EU private standards (GLOBALGAP, EUREPGAP) as substitutes for missing public standards: the case of fresh fruit and vegetables Seminar Presentation: “Marketing and Trade of Fresh Fruit and Vegetables“ Tatjana Schmolke May, 30th, 2008

Outline EU Public legislations for FFV Marketing Private Standards for FFV GLOBALGAP Benefits and challenges of Private Standards Comparison of Public and Private Standards Conclusion

EU legislations for FFV Marketing Codex Alimentarius and UN/ECE Standards: Consumers’ health Fair trade practices Promotion/ coordination of uniform food standards Food Law (EC) No. 178/2002 Commercial Law (EC) 2200/96

EU legislations for FFV Marketing Principles, requirements, procedures and matters of food safety Risk analysis, precaution and traceability Mandatory for all FFV marketed in the EU Food Law (EC) No. 178/2002

EU legislations for FFV Marketing Common organization of the market in FFV Fair trading and market transparency Elimination of unsatisfactory or harmful quality Improvement of production profitability Minimum requirements for all FFV marketed in the EU EU Marketing Standards for all market important FFV species Commercial Law (EC) 2200/96

Minimum Requirements for FFV FFV marketed in the EU must be: Intact Sound Clean Practically free from pests and damages caused by pests Free of abnormal external moisture Free of any foreign smell and/or taste Source: EC; 2001

Marketing Standard for Citrus Fruit For Lemons, Mandarins and Oranges: Quality Minimum Requirements Maturity Requirements Classification Sizing Tolerances Presentation Marking Minimum Size Size scales Minimum differences Quality Size Uniformity in: Origin Type Class Ripeness Packer Ident. Nature and Origin of Produce Lot-Number Maturity Requirements For Mandarins: Minimum juice content Mandarins excluding Clementines: 33% Clementines: 40% Coloring Must be typical of the variety on at least one third of the surface of the fruit Source: EC; 2001

Why Private Standards? GLOBALGAP: Internationally harmonized standard Substitutes for missing public regulations Product standardization and differentiation Competitiveness and access to international markets Satisfaction of consumers’ demand for Safe, high quality and traceable food social, animal and environmental standards GLOBALGAP: Internationally harmonized standard

GLOBALGAP Integrated Farm Assurance Standard All Farm Base Crops Base Livestock Base Aquaculture Base Fruit and Vegetables Flowers and Ornamentals Combinable Crops Green Coffee Tea Cotton Cattle and Sheep Dairy Pigs Poultry Salmonids Shrimps Pangasius Tilapia Source: Globalgap; 2007

FFV Certification General Control Points and Compliance Criteria (CPCC): Production according to GAP Food hygiene/ safety/ traceability Environmental and Labour standards Quality management standards Special CPCC for FFV: Propagation Material Soil and Substrate Management Irrigation and Fertigation Harvesting Produce Handling Source: Globalgap; 2007

Benefits from Private Standards Producer: Market Access Retailer: Competition on global markets Product differentiation (quality and safety) Transaction cost and acquisition risk reduction Standards are at no cost Consumer: Trust Safety, Quality Traceability Sources: Gay and Schneider; 2007/ Peris and Juliá; 2007/ Henson and Reardon; 2005

Challenges of Private Standards Producer Pressure from retailers Risk of loosing market share / market access Extra costs without price premium Difficulties for small scale farmers from developing countries Retailer Traceability linkages Hygiene, Food Safety and Quality Consumer Added value not visible Branding Sources: Gay and Schneider; 2007/ Chemnitz; 2007/ Vermeulen et al.; 2006

Comparison of Public and Private Standards Legally binding Voluntary Product Quality Process Quality Traceability and Risk management Scarce controls Frequent controls Food safety and quality assured Product differentiation NOT possible Product differentiation possible

Conclusion 1 Public Standards fully cover: Food safety Quality Traceability Practically no missing standards exist Private Standards make product differentiation possible

Conclusion 2 GLOBALGAP Effects of Private Standards internationally harmonized standard Focusing on process quality Effects of Private Standards Producers can gain market access but at high costs Retailers put pressure on producers Retailers receive certified FFV at no cost Consumers gain indirectly as the added value is not visible to them

Conclusion 3 Remaining questions: Does required quality reach POS? Do Private Standards act as barriers to trade? Are developing countries disadvantaged?

Thank you for your attention!

References EC; 2001: Commission Regulation laying down the marketing standard for citrus fruit. (EC) No 1799/2001. 12 September 2001. Consolidated version Globalgap; 2007: Integrated farm assurances. General regulations. Global G.A.P (Eurepgap). Globalgap and Food Plus. Available at: http://www.globalgap.org/cms/upload/The_Standard/IFA/English/GRs/PartI/GG_EG_IFA_GR_Part_I_ENG_V3_0_2_Sep07.pdf. Accessed: 15/05/2008 Globalgap; 2007a: Checklist Fruit and Vegetables. Available at:http://www.globalgap.org/cms/front_content.php?idart=147&idcat=48&lang=1&client=. Accessed: 29/05/2008 Gay, S.H. and Schneider, A.; 2007: A comparative analysis of food quality assurance schemes:The case of neuland and eurepgap. 47th annual conference of the German Association of Agricultural Economists (GEWISOLA) and 17th annual conference of the Austrian Association of Agricultural Economists (ÖGA). 26.-28. September 2007. Freising/ Weihenstephan Henson, S.J. and Reardon, T.; 2005: Private Agri-Food Standards: Implications for Food Policy and the Agri-Food System. Food Policy, 30 (3): 241-253 Peris Moll; E-M. and Juliá Igual, J.F.; 2007: Production costs of citrus growing in the Communidad Valencia (Spain): EurepGAP protocol versus standard production. In: Theuvsen, L/ Spiller, A./ Peupert, M. and Jahn, G. (eds.): Quality management in the food chains. Wageningen Academic Publishers. Wagneingen: 69-78 Chemnitz, C.; 2007: The compliance decision with food quality standards on primary producer level. A case study of EUREPGAP Standard in the Moroccan Tomato Sector. 1st Mediterranean Conference of Agro-Food Social Scientists. 103rd EAAE Seminar Adding Value to the Agro-Food Supply Chain in the Future Euromediterranean Space. 23rd-25th April 2007. Barcelona Vermeulen, H./ Jordaan, D./ Kortsen, L. and Kirsten, J.; 2006: Private Standards. Handling and Hygiene in Fruit Export Sypply Chains: A Preliminary Evaluation of the Economic Impact of Parallel Standards. Contributed Paper IAAE Conference. Gold Cost. Australia. August 12-18. Available at: http://agecon.lib.umn.edu/cgi-bin/pdf_view.pl?paperid=22649&ftype=.pdf. Accessed: 20/03/2008