Development and Para-Legal Activities Association. Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at NRI. James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
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Key messages
n There are currently no active GLOBALGAP certification schemes in Uganda. (In December 2007 two farmer groups Awaggwa Ekku farmers cooperative society and Abasaija Kweyamba cooperative society were certified for GLOBALGAP, and it is believed one more company received the certificate during the first quarter of 2008). n Ugandan horticultural exports are niche crops for wholesale and ethnic markets. n Horticultural exports are predominantly grown by smallholders. n There was steady growth in horticultural exports from the 1990s until 2005, with 2,145 smallholders involved in 2005. n A sharp drop of 40 per cent in smallholder participation in exports in 2005/6 is attributed to fuel prices and PVS. Production and processing of fresh produce for export to the European Union (EU) is an attractive market opportunity, with ten sub-Saharan Africa countries exporting significant volumes of fresh fruit and vegetables to the EU. Smallholders and the rural poor play a significant part in these supply chains. The infancy of this new industry in Uganda, in which there are currently no GLOBALGAPcertified growers, presents both opportunities and threats for future pro-poor agriculture-based growth. Ugandas horticultural exports are less developed than in its Kenyan neighbour: 5,600 tons in 2005, one tenth of Kenyas.
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Taking pineapples to export
GLOBALGAP was founded in 1996 by a group of 11 British and Dutch retailers, with the objective of creating a single private sector standard for ensuring the food safety and quality of fruit and vegetables from seed through to the farm gate. By 2007, the now 30 retailer members of GLOBALGAP control an estimated 85 per cent of fresh produce sales to consumers in the EU. Ugandas export horticulture industry is concerned that lucrative EU markets where average unit prices can be five times higher than for regional trade are increasingly out of its reach as PVS become embedded in the industry. An additional worry is that small-scale grower (smallholder) participation in EU supply chains is falling. These concerns exist at a time when Uganda produces no GLOBALGAP-certified export horticulture, but the experience of smallholders in neighbouring countries and demands from buyers are starting to suggest that something must be done to ensure sustainability in this industry.
This indicates a potential for the upgrading of the Ugandan export horticulture sector into products, qualities or quantities that are required to enter the dominant supermarket supply chains. However, industry concerns abound that this sector first needs to secure these markets and PVS are playing a defining role in this.
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Conclusions
Uganda continues to benefit from exports of niche products through wholesale channels to the EU, but there is concern that these are on the decline. The introduction of GLOBALGAP certification could enable access to these lucrative markets, but there are no guarantees of success. Uganda appears to be facing a difficult decision over the direction of investment in its export horticulture industry. On one hand, it could follow the high-cost route of GLOBALGAP compliance to gain access to lucrative markets. On the other hand, it could continue the non-GLOBALGAP route for the non-supermarket supply chains. Both choices offer risks and benefits (see Table 1 below) yet without concerted effort from the national-level industry, and complementary demand from EU
trading partners, no change is likely. This is due to two missing elements: an enabling environment and industry commitment. The enabling environment in rural Uganda remains incomplete. Compliance in the long term is not simply a question of raising standards and practice at farm level. It is essential to make other elements of the agricultural system efficient. Without an enabling environment, compliance is rendered difficult for even the strongest firms. Appropriate markets do not exist for credit, information, and business service provision, thereby stifling efficiency and investment. Securing market share is the most important outcome from GLOBALGAP compliance within the Ugandan export sector. Compliance could serve to avoid further loss of market shares in Europe and recapture markets that have recently been lost. However, this requires that exporters commit themselves to undergo certification within the coming year. Ideally, the Horticulture Promotion Organisation of Uganda should coordinate this process and ensure that several companies can be certified at the same time, thus avoiding delays and extra costs. Upgrading to comply with GLOBALGAP appears possible for some industry participants along the supply chain. Analysis shows an export company would have to sell an additional 53 tons and smallholders would have to increase their production by 50 per cent to compensate for additional compliance costs. Yet overseas markets are typified by risk, and currently all of the initial exporters are seeking market opportunities elsewhere. It is suggested that there are also opportunities in exploring the following market opportunities: n Cross-border trade in horticultural products in which Uganda has a comparative advantage. For example, matooke, pineapples and apple bananas are already being exported to Kenya. n Ugandas domestic market is expanding due to population growth and changing consumer preferences. n Processing of fruit and vegetables for the domestic and international markets takes place, albeit on a small scale. This includes drying of fruits such as pineapples and mangoes, and the production of juices. Stakeholders in the horticultural sector state that, with sufficient support from government and donors, there is scope to take better advantage of the horticultural production potential in Uganda and market opportunities. This would require upgrading infrastructure, the availability of finance on favourable terms, and support for the organisation of groups of small-scale outgrowers, given that the latter are likely to form the backbone of the export industry in the foreseeable future. It has been suggested that National Agricultural Advisory Services could play a stronger role in this respect.
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Table 1. Opportunities and threats presented by GLOBALGAP compliance and the non-GLOBALGAP alternatives
Scenario 1. No GLOBALGAP: continue with current EU market access (non-supermarket focus). 2. No GLOBALGAP: focus on African cross-border and domestic trade. Opportunities n No extra compliance costs. n Diversification (e.g., into organic fruit production or processing). n Lower fuel-cost-based risks. n Focus on regional comparative advantage crops (e.g. pineapples and apple bananas). n Securing EU market share. n Recapture lost markets. n New technologies and knowledge transfer increase global competitiveness. Threats n Loss of market share due to increased demand for GLOBALGAP certification. n Reduced unit benefits and total revenues. n Zero demand for current niche crops. n Aggressive regional competition. n Costs of upgrading to comply with GLOBALGAP necessitate consolidation. n Direct competition with other EU exporters such as Kenya. n No exporter leader to break into the EU market.
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Fresh Perspectives 14
Costs and benefits of GLOBALGAP compliance for smallholders: synthesised findings
IIED and NRI
Key messages
n While smallholders face on-farm costs (initial and recurring investments) and off-farm costs (chain management) to comply with GLOBALGAP, no premium is paid for certified products at farm level. n Smallholders benefit from a cascade of opportunities owing to preferential market access such as upgraded produce quality, improved field hygiene, better knowledge of pesticide use, and wider farm management benefits. n Key factors of success are co-investments by exporters, flexible technical support, and appropriate donor aid.
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IIED and NRIs research on the costs and benefits of GLOBALGAP compliance for small-scale growers in sub-Saharan Africa has shown that there are evident barriers to sustaining access to export horticulture markets. Financial costs and technical requirements are high. Those smallholders already in the export business who are required to comply in order to continue exporting often complain that prices received do not increase, while costs of compliance are high. Yet the perceived benefits of upgrading production activities are high for those smallholders who are able to comply and there are secondary benefits for the rural economy. Benefits for the wider economy include the jobs provided in packhouses and in transportation. Exporter companies have demonstrated their willingness to form partnerships with smallholders by providing high levels of financial, technical and administrative support. Donor commitment to this trade has in turn provided an important startup impetus in helping growers to adapt to EU requirements. Going forward, realising and sustaining these benefits across farms and economies, now requires appropriate investments to facilitate continuation of the European market access that has proved to be so beneficial to the economies of some developing countries. This research aimed to identify, quantify and assess the range of costs and benefits associated with compliance with the GLOBALGAP standard in order to design policies for donors and standardsetters that are pro-poor and sustainable. The GLOBALGAP Protocol for Fresh Fruit and Vegetables was chosen as a special focus for the study as this is the only standard that has been identified as having a significant impact on African smallholders. From an economic development viewpoint, trade linking rich countries with relatively poor smallholders in developing countries has great potential to provide poverty alleviation and long-term economic development and to complement current development aid budgets. This is particularly true in Kenya and Zambia.
Methodology
A techno-economic research team was formed (made up of an economist working with a standards compliance expert) and this team conducted face-to-face semi-structured interviews along the supply chain. This research was conducted in March 2006 (Zambia) and October 2006 (Kenya). Rather than using formal questionnaires to gather information, the team used a semi-structured interview process to elicit answers, views and reflections on: financial costs and benefits; production changes; perceptions of the compliance process; and non-financial changes and benefits. The analysis of the viability of GLOBALGAP compliance for small-scale growers could be expressed as: Viability = Turnover from crop sales Initial and recurring costs associated with compliance Conceptually, Kenya is the leader country in the export horticulture markets for the region, and is being followed by Zambia. This is well-illustrated by the comparative number of smallholder exporters, volume of exports, and GLOBALGAP certificates in each country (see Box 1).
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Key costs factors relate to the requirement (and ability) to invest in upgrading certain components of production
GLOBALGAP compliance requires higher threshold levels of capitalisation than many smallholders can afford. In Kenya, average per-farm initial costs of compliance with GLOBALGAP in 2006 were measured at 1,145, of which 36 per cent was paid by the smallholders, and annual recurrent costs were 175, with farmers paying on average 14 per cent of recurrent costs associated with GLOBALGAP and exporters (and/or donors) paying the rest.
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Fresh Perspectives 15
Food safety standards: a catalyst for the winners a barrier for the losers? The case of GLOBALGAP in horticultural exports from Kenya
Solomon Asfaw, Dagmar Mithfer and Hermann Waibel Solomon Asfaw is a Ph.D. candidate (research associate) in Economics, at the Faculty of Economics and Management, Leibniz University of Hannover, Germany. Dagmar Mithfer is a scientist at the International Centre of Insect Physiology and Ecology (icipe) in Kenya. Hermann Waibel is a professor at the Faculty of Economics and Management, Leibniz University of Hannover.
Key messages
n Resource-poor farmers with limited access to information and services face difficulties in complying with certification schemes. n Small-scale farmers who do adopt the standards enjoy a range of tangible and intangible benefits. n The financial internal rate of return on investments in standards compliance at farm level is remarkably high even when pessimistic assumptions are made. Investment in standards compliance pays off for small-scale producers in Kenya even in the absence of external support. n Although the financial support of donors or private companies is crucial for smallholders to achieve certification, subsidising GLOBALGAP certification among smallholders may not be justified from a development perspective for a number of reasons.
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Many sub-Saharan African countries have been diversifying their export portfolios away from primary commodities into non-traditional products such as horticultural produce in order to increase their export earnings and reduce poverty levels. Several studies have documented the positive role of the horticultural export sector in meeting these targets. However, there are concerns that the proliferation and enhanced stringency of food safety standards that are imposed by highincome countries can negatively affect the competitiveness of producers in developing countries and impede actors from entering, or even remaining in, high-value food markets. In parallel with changes in legal requirements, supermarket chains in Europe have developed prescriptive, production-orientated standards, e.g., GLOBALGAP. To comply with these standards, producers have to change their production technology, e.g., by switching to less harmful pesticides and investing in structures like grading sheds, charcoal coolers, disposal pits, toilets and pesticide stores. Thus, unlike larger commercialised farms, smallholder farmers are faced with financial constraints and human resource limitations in complying with standards. Consequently, small-scale producers, who are the very target of many agricultural
development programmes that aim at poverty reduction in line with the first Millennium Development Goal, could become losers in this development. Yet others argue that in some cases such standards can play a positive role, providing the catalyst and incentives for the modernisation of export supply and regulatory systems, and the adoption of safer and more sustainable production practices.
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crops per year, which is the most frequent case in Kenya, and Scenario 2 considers the worst case situation of two cropping seasons only. Assuming a constant impact of GLOBALGAP on net income in all cropping seasons of 8,727 KSh,7 the annual net income attributable to GLOBALGAP adoption is approximately 22,443 KSh in Scenario 1 and 14,962 KSh in Scenario 2. Using the cost data presented above, the financial internal rate of return and repayment period are determined. 8 Firstly, it is assumed that farmers pay all the costs, including for auditing, training and testing. Considering three cropping seasons per year and a constant net income over the life span of the investment, the estimated financial internal rate of return is 33 per cent for a conservative five years of investment and 42 per cent for an upper limit ten-year life span of investment. However, when two cropping seasons per year are considered, the financial internal rate of return declines to minus one per cent for five years and 15 per cent for a ten-year life span of investment. Secondly, it is assumed that external agencies cover the annual audit fees, training and testing costs as has been the case for small-scale farmers in Kenya. In this case, the financial internal rate of return is high, ranging from 30 per cent for Scenario 2 and up to 66 per cent for Scenario 1. The repayment period analysis demonstrates that smallholders can recover their investment cost in two to three years in the three cropping seasons scenario, and in up to seven years for two cropping seasons without any donor/exporter support (this analysis did not incorporate the risk inherent in the investment or compare the findings against alternative investment options that are available to smallholders, due to lack of information). However, comparing the financial internal rate of return to the medium-term lending rate by banks in Kenya, which is about 12 per cent, we can generally conclude that investment in standards compliance is beneficial for small-scale producers in Kenya even in the absence of external support. Yet the question remains whether many small-scale farmers in Kenya can finance the initial cost of about 37,000 KSh to start up the implementation of the protocol, and at the same time the donors/ exporters can continue their financial and technical support.
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Policy implications
The above discussion has one major message for policy: it is the asset-poor with limited access to information and services who may be excluded from participating in export market value chains. The government and private sector can help farmers expand and upgrade their range of assets and practices to meet the new requirements of supermarkets and other coordinated supply chains. Options include public investments to increase farmers productivity and connectivity to markets, and public-private partnerships to promote collective action and build the technical capacity of farmers to meet the new standards. Up until now, the role of the public sector in this development was rather limited compared to the private sector. Nevertheless, if it is the policy goal of the Kenyan government to keep as many smallholders as possible in the export market by helping them to
7. We used different micro-econometric modelling techniques to obtain the income effect of adopting GLOBALGAP among smallholders in Kenya. 8. The financial internal rate of return is an indicator to measure the financial return on investment of an income-generation project, and is used to make the investment decision. The financial internal rate of return is obtained by equating the present value of investment costs (as cash outflows) and the present value of net incomes (as cash inflows) and thus determining the break-even interest rate. In general, the higher the percentage compared to the minimum alternative rate of return, which could be the lending rate in the bank, the better it is.
become certified with the emerging standards, the questions are: what cost can this be achieved at, and what alternatives might there be? So far donors have supported the smallholders to attain standards, and some exporters have also helped farmers overcome their asset constraints and improve their business image by providing technical assistance. Although the financial support by donors or private companies is crucial for smallholders to achieve certification, subsidising GLOBALGAP certification among smallholders may not be justified from a development perspective for a number of reasons. n First, donor support may be insufficient to offset the increased smallholder disadvantage. There is also a danger that farmers wont maintain their level of certification once donor support ends, rendering smallholders involvement in GLOBALGAP production unsustainable. n Second, large farms growing vegetables employ large numbers of labourers, who are often from poorer segments of the rural population than the farmers adopting GLOBALGAP. Thus, subsidies for smallholders can have a digressive impact on income distribution among the rural poor. n Third, it is not yet clear who is benefiting most from the subsidies in the supply chain, and it is possible that farmers are indirectly paying for the subsidy through lower product prices. This does not mean that financial and technical support for small-scale producers is unjustifiable, but it requires further research that assesses the costs of helping a larger part of the smallholder population to achieve food safety standards and compares these with alternative options for attaining poverty alleviation and rural development.
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Fresh Perspectives 16
GLOBALGAP certification in Kenya: lessons from the Vegcare experience
Lynette Luvai Lynette Luvai is the Partnerships and Marketing Manager of the Commercialised Activities Sector at CARE Kenya. For the past two years, Lynette has worked with smallholder farmers in horticulture, assisting them to access markets for their produce and also to comply with GLOBALGAP.
Key messages
n GLOBALGAP certification is not adapted to underskilled and under-resourced small-scale farmers from developing countries. n Beyond the need to reduce costs of compliance for small-scale farmers, it is essential to contextualise the requirements to develop local understanding and expertise. n Final consumers are the main beneficiaries of PVS and should therefore contribute to the cost of compliance by paying a higher price for certified produce.
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Lynette Luvai
Kenya is predominantly an agro-based economy, with agriculture employing about 80 per cent of the population. Agriculture accounts directly for 26 per cent of the gross domestic product, and indirectly for an additional 27 per cent. It is estimated that small-scale farmers account for about 60 per cent of the countrys total agricultural output. Although smallholders in Kenya have traditionally dominated the horticultural sector, during the past decade they have steadily lost market share owing to the limitations of their size of operation, as well as their inadequate technical knowledge and managerial capacity. Their position has been further eroded by the introduction of stringent new laws and market standards that aim to ensure sound environmental management, ethical trade practices, good agricultural practices, and high-quality produce. This paper draws on field experience of the implications of GLOBALGAP certification for Kenyan producers and offers some key factors for success in sustaining smallholders participation.
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Fresh Perspectives 17
The impact of private agrifood standards on smallholder incomes in Kenya
Timothy Mwangi Timothy I. Mwangi is an agronomist for the USAID-funded Kenya Horticultural Development Program (KHDP) and is in charge of GlobalGAP/SPS management. He has 14 years experience in commercial agricultural development and specialises in quality control systems, training, implementation, audits, post-harvest technology, disease control and pest management.
Key messages
n GLOBALGAP is an opportunity and not a threat to Kenyan smallholders and it is achievable. n To succeed in implementation of any new private or public food standard, cooperation is required from all stakeholders farmers, exporters, government and development partners (donors). n GLOBALGAP benefits serve the whole value chain, improving the conditions of trade for fresh produce. The Kenya Horticultural Development Program (KHDP) is a five-year USAID-funded programme established in October 2003.The aim of the programme is to sustain and increase smallholder sales and income through production and employment in the fresh and processed food sectors in Kenya. KHDP provides marketing, post-harvest handling, processing, and agronomic support for smallholders and allied agri-businesses. One strategic area of support given to smallholders is training and certification in GLOBALGAP (formally EUREPGAP) a private voluntary food standard required before exporting to European retail markets. This paper seeks to summarise the methodology and the key findings from the USAID/KHDP initiative, focusing on the impact of food standards on smallholder incomes.
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Results
Ability to comply with GLOBALGAP and other food standards Results showed that smallholders have succeeded in becoming certified with GLOBALGAP. By December 2007, at least 2,210 outgrowers had achieved certification for fresh fruit and vegetables and at least 6,000 for processed vegetables. It is estimated that there are more than 20,000 farmers growing fresh produce for the export market. Increase in fresh produce exports Kenya has maintained its market share and increased its fresh produce exports (see Figure 1). All Kenyas fresh produce exports have increased since 2003, with higher than average growth in outgrower vegetable exports (see Figure 2). Increase in outgrower production and income Exporters and large-scale farms have invested mainly in flower production and improved high-care packing facilities rather than in vegetable production on their own farms. However, outgrower production and income from vegetable exports actually increased between 2001 and 2007. From the two graphs it was noted that the farmers production increased per given area and also their average income increased across all export growers in Kenya (see figures 3 and 4).
Figure 3. Annual production (kg) pre-GLOBALGAP (before 2003) and postGLOBALGAP (after 2004)
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Figure 4. Average annual net incomes pre-GLOBALGAP (before 2003) and post-GLOBALGAP (after 2004)
Key findings of successful inclusion of smallholders in GLOBALGAP certification include: n Increased investment by exporters in technical support to their contracted outgrowers. n Increased cooperation between exporters, intermediaries, government and development agencies. n Increased transparency along the value chain. n Increased demand for food safety from domestic market consumers.
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Fresh Perspectives 18
Making GLOBALGAP smallholder-friendly: can GLOBALGAP be made simpler and less costly without compromising integrity?
Andrew Graffham and Jerry Cooper Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). Jerry Cooper is a pest management specialist with 30 years experience in crop protection, especially in control of major vegetable crop pests. He works in the Agriculture, Health and Environment Group at NRI.
Key messages
n Smallholders in sub-Saharan Africa have found sustained GLOBALGAP compliance challenging, with over half exiting formal involvement in export horticulture. n The most successful GLOBALGAP-compliant smallholder schemes are highly committed to a commercial farming approach, well organised in strongly-managed producer groups, and linked to a large, well-resourced export company. n Costs of compliance could be reduced if the standard was revised so that the level of control was based on a clear understanding of the risks associated with different crop types and production practices. n Most small-scale production for export in sub-Saharan Africa would fall into low-risk categories for food safety. n Adopting smallholder-friendly recommendations will reduce GLOBALGAP compliance costs to smallholders by 45 per cent in the first year and 11 per cent over a five-year period. GLOBALGAP has become the most successful family of PVS for primary production of a wide range of agricultural products, with over 80,000 certified producers in 80 countries. Overall the content of the Fruit and Vegetables Protocol (All Farms Base, Crops Base and Fruit and Vegetables Module) is well designed and fit for purpose when applied to large-scale commercial growers; however, the experience for smallholders in sub-Saharan Africa has been less positive. In Kenya, over half of the total number of smallholders has dropped out of the GLOBALGAP-compliant supply chain in a single year. This paper reports research examining the potential to support the sustained participation of good smallholders in supply chains governed by GLOBALGAP without compromising food safety.
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than just buy the produce; it provides extensive technical support and co-investment in compliance. Typically, the bulk of the compliance costs are met by the exporter, and the exporter manages more complex parts of the standard such as the operation of the Option 2 quality management system scheme, risk assessments, and much of the organisation behind the documentation and traceability components of the system. It is significant that smallholders who are not well supported by their exporter struggle with GLOBALGAP. Evidence from Kenya has shown that most either fail to certify or drop out of the compliance system within one to two years of being certified. The most common causes of individual grower withdrawal from GLOBALGAP are an inability to deal with the complexities of the standard and the high costs associated with compliance. Even growers linked to large export companies have lost out, as the high costs associated with testing for pesticide residues on every farm site, and the farm- or plot-level traceability systems for very small production volumes, can make continued procurement from smallholders unattractive. In these cases the exporter changes its procurement strategy and tends to focus on a small number of large commercial farms.
What do smallholders and exporters think about GLOBALGAP and smallholder compliance?
Surveys of smallholders in Kenya showed that virtually all smallholders saw many advantages in being GLOBALGAP-compliant and wanted to be certified if problems with high costs and the complexity of some control points could be resolved. Similarly, exporters said that smallholders were a valuable part of their export strategy and they did not wish to stop procuring from them. One exporter summed up the general level of concern as follows: We must put up a strong case for changes to the standard, otherwise we are going to wipe out the smallholder supply chain.
Steve Homer
Risk-based assessments
Overall costs of compliance could be reduced if the standard was revised so that the level of control was based on a clear understanding of the risks associated with different crop types and production practices. Most small-scale production in sub-Saharan Africa would fall into low-risk categories and thus merit a reduced level of control with consequent savings on compliance costs. The biggest single cost-reduction measure could be achieved by reducing the requirements for pesticide residue testing to a realistic level, on the basis of a practical understanding of the level of risk on the farm. Costs could also be reduced by reducing the frequency of inspection to every two years and/or reducing the number of farm sites visited under Option 2 for growers with low-risk operations who have a proven track record of compliance for at least two years.
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What will be the advantages for smallholders if the proposed modifications to GLOBALGAP are accepted?
To give an idea of the potential scale of savings, a before and after comparison has been made for a hypothetical group of Kenyan smallholders growing fine beans for export to the EU (based on real field data). This group consists of 750 growers in a GLOBALGAP Option 2 scheme with an average plot size of 1ha of which 0.01ha is dedicated to an export crop of green beans. There are 60 collection centres and a single exporter. A few of the key savings are shown in Table 1.
6,000
1,500
4,500
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Pesticide store brick built walls, cement base, bunded entrance, wooden door with lock, metal roof with spaces for ventilation, H1.7metres (m) / W1.2m and D1.5m approximately.
36,000
7,800
28,200
Pesticide maximum residue level (MRL) analysis one test per farm site on an annual basis. MRL cost was taken from a real example but note that costs varied widely for different schemes in Kenya according to who was doing the analysis (from 80 to 150 per sample).
88,200
3,175
85,025
In the above example, with a smallholder-friendly version of GLOBALGAP, full implementation costs in the first year would be reduced by 241,425 to 1,017,993 an overall reduction of 20 per cent when compared to the current version of GLOBALGAP. The total cost per individual grower would be 1,357 but in practice the total growers contribution would be 180,492, which equates to 241 per grower for the initial investment. This is a 45 per cent reduction in the first year when compared to the individual cost of 435 per grower for the current version of GLOBALGAP.
Over a five-year period, overall costs would be 11 per cent lower (a saving of 578,395 over five years) for the smallholder-friendly version of GLOBALGAP when compared to the conventional version. These costs might be further reduced if the detailed risk assessment indicated potential for a reduced level of management and control. However, there are limits to the level of cost reductions as many of the most significant ongoing costs (such as outgrower management and operational costs) are inherent in ensuring management and control of the system. The cost-saving measures recommended are intended to ensure that the spirit of GLOBALGAP from an integrity perspective is not compromised. With minimal changes, start-up and running costs for smallholders over the first year can be reduced by 45 per cent and over a five-year period by 11 per cent. Even with these measures, successful smallholder groups need to be highly committed to a commercial farming approach, well organised in strongly-managed producer groups, and linked to a large, well-resourced export company that can assist in managing complex areas such as the Option 2 quality management system.
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Fresh Perspectives 19
An exploration of farmers decision-making and reasons for participation in and subsequent withdrawal from GLOBALGAP
Andrew Graffham, Jerry Cooper, Henry Wainwright and James MacGregor Andrew Graffham is a food technologist with 14 years experience in food microbiology, food safety and quality assurance. He works in the Enterprise, Trade and Food Management Group at the Natural Resources Institute (NRI). Jerry Cooper is a pest management specialist with 30 years experience in crop protection, especially in control of major vegetable crop pests. He works in the Agriculture, Health and Environment Group at NRI. Henry Wainwright is Director of The Real IPM Company (K) Ltd., a Kenyan company focusing on crop protection and options for pesticide reduction. James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism.
Key messages
n A survey of smallholders who used to export GLOBALGAP-certified crops but whose certification has lapsed shows that 83 per cent continue to grow export crops. n The former GLOBALGAP-certified farmers had left the scheme within one to three years of first being certified, citing high investment and running costs and lack of a price premium for certified production. n Farmers who withdrew from GLOBALGAP received a much lower level of advice and support from the buyer, are paid a lower price per kilogram, grow and sell smaller volumes, and derive much less of their household income from sales of export crops. n Since leaving GLOBALGAP, different income strategies have been adopted, namely cultivation of new crops, off-farm employment, and adoption of new business practices. In the past, smallholder farmers in Africa and other countries that exported produce to Europe did not have an obligation to prove the safety and quality of their produce. But in recent years the supply chain has started to demand certified produce, so farmers have had no option but to comply. Now GLOBALGAP is a widely accepted private voluntary standard (PVS) whose membership is often a prerequisite for being linked to an export company. During previous project work in Kenya and Zambia with exporting farmers mainly sending vegetables to Europe the authors noted a significant percentage of farmers had lost their certification for GLOBALGAP. The reasons why farmers were no longer certified were explored since being certified had several advantages in terms of market access. Farmers in Kenya whose certification had lapsed or who prepared for certification but never completed the process were
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surveyed. A report (Graffham et al. 2007) analysed the responses from the farmers who were interviewed. This paper aims to summarise the key findings.
GLOBALGAP advantages
Being GLOBALGAP-compliant was considered to be a significant advantage by the large majority of farmers who were interviewed. Small-scale growers cited 12 benefits from GLOBALGAP certification, the most important being improved hygiene (70 per cent of respondents) and safe use of chemicals (55 per cent of respondents). In addition, the revenues for crops were sometimes higher, access to market and training were facilitated, and crop handling and quality also improved significantly. Obtaining and maintaining GLOBALGAP certification were closely associated with the relationship between farmers and their buyers, often an export company. The survey indicated that the company or buyer had often helped the farmer towards obtaining certification by providing advice and support.
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Fresh Perspectives 20
Tackling the exclusion of smallholders from fresh produce markets: a personal view
Ruth Nyagah Ruth Nyagah has worked in the fresh produce sector for the last 14 years. Since 2004, she has been working at Africert, covering fruit and vegetables under GLOBALGAP; coffee, tea, fruit and vegetables under the Rainforest Alliance; coffee under Starbucks C.A.F.E and the Common Code for the Coffee Community (4C) Association, and at the British Retail Consortium (BRC).
Key messages
n Private standards have disadvantaged the smallest farmers, leading to exclusion from the export chain and often stopping production. n The fresh produce export market is small and complex, which may not allow all smallholders to participate. n The smallest producers, who are not able to comply with the private standard requirements of the fresh export market, should seize other opportunities upgrade production techniques to supply all year round and target different segments of the market, or use domestic markets as an alternative outlet. PVS are playing an increasing role in determining access to export markets for small-scale farmers. Producers who cannot meet the standards are facing marginalisation. The emergence of PVS as requirements for entry to some segments of the export market is of interest for a number of reasons. The market dictates its requirements in terms of volume and timing, and the producer will often have no choice but to comply, regardless of the level of risk or cost. However, compliance brings a number of benefits along the supply chain, including improved producer health, more awareness of environmental issues, and better conditions for workers; such benefits often remain unquantified and are generally not taken into account in price negotiations between buyers and producers. Drawing on many years experience of quality and food safety issues in the private sector (both preand post-farm-gate) and extensive research, this paper seeks to give a personal view of the impact of PVS on African smallholders. It discusses the role of farm size in the exclusion of smallholders from the market, and the key conditions for inclusion. Finally, the paper suggests how to improve access to markets for smallholders who are unable to qualify for export markets.
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been identified over the last two or three years, including free training for producers, mostly funded by development partners through either export companies or private training institutes. Topics have included integrated pest management, basic quality management systems, environmental management, the safe use and disposal of pesticide containers, basic business management skills and group dynamics, record-keeping, and food safety. Such training has, in turn, impacted on the production methods used by farmers in most cases improving produce quality, which effectively results in increased market security and savings on inputs. On the negative side, PVS have disadvantaged the smallest producers, those without strong farmer group/exporter support. Such producers have become marginalised from the export chain and have in most cases stopped producing. Larger-scale producers have greater bargaining power with the market because of the volume of their production and because they are able to meet contractual demands on quotas reliably.
The positive impact of market standards on smallholders: An example of a smallholder group working with an exporter, demonstrating how earnings have grown progressively through binding growerbuyer contracts and certification
KGG n KGG had 33 members in 2006 (nine women, 24 men). It grows French beans for the export market. n KGG began in 2003 with nine members doing ad hoc export farming for multiple exporters. n The minimum land size per farmer is 1ha, with a maximum of 4ha, to enable a minimum of 0.25 acre of French beans to be planted every month, with a projected monthly production of 800kg. The average price is US$0.60 per kg, with production costs of average US$0.39 per kg. n In 2004, GLOBALGAP training started, provided by the exporter. KGG improved its internal dynamics through the development of a constitution with strict membership criteria and penalty clauses for defaulters. n At the same time, the group entered structured informal domestic markets to boost sales and create a strong financial base. n In 2005, the group achieved its first fixed annual price contract with an exporter as it became more organised and committed. n In 2005, the weekly production of French beans averaged 4 tons. n In 2006, weekly production doubled to an average of 8 tons as members dedicated more of their land to export production (either by farmers allocating more of their own land or by leasing more land with their increased income). n GLOBALGAP implementation (quality management systems) started in 2006 and certification was achieved in December 2006. n Employment has increased from 15 workers to 264 since inception. They carry out various temporary or permanent production activities across the production year, including planting, weeding, harvesting, spraying, supervision and record-keeping. n The groups gross income increased from US$7,000 in 2004, when it was still just consolidating itself, to US$20,000 in 2005, when farmers started dedicating themselves to serious export farming through contractual volumes and pricing. In 2006, income reached US$130,000, when farmers raised their weekly production volumes through increased production area, better production methods, and increased price per kg of produce.
Source: Exporter and author
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A trend of further marginalisation of the smallest growers has been identified within smallholder producer groups. A producer with an output of only 1 kilogram of beans twice a year will often not be admitted to a producer group. Exporters in turn prefer to deal with strong groups with assured volumes groups that are even more inaccessible to the smallest producers, causing the cycle of marginalisation to continue and the gap between the smallest producers and the exporters to widen.
Key conditions for inclusion of smallholders in the fresh produce export market
n Size of land: this justifies a certain level of inputs to expect a given amount of produce, which actually determines if the farmers make a loss or gain. n Guaranteed annual prices, although these may differ at certain times of the year, based on the volume the group is able to supply to the market as per annual contractual arrangements with the exporter. n Commitment of farmers to implement and sustain compliance with GLOBALGAP: this is based on both internal and external factors, e.g., technical support from exporters and, internally, the ability of the group to work together.
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n It is possible that not all small producers will be able to qualify to produce for the fresh export market. The dynamics of the fresh produce export market are complex and smallholders without support and good linkages to the market may not be able to keep up with them. Furthermore, the export market may not be large enough to accommodate every producer. It is therefore important for sustainable development to look at how to improve production and market access for producers, without necessarily focusing on a particular fresh export market. For example, the development of value-adding at the production level could avoid high-season waste (e.g., drying fruit, tomatoes, etc.), as well as provide access to different segments of the market. n Domestic markets are poorly developed in Africa and this is an area of development that is often overlooked. Despite the limited size of the fresh produce export market, a lot of attention, effort and resources have been put into it, often at the expense of developing and growing local domestic markets. Such markets could provide an important outlet for smaller producers excluded from the export market.
Section 3 references
Asfaw, S, D. Mithfer and H. Waibel (2008), Food safety standards: a catalyst for the winners; a barrier for the losers? The case of GLOBALGAP in horticultural exports from Kenya. Fresh Perspectives series no. 18, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A. and J. Cooper (2008a), Making GLOBALGAP smallholder-friendly: can GLOBALGAP be made simpler and less costly without comprimising integrity? Fresh Perspectives series no. 11, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A. and J. Cooper (2008b), Making GLOBALGAP smallholder-friendly. Fresh Insights no. 16, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A. and J. MacGregor (2007a), Impact of GLOBALGAP on small-scale vegetable growers in Zambia. Fresh Perspectives series no. 3, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A. and J. MacGregor (2007b), Impact of GLOBALGAP on small-scale vegetable growers in Zambia. Fresh Insights no. 5, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A., E. Karehu and J. MacGregor (2007a), Impact of GLOBALGAP on small-scale vegetable growers in Kenya. Fresh Perspectives series no. 2, DFID/IIED/NRI. Available at www. agrifoodstandards.net Graffham, A., E. Karehu and J. Macgregor (2007b), Impact of GLOBALGAP on small-scale vegetable growers in Kenya. Fresh Insights no. 6, DFID/IIED/NRI. Available at www.agrifoodstandards.net Graffham, A., J. Cooper, H. Wainright and J. MacGregor (2007), Small-scale farmers who withdraw from GLOBALGAP: Results of a survey in Kenya. Fresh Insights no. 15, DFID/IIED/NRI. Available at www. agrifoodstandards.net Graffham, A., J. Cooper, H. Wainright and J. MacGregor (2008), An exploration of farmers decisionmaking and reasons for participation in, and subsequent withdrawal from GLOBALGAP. Fresh Perspectives no. 34, DFID/IIED/NRI. Available at www.agrifoodstandards.net Horticultural Crops Development Authority (HCDA) (date unknown), Data available at www.hcda. or.ke > home > resource center > annual statistics. IIED and NRI (2008a), Costs and benefits of GLOBALGAP compliance for smallholders: synthesised findings. Fresh Perspectives series no. 7, DFID/IIED/NRI. Available at www.agrifoodstandards.net IIED and NRI (2008b), Costs and benefits of GLOBALGAP compliance for African smallholders: A synthesis of surveys in three countries. Fresh Insights no. 13, DFID/IIED/NRI. Available at www. agrifoodstandards.net Kenya Revenue Authority (date unknown), Data and information available, with authorisation, at www.kra.go.ke. Kenya Horticultural Development Program (KHDP) (2006), KHDP Survey. Available at www.fintrac. com/dis once a password has been granted. Kleih, U., F. Ssango, F. Kyazze, A. Graffham and J. MacGregor (2007a), Impact of GLOBALGAP on smallscale vegetable growers in Uganda. Fresh Perspectives series no. 4, DFID/IIED/NRI. Available at www.agrifoodstandards.net Kleih, U., F. Ssango, F. Kyazze, A. Graffham, and J. MacGregor (2007b), Impact of GLOBALGAP on small-scale vegetable growers in Uganda. Fresh Insights no. 10, DFID/IIED/NRI. Available at www. agrifoodstandards.net
Luvai, L. (2008), GLOBALGAP certification in Kenya: lessons from the Vegcare experience. Fresh Perspectives series no. 22, DFID/IIED/NRI. Available at www.agrifoodstandards.net Mwangi, T. (2008), The impact of private agrifood standards on smallholder incomes in Kenya. Fresh Perspectives series no. 28, DFID/IIED/NRI. Available at www.agrifoodstandards.net Nyagah, R. (2008), Tackling the exclusion of smallholders from fresh produce markets: a personal view. Fresh Perspectives series no. 19, DFID/IIED/NRI. Available at www.agrifoodstandards.net
4
Costs and risks in the wider sustainable development context
PVS are not the only factor affecting long-term involvement of African horticulture exports in markets. Mounting concerns over the environment have notably targeted carbon emissions and natural resources use related to production and trade of developing countries agricultural produce. Taking a closer look at these issues has allowed a more informed debate on tensions between the economic development of African exporting countries and the ecological impact of trade with Europe.10
Informed debate in the UK on food miles versus fair miles is now allowing supermarkets to move away from token gestures towards a more balanced response based on sustainable development principles. In addition, a number of initiatives prove further commitment in meeting environmental public concerns while not discriminating against air-freighted produce suppliers. Major UK retail companies have started working with the governmentsupported Carbon Trust in developing a standard method for measuring the embodied greenhouse gases in products and services. The final objective is to display a carbon label to enable consumers to compare the carbon footprint of produce. However, caution must be exercised because carbon analysis can work against developing countries that export goods, and the subsequent carbon labelling can be harmful for development.
Fresh Perspectives 21
Air-freighted fresh food: guilty pleasure or sustainable development champion?
James MacGregor and Ben Groom James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism. Ben Groom is a lecturer in economics at the School of Oriental and African Studies, University of London, and a researcher for the China Council for International Cooperation on Environment and Development (CCICED) focusing on urban and agricultural water resource management. He has over 15 years of experience in economics and holds a Ph.D.
Key messages
n Air freight enables rapid responses to unforeseen changes; e.g., unpredicted warmer weather episodes in the UK boost fruit consumption. n Air freight for fresh produce is estimated to account for less than 0.1 per cent of carbon emissions but supports over one million livelihoods in sub-Saharan Africa. n Air freight overcomes some costs of trade time, distance, storage, depreciation, damage and administration. n Rapid transport expands land-use options in producer countries. n Supportive policies are required to ensure the sustainable pro-poor impact of air freightled development in producer countries. n Air freight changes horticulture industry structure and provides opportunities for PVS, which need careful implementation to be pro-poor.
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Introduction
The Stern Review Report on The Economics of Climate Change (2007) reports that emissions from aviation have been rising faster than other sectors in recent years, largely as a result of global trade. Nowhere are these concerns expressed more vocally than in relation to tourism and air freight. Yet these concerns extend only to the environmental impacts of aviation, ignoring attendant social and economic benefits. Indeed, while the climate change debate identifies air-freighted fresh produce from sub-Saharan Africa as the epitome of unsustainable consumption, research shows that over one million livelihoods are supported in part by the fresh produce trade with the UK. Furthermore, this trade complies with the highest public and private standards. This briefing paper seeks to expand analysis of aviations impact on sustainable development by understanding the impact that air freighting has on producer nations, particularly in developing countries.
Environmental footprint
Social footprint
Economic footprint
Environmental footprint
Energy
Water
Carbon
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Social footprint Labour Livelihoods Economy
100 Section 4: Costs and risks in the wider sustainable development context
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Section 4.1: The air freight and food miles debate 101
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102 Section 4: Costs and risks in the wider sustainable development context
Fresh Perspectives 22
Miles better? How fair miles stack up in the sustainable supermarket
Ben Garside, James MacGregor and Bill Vorley Ben Garside is a researcher in the Sustainable Markets Group at the International Institute for Environment and Development (IIED). His areas of interest beyond PVS include: effects of the food miles/carbon debate on rural livelihoods in the South, the consumption agenda, and the opportunities/ risks new technologies bring to the developing world. James MacGregor is an economist and senior researcher at IIED. He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism. Bill Vorley is head of IIEDs Sustainable Markets Group, and leads the groups work on food and agriculture. He has a background in ecology, and trained in the farm fields of southern England and Southeast Asia. After eight years working in agribusiness, he continued his research interest in business and sustainable development in the US and, since 1999, at IIED.
Key messages
n Air freighting flowers, fruit and vegetables from developing countries, especially those in Africa, has drawn fire on environmental grounds and highlighted the issue of fairness in the food miles debate. n Without the right analysis, there is a risk that environmental and food miles arguments will work against development goals such as trade, not aid . n Informed debate in the UK on food miles versus fair miles is now allowing supermarkets to move away from token gestures towards a more balanced response.
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Introduction
In 2007, food miles shot to the top of consumer concerns in the UK. Buying goods that took the shortest route from farm to table was widely seen as a way of shrinking carbon footprints. Airfreighted produce became the epitome of unsustainable consumption, and some UK retailers began to label flown items such as green beans from Kenya. Yet looking at the bigger picture, fresh produce air-freighted from Africa accounts for less than 0.1 per cent of UK emissions and per capita emissions from sub-Saharan Africa are minuscule compared to those in industrialised countries. Against this background are the one million plus African livelihoods supported by growing the produce. Within the grocery supply chain the time is ripe for fair miles a working idea that puts development in the South on the environmental agenda, and allows UK retailers a more balanced response on behalf of their millions of customers. At the start of 2007, UK retailers were jostling to establish their green credentials by pledging on eco-initiatives. In part this was a response to a rapid change in consumer polling on environmental issues especially on climate change and food miles. Both Tesco and Marks & Spencer announced that they would label air-freighted products and stock more locally-produced food.
Section 4.1: The air freight and food miles debate 103
Marks & Spencer launched a 200 million five-year plan in January of that year. Its aim was to become carbon neutral by 2012 and roll out environmental management requirements for suppliers. In an effort to minimise the amount of food air freighted, it began to label such food as flown. The same month, Tescos chief Terry Leahy launched a 500 million eco-plan with a pledge to reduce the companys carbon footprint and encourage consumers to buy more sustainable products. Their target was to measure the footprints of 70,000 items so that shoppers could be empowered to make informed choices and help in driving the market for low-carbon products. Leahy set a target to air freight less than 1 per cent of Tescos products (with a bias for sourcing from the poor within this percentage), compared to the 3 per cent currently flown in. Stickers for air-freighted products bearing the legend by air were introduced as an interim measure. In late spring, the Soil Association launched a one-year consultation on ways to reduce or eliminate the environmental impact of organic air freight, with a view to a complete or partial ban. Amid media attention, and as part of the huge response to such a ban, IIED submitted its analysis. This shows why a ban on air freighting will damage lives in Africa, and why the Soil Association should see the consultation as a chance to positively support fair miles.
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104 Section 4: Costs and risks in the wider sustainable development context
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Section 4.1: The air freight and food miles debate 105
Yet air freight remains on the radar. In October the Soil Association announced a ban on certification of air-freighted produce that was not additionally certified by it or by The Fairtrade Foundation. On the Department for International Development (DFID) website, the UKs Minister for Trade and Development, Gareth Thomas, responded by expressing concern for the livelihoods of the African farmers who dont meet these extra standards , adding that the move could also turn consumers away from air-freighted fruit and vegetables in general. (DFID 2007). There is no need for legitimate interest in local food and food miles to work against the interests of developing countries. What is clear is that consumers, policymakers, and food chain businesses should base decisions on good information. If environmental harm is to be weighed against developmental gains, it is essential to consider the full context in more detail, so that: n the degree of harm is put into the context of Africas current use of ecological space; n the degree of harm is quantified and compared to that of other food choices; and n the degree of development gain is quantified, to demonstrate whether this trade really benefits those living in poverty.
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Fresh Perspectives 23
African air freight of fresh produce: is transport of virtual water causing drought?
Stuart Orr and Ashok Chapagain Stuart Orr works in freshwater policy at World Wide Fund for Nature (WWF)-UK, working mainly with business on water stewardship, standards and metrics, and links to their field programmes on environmental flows and better water management structures. Ashok Kumar Chapagain has been an irrigation engineer in Nepal for more than a decade and worked as a researcher at the University of Twente on issues related to water footprints. In 2007 he joined WWF-UK as a water footprint officer and works under themes of sustainable consumption and freshwater resources.
Key messages
n Globally, 70 per cent of all freshwater is used in agriculture. n The UK uses 189 million cubic metres (m3) of African water annually for green bean consumption. n A single Kenyan rose uses 2.7 litres of evaporated blue water (surface and ground water) and pollutes a further 1.3 litres of local water resources.
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Introduction
Every year the UK uses 189 million m3 of African water virtually,11 as a result of the import of green beans produced there. Formal planning for water use at a local and national level is beneficial, but the current international trade of fresh fruit and vegetables does not internalise wider environmental costs. Global environmental implications of water use (and trade) cannot be resolved without a larger and more comprehensive study.
11. The virtual water flows have been calculated using the methods presented in a paper by Chapagain and Orr (2009).
108 Section 4: Costs and risks in the wider sustainable development context
Virtual water constitutes the total volume of water involved in the sustainable production of a crop. Virtual water studies have highlighted benefits of food security for regions such as Southern Africa, as well as food trade in Japan. The relative comparative advantages of countries have been used to explain why virtual water trade takes place. Although not accounting for this movement of virtual water is potentially beneficial in traditional economic trade terms, it could lead to longer-term sustainability issues as it represents, in effect, a type of environmental subsidy.
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Impact on livelihoods
Emotive press accounts have highlighted the issue of irresponsible water use from sites such as Lake Naivasha in Kenya. When consumers buy a Kenyan rose, do they consider the 2.7 litres of blue water that was evaporated or the 1.3 litres of water that was polluted in Kenya for its production? Does the price of a particular rose stem represent its impact on the water resources in the place where it was grown? Can the existing market bring the demand and supply to an equilibrium at which the price truly reflects the opportunity cost of the use of water resources for a particular rose stem? From a social and economic view, horticulture and floriculture exports from emerging markets such as Zambia and Kenya have been praised as positive moves toward cash crop production. However, from an environmental perspective, the depletion of water levels and the deterioration of water quality in places like Lake Naivasha are blamed on this. The concept of virtual water could be an important tool in the food trade debate. Indeed, the physical use of precious water resources, combined with virtual water trade, is an important consideration in the context of sustainable African livelihoods and the aim of achieving the Millennium Development Goals.
Box 1. How can the government help exporting countries to monitor their water usage and make trade more efficient and sustainable for the long term?
n n n n n n n n n n Differentiate the blue and green inputs into crops. Build capacity for green water to be utilised better or better captured for crop growth. Promote more benign irrigation practices and help increase irrigation efficiencies. Reduce chemical applications that have the potential to leach into the surrounding freshwater systems. Place an upper limit on basin extraction and share equitably and transparently. Launch educational campaigns encouraging an understanding of the real value of water to all basin inhabitants. Provide baseline information to poorly understood production sites. Establish the real state of water resources in export countries to feed directly into development plans. A clearer understanding of the opportunity costs of water needs to be developed. Establish future water scenarios for countries affected by climate change and population increase, which include water exports and imports through trade. Feed development gains (taxes) back into water infrastructure projects.
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Fresh Perspectives 24
Room to move: ecological space and emissions equity
James MacGregor and Muyeye Chambwera James MacGregor is an economist and senior researcher at the International Institute for Environment and Development (IIED). He is a specialist on international trade in natural resources, the economics of wildlife, industrial organisation and natural resources, economics of standards, responsible trade and smallholders, and sustainable tourism. Muyeye Chambwera is a researcher within IIEDs Sustainable Markets Group and Climate Change Group, focusing on the economics of climate change. Before joining IIED in 2007, he worked for the WWF Southern Africa Regional Programme Office for ten years on environment and development issues.
Key messages
n Equity in mitigation should remain a key element in discussions under the Kyoto Protocol. n Compared to industrialised countries, developing countries have ecological space credit because of lower emissions, past and present. n The international community needs to recognise the global benefits of promoting opportunities for developing countries to use or sell their unused ecological space for example through low-carbon development, trade, transfer of knowledge, and poverty reduction. n Identifying and promoting equitable trade expansion would then promote sustainable development.
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Introduction
Tackling climate change will involve a monumental balancing act. How can we curb emissions effectively while ensuring that poor countries are not restricted in their efforts to develop sustainably? The concept of ecological space offers a viable solution. By measuring and comparing countries greenhouse gas emissions, we can pinpoint their share of the total remaining emissions the planet can sustain without serious disruption to climate. The relatively low emissions of poor countries and the per capita levels for the poorest are just 2 per cent of those in the US allow them the ecological space for non-restrictive economic development. Overall, the concept is a workable guide to achieving emissions equity while collectively moving towards a low-carbon future.
When we look at how ecological space is actually distributed globally, however, there is an obvious imbalance. Past and present emissions and hence contributions to climate change differ widely among different countries. Today, sustainable carbon emissions stand at about 2 tons per person per year. However, the actual global average is 3.6 tons, with the UK averaging 9.2 tons and Africa 1.04. So the UK and certain other countries have exceeded the limits of their ecological space, while Africa is under-utilising its own. The least developed countries12 emit the least carbon per capita and in total. In Africa, only two countries Libya and South Africa emit more than the global average. In the least developed countries, the average per capita emission of 0.2 tons amounts to about 2 per cent of that in the UK. The 19502000 data from the World Resource Institutes Climate Analysis Indicators Tool shows that African countries contributed 4.6 per cent of cumulative global carbon emissions over that period, and contribute just 3.5 per cent today. Meanwhile, the EU has been exceeding global per capita average emissions for many years.
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12. The group of least developed countries, as defined by the United Nations General Assembly in 2003, comprises 50 countries; 34 of these are in Africa.
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Third, the use of ecological space as a benchmark has limitations. As the global population rises, the global per capita ecological space shrinks. With the population of Africa forecast to double by 2025, total CO2 emissions will rise if the per capita emissions are kept constant. Thus per capita and total ecological space available to different countries and regions as well as globally will need to be reviewed as conditions such as population shift. Finally, as economic development continues, total carbon emissions from least developed countries and developing countries will rise. If this economic development entails a shift from agriculture to manufacturing, higher levels of emissions will be expected. To keep these low, it will be essential to support this shift with the transfer of cleaner technology from developed countries. Even if the economic development is agriculture-based, improvements in technology and productivity are essential to minimise agricultural expansion because it often involves deforestation, which can generate emissions problems too.
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Section 4 references
Chapagain, A.K. and S. Orr (2009), An improved water footprint methodology linking global consumption to local water resources: A case of Spanish tomatoes, Journal of Environmental Management 90(2): 121928. Department for International Development (DFID) (2007), Gareth Thomas responds to Soil Association decision on air-freighted products. 26 October 2007. Available at www.dfid.gov. uk/news/files/soil-association.asp. Finch, J. (2007), How green do you want your bananas? Co-op ballots members on ethical issues. The Guardian website, 3 September, 2007. Available at www.guardian.co.uk/ environment/2007/sep/03/food. Freshinfo (2007a), Tesco to start carbon-labelling. 14 March. Available at www.freshinfo.com/ index.php?s=n&ss=nd&sid=40994&s_txt=&s_date=0&ms=&offset=0. Freshinfo (2007b), Tesco and M&S admit airfreight apathy. 7 November. Available at www. freshinfo.com/index.php?s=n&ss=nd&sid=44008. Garside, B., J. MacGregor and B. Vorley (2007), Miles better? How fair miles stack up in sustainable supermarket. Fresh Perspectives series no. 9, DFID/IIED/NRI. Available at www. agrifoodstandards.net. Global Commons Institute, Contraction and Convergence, Available at www.gci.org.uk/ contconv/cc.html. Intergovernmental Panel on Climate Change (IPCC) (2006), Socio-Economic Baseline Data: Africa region. IPCC Data Distribution Centre, IPCC, Switzerland. MacGregor, J. (2006), Ecological space and a low-carbon future: crafting space for equitable economic development in Africa. Fresh Insights no.8, DFID/IIED/NRI. Available at www. agrifoodstandards.net. MacGregor, J. and B. Groom (2007a), Air-freighted fresh food: guilty pleasure or sustainable development champion? Fresh Perspectives series no. 6, DFID/IIED/NRI. Available at www. agrifoodstandards.net. MacGregor, J. and B. Groom (2007b), Trade, Development and Poverty: The role of airfreighted horticultural products. Fresh Insights no. 11, DFID/IIED/NRI. Available at www. agrifoodstandards.net. MacGregor, J. and B. Vorley (2006), Fair Miles? Weighing environmental and social impacts of fresh produce exports from Sub-Saharan Africa to the UK (summary). Fresh Insights no. 9, DFID/IIED/ NRI. Available at www.agrifoodstandards.net. MacGregor, J. and B. Vorley (2007), Fair miles? The concept of food miles through a sustainable development lens. Fresh Perspectives series no. 1, DFID/IIED/NRI. Available at www. agrifoodstandards.net. MacGregor, J. and M. Chambwera (2007), Room to move: ecological space and emissions equity. Fresh Perspectives series no. 14, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Orr, S. and A. Chapagain (2006), Virtual water: a case study of green beans and flowers exported to the UK from Africa. Fresh Insights no. 3, DFID/IIED/NRI. Available at www.agrifoodstandards. net. Orr, S. and A. Chapagain (2007), African air freight of fresh produce: is transport of virtual water causing drought? Fresh Perspectives series no. 5, DFID/IIED/NRI. Available at www. agrifoodstandards.net.
Royal Commission on Environmental Pollution (2005), The Environmental Effects of Civil Aircraft in Flight. RCEP Special Report. Available to download at www.rcep.org.uk/aviation/av12-txt.pdf. Stern, N. (2007), The Economics of Climate Change. The Stern Review. H.M. Treasury, Cambridge University Press, UK. The African Channel (2007), M&S assures fresh produce exporters. 19 June. Available at http:// theafricanchannel.co.uk/index.php?option=com_content&task=view&id=235&Itemid=51. World Resources Institute (WRI) (2006), Climate Analysis Indicators Tool (CAIT) Version 3.0. WRI Washington DC. Available at http://cait.wri.org.
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5
Recommendations
This section presents a set of recommendations resulting from our analyses and identification of issues reported in the first four sections. Some of these recommendations are building on best practice activities and, where applicable, are illustrated here by briefing papers.13
13. Source papers for this section are the Fresh Perspectives briefing papers (Mithfer 2008; Azaglo and Derrick 2008; Okello et al. 2008; Anstey 2008; Humphrey 2008; Hoffmann and Vossenaar 2008; Ouma 2008; Wright 2008; Wainwright and Labuschagne 2008; Waweru 2008; and Baker 2008) that all follow as case studies and are available at: www.agrifoodstandards.net. 14. See the Sustainable Food Lab website: http://www.sustainablefoodlab.org/article/ articleview/19405/1/2370
Fresh Perspectives 25
Linking smallholders to high-value crop markets: how does the group approach work?
Dagmar Mithfer The author is a scientist at the International Centre of Insect Physiology and Ecology (icipe) in Kenya and coordinates economic impact assessments relating to the horticulture sector in East Africa.
Key messages
n Achieving compliance with GLOBALGAP standards requires investment at producer level, which includes investment in farmer training but also in structures of farmer organisation. n There is a wealth of experience in training to learn from. n All aspects of agricultural training (topics, approaches and interventions) should be coordinated and harmonised with national public extension programmes. n Support structures for smallholders to achieve good agricultural practice also need to include support structures for viable farmer groups and organisations. n Alternative opportunities for small-scale farmers such as opportunities provided through growing domestic and regional trade in horticultural products need to be assessed. GLOBALGAP certification involves investment not only in human capital farmer training but also in infrastructure, such as grading sheds and pesticide stores, and changes in production inputs, such as switching to specific approved pesticides. The initial investments required for certification are nondivisible; however, by splitting costs across a group of farmers, the initial investment cost per farmer can be reduced. Thus certification as a group through Option 2 or 4 certification15 provides the opportunity to achieve economies of scale, which is furthered by being able to purchase inputs in bulk, thereby reducing variable costs. Theoretically, accredited and certified standards can decrease transaction costs from the supermarkets perspective. However, at the production level, standards increase transaction costs in terms of implementation and monitoring. These costs increase with the number of producers an exporter deals with. Therefore, unless smallholders are organised as a group, they can lose some of their comparative advantage in relation to larger-scale producers. According to the standards guidelines, group certification (as opposed to certification as an individual farmer) requires an internal monitoring and control system, thus acknowledging (indirectly) that farmers are single decision-making units. This internal monitoring and control system means that some of the transaction costs are shifted from the exporter to the producer group.
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15. In Kenya, until 2007, two categories of certification were available: Option 1 for individual farmers and Option 2 for groups of farmers. Both of them were linked via an exporter to the European supermarkets. In addition, since 2007, Kenya has had its own standard, KenyaGAP, which is benchmarked against GLOBALGAP. A further two certification options are now available: Option 3 and Option 4 give the opportunity to certify individual farmers and farmer groups, respectively, against KenyaGAP, and thus also GLOBALGAP.
This paper summarises findings on organisational issues and challenges faced by exporters and smallholders, related to the latters link to high-value crop markets. It is based on several surveys in Kenya, conducted under an icipe project and its partners (Mithfer 2007). The paper strives to answer the following questions: i) how can successful be defined in the context of commercial smallholders? ii) what factors characterise successful smallholder groups? and iii) what is the comparative advantage of smallholder production from the exporters perspective? Answers to these questions are discussed in the wider context of enabling policies in Kenya.
Findings from the exporters perspective: small farms versus large farms
From the exporters perspective, farmer groups are deemed successful if they have implemented the exporters regulations and are able to meet targets without side-selling, be it for certified or non-certified export production. Overall, an exporters decision about where to source horticultural produce depends on the production capacity and risks and costs linked to each production option.
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Looking at the trade-off between risk diversification and monitoring costs, in the medium to long term it can be expected that production will shift more towards medium-scale farms. These may be farms that already have the necessary production area (possibly allocated to other enterprises) or farms growing in size as a result of a dynamic land market and the increased renting of horticultural plots.
Findings from the smallholder farmer group perspective: what characterises a successful farmer group and how can this be achieved?
Interviews with various Kenyan horticulture experts have shown that perceptions of what constitutes a successful farmer group differ, depending ultimately on the overall aim of the group and the point of view of the expert. However, the most important factor apparent across all the studies is the need for the group to have a constant link to the market, although not necessarily through the same buyer. In fact, a case study of seven small-scale farmer groups producing for the export market showed that the most successful group had changed from one exporter (A) to another (B) (Paalhaar 2007). In this case, exporter B benefited from the fact that most of the investment and learning had already been achieved while the group had been contracted to exporter A. These case studies of the smallholder groups showed that, in maintaining the link to the market, hard factors (clear rules, strict penalties and good structure within the group) were more important than soft ones (those that contribute to social cohesiveness such as frequent group meetings and communal plots). Furthermore, groups with external support were more successful because they were better informed and had a better understanding of the rules and regulations.
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Other benefits, arising from training on production standards, are: better-informed decisions about input use (especially regarding the use of agrochemicals), access to high-quality seed, and improved hygiene on the farm. Although record-keeping, as required by the standard, is resource-consuming, it enables the farmers to calculate the profitability of their enterprise, thereby enabling better monitoring of production. It should be noted that these benefits are not necessarily exclusive to those who have received GLOBALGAP training, but have also been reported from other training interventions.
Key lessons:
n Access of smallholders to markets with the highest production standards is tied to their link with an exporter. Smallholders who remain in the certified export system need to navigate a steep learning curve in terms of improving their production system, as well as their business and marketing skills. n From an exporters perspective, it is beneficial to work with groups who have already been exposed to production standards under contract with another exporter. This reduces the investment required in capacity-building and infrastructure. n Successful smallholder groups tend to have a functioning group constitution, which defines not only incentives but also sanction mechanisms, and supports the success of smallholders. n Groups can be further strengthened through clear rules and additional goals that translate into benefits such as savings schemes, all of which can increase cohesion and trust within the group. n Public institutions can play an important role in contributing to the process by providing clear policies for production, marketing, contracts, and the implementation of standards. They also need to identify and clarify the role of an ombudsman in case of conflict. The definition and enforcement of national standards would lower the costs to the exporter of implementing and maintaining their standards: multiple sets of related standards decrease marginal costs if auditing is done for the set of standards.
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Fresh Perspectives 26
Private voluntary standards: placing small-scale growers on a different footing
Mark Azaglo and Simon Derrick Mark Azaglo works as the Internal Farm Standards Auditor at Blue Skies Ghana. He has extensive experience working with smallholders who are faced with running their farms to reach UK and European supermarket standards. Simon Derrick joined Blue Skies in 2005 where he implemented a system to assist with agronomic planning and traceability. He is now responsible for communications and has taken a lead role in developing Caretrace, an online traceability and sustainability reporting system that enables people to find out about the origins of a product and the social, environmental and economic impacts associated with it.
Key messages
n PVS have been created to address particular concerns and are largely driven by agendas set in consumer nations, which may not be appropriate in developing countries. n As PVS become more complex, they become even less applicable for farming systems in tropical and subtropical areas. n There are enough examples to suggest consumers do place value on goods and services that link to something important to them, and will even pay a premium. n Most smallholders already farm in a way that has a low environmental impact and supports wide environmental biodiversity. This should be seen as a valuable commodity which needs more focus. PVS invariably designed to both assure and appeal to customers (people who buy) and consumers (people who eat) farm produce (these are not necessarily the same people) in industrialised countries. Smallholders who grow the produce are obliged to comply with these standards if they trade internationally with customers who demand standards compliance. These private standards are agenda driven; they address the concerns of particular organisations. When the farm is local to the customer/consumer, the farmer may at least understand the issues and choose which standards to support. However, when trade is international and particularly when sourcing from developing nations the issues and concerns of developed country customers/consumers can literally be a world away and are often seen with some confusion at local levels. This paper aims to offer a new perspective on how to value smallholder attributes for final consumers. Notably it is proposing the consumer engages with the smallholder using the subject of environmental care; deliberately not using the term farmer but instead using the term environment carer (or environment steward). The environment is a subject that Western consumers value and smallholders are already working alongside rather than against the environment in practice but without recognition. Produce then becomes a medium of exchange, a practical link between smallholders and the consumer, who can now choose to support the
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Blue Skies
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Pineapple picker with certified produce
environment when selecting food for purchase. Further, this proposal suggests consumers can be more effectively engaged by bringing focus towards protecting and enhancing the environment for the benefit of particular named animals. Imagine, if you will, having a World Wide Fund for Nature (WWF) logo, or the Royal Society for the Protection of Birds (RSPB) logo on produce, indicating that the product is associated with specific and credible wildlife environment enhancement.
easier for exporters and supermarkets to change standards (as they are periodically upgraded) and impose yet further demands without compensation or recognition of practical realities. Over time, these standards tend to develop in sophistication and complexity, need further work to upkeep and audit, and grow ever more distant from simple farming systems in developing countries. As we look into the future, this trend of direction and smallholder alienation looks set to continue.
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take charge of their non-cropped land to do something valued in the developed countries (looking after the environment in general) and looking after a particular animal species in particular (the more threatened the better). In marketing terms it might be possible with the appropriate logo on the final product pack to link an environment steward (i.e., a renamed smallholder) to a particular animal. In effect, the consumer pays for the environmental work and gets the product for free.
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Fresh Perspectives 27
Smallholder compliance with international food safety standards is not a fantasy: evidence from African green bean producers
Julius Okello, Clare Narrod and Devesh Roy Julius Juma Okello is a lecturer at the University of Nairobi. Clare Narrod is a Senior Research Fellow for the Markets, Trade, and Institutions Division at the International Food Policy Research Institute (IFPRI) and leads a programme in Food and Water Safety. Devesh Roy is a Research Fellow at IFPRI and conducts research on international economics with a focus on product standards in international trade.
Key messages
n Small-scale farmers face three distinct problems: i) how to produce safe and/or high-quality food, ii) how to be recognised as producing safe and/or high-quality food, and iii) how to identify cost-effective technologies for reducing risk and/or improving quality. n Through reorientation of target markets (less demanding markets), contracting and collective action (in the form of producer marketing organisations), and publicprivate partnerships, smallholders have been able to meet international food safety standard requirements and maintain their participation in high-value chains. n Whereas donor support is needed to help small farmers meet PVS in the short run, assessing the full costs and benefits of donor interventions is key to avoid distorting private incentives to invest in meeting the standards. Though smallholders have been participating in the production of non-traditional agricultural exports, there is concern that with increased PVS smallholders will be marginalised from the export markets. Small-scale farmers face three distinct problems: i) how to produce safe and/or highquality food, ii) how to be recognised as producing safe and/or high-quality food, and iii) how to identify cost-effective technologies for reducing risk and/or improving quality. This briefing paper provides an example of smallholders who have been able to overcome these constraints. Globalisation of world economies has opened a window of opportunity for many African countries. With the failure of structural adjustment programmes to encourage reasonable growth, many developing countries turned to production of non-traditional agricultural exports to diversify their agricultural exports and increase foreign exchange earnings. Initial countries diversifying in Africa included South Africa, Cte dIvoire, Senegal, Egypt and Kenya, with Zambia, Ethiopia and Madagascar registering comparatively recent growth in such exports. In most of these countries, smallholders generally dominate the production of non-traditional agricultural exports. The growth in non-traditional agricultural exports has, however, been met with increased scrutiny for food safety by major European importers following greater consumer demand for food safety. The increased demand for safety arises from: the rise in income that has enabled consumers to
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pay for safe food; technological improvements that make it easier to measure food contaminants and document their impact on human health; and the various international food safety scares such as Salmonella and Listeria contamination of fruits and vegetables that have made consumers, producers, and legislators more aware of the risks associated with food safety problems. Consumer demand for safety has led European governments to revise legislation relating to pesticide use and microbial control, and forced major European retailers to develop private food safety protocols to be followed by their suppliers (e.g., GLOBALGAP). The protocols cover pesticide residue limits, hygiene levels, and traceability; they require large investments and third-party certification. Compliance with these PVS requires producers to switch to safer but more costly pesticides, invest in expensive medium- and long-term assets (e.g. grading and cooling facilities), and keep technical records of pesticide usage and application. These requirements have generated concerns that small-scale farmers are being marginalised by PVS (Dolan and Humphrey 2000; Graffham et al. 2007). This paper presents strategies that have been used by some African countries to successfully maintain the participation of smallholders in high-value fresh vegetable export businesses, and therefore argues that PVS need not necessarily marginalise smallholders. It summarises a study conducted between December 2005 and February 2006 using value chain analysis (see Okello et al. 2007). The study involves personal interviews with various participants in the green bean value chain and is based on case studies looking at smallholders roles in green bean exports from Kenya, Zambia and Ethiopia to Europe. Green beans are one of the leading fresh export vegetables from Africa and over the years some European retailers have developed stringent food safety standards for their suppliers. In the three countries, smallholders differed in their coping mechanisms associated with meeting PVS. Kenya has a long history of smallholder-based systems exporting to the EU, whereas in Zambia and Ethiopia green bean export by smallholders is a fairly recent occurrence. Furthermore, Kenya began exporting to the EU and developing the infrastructure and institutions (involving smallholders) before the inception of PVS and traceability guidelines. In contrast, Zambia and Ethiopia entered the supply chain after the PVS system was already in place.
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and collective action in the form of producer marketing organisations and publicprivate partnerships, smallholders in Kenya, Zambia and Ethiopia have been able meet PVS requirements and maintain their participation in high-value chains. They have achieved this by focusing on less demanding markets, by jointly investing in the facilities needed to meet the PVS, and through support from the private and public sectors. To what extent these initiatives are sustainable or can be scaled up remains to be researched. Collective action among small-scale farmers has been useful in meeting PVS and helping small-scale farmers attain scale economies and meet traceability requirements. However, this would not have been sufficient without the assistance of several publicprivate partnerships. Though government and donor initiatives have maintained smallholder participation in high-value markets, they raise important policy questions due to the subsidies involved. Some of the subsidies, apart from the fiscal cost, distort private incentives to invest in meeting the standards. Assessing the full costs and benefits of donor interventions is an important area for further research. Importantly, at least in the short run, donor support is needed to help small-scale farmers meet PVS and to complement the role played by other strategies.
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16. See ETI website: http://www.ethicaltrade.org/Z/lib/2005/09/smhldr-gls/index.shtml. 17. The Africa Observer has a very strong involvement in the GLOBALGAP Fruit and Vegetable Sector Committee. In May 2007, GLOBALGAP appointed Dr. Johannes Kern as Smallholder Ambassador and Africa Observer. See: http://www.africa-observer.info/about.html. 18. See Chatham House website: http://www.chathamhouse.org.uk/research/eedp/current_projects/ procurement/. 19. See DFID website: http://www.dfid.gov.uk/news/files/pressreleases/fund4-ethical-products-UK.asp.
Fresh Perspectives 28
Improving buyer awareness: developing guidelines to increase buyers knowledge of the people working in their supply chains
Chris Anstey Chris Anstey is an independent consultant who helps change companies and organisations. He has spent a lifetime in the food industry, starting with primary food production as a fruit farm manager supplying the UK supermarkets. He moved to Tesco in 1993 when it was the third-largest supermarket chain in the UK and left 15 years later when it was third largest in the world. His expertise includes private standards and global retailer supply chain policy.
Key messages
n Though retailers and manufacturers have started to commit to development policies, core brands and the way they are purchased remain largely unaffected. n Buyers need to be informed of development issues, with adapted training materials to change business as usual . n There is positive interest in, and strong need for, sector- and company-specific training modules. Retailers should commit resources to buyer training and awareness-building in development issues. This is about procurement best practices in a world where supply chains reach from the plates of the rich to the fields of the poor. Chain-wide learning should be encouraged, bringing producers, exporters, importers and retailers together to understand the issues. As a part of the project SmallScale Producers and Standards in Agrifood Supply Chains, funded by DFID and jointly run by IIED with the NRI, a collaborative project considered how to address this issue. Consequently, a new training programme for buyers to inform and build knowledge about international development issues was developed, led by Chris Anstey Ltd., in association with Impactt Ltd. (a consultancy and training provider to the retailers). It was then tested with two major UK retailers, the Co-operative Group and Tesco. This has revealed broad support among NGO and business stakeholders in the UK and Europe and useful shared learnings.
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Section 5.2: Retailers and their associations: foster sector-wide collaborations 131
The global food business is now building on its current approach of setting and enforcing standards. It is starting to expect buyer awareness and understanding of the key consumer questions that must be answered in order to enable the delivery of responsible purchasing. For example: Where is the product made? How is it made? What about the ingredients? What are the social, environmental and reputational risks? How have trading practices affected workers and producers? Is all of this in line with my company policy? The emerging trend is for companies to seek new commercial frameworks to ensure their buying delivers more than the basics of margin and profit. This search for responsibility will drive sustainability in trading relationships, with the resulting benefits of income security for workers and producers in developing countries. For example, the Chartered Institute of Purchasing and Supply (CIPS), in association with the development charity Traidcraft, published a guide to more responsible purchasing practices in May 2008 called Taking the Lead. They identified the key success factors for an organisation to manage responsible purchasing as: n leadership and accountability; n knowledge of the consequences of buying actions; n managing conflicting priorities; n thinking and acting beyond short-term horizons; n managing relationships in the supply chain; and n responsible use of power in the supply chain.
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Drivers of change
Price will remain the fundamental competitive issue for food retailers and brand manufacturers, as well as the small and medium-sized enterprises that work with them as service providers, suppliers and producers. But there is also a significant shift in consumer priorities that sees the publicly listed food companies demonstrating that corporate responsibility has become a licence to operate rather than a tool for differentiation. At its heart is the recognition that there is a range of voluntary commitments for business over and above mandatory requirements. The origins of certain food commodities and ingredients in developing countries mean that the development impact of procurement decisions is emerging on the corporate responsibility agenda. There is also a realisation that monitoring is only a part of the effort. The countless audits in factories and farms may have improved compliance but have not really delivered a change in approach or thinking. The leaders are now seeking innovation based on learning. Emerging best practice sees a series of proactive relationships forming between business and civil society stakeholders. These relationships are characterised by one party seeking a credible witness to their business model development while the other seeks to influence sustainable business practices. They learn from each other and change is the outcome.
Challenges
Meanwhile, there are communication anomalies. In marketing terms, ethical has been redefined to equal labour standards and fair has been redefined to equal Fairtrade. Thus, commitments in certain commodities under a Fairtrade brand can become a proxy for an overall policy focus on rural development. However, generating real business in poor countries is something quite real and quite different.
Also, development issues can appear detached from brand integrity. How the raw materials that are used in a factory get there is considered somebody elses problem. Finally, there is little evidence of the emergence of real development policy amongst the retailers and manufacturers, although there is evidence of the start of change. Core brands and the way they are purchased remain largely unaffected.
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20. COLEACP is an inter-professional network funded by the EU that promotes sustainable horticultural trade, gathering together African and Caribbean producers and exporters with EU importers of fruit and vegetables, flowers and ornamental plants.
Section 5.2: Retailers and their associations: foster sector-wide collaborations 133
Outcome
Draft guidelines for building buyer awareness of development issues were agreed by the project. With the support of DFID, these will be developed into a public document (see Box 2). The seminar structure will also be included to provide a core set of training materials. Retailers, manufacturers, suppliers or service providers will be encouraged to use the training materials to initiate their own programmes to raise buyer awareness.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 135
Fresh Perspectives 29
Donor responses to the challenge of GLOBALGAP in Kenya
John Humphrey John Humphrey is a Fellow of the Institute of Development Studies at the University of Sussex. He has researched extensively on global value chains and food standards.
Key messages
n Aid donors in Kenya recognised the challenges GLOBALGAP posed for small farmers, and many of them implemented programmes to support these farmers. n The challenge was defined largely in terms of small-scale farmers and the certification process rather than the management systems that lay behind GLOBALGAP. n The goal of donor interventions has to be reducing rural poverty, not sustaining particular forms of agricultural production.
John Humphrey
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Pesticide store
136 Section 5: Recommendations
Food safety has moved up the agenda in all industrialised countries in recent years, partly as a result of successive food scandals and their consequences for consumer confidence. Governments have tightened both product standards and standards for the processes through which food is produced, transported and processed. Business, too, has had to respond. It faces legal requirements to meet ever more stringent public food safety standards and the need to maintain customers confidence at a time when global supply chains are becoming more complex. PVS developed by groups of companies are one response to this challenge. The GLOBALGAP standard for horticulture is, however, intricately bound up with the development of European Union food safety regulations and with the obligations the European Union places on supermarkets (and other food business operators) to ensure food safety. It is also bound up with the management of horticultural value chains that link together and coordinate the activities of producers, exporters, importers and retailers. As a pre-farm-gate standard, GLOBALGAP extends the principles of risk identification and management to farm production, introducing internal audit and third-party certification to the preparation, growing, harvesting and on-farm packing of horticultural products. In January 2005, GLOBALGAPs European supermarket members made certification obligatory for suppliers. This meant that all exports from Kenya to GLOBALGAP members in Europe would, in principle, have to come from certified farms. Kenyan fresh vegetables are sold predominantly to the United Kingdom and The Netherlands, where GLOBALGAP-member supermarkets have a dominant share of imported fresh produce sales. If the participation of small-scale farmers in this thriving business is to continue, they will have to be certified. This paper summarises an Institute of Development Studies working paper by the author entitled: Private Standards, Small Farmers and Donor Policy: GLOBALGAP in Kenya (WP 308).
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How do donors priorities in supporting smallholders respond to the new risk of exclusion?
This challenge was recognised by numerous development agencies, and they decided to do something about it. For these agencies, the immediate challenge was to ensure that the implementation of GLOBALGAP in Kenya did not undermine their broader goals of reducing poverty and delivering pro-poor growth through promoting a vibrant small-scale farmer sector, including export horticulture. If small-scale farmers were excluded from export horticulture, this would have consequences for the incomes of small-scale farmers and for employment on export smallholdings, with broader knock-on effects in the non-farm rural economy. GLOBALGAP was perceived to threaten small-scale farmers and rural livelihoods because of the financial resources, agronomic techniques, management systems, and certification costs needed to implement it. However, GLOBALGAP seemed to offer a viable strategy for small-scale farmers through what is known as Option 2 (certification of farmer groups). By late 2004, there was urgency about donor initiatives. In the words of one donor, there was the sense that donors needed to do something and that hasty action was required if the marginalisation of small-scale farmers was to be avoided. A representative of the GTZ agricultural programme in Kenya described the sentiment prevailing in the second half of 2004: We were panicking about
Section 5.3: Adapt donor support to promote profitable options for smallholders 137
January 1st, of course. Everyone was doing some activity. All of us were running around, panicking. We did understand that there was going to be a deadline. We did understand that this was going to be an important thing. The goal of the donors was not, in many cases, framed in terms of integrating small-scale farmers and farmer groups into those horticultural export value chains that required GLOBALGAP certification. Rather, it was framed in terms of making it easier for small-scale farmers, and particularly farmer groups, to achieve GLOBALGAP certification. This had three consequences: n First, the challenge was defined in terms of the certification process rather than the management systems that lay behind it. Certification is not the end in itself, but rather verification that a quality management system has been put in place. n Second, the costs of certification, rather than the costs of maintaining the quality system, were emphasised. For farmer group certification, the GLOBALGAP requirement of a quality management system is particularly onerous. n Third, the focus was on farmers and farmer groups rather than on the value chain linkages in the export horticulture business and the critical role played by exporters in securing access to those buyers who required GLOBALGAP certification.
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The value chain focus redefines the problem. Exporters have responsibility for sourcing GLOBALGAP-certified produce. If they want to retain the business of their customers, then they must ensure a supply of certified produce. If existing suppliers of fresh vegetables have difficulties in meeting the standard, then it is the exporters and importers who have to resolve the problem. If importers in the key northern European markets for GLOBALGAP-certified produce (the United Kingdom, The Netherlands and Germany) cannot obtain such produce, then they will be obliged either to switch to suppliers (exporters) who can supply the product, or they will have to work with their existing suppliers to enable them to meet the GLOBALGAP requirement. This is the price the importers have to pay to ensure that they keep the retailers business. The retailers expect the importers to solve this problem. As GLOBALGAP becomes a condition of market access, the pressure is transferred down the chain. If the exporters can grow this produce on their own farms, or work with large-scale farmers, the problem may be relatively easy to solve. Large contract farms and exporter-owned farms do not have much difficulty in meeting the standard. If, as in Kenya, small-scale farmers have been an important and cost-effective part of the export industry, then it is the exporters responsibility to ensure that the value chain is adapted to the new requirements. If there is a gap between the new requirements and supplier capabilities, it is the exporters in particular who should be filling it. In the context of declining supplier competence relative to the new value chain requirements, exporters would either take production in-house, or work with closely-supervised captive suppliers. Donors can intervene in support of local-level adaptation. However, an analysis of the fresh produce value chain reveals the importance of changing the way the standard itself is defined and enforced. As a commercial organisation itself operating in the standards business, GLOBALGAP has an interest
in the widespread acceptance of its standard, and efforts to modify the standard and to establish equivalent local standards (ChileGAP, KenyaGAP, etc.) have helped to reduce certification costs.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 139
Fresh Perspectives 30
Proactively complying with private voluntary standards: key findings of country case studies in Ghana, Kenya and Uganda
Ulrich Hoffmann and Rene Vossenaar Ulrich Hoffmann (Ph.D.) is the head of the Trade and Sustainable Development Section in the International Trade Division of the Secretariat of the United Nations Conference on Trade and Development (UNCTAD). Rene Vossenaar formerly worked with UNCTAD as the head of the Trade, Environment and Development Branch. The views expressed in this paper are those of the authors and do not necessarily represent the official view of UNCTAD or its member states.
Key messages
n The wider use of good agricultural practices can bring both commercial and sustainable development benefits. However, these benefits are not specific to GLOBALGAP. To fully harness these benefits, developing country governments, the private sector and donors need to promote proactive adjustment policies, ideally within the framework of a national good agricultural practice programme that targets the most appropriate sustainability standards. n Developing countries that have implemented proactive adjustment policies have coped well with more stringent public and private sector standards in key export markets and have expanded their market share, although this masks to a certain extent a shift from smallholder to agrifood estate production. n Wage employment on commercial farms and in packaging and processing facilities may make a greater contribution to poverty reduction than by promoting production by small-scale farmers. Small-scale farmers can be successfully integrated into global supply chains, but as part of well-managed outgrower schemes or producer groups, with close links to exporters. PVS are becoming more frequent and complex and have both positive and negative effects on producers in developing countries. Some years ago, UNCTAD created the Consultative Task Force (CTF) on Environmental Requirements and Market Access for Developing Countries to help facilitate a dialogue between public and private stakeholders on the impact of, and adjustment to, PVS. So far, CTF work has focused on two sectors: i) electrical and electronic equipment and ii) horticulture, in particular fresh fruit and vegetables. PVS can be broken down into different categories. PVS that are communicated to consumers can be used as an instrument for product differentiation and segmentation. These standards are proliferating (e.g., social and ethical standards) and some of them may lead to price premiums. Other PVS are used in the business-to-business context. In the latter case, retailers have attempted to harmonise specific elements through collaboration on core attributes and procedures (Fulponi
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2007). These standards are characterised by a quality management system approach, with thirdparty audits to certify conformity.21 One example is GLOBALGAP. This paper draws on recent UNCTAD publications on the trade and development implications of PVS, in particular the GLOBALGAP standard for fresh fruit and vegetables, and proactive adjustment policies that can assist developing countries in coping with and deriving possible benefits from these standards. The publications cover three developing regions: South and Central America; the Association of southeast Asian Nations (ASEAN); and sub-Saharan Africa (UNCTAD 2007a; UNCTAD 2007b; UNCTAD 2008). This paper focuses on the experiences of sub-Saharan Africa, largely based on case studies carried out by experts in Ghana, Kenya and Uganda and a series of stakeholder dialogues in these countries organised jointly with the Food and Agriculture Organization of the United Nations (FAO).
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Section 5.3: Adapt donor support to promote profitable options for smallholders 141
estimate that in Kenya only 2 per cent of smallholder produce goes for export (with the share linked to global supply chains being even lower). Smallholders acting as outgrowers account for 25 per cent of those engaged in fresh fruit and vegetables export production, whereas farm labourers account for about 75 per cent. It is difficult to know the implications, if any, of PVS on the volume and value of sub-Saharan African exports of fresh fruit and vegetables. In recent years, EU imports of fresh fruit and vegetables from sub-Saharan Africa continued to grow, but at a much slower pace than fresh fruit and vegetables imports from other developing countries. As a result, the sub-Saharan African share in EU imports from developing countries decreased. This could be attributed largely to the erosion of ACP (African, Caribbean and Pacific Group of States) tariff preferences,23 the introduction of new varieties, and supply-capacity problems in sub-Saharan Africa. The larger penetration of PVS in the EU market and stricter application of GLOBALGAP in this period could also have affected fresh fruit and vegetables producers and exporters in sub-Saharan Africa, but more detailed analysis would be needed to assess such effects. The fact that trade performance has been uneven among sub-Saharan African countries24 indicates that many other factors have played a key role. In the case of large and traditional trade flows, producers and exporters in sub-Saharan Africa seem to have coped well with more stringent public and private sector standards although this masks, to a certain extent, a shift from smallholder to agrifood estate production. In some countries with smaller trade flows, and in smaller countries, problems in complying with PVS may result in export losses.
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Of the three sub-Saharan African countries studied, Kenya, a traditional supplier of UK supermarket chains, has the most exposure to private sector standards, whereas Uganda, which largely exports to wholesale markets, probably has the least exposure. Ghana may be somewhere in the middle, as the competitiveness of Ghanaian fresh fruit and vegetables exporters has so far been based on supplying the lower end of the market, but this is likely to change as the focus shifts to supplying higher value-added products, in particular in the fresh fruit sector.
From the various case studies, it is clear that there is no one size fits all solution for addressing the challenges of PVS and developing and implementing national good agricultural practice schemes. Kenya has successfully benchmarked national standards (KenyaGAP) to GLOBALGAP. Ghana has developed a roadmap and is currently considering various options. In Uganda, developing and implementing national standards is quite a challenge, but the countrys experiences in the flower sector and with organic agriculture may be very helpful. When contextualising national programmes, it is important to realise that they need to be part of a development framework that emphasises both the commercial context (i.e., compliance with downstream market standards) and the non-commercial sustainability aspects, such as social, environmental and economic benefits. This is the rationale for using public (and development assistance) resources to support national good agricultural practice implementation. In short, the factors of success for meeting PVS standards are: n Enhancing awareness of the benefits of good agricultural practice schemes and promotion of their wider use. n Improving infrastructure (e.g., cold storage facilities, transport), publicprivate partnerships, an enabling legal/regulatory framework to facilitate compliance with control points and compliance criteria, and extension services and support to private sector activities (e.g., in the area of support services and certification). n Strengthening linkages between producers and exporters/importers. n Supporting effective and stable producer organisations. n Deploying tools and mechanisms to reduce compliance and certification costs to small-scale farmers. For developing and implementing national standards the following issues are important: n A clear understanding of the concepts and objectives; adequately reflecting smallholder conditions and market requirements (a modular approach may be needed). n Assuring broad stakeholder participation and clearly defined roles of the government, the private sector and other stakeholders. n An enabling policy framework that assures enforcement of mandatory food safety requirements and provides incentives to comply with PVS. n Flanking/supportive measures to address constraints of implementation, in particular as regards small-scale farmers. n Reliable and internationally accredited inspection, certification and laboratory services.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 143
Fresh Perspectives 31
Development practice, agrifood standards, and smallholder certification: the elusive quest for GLOBALGAP?
Stefan Ouma Stefan Ouma is a research associate and doctoral candidate at the Department of Human Geography at the University of Frankfurt. His research interest focuses on value chains, global food governance, and local economic development with a particular focus on sub-Saharan Africa. He has worked on agrifood chains, standards, contract farming and institutional change in Kenya and is currently doing his doctoral thesis on the integration of Ghanaian firms and farms into the global agricultural market.
Key messages
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n Smallholder farmers can achieve GLOBALGAP certification, but certification is challenged by organisational, managerial, and economic constraints as well as by the need for continuous system maintenance. n Successful certification schemes are typified by strong exporter links and judicious use of donor funding. n Donor organisations must have a clear exit strategy to ensure business incentives are both aligned and sustainable. n Problems related to adjusting to GLOBALGAP must be considered as more than mere technical issues, but situated in the wider context of structural constraints; these are deficiencies in local production systems, the volatility of fresh produce markets (and thus difficulties for farmers to generate a stable income), and the flaws in the local institutional setting (e.g., lack of investment security due to opportunistic behaviour, public service provision).
There has been a widespread fear among different international development organisations that the proliferation of GLOBALGAP would lead to the exclusion of smallholder farmers from high-value markets in horticulture-producing countries across sub-Saharan Africa. Accordingly, supporting smallholder certification to GLOBALGAP and related capacity development at both farm and institutional levels has been put on the development agenda by Gesellschapt fr Technische Zusammenarbeit (GTZ), the Department for International Development (DFID), the United States Agency for International Development (USAID), the Comit de Liaison Europe-Afrique-CarabesPacifique and the Pesticides Initiative Program (COLEACP/PIP), and recently the World Bank in several developing countries, including Ghana and Kenya as prominent examples.
This briefing paper draws on results from a research project on the impact of GLOBALGAP on value chains in the horticulture sub-sector in Kenya (and to a lesser extent on preliminary results from a new project on Ghana25) with critical reference to the certification of smallholder farmers.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 145
able to develop paternalistic support systems or cost-effective quality management models while spreading the costs of certification along the whole value chain (see figure 1).
Figure 1. Different support models of exporters for smallholders seeking GLOBALGAP certification
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Exporter-linked farmers have experienced mostly non-tangible benefits, ranging from less input use to higher productivity levels. In some cases, farmers received higher farm-gate prices and obtained a preferred supplier status where strong linkages with exporters were given. However, these were mostly more commercially orientated farmers with sufficient resources and skills at their disposal (see figure 2). Most exporters received donor assistance, which can be helpful if carefully targeted. However, this has not always been the case. Donor projects were often uncoordinated and not informed sufficiently about the nature of horticultural markets and value chain relations. The green bean rush and the call for the market inclusion of smaller players often resulted in the certification of groups that are no longer in existence today due to a breakdown or lack of exporter linkages, group mismanagement, or lack of funds. As empirical results show, sustainable certification of smallholder farmers rests on several determinants (nature of relation with the exporter, capabilities of farmers, group cohesion, farming skills), which must be kept in mind when supporting certification at project or programme level.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 147
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Fresh Perspectives 32
Are private standards important to small-scale grower project sustainability? A personal view
Steve Wright Steve Wright is the Technical Manager for Blue Skies Holdings Ltd., which has small-scale growers supplying fruit to their Ghanian, Egyptian and Brazilian high-care factories. Over ten years Blue Skies has earned an excellent reputation for working fairly and in partnership with farmers, and in so doing has created sustained income and development. Blue Skies is market-orientated.
Key messages
n Too often, development agency projects fail to connect smallholders to export markets since they are production-orientated whereas private sector trading partners would invest in market-orientated strategies. n Export businesses have clear advantages over development projects in building sustainable smallholder participation in export chains, drawing on strong leadership, commercial understanding of customer demand, and capable staff to deliver results. n Small-scale producers and development agencies should rethink their goals towards a more market-orientated approach and value-appreciation of produced goods.
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Today, there is still debate about how to identify vulnerable groups, target resources, and design projects to increase the income and improve the quality of life of the very poor. A great deal of discourse, activity and funds have focused on connecting small-scale growers to international markets, examining and overcoming international market private standards, and attempting to make processes sustainable now and in the future. Yet despite so much close attention, all too often the withdrawal of support and donor funds signals project decline and eventual demise. The question is why? Project sustainability success produces a rather different question: is the project productionorientated i.e., how can income be gained by trading local produce internationally? Or is it marketorientated i.e., what does the market want, and how can goods or services be created to meet market demand? Both approaches may end up using local labour and supplying locally-sourced goods/services to the international trade. This paper seeks to highlight how fundamentally different the basis, outlook and governing factors of each approach is, plus the respective outcomes of each approach. It also examines the perception and the role of private standards for each outlook.
Section 5.3: Adapt donor support to promote profitable options for smallholders 149
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Smallholders have great trouble adapting standard requirements to their own realities
Actually implementing identified standards needs the right approach. While the control point questions might be international, the answers should be appropriate and practical at the local level. Today there is a very real difficulty interpreting clever control point questions designed for sophisticated developed country farms into questions relevant to the simple farming circumstances of most small-scale growers. Export businesses have an inherent advantage: they are connected to industrialised country import firms, which often have technical staff and expertise available to work through the required standards, and understand what they mean and how they can be implemented. Smallholder groups may have development agency support, but development agencies rarely have practised expertise in the different standards and their implementation. This means small-scale growers struggle from the outset with schemes and fail to deliver clever (and appropriate) answers to control point questions. When external funding ceases and smallholders have no more support to maintain these standards, schemes often cannot continue to function. What is missing from small-scale grower groups is a driving force to implement standards and continue to develop them over time.
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Section 5.3: Adapt donor support to promote profitable options for smallholders 151
Sustained income generation, and all the benefits that develop from it, occurs as a result of paying attention to the market, not as a result of paying attention to production. This means development agencies need to rethink the goal of improved income for poor people so that it becomes identify markets, customers, goods and services and align local resources to supply; the improved income that results then benefits the participants. Simultaneously, decision-makers at all levels need to have their models and even beliefs restructured so that with the same local-level resources (and development agency support/funding) connections are better made, goods or services flow, and income-generation becomes sustained. When the time comes to efficiently place funding, lever development agencies should always consider value how can local goods and services be valued by consumers in international markets? Taking this approach sidesteps the traditional treadmill of increasing quality for ever lower-priced farm products, and perhaps also means local people can engage with international consumers in their local region, using appropriate and practical means. The sisal woven handbag produced in Kenya has become an iconic international fashion item. One wonders if this hard-won success could have been facilitated and enlarged by value thinking and better market connections rather than leaving it to slowly gain market interest from returning tourists over the years. What else could be in the pipeline just waiting for the right approach?
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The genuine difficulty in having small-scale growers engage with a sophisticated industrialised market with meaningful (and hopefully appropriate and practical) goods or services lies in creating and sustaining market connections. Long term, the profit motive from investors in a business structure appears to be the model that works consistently. Perhaps the single largest constraint in development work is belief (or rather lack of belief ); belief it is possible, belief it is practical, belief that the project can work, belief that if actions are sustained then income will result. Finally, the mechanisms of communication should be considered. What are the dots, what are the connections between the dots, and what is the resulting picture? Participating small-scale growers should understand businesses need to operate in a certain way and connect with their customers effectively if they are to succeed. Connecting effectively means uncovering missing dots and misplaced connections, and bringing a different view in to create understanding and reliable and desirable outcomes. What we say and how we say it are vital parts in helping people obtain the full picture. In this light, one wonders: how much is project failure down to miscommunication, not just an incorrect approach?
5.4 Researchers, standard-setters and service providers as tool providers to assess alternatives
Research is required to provide simple guidelines or tools to assist exporters to map the participation of smallholders in their supply networks. Such tools can also help exporters in understanding the development impact of their horticulture operations, and are a means to improve that impact within the commercial realities of business. Alternative options are required for marginalised smallholders such as non-certified or domestic markets. It is important to help secure the existing trade in non-certified produce for domestic, regional and wholesale export markets. Consideration needs to be given to helping farmers and exporters establish a simple system of traceability and crop record-keeping, thus helping the food service supply companies that audit their suppliers. Such a system would be much simpler than private sector certification such as GLOBALGAP, but it would give increased confidence to the food service sector and help with improving their due diligence. Consideration could also be given to the establishment of a simple certification procedure for some segments of the sub-Saharan African regional market. Researchers should continue to gather consistent and reliable field data including both economic and social to enable mapping of small-scale producer participation and creation of a methodology for analysing any development impacts. In particular, more robust longterm research is necessary to assess progress and build strong conditions for improvement and replication. Standard-setters should appreciate that meeting supermarket standards has costs and benefits for all producers. Since costs are increasing and are squeezing poorer and smallerscale farmers out of this market, they should take opportunities for cost reduction seriously. Notably, costs of compliance could be reduced without compromising the integrity of standards if revisions could base the level of control on a clear understanding of the risks associated with different crop types and production practices. Much can be done to improve the inclusiveness of procurement with minimal impact on risk. On food safety, for instance, most small-scale production for export in sub-Saharan Africa would fall into lowrisk categories. A methodology to assess the development impact of PVS should be applied to any standard. This would guard against crafting more complexity into PVS than is practical. Revisions to existing PVS are usually assessed in terms of financial costs and benefits and from the viewpoint of the buyer and the retailer. Thus the views of producers, and the non-financial benefits that producers and producer nations accrue, may not be fully represented in a financial assessment of the additional criteria. A producer voice in standard setting is vital. It is strongly recommended that the position of the Africa Observer in GLOBALGAP be strengthened and supported by GLOBALGAP members, in order that it is less reliant on donor subsidy.
Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 153
Fresh Perspectives 33
Private standards: a personal perspective from a training service provider
Henry Wainwright and Louise Labuschagne Henry Wainwright and Louise Labuschagne jointly run The Real IPM Company (K) Ltd., employing 70 people. It primarily focuses on crop protection and options for pesticide reduction and it undertakes training and consultancy for others as well as producing and promoting the use of biocontrol agents, mainly in the horticultural sector.
Key messages
n The success of any producer group lies in its organisation and discipline, which will enable the group to function and meet a PVS. n Farm practices have improved in the horticultural sector as a result of private standards. n The exporter is a key component to implementing a private standard and to transferring knowledge and technology development to the small-scale producer. n Small-scale producers can meet and have met the standards, and from our first-hand experience often to a higher standard than producer units in Europe.
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The Real IPM Company (K) Ltd. is an associate member of GLOBALGAP and has four registered trainers with GLOBALGAP. As a company based in Kenya, we undertake training in support of GLOBALGAP with particular reference to: n enabling companies to comply with the required criteria and checklists (e.g., training in the safe use of pesticides, field hygiene, integrated pest management); n training company staff in the GLOBALGAP principles and practice; and n internal audit training. The Real IPM Company (K) Ltd. has extensive knowledge and experience of training, and has no involvement with certification or with any organisations that undertake this private standards function. Thus this briefing paper aims to provide a personal view on the impacts and conditions for success of private standards. The opinion expressed is purely derived from field experience and training implementation and is not the result of a systematic scientific study.
Failure of smallholders to join and comply with standards is often the consequence of a lack of discipline from producers
Private standards like GLOBALGAP are demanding on the producers. These demands can take the form of management time: the need for systematic organisation, preparation, system maintenance, increased time for staff training, development and maintenance of recording systems, and
Rose scouting
development and financing of infrastructure, while still managing to produce a crop on time and of the right quality. Issues raised by the producers, especially when entering a private standard for the first time, are often related to the perceived complexity and worthlessness of bureaucracy. Yet many producers come back for a re-audit the next year, and negative opinions do decrease as benefits are seen and appreciated. The successful smallholder group has a regular outlet, which is stable in both quantity and price. Many of these grower groups existed before private standards were developed, but these groups adopted private standards as part of their business evolution. However, the success of any producer group lies in its organisation and discipline, which will enable the group to function as a single entity. In Real IPMs experience, failure of a group to maintain a private standard is the failure of the group to function as a cohesive unit rather than due to the demands of the standard. What constitutes a successful group is complex, and cannot simply be related to physical characteristics like group size, location, etc. Groups can be formed by like-minded individuals; however, those that form spontaneously without any commonality will be limited. Groups need to be nurtured and supported, and this is a prime task of the exporter. The role of the exporter in maintaining the integrity of a group is quite critical here.
Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 155
Hilary Wainright
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Exclusion of producers from the export market due to their inability to meet standards is a reality. However those who have been excluded are likely to be inconsistent producers who come and go from the market, often through a middleman. The negative opinions concerning middlemen (did not turn up to collect the crop, offered a very low price, only came when they were short of crops, etc.) have been replaced by the claim that private standards are excluding the small-scale producer from the market. Those who complained about middlemen are often those who complain about private standards.
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The role of donor support needs more careful comparative review and harmonised action plans that leave behind a sustainable industry. Generic tools: training and skills development are key components in implementing private standards. Rather than donors paying for more training and certification, the production of generic tools (adaptable documentation) that are more widely available (downloadable from the internet) is potentially more valuable. The work by GTZ on its generic quality manual is potentially transferable and a valuable asset for others. Comparability: the small-scale producers can meet, and have met, standards and from Real IPMs firsthand experience often to a higher standard than producer units in Europe meticulously managed pesticide stores are regularly seen on very small Kenyan shambas (farms) that comply with a private standard. Therefore the challenge is to find ways to expand this best practice.
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Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 157
Fresh Perspectives 34
Rethinking the value chain in the fruit and vegetables sub-sector
Amos Waweru Amos Waweru is the lead consultant with Standards & Solutions Consulting Ltd. and has worked extensively with small-scale farmers in Kenya and other East African countries on certification to standards, market development, and business services provision.
Key messages
n It can no longer be business as usual if continued participation of small-scale farmers is to be sustainable. n Small-scale producers must be able to operate as business units that are efficient and competitive. n For this to happen, government and the other stakeholders in the supply chain must support them by providing an enabling policy environment and conspicuous incentives.
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Service providers are third-party organisations that do not participate directly in delivery of goods in the supply chain. Rather they interact with buyers, exporters and producers to provide tools, advice and guidelines for supply chain actors to understand, monitor and quantify their business features and partners. Examples of service providers include government, NGOs, and private consultancy companies. Service providers act as important brokers in ensuring continued participation of small-scale producers in the fruit and vegetable export industry by facilitating a suitable policy environment, identifying and promoting incentives for exporters to interact with small-scale growers, and recommending innovative business models to ensure winwin scenarios.
Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 159
Amos Waweru
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Guidelines and tools for exporters to understand the development impacts of their operations
First, an understanding of development impacts is necessary. These impacts are either intended or incidental. The impacts can be mapped out into the following categories but are not limited to these alone and could include others or/and be grouped differently: 1. Economic impacts. This includes incomes earned by the different actors, and opportunities for employment and jobs creation. 2. Market information, technology transfer and skills acquisition along the value chain. This concerns how information from the consumer flows along the chain and back to the producer, and how the actors respond by acquiring skills and new technology to meet the demands of the consumer and continually satisfy their needs. 3. Business skills development and upgrading, particularly for the smallholder farmers as well as the other actors in the chain. This concerns how the small-scale farmers manage their production in a businesslike manner, which emphasises commercialised production activities rather than subsistence-orientated production and thinking. 4. Social impacts. Development of farmer groups as business units. Due to the rigorous quality requirements of exporters, the small-scale farmers, groups and individuals have been forced to become more efficient in terms of management in order to avoid being excluded from the chain. Therefore farmer groups have become the preferred business unit, one which is most effective in managing the complex needs and requirements of the exporters. 5. Environmental benefits arising from application of good agricultural practices such as the safe and effective use of pesticides. This mainly concerns the protection of waterways from harmful effects of plant protection products, health and safety of the small-scale farmers and their workers by lower exposure to these plant protection products, and hygienic farms and homes, which generally increases standards of living. 6. Infrastructural development, which increases the asset base of the chain to meet market requirements. This will include hardware and equipment such as collection centres, pesticides and fertiliser stores. Based on these possible development impacts, the following would act as indicators for robust monitoring and evaluation that would assist exporters in mapping their small-scale suppliers and understanding the threats and benefits of the trading relationships. 1. Contract duration: the time that small-scale farmers are contracted to an exporter. This would provide an indicator of the kind of relationship existing between them, and the benefits accruing to the stakeholders involved. 2. Numbers of small-scale farmers included: increasing or decreasing the number of farmers who engage with the exporters. This can be tracked using the farmers registers of the farmer groups contracted. 3. Complaints tracking mechanisms in place: exporters complaints to the farmers are recorded and analysed in order to assess their nature (quality issues, contractual issues such as side-selling of contracted produce). Over time, these complaints are assessed in terms of how they change in relation to their nature and frequency of occurrence in order to determine how effective the farmers are in meeting the exporters requirements. 4. Surveys carried out: exporters can carry out periodic surveys to gauge the impact that they have had amongst the small-scale farmers.
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5. Field days with the small-scale farmers that would serve as a tool to obtain feedback from them and help the exporters respond to their needs.
Guidelines and tools for the small-scale farmers to connect with lucrative markets
1. Good agricultural practice. Small-scale farmers need to demonstrate their application of good agriculture practices to current and potential markets. This will be mainly through keeping records of all farm practices and particularly those concerned with the application of plant protection products and harvesting (among others). Also, self-assessment using the current checklists of existing standards or modified versions of these checklists will become increasingly important. 2. Risk assessment. Of primary importance are risk assessments carried out on food safety, but also of importance are those carried out in other areas such as the environment and workers welfare (depending on the requirements of the markets). This is particularly critical when niche markets are being targeted, such as those of Fairtrade. The purpose of the risk assessment is to demonstrate to the markets that an evaluation of risks and their levels has been undertaken, and that, as a result, control measures have been designed and are at various levels of implementation. 3. Easily comprehensible market requirements tools that will enable the farmers to understand and respond to the criteria they are expected to meet, e.g., quality specifications, standards (if any), food safety regulations. 4. Knowledge and skills levels guidelines that will broadly detail what competencies are required for the small-scale farmer to access those markets. This will assist in building the capacities of these farmers. This knowledge relates more specifically to the application of good agriculture practices and crop husbandry practices. This briefing paper has discussed the importance of service providers in facilitating exporters to be more inclusive of small-scale farmers when making decisions on which suppliers to use. With a business as usual attitude, many more small-scale farmers are likely to drop out of these export markets. From the service provider perspective, it is important to explicitly inform the exporter of the development benefits that inclusion can have, as well as to work with the exporter to create business models that work for them. Part of this process is educating the small-scale farmers on good practices to better enable them to meet the high demands of dynamic export markets. The result is a business model that includes responsive small-scale farmers and works for sustainable development.
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Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 161
Fresh Perspectives 35
Mind the GAP. Why a user-friendly knowledge system is necessary to reconcile private standards and public responsibilities
Peter S. Baker Dr Peter Baker is Commodities Development Specialist at Commonwealth Agricultural Bureau International (CABI), a not-for-profit agricultural research organisation. Dr Baker has more than 25 years experience in entomological research and training, as well as in consultancy work in science for development. He has particular experience in commodities especially coffee including sustainable pest control, farmer participatory approaches, biodiversity, and smallholder farmer issues. Agriculture is back. Until quite recently there was little global concern about the availability of food, and a general belief that technology would provide a solution to any supply problem. However now, a combination of rising populations, environmental degradation, escalating oil prices, and demand for biofuels suggests that the era of cheap resources is over.
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Government is back too. At least 29 countries have significantly reduced food exports in recent months, action to simply ensure that people have enough to eat. In the case of rice for example, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries have capped or halted wheat exports (Bradsher and Martin 2008). The implications for the global economy are serious, as Joachim von Braun, Director General of the International Food Policy Research Institute, said: If one country after the other adopts a starve your neighbor policy, then eventually you trade smaller shares of total world production of agricultural products, and that in turn makes the prices more volatile (Ryan 2008). The World Bank World Development Report 2008 portrays a more nuanced approach: The private sector drives the organisation of value chains that bring the market to smallholders and commercial farms. The state through enhanced capacity and new forms of governance corrects market failures, regulates competition, and engages strategically in public-private partnerships to promote competitiveness in the agribusiness sector and support the greater inclusion of smallholders and rural workers. In this emerging vision, agriculture assumes a prominent role in the development agenda.
But an era of food and energy shortages is a dangerous time: the increased complexity of agrifood management and governance a gamut of public, private and civil society bodies risks a future of ill-defined responsibilities that may variously include cooperation, duplication, intervention and unilateral response to crisis. The EU Economic Partnership Agreements now being signed will open up developing countries to more opportunities in Western markets as well as greater imports of food. But how will policies aimed at boosting aid-for-trade interact with food aid programmes and national food security issues? There is already confusion in the minds of many farmers and their support institutions about which standards of sustainable production are best for them in the long run. There are also signs of confusion at the level of international policymaking too. The recent unrealistic assumptions surrounding biofuel policy, for instance, show a lamentable lack of understanding and due scientific process. There is every sign too that the public does not have full confidence in the ability of governments to regulate food and the increased purchasing of organic and fair trade labels for assurance of purity is a clear signal.
Complexity
The focus of this briefing paper is complexity and how we deal with it; environmental parameters that we once considered immutable are now in flux and are interacting with a world crowded with multiple stakeholders holding diverse views and shifting policies. Developing countries are faced with very difficult decisions. To what extent should they invest in risky long chains to export to distant markets and rely on food imports that can be rapidly cut off? How do they make the correct decisions based on the price of energy, other input costs, world food prices, environmental risks, land degradation and so on? The processes and assumptions for decision-making at the national and international level are poorly known and opaque. Models, expert systems and the like may exist but are surely inappropriate and inadequate for the major responsibilities we now face. The deepening global economic crisis only confirms a general feeling that, when it comes to an understanding of how our world works and taking rational action, we do not seem to be getting smarter. It is plain though that farmers, businesses, governments and NGOs are expected to work together and private standards are the clearest manifestation of this alliance. But while the number and complexity are increasing, the role of private and public actors in supporting implementation is unclear. NGOs carry out training to comply with business standards, often supported by public finance, but will this continue to expand and come to represent a force equal or superior to ailing national extension bodies? The interface with the farmer is a crucial point in the chain and we may be leaving too much to chance in this new age of uncertainty.
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Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 163
The sort of sustainable systems that we all want to promote imply a new way of working. Conventional planning and thought, based on agronomy and business plans, are not enough because truly sustainable production has to look much further into the future than we can manage with spreadsheets alone we need to improve our thinking.
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A mix of databases, maps, models, simulations, expert systems and case histories could provide a list of technical possibilities seen as most likely to work over an agreed time span. Then, through a mix of dialogue, demonstration and participation, these could be placed into the public domain for universal consideration. The guiding principle would be that all have access to the same information and knowledge from which, ultimately, farmers, co-operatives and businesses develop viable business plans for their future. A high level of user-friendliness would be required. At present such a system does not exist but can be developed. It would take time and resources to build and there would be initial failures and gaps in understanding that would help inform research agendas. But it would only get better through subsequent iterations. In the main, the resources would have to come from the public purse, but would easily be cost-effective because of improved understanding and reduction in waste of donor funds for future projects. The irony is that we have far more information available to us than ever before, but we are not making the best use of it as we say in CABI, the world is drowning in information but starved of knowledge. The brilliant Nobel laureate climate modellers have shown the way; we must simply try to build upon the foundations they have given us. The problem of sustainable development is really a stalking horse for the grand debate in which science is now involved with broader society, much as the contentious motion of the planets was Galileos stalking horse over 350 years ago for the then-emerging science of dynamics, which led to the breathtaking, all-encompassing sweep of Newtons physics.
This is a debate about how we should understand difficult things. Scientists have not joined this debate with society since the Renaissance, when Galileo confronted the church, and argued for a new physics argued that the physical world could be understood through a rational and material process which came to be called the scientific method. This, in the end, transformed society and swept away the Middle Ages. We now face a debate of similar proportions and consequence. (Bradbury 1998)
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Section 5.4: Researchers, standard-setters and service providers as tool providers to assess alternatives 165
Section 5 references
Anstey, C. (2008), Improving buyer awareness: developing guidelines to increase buyers, knowledge of the people working in their supply chains. Fresh Perspective series no. 35, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Azaglo, M. and S. Derrick (2008), Private voluntary standards: placing small-scale growers on a different footing. Fresh Perspectives series no. 29, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Baker, P. S. (2008), Mind the GAP, why is a user-friendly knowledge system necessary to reconcile private standards and public responsibilities? Fresh Perspectives series no. 37, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Bradbury, R. H. (1998),Sustainable development as a subversive issue. UNESCO flagship Nature & Resources October 1998. Bradsher, K. and A. Martin (2008), Hoarding nations drive food costs even higher. New York Times 30th June. Chartered Institute of Purchasing and Supply and Traidcraft Exchange (2008), Taking the Lead. A guide to more responsible procurement practices. Available to download at www.cips.org/documents/ Taking%20a%20lead.pdf. Dolan, C. and J. Humphrey (2000), Governance and trade in fresh vegetables: The impact of UK supermarkets on African horticultural industries, Journal of Development Studies 35:147-177. Fulponi, L. (2007), The globalization of private standards and the agrifood system in J.F.M. Swinnen, (ed.) Global Supply Chains, Standards and the Poor: How the Globalization of Food Systems and Standards Affects Rural Development and Poverty. KU Leuven, Belgium. Graffham, A., E. Karehu and J. MacGregor (2007), Impact of GLOBALGAP on small-scale vegetable growers in Kenya. Fresh Perspectives series no. 2, DFID/IIED/NRI. Available at www. agrifoodstandards.net Hoffmann, H. and R. Vossenaar (2008), Proactively complying with private voluntary standards: key findings of country case studies in Ghana, Kenya and Uganda. Fresh Perspectives series no. 17, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Humphrey, J. (2008), Donor responses to the challenges of GLOBALGAP in Kenya. Fresh Perspectives series no. 20, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Jaffee, S.M. (2003), From Challenge to Opportunity: The transformation of the Kenyan fresh vegetable trade in the context of emerging food safety and other standards. Agriculture and Rural Development Discussion Paper 1. World Bank, Washington, DC, USA. Knig, T., J. Blatt, K. Brakel, K. Kloss, T. Nilges and F. Woellert (2008), Market-driven development and poverty reduction: A value chain analysis of fresh vegetables in Kenya and Tanzania. Seminar fr Lndliche Entwicklung, Centre for Advanced Training in Rural Development, Humboldt University, Berlin, Germany. Mausch, K. (2007), Do EUREPGAP standards favour large-scale vegetable producers in Kenya? Unpublished M.Sc. thesis. Faculty of Economics and Business Administration, University of Hannover, Germany. Mithfer, D. (2007), Economic impact assessment as a decision-making tool for resource allocation in horticultural research in East Africa. Funded by the German Federal Ministry for Economic Cooperation and Development (BMZ/GTZ). Available at www.gtz.de/de/dokumente/enICIPEprojekt4-2007.pdf. Mithfer, D. (2008), Linking smallholders to high-value crop markets: how does the group approach work? Fresh Perspectives series no. 25, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Mithfer, D., E. Nangole and S. Asfaw (2008), Smallholder access to the export market: the case of vegetables in Kenya. Outlook in Agriculture 37(3):203-211 MoARD, (2001a), National Agricultural Extension Policy (NAEP). Ministry of Agriculture and Rural Development, Nairobi, Kenya.
MoARD, (2001b), National Agricultural and Livestock Extension Programme (NALEP). Implementation Framework. Ministry of Agriculture and Rural Development, Nairobi, Kenya. Okello, J.J., C. Narrod and D. Roy (2007), Food Safety Requirements in African Green Bean Exports and Their Impact on Small Farmers International Food Policy Research Institute Discussion Paper 737. IFPRI, Washington, DC, USA. Available to download at www.ifpri.org/pubs/dp/IFPRIDP00737.pdf. Okello, J.J. and S.M. Swinton (2007), Compliance with international food safety standards in Kenyas green bean industry: Comparison of a small- and large-scale farm producing for export, Review of Agricultural Economics 29:269-285. Okello, J., C. Narrod and D. Roy (2008), Smallholder compliance with international food safety standards is not a fantasy: evidence from African green bean producers. Fresh Perspectives series no. 15, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Ouma, S. (2008), Development practice, agrifood standards, and smallholder certification: the elusive quest for GLOBALGAP? Fresh Perspectives series no. 21, DFID/IIED/NRI. Available at www. agrifoodstandards.net. Paalhaar, J. (2007), The influences of group culture on the participation in the export market: A case study of farmer groups producing for the horticultural export market in Kenya. Unpublished M.Sc. thesis. Department of Social Sciences, Wageningen University, The Netherlands. Ryan, M. (2008), Starve your neighbour, policy foils food trade, Reuters, March. Available online at: http://in.reuters.com/article/businessNews/idINIndia-32301720080305. Sautier, D., H. Vermeulen, M. Fok and E. Binabe (2006), Case studies of agri-processing and contract agriculture in Africa. Background paper for the World Bank World Development Report 2008. Available at www.rimisp.org or www.cirad.fr. United Nations Conference in Trade and Development (UNCTAD) (2007a), The implications of private-sector standards for good agricultural practices. Exploring options to facilitate market Aaccess for developing-country exporters of fruit and vegetables: experiences of Argentina, Brazil and Costa Rica. UNCTAD/DITC/TED/2007/2. New York and Geneva. United Nations Conference in Trade and Development (UNCTAD) (2007b), Challenges and opportunities arising from private standards for food safety and environment for exporters of fresh fruit and vegetables in Asia: experiences of Malaysia, Thailand and Vietnam. UNCTAD/DITC/ TED/2007/6. New York and Geneva. United Nations Conference in Trade and Development (UNCTAD) (2008), Private-sector standards and national schemes for good agricultural practices. Implications for exports of fresh fruit and vegetables from Sub-Saharan Africa: experiences of Ghana, Kenya and Uganda. UNCTAD/DITC/ TED/2007/13. New York and Geneva. Wainright, H. and L. Labuschagne (2008), Private standards: a personal perspective from a training service provider. Fresh Perspectives series no. 32, DFID/IIED/NRI. Available at www.agrifoodstandards.net. Wareru, A. (2008), Rethinking the value chain in the fruit and vegetables sub-sector. Fresh Perspectives series no. 36, DFID/IIED/NRI. Available at www.agrifoodstandards.net. World Bank (2008), World Development Report 2008. Agriculture for Development. Washington DC, World Bank. Available at http://216.239.59.104/search?q=cache:an_XE-XDxtIJ:siteresources. worldbank.org/INTWDR2008/Resources/2795087-1192111580172/WDROver2008-ENG.pdf+Wor ld+Development+Report+2008+Agriculture+for+Development.+World+Bank+Washington.&hl =en&ct=clnk&cd=1&gl=na. Wright, S. (2008), Are private standards important to small-scale grower project sustainability? A personal view. Fresh Perspectives series no. 24, DFID/IIED/NRI. Available at www. agrifoodstandards.net.
Concluding remarks
This project points strongly to the need for three chief agents to work together to recognise the costs and benefits of their actions, and of others, in order to ensure both the development potential and the sustainability of agrifood systems are maximised. The trends in this integrated pattern of operating agrifood supply chains are nascent but increasingly promising for all sub-Saharan African farmers. Donors and governments continue to promote and support small-scale producers access to certified agricultural export markets in the belief that this leads to the generation of economic profits and livelihood enhancement. Private sector businesses are increasingly committing to the development agenda, sourcing from smallscale producers being a proactive answer to reputational risks as well as a profitable economic investment. And farmers are continuing to prove they can produce high-quality produce to exacting standards. Indeed, although PVS are often perceived as a barrier to African small-scale producers, primarily because of the necessarily high farm-level investment in compliance, those who can afford to meet the standard requirements welcome the range of benefits from preferential market access including higher net returns, technology transfers, and access to upgraded input markets and services. And the benefits are not limited to these compliant farms. Spillovers into the rural economy are an essential component of poverty alleviation, improved farming practices, and upgraded regional food quality. Complementary to focusing on PVS compliance of smallholders in export markets, efforts should also target developments in the domestic and regional markets. Much can be learned from the experiences of Asia and Latin America, where regional trade has played a significant role in economic development. The fastest-growing trade is occurring among developing countries or from industrialised to developing countries, whereas conversely orientation on PVS has always been from developed to developing countries. There is a strong need to build equally lucrative local and regional markets in Africa. Assuming that the final goals are economic, development and environmental benefits, public and private partners should favour a comprehensive and consistent approach towards fostering trade in developing countries. In the context of climate change pressure and food price concerns, sub-Saharan Africa increasingly needs to move away from the traditional paternalistic system. Importantly, this challenge will need to be backed by supportive and coordinated policies of both donors and businesses.