1. Agri-food competitiveness strategy: Environmental & Health requirements by Daniele Giovannucci for UNESCAP Bangkok, October 20006

3. 3 challenges 1.Strategies to enhance export competitiveness and environmental sustainability. 2.How can small producers be effectively integrated? 3.Required institutional arrangements and policy frameworks.

4. 3 challenges 1.Strategies to enhance export competitiveness and environmental sustainability = Private Sector 2.How can small producers be effectively integrated 3.Required institutional arrangements and policy frameworks

5. Standards are new global trade paradigm New consumer environment Health, food safety, social, and environmental concerns New business environment Competitiveness, efficiency, reputation, new technologies, & risk mgt. New public sector (gov) environment Avian flu, bioterror rules, GMO, MRLs, mad cow, … less able to keep up with > private standards

6. new global trade paradigm Standards pre-requisite for Competitiveness

7. House of cards? Many standards are built on trust with limited checks (Limited field & lab verification capacity) Confusing proliferation of standards Private standards can be dynamic + opaque Companies use them as a marketing ploy Nations use them as NTB

8. Standards Beyond basic food safety - increasing pressure JAS, USDA, EU MRLs for traceability and accredited certification Volatile public & private standards – hundreds blur the boundaries between environmental, safety, social

9. Some key private-public standards SAFETY ISO 22000 HACCP SOCIAL FT SA ISO 26000 ENVIRONMENT ISO 14000 Organic R.A. OTHER EUREP & ASEAN- GAP

10. Standards Evolving Organic Fair Trade Eco-friendly Corporate & Private standards COSA C ommittee O n S tandards A ssessment (COSA)

11. 4 Myths of Socio-Environmental Standards 1.Labor 2.Certification cost 3.Premiums or access 4.Yields and Domestic Food Security

12. 3 challenges 1.Strategies to enhance export competitiveness and environmental sustainability 2.How can small producers be effectively integrated 3.Required institutional arrangements and policy frameworks

13. MARKET REALITIES: Domestic vs. Export Distinction disappearing between global and local markets  Distribution channels concentrating i.e. supermarkets  Spot & wholesale markets decreasing - contracts increasing  As mkts open, supply chains compete at global not local level with safety and SPS costs increasing Local institutions - Training

14. Green Food Development in China Source: Giovannucci calculations for retail prices adapted from OFDC data Rmb 100 billion

15. MARKET REALITIES: Consolidation of procurement Big challenges for smaller producer:  demanding private standards: size, color, safety, consistency, volume, packaging, labels,…  implied investments: drip irrigation, greenhouses, advanced storage, hygienic services…  Lower prices & payment delays Knowledge systems – Assns. Technology – Credit - Funds Group negotiation – Working capital

16. Supermarket Development in China

17. 3 challenges 1.Strategies to enhance export competitiveness and environmental sustainability 2.How can small producers be effectively integrated 3.Institutional arrangements and policy

18. To achieve sustainable standards Knowledge intensive & condition-sensitive learning processes & so they require adequate time & institutional support

19. Implications for producers in developing countries Public Goods or not? Who pays? Private systems want to offload compliance costs Role of policy, regs. & gov capacity to assess & disseminate standards

20. KEY POLICY POINT SUMMARY Public good aspect is the rationale for: 1.Eliminate bias in public expenditures i.e. R&D, subsidies 2.Build government & public sector capacity –Investment in a knowledgeable research & extension services –Provide user-friendly standards knowledge bases –Credibility systems & lower compliance costs (certification, accreditation, right regulations 3.Fund for farmers to access initial financing required for certification and initial investments i.e. biopesticide production. 4.Incentives in the form of limited temporary tax benefits or incentives for certification, inputs development, or transition.

21. DPG@consultant.com Daniele Giovannucci