Session 4. Bramley - Dual Standards in South Africa Produce Markets

Dual food standards in South Africa

Cerkia Bramley cerkia.bramley@up.ac.za

Context

Following a number of high profile food safety incidents, concern over food safety has escalated in recent years.

Consumer demands and liability risk has led to retailers demanding more onerous food standards

Context

While food standards reinforce consumer confidence in a global food system and reduce food safety and quality risks for retailers, they also impact participation in the food system:

– Proliferation of standards – Multiple audits – Onerous requirements in terms of documentation etc.

Context

Private standards are fast becoming the key factor in determining market access (Henson (2006).

Particularly significant for small scale producers, with a growing body of research exploring the impact of food safety standards on small scale farmers’ ability to access international markets (Reardon et al. 2009; Henson and Humphrey, 2010, Maertens, 2006).

Context But! Potential for standards to include SCF in developing countries in high value supply chains, which are driven by consumers’ demand for quality (Ponte and Gibbon, 2005; Giovannucci, 2003).

Impact of standards on participation in food supply chains dependant on the enabling policy and institutional environment.

Context

Paradoxically, while food standards have become a major concern to market access for developing countries, the lack of food safety standards within these countries continue to pose a threat to public health. Rising consumer demand for food safety but public regulatory frameworks remain insufficient: – Fragmentation – Overlapping mandates – Lack of coordination – Lack of monitoring and enforcement

Question

Can dual standard development advance market access for emerging farmers while at the same time ensuring public health.

Dual Standard Setting

Both public and private initiatives in a number of developing countries to adapt international standards to account for local conditions in order to ease access for local farmers to export markets.

Dual Standards Setting

GlobalGAP has programs to adapt their standards for so-called “local” production, creating less onerous procedures intended to provide the most basic level of food safety and to be accessible to producers with little background in food safety management = LocalGAP standard

Development of KenyaGAP and ChileGAP

Project outline

Research question:

Is there potential for dual standards development in South Africa both from a public health and market access perspective?

Could FPMS be driver for LocalGAP in South Africa?

Fresh Produce Markets in SA

Primary mechanism for price formation, marketing and distribution of fresh produce in SA.

Around 60% of all fresh produce traded pass through the FPMs.

Operate on commission basis with producers delivering their produce to market agents who then sell the produce to buyers.

Four largest markets represent 74% of volumes sold on FPMs in SA.

Fresh Produce Markets in SA

SUPPLIERS

Both large and small scale farmers deliver to fresh produce wholesale markets.

Large scale commercial farmers still supply the bulk of produce sold on fresh produce wholesale markets, delivering between 80% - 90% of the supply.

Around 10% of produce sourced from emerging farmers.

Fresh Produce Markets in SA

BUYERS:

Both the formal and informal sectors are served by FPMs in South Africa

Informal buyers including spaza shops, corner cafes, street hawkers – 60%

Formal buyers– 40%.

Fresh Produce Markets in SA

BUYERS:

Contrary to what is generally thought, retailers are topping up produce sourced through contract by buying on FPMs.

Increasing trend - currently at around 10% of FPMs sales.

Potentially significant in terms of food safety driver on FPMs.

Food Safety on FPMs

Public regulatory framework provided by:

Department of Agriculture

Departement of Heatlh

Benchmarked to Codex standards

Market itself more engaged in managing quality rather than safety

But it appears that at least on paper that food regulation is sufficient.

Food Safety on FPMs

Problem is lack of monitoring and enforcement:

Lack of man-power by relevant authorities

Irregular sampling done

Poor lab facilities

Poor capacity to test for pesticides

Food Safety on FPMs

Even for retailers there is evidence to believe that they do not inspect for food safety for produce procured at the market.

Do not test for example for pesticides.

Potential for dual standards Given existing public regulatory framework, a dual standard will only make sense where it can improve on monitoring and enforcement of food safety.

Value of dual standard not necessarily to provide better standards, but in ensuring better monitoring and enforcement of food safety.

Retailer interest in dual standard

With retailers now returning to FPMs, albeit to small extent currently, a dual standard may be vehicle for retailers to:

Overcome food safety concerns on FPMs due to lack of public enforcement.

Retailer interest in dual standard

Liability concern for retailers:

Consumer Protection Act 68 of 2008

Concept of strict liability for defective products

All supply chain participants liable unless it can be shown that damage did not result with the particular party.

Increased awareness of food safety and risk of claims

FPM interest in dual standard

FPMs more concerned with quality than safety:

Current lack of concern from consumer side

Not same liability concern as other supply chain participants

However, competitive drive to attract retailers may be a strong driver for implementing better food safety systems.

FPM interest in dual standard

Showing compliance with a dual standard which ensure greater enforcement of food safety may be way for FPMs who are competing to get retailers back on their markets to attract the retailers.

Potential for Dual Standards in SA

So, the potential for a dual standard in SA seems at this stage to depend on:

Retailers requiring better food safety when procuring from FPMs

FPMs responding to this concern by increasing food safety by means of this standard.

Potential for Dual Standards in SA

Retailer volume on FPM still perhaps too small to drive this.

But the competition between FPMs may drive it.

Need to further explore:

importance of retailers on these markets

Competitive forces between FPMs

Potential for Dual Standards in SA

Need to ask, is there really a need if existing framework is sufficient to ensure public health provided enforcement is upped?

Crucial that enforcement be seen to happen, confidence of buyers need to be established. Only then will it also address the need to improve market access.

Potential for Dual Standards in SA

Dependant on the way in which retailers respond to this.

It seems therefore that the drive for improved food safety on FPMs through dual standard is likely to be driven by retailers.

Recent Advances

Massmart Walmart, SPAR, Pick n Pay, Shoprite Checkers, Famous Brands, Fruit & Veg City and Woolworths (excluding Woolworths’ private label suppliers). Agreed to embark on the Single Food Safety Audit. Designed and maintained by the Global Food Safety Initiative (GFSI) Objective – do away with multiple food safety audits.

Thank you