STDF Workshop on SPS Capacity Evaluation Tools Geneva—March

STDF Workshop on SPS Capacity Evaluation Tools Geneva--March 31, 2008 Food Safety and Agricultural Health Action Plans John E. Lamb, Sr. Agribusiness Specialist, Agriculture and Rural Development Department World Bank, Washington, DC 1

The context Ø Changes in effective demand 2

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” 3

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution 4

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution Ø Industry consolidation 5

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution Ø Industry consolidation Ø Globalization of sourcing and marketing 6

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution Ø Industry consolidation Ø Globalization of sourcing and marketing Ø Competition between value/supply chains 7

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution Ø Industry consolidation Ø Globalization of sourcing and marketing Ø Competition between value/supply chains Ø Changes in procurement systems 8

The context Ø Changes in effective demand Ø Rise of “efficient consumer response” Ø Shifting channels of distribution Ø Industry consolidation Ø Globalization of sourcing and marketing Ø Competition between value/supply chains Ø Changes in procurement systems Ø Reversal of decline in real food prices 9

Why should the World Bank and other donors worry about standards? ü Protection of the food supply, plant and animal health, and environment 10

Why should the World Bank and other donors worry about standards? ü Protection of the food supply, plant and animal health, and environment ü Regulation of internal commerce 11

Why should the World Bank and other donors worry about standards? ü Protection of the food supply, plant and animal health, and environment ü Regulation of internal commerce ü Facilitation of orderly, arms-length trade 12

Why should the World Bank and other donors worry about standards? ü Protection of the food supply, plant and animal health, and environment ü Regulation of internal commerce ü Facilitation of orderly, arms-length trade ü Contribution to economic growth 13

Why should the World Bank and other donors worry about standards? ü Protection of the food supply, plant and animal health, and environment ü Regulation of internal commerce ü Facilitation of orderly, arms-length trade ü Contribution to economic growth û Danger of crowding out, especially small producers and SMEs, but sometimes entire industries 14

What functions do public standards play in this scenario? F They determine the official rules of the game 15

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science 16

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science F They strive to ensure transparency 17

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science F They strive to ensure transparency F They control entry to foreign markets 18

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science F They strive to ensure transparency F They control entry to foreign markets F They serve to limit the spread of pests, disease, invasive species 19

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science F They strive to ensure transparency F They control entry to foreign markets F They serve to limit the spread of pests, disease, invasive species F They protect consumers, agriculture and the environment 20

What functions do public standards play in this scenario? F They determine the official rules of the game F They give primacy to good science F They strive to ensure transparency F They control entry to foreign markets F They serve to limit the spread of pests, disease, invasive species F They protect consumers, agriculture and the environment F They are designed mainly to mitigate health risk, but also serve to limit risks to the economy 21

What functions do private standards (i. e. requirements) play? F They determine the commercial rules of the game 22

What functions do private standards (i. e. requirements) play? F They determine the commercial rules of the game F They convey information on the requirements and expectations of particular end-markets (consumer segments and those who serve) 23

What functions do private standards (i. e. requirements) play? F They determine the commercial rules of the game F They convey information on the requirements and expectations of particular end-markets (consumer segments and those who serve) F They do recognize good science, but give primacy to the consumer and business 24

What functions do private standards (i. e. requirements) play? F They determine the commercial rules of the game F They convey information on the requirements and expectations of particular end-markets (consumer segments and those who serve) F They do recognize good science, but give primacy to the consumer and business F They control access to domestic and foreign channels of distribution and end-markets, not always transparently 25

What functions do private standards (i. e. requirements) play? F They determine the commercial rules of the game convey information on the requirements and expectations of particular end-markets (consumer segments and those who serve) F They do recognize good science, but give primacy to the consumer and business F They control access to domestic and foreign channels of distribution and end-markets, not always transparently F They are mainly a private good, enhancing profits to supply/value chain participants, while reducing commercial, reputational and legal risk 26

What functions do private standards (i. e. requirements) play? F F F They determine the commercial rules of the game They convey information on the requirements and expectations of particular end-markets (consumer segments and those who serve) They do recognize good science, but give primacy to the consumer and business They control access to domestic and foreign channels of distribution and end-markets, not always transparently They are mainly a private good, enhancing profits to supply/value chain participants, while reducing commercial, reputational and legal risk Yet they do serve public purposes by helping to mitigate the spread of pests and diseases 27

A hierarchy of standards has emerged Service Supply Chain Management Environ. Standards Social Standards Food safety and Agricultural Health Standards Technical and Commercial Requirements (identity, quality, condition, presentation, etc) 28

What has the World Bank been doing in this area? Ø Serious WB engagement began about 5 years back, with the launch of the Initiative to Mainstream Standards in Bank Operations http: //web. worldbank. org/WBSITE/EXTERNAL/TOPICS/TRADE/0, , content. MDK: 20629901~menu. P K: 222955~page. PK: 148956~pi. PK: 216618~the. Site. PK: 239071, 00. html 29

What has the World Bank been doing in this area? Serious WB engagement began about 5 years back, with the launch of the Initiative to Mainstream Standards in Bank Operations Ø This arose within the trade department (PREM), which was charged with trade capacity-building Ø 30

What has the World Bank been doing in this area? Serious WB engagement began about 5 years back, with the launch of the Initiative to Mainstream Standards in Bank Operations Ø This arose within the trade department (PREM), which was charged with trade capacity-building Ø More recently the initiative has been mostly taken over by the agriculture and rural development department (ARD) and the Regions Ø 31

What has the World Bank been doing in this area? Serious WB engagement began about 5 years back, with the launch of the Initiative to Mainstream Standards in Bank Operations Ø This arose within the trade department (PREM), which was charged with trade capacity-building Ø More recently the initiative has been mostly taken over by the agriculture and rural development department (ARD) and the Regions Ø IBRD/IDA provides about $170 million in annual loan and grant funding for agri-food standards Ø http: //web. worldbank. org/WBSITE/EXTERNAL/TOPICS/TRADE/0, , content. MDK: 20629901~menu. P K: 222955~page. PK: 148956~pi. PK: 216618~the. Site. PK: 239071, 00. html 32

IFC is also involved in environmental, health, safety, and social standards Ø IFC activities cut across sectors, but include agribusiness Ø Closely tied to what private sector calls CSR, or the “triple bottom line” of financial, social and environmental sustainability Ø http: //www. ifc. org/ifcext/enviro. nsf/Content/Env. Soc. Standards 33

Bank involvement in mainstreaming standards takes various forms l Support for Global Public Partnerships (GPPs), e. g. STDF 34

Bank involvement in mainstreaming standards takes various forms l l Support for Global Public Partnerships (GPPs), e. g. STDF Economic and Sector Work (ESW), e. g. “Food Safety and Agricultural Health Standards: Challenges and Opportunities for Developing Countries” 35

Bank involvement in mainstreaming standards takes various forms l l l Support for Global Public Partnerships (GPPs), e. g. STDF Economic and Sector Work (ESW), e. g. “Food Safety and Agricultural Health Standards: Challenges and Opportunities for Developing Countries” Knowledge Products (KP), e. g. “Guide for Assessing and Responding to Needs for National Agrifood Laboratory Improvement” (late FY 08) 36

Bank involvement in mainstreaming standards takes various forms l l Support for Global Public Partnerships (GPPs), e. g. STDF Economic and Sector Work (ESW), e. g. “Food Safety and Agricultural Health Standards: Challenges and Opportunities for Developing Countries” Knowledge Products (KP), e. g. “Guide for Assessing and Responding to Needs for National Agrifood Laboratory Improvement” (late FY 08) Analytical and Advisory Assistance (AAA), e. g. technical assistance to Malaysia’s MAFC and EPU 37

Bank involvement in mainstreaming standards takes various forms l l l Support for Global Public Partnerships (GPPs), e. g. STDF Economic and Sector Work (ESW), e. g. “Food Safety and Agricultural Health Standards: Challenges and Opportunities for Developing Countries” Knowledge Products (KP), e. g. “Guide for Assessing and Responding to Needs for National Agrifood Laboratory Improvement” (late FY 08) Analytical and Advisory Assistance (AAA), e. g. technical assistance to Malaysia’s MAFC and EPU Support for Public Private Partnerships (PPP), e. g. “Trade Standards Practitioners Network” 38

Considerable research has been supported as well Ø Studies on specific challenges relating to standards in general and food/agricultural health in particular 39

Considerable research has been supported as well Ø Studies on specific challenges relating to standards in general and food/agricultural health in particular l Cost of compliance 40

Considerable research has been supported as well Ø Studies on specific challenges relating to standards in general and food/agricultural health in particular l l Cost of compliance Strategies for maintaining or restoring smallholder participation in profitable value/supply chains 41

Considerable research has been supported as well Ø Studies on specific challenges relating to standards in general and food/agricultural health in particular l l l Cost of compliance Strategies for maintaining or restoring smallholder participation in profitable value/supply chains Best practices in assessing investment needs in national agri-food laboratory systems for food safety and for plant/animal health 42

Considerable research has been supported as well Ø Studies on specific challenges relating to standards in general and food/agricultural health in particular l l Cost of compliance Strategies for maintaining or restoring smallholder participation in profitable value/supply chains Best practices in assessing investment needs in national agri-food laboratory systems for food safety and for plant/animal health Comparison of responses from different source countries to changes in EU aflatoxin tolerances 43

Other types of research Ø Value-chain studies: groundnuts from Senegal; shrimp from Nicaragua; Nile perch from Kenya; shrimp, asparagus and edamame from Thailand 44

Other types of research Ø Value-chain studies: groundnuts from Senegal; shrimp from Nicaragua; Nile perch from Kenya; shrimp, asparagus and edamame from Thailand Ø Subsector studies: fresh vegetables from Kenya; fisheries from Senegal; ethnic foods from Jamaica; horticultural products from India 45

What about SPS Action Planning? Ø Country-level SPS assessments: l l 5 countries (Zambia, Kenya, Niger, Uganda, Pakistan) 1 region (Commonwealth of Independent States) 46

What about SPS Action Planning? Ø Country-level SPS assessments: l l Ø 5 countries (Zambia, Kenya, Niger, Uganda, Pakistan) 1 region (Commonwealth of Independent States) Five SPS Country Action Plans to date l l l Vietnam Laos Armenia Moldova Tanzania 47

What about SPS Action Planning? Ø Country-level SPS assessments: l l Ø Five SPS Country Action Plans to date l l l Ø 5 countries (Zambia, Kenya, Niger, Uganda, Pakistan) 1 region (Commonwealth of Independent States) Vietnam Laos Armenia Moldova Tanzania One Regional SPS Action Plan l CIS countries 48

Typical content of an SPS Action Plan 49

Lessons Learned 1. No one size fits all 50

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 1. 51

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 3. Countries also have different risk preferences 1. 52

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 3. Countries also have different risk preferences 4. The history of the SPS infrastructure matters 1. 53

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 3. Countries also have different risk preferences 4. The history of the SPS infrastructure matters 5. Resource endowments and political leverage among and within Ministries vary greatly 1. 54

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 3. Countries also have different risk preferences 4. The history of the SPS infrastructure matters 5. Resource endowments and political leverage among and within Ministries vary greatly 6. Donor preferences—even fads—can distort 1. 55

Lessons Learned No one size fits all 2. Each country has a unique SPS risk profile 3. Countries also have different risk preferences 4. The history of the SPS infrastructure matters 5. Resource endowments and political leverage among and within Ministries vary greatly 6. Donor preferences—even fads—can distort 7. Buy-in for the analytics, the recommendations, and follow-through is very important 1. 56

Lessons Learned No one size fits all Each country has a unique SPS risk profile Countries also have different risk preferences The history of the SPS infrastructure matters Resource endowments and political leverage among and within Ministries vary greatly 6. Donor preferences—even fads—can distort 7. Buy-in for the analytics, the recommendations, and follow-through is very important 8. Market-orientation, business-like operations, and a plan for sustainability are all critical too 1. 2. 3. 4. 5. 57

Questions requiring further work C How to strike the proper balance between global, regional and domestic challenges and opportunities? 58

Questions requiring further work C How to strike the proper balance between global, regional and domestic challenges and opportunities? C How to use risk assessment in a methodical way to make SPS decisions, not just for agri-food trade, but also for domestic food safety, agricultural health and environmental protection? 59

Questions requiring further work C How to strike the proper balance between global, regional and domestic challenges and opportunities? C How to use risk assessment in a methodical way to make SPS decisions, not just for agri-food trade, but also for domestic food safety, agricultural health and environmental protection? C How to define, disseminate and encourage application of best practices in cost/benefit, cost effectiveness and cost utility analysis for and across developing countries? 60

Questions requiring further work How to strike the proper balance between global, regional and domestic challenges and opportunities? C How to use risk assessment in a methodical way to make SPS decisions, not just for agri-food trade, but also for domestic food safety, agricultural health and environmental protection? C How to define, disseminate and encourage application of best practices in cost/benefit, cost effectiveness and cost utility analysis for and across developing countries? C How to balance the desire for better technical analysis with the twin realities of limited resources and strong pressure groups that might distort decisions? C 61

Questions requiring further work C C C How to strike the proper balance between global, regional and domestic challenges and opportunities? How to use risk assessment in a methodical way to make SPS decisions, not just for agri-food trade, but also for domestic food safety, agricultural health and envrionmental protection? How to define, disseminate and encourage application of best practices in cost/benefit, cost effectiveness and cost utility analysis for and across developing countries? How to balance the desire for better technical analysis with the twin realities of limited resources and strong pressure groups that might distort decisions? How to improve the policy dialogue and rule-making process in client countries? 62

Where is this going within the Bank? C Not going away soon 63

Where is this going within the Bank? Ø Not going away soon F Discussions around agri-food standards currently center on Aid for Trade, Regulatory Management, Doing Business in Agriculture 64

Where is this going within the Bank? Ø Not going away soon Ø Discussions around agri-food standards currently center on Aid for Trade, Regulatory Management, Doing Business in Agriculture F Perceived need to maintain a balance between public and private, improve understanding of respective roles, improve coordination 65

Where is this going within the Bank? Not going away soon Ø Discussions around agri-food standards currently center on Aid for Trade, Regulatory Management, Doing Business in Agriculture Ø Perceived need to maintain a balance between public and private, improve understanding of respective roles, improve coordination F Desire to increase attention to domestic quality, food safety, agricultural health, and environmental protection Ø 66

Where is this going within the Bank? Not going away soon Discussions around agri-food standards currently center on Aid for Trade, Regulatory Management, Doing Business in Agriculture Ø Perceived need to maintain a balance between public and private, improve understanding of respective roles, improve coordination Ø Desire to increase attention to domestic quality, food safety, agricultural health, and environmental protection F Felt need to improve methods of dealing with multiple risks, identifying tradeoffs, and improving regulatory mgt. Ø Ø 67

Where is this going within the Bank? Ø Ø Ø F Not going away soon Discussions around agri-food standards currently center on Aid for Trade, Regulatory Management, Doing Business in Agriculture Perceived need to maintain a balance between public and private, improve understanding of respective roles, improve coordination Desire to increase attention to domestic quality, food safety, agricultural health, and environmental protection Felt need to improve methods of dealing with multiple risks, identifying tradeoffs, and improving regulatory mgt. Next major ESW likely to be “Guide for Investment Analysis, Planning and Implementation in National Agrifood Analytical and Control Infrastructure” (FY 09) 68

Summing up our future directions 1) Risk analysis 69

Summing up our future directions 1) Risk analysis 2) Regulatory management (RIA, stakeholder consultation, rulemaking) 70

Summing up our future directions 1) Risk analysis 2) Regulatory management (RIA, stakeholder consultation, rulemaking) 3) Improving food and agricultural health policies, regulations and their application in domestic markets 71

Summing up our future directions 1) Risk analysis 2) Regulatory management (RIA, stakeholder consultation, rulemaking) 3) Improving food and agricultural health policies, regulations and their application in domestic markets 4) Private sector involvement 72

Summing up our future directions 1) Risk analysis 2) Regulatory management (RIA, stakeholder consultation, rulemaking) 3) Improving food and agricultural health policies, regulations and their application in domestic markets 4) Private sector involvement 73