Increased trade in food products has many benefits. It provides greater dietary diversity, year-round availability, and, often, lower prices to consumers in many countries. Growing incomes around the world are leading to increased consumption and trade of animal and seafood products. Consumers in many countries find unfamiliar or nontraditional foods becoming increasingly available. In addition to these potential benefits to consumers, producers in less-developed countries (LDCs) benefit from expanded food exports, which earn foreign exchange and increase rural incomes.
However, these changes also carry certain risks. New foods, particularly fresh foods, may carry new or unfamiliar hazards. There are changes in the way food is handled and marketed. New pathogens or antibiotic resistance in pathogens may emerge. And the increased availability of processed or prepared foods reduces consumer control over preparation. The benefits to consumers and to low-income producers will not be realized if food exports from LDCs do not meet food-safety and quality standards in high-income markets or if LDCs cannot improve food safety for their own consumers.
A new understanding and awareness of the importance of food-borne disease has developed, with the result that food safety and food quality are becoming more important issues for the world’s consumers, who increasingly demand greater safety assurances from food producers and regulators.. This increased awareness coincides with the identification of new pathogens and their potential long-term consequences, coupled with better surveillance and trace-back techniques.
During the 1990s, many industrialized countries introduced new, more stringent food-safety standards, such as mandatory process controls to reduce risks throughout the production process. Meeting these standards for higher food safety and quality poses a challenge to LDCs as they seek to expand agricultural exports. While such exports can provide an important source of income for the rural poor, meeting higher standards can require additional management, capital investments, purchased inputs, monitoring, and certification. Whether small producers can successfully meet these requirements remains to be seen.
How these standards will be met and whether meeting them will have benefits for poor consumers and producers in LDCs are issues explored in this brief.
There is growing recognition that both quality and safety must often be managed from farm to table through process controls, such as the use of good agricultural practices or good manufacturing practices in food production and processing. Because many hazards may enter food products at several points in the production process—and are expensive to test for—prevention and control through documented production practices is often the only way to verify food safety. The public sector has also embraced the concept of process control and hazard prevention, which is now mandated in several industrialized countries for portions of the food system.
This movement toward farm-to-table process control has important implications for LDC exporters of fresh food products:
- First, there are market incentives for LDC exporters to adapt these management practices and to coordinate safety and quality management more closely with importers.
- Second, such costs may influence the distribution of benefits from trade. Studies in the United States and Europe have demonstrated that there are economies of scale in food-safety management. It is possible that safety standards favor large-scale producers in export industries.
- Third, LDC exporters must demonstrate that foods produced with different production practices are just as safe as those produced within importing countries. To do so, the public sector in LDCs will need to demonstrate equivalent regulatory capacity in order to meet importers’ food-safety standards.
Increasingly specialized product specifications and the demands of niche markets require specialized quality management. Sometimes characterized as total quality management, such approaches provide assurances that products will meet these complex specifications. Internationally recognized certification, often through the International Standards Organization (ISO), is increasingly applied to food production and processing. The ISO provides a “standard for standards” by applying a framework to verify the quality-assurance elements of a firm’s production process. This type of quality and safety management is increasingly in demand in high-income markets, and new institutions are evolving to certify production practices for meats and horticultural products.
To meet differing food-safety standards, the private sector must coordinate the process from the import market back to export production. For example, production in an LDC could be owned and controlled by a multinational firm for export to a high-income market, or local growers might be coordinated through an exporting firm that provides guidance on quality standards and assurances to importers.
However, private coordination alone may not be enough to meet export standards; public involvement may be necessary to capture all of the potential returns to improved quality and safety. This may include establishing a legal and regulatory framework recognized by the importing countries, along with monitoring and evaluating risks in order to demonstrate equivalence of risk outcomes to importers. Public investments—such as sanitation and water supplies that support better hygiene throughout the food chain and a marketing infrastructure that improves the performance of the system in terms of timeliness, freshness, cleanliness, and quality—can also improve food safety and quality in both domestic and export markets.
Two examples of nontraditional exports from LDCs illustrate how a combination of public and private efforts can overcome trade barriers based on concerns about safety and quality. Raspberry exports from Guatemala were implicated in an outbreak of food-borne illness in the US in 1996, and imports were suspended. A coalition of industry and government organizations worked with growers to establish and certify good agricultural practices that reduce the risk of food-borne pathogens. The export market was re-established in 1999. A second example is the seafood export industry in Bangladesh, which faced a ban on exports to the European Union in 1997 because of poor hygiene in processing plants. Both industry and government made investments in more modern plants and laboratories, and trained personnel in hazard prevention and control. As a result, the EU lifted the ban in late 1997.
The Sanitary and Phytosanitary (SPS) Agreement of the World Trade Organization provides a framework for resolving disputes about measures that protect human, animal, and plant health. There is evidence that this agreement has reduced some SPS barriers to trade and has facilitated trade for LDCs. For example, developing countries have used the notification system to raise concerns about changes in developed-country standards. When the EU proposed lowering the maximum residue level for aflatoxin in many food stuffs in 1998, several countries protested, including Gambia, India, Brazil, and the Philippines. These countries argued that the EU’s new standard would raise exporter costs without improving food safety. The EU later revised its proposed aflatoxin level for peanuts and announced that it would reconsider other commodities.
Although the SPS agreement has improved discussion of these issues, LDCs are concerned that internationally recognized standards established under the Codex Alimentarius do not adequately represent their conditions and constraints. Furthermore, controversies over the role of science and consumer protection in setting standards remain to be resolved.
One important question is whether improvements in the quality and safety of exports benefit domestic consumers in LDCs. The relative importance of food-safety risks differs with climate, food habits, levels of income, and public infrastructure. In developing countries, poor sanitation and inadequate supplies of safe drinking water pose a much greater hazard to health than in developed ones. For example, according to the World Health Organization, diarrheal disease is the greatest cause of illness and death in children under age five, and contaminated food contributes to 70 percent of these deaths. Mycotoxins are more prevalent in the subtropics and tropics, and pose greater risks where diets are concentrated in foods with higher mycotoxin levels. Parasites and intestinal worms are also more common in LDCs. These differences in the source and incidence of food-borne illness mean that public interventions to address health issues in LDCs can be expected to differ from those that address export barriers.
When a product is consumed domestically and investments to meet export market standards for that product affect a large portion of production, those investments will have positive spillovers for domestic consumers. However, some products may be produced almost entirely for export, in which case, investments to meet high standards for quality and safety in exports will have little or no direct spillovers for domestic food safety. Indirectly, new export markets can improve people’s health and well-being by increasing the income of rural households.
Globalization brings new opportunities for food producers, along with new challenges to meet growing demands for quality and food safety. Capturing new opportunities to export high-value food products will require LDC exporters to manage safety from farm to table and to meet increasingly stringent food-safety standards in import markets. Successful performance in export markets has the potential for substantial gains from trade, as well as generating income in the rural sector in LDCs, but at the same time, it requires new and different kinds of market coordination. The public sector can play a role in improving food safety and quality to meet export-market standards, addressing domestic issues of public health at the same time.
The challenges that arise are not for the LDCs alone—developed countries have a responsibility to consider the implications of their standards for food safety and quality and their requirements for enforcing those standards. They also have a responsibility to provide technical assistance to their LDC trading partners.
For further reading see F.K. Kaferstein, Y. Motarjemi, and D.W. Bettcher, “Foodborne Disease Control: A Transnational Challenge,” in Emerging Infectious Diseases (Atlanta: Centers for Disease Control, 1997), ; L.J. Unnevehr and N. Hirschhorn, Food Safety Issues in the Developing World (World Bank Technical Paper No. 469, 2000), ; and Understanding the WTO Agreement on Sanitary and Phytosanitary Measures (Geneva: World Trade Organization, 1998).
Laurian J. Unnevehr (laurian@uiuc.edu) is a professor in the Department of Agricultural and Consumer Economics at the University of Illinois at Urbana-Champaign, USA.