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Standards Issues in Agricultural Development

Lawrence BuschR. James Bingen

Craig HarrisThomas Reardon

Institute for Food andAgricultural Standards

Michigan State UniversityPaper presented at USAID Washington, February 2000

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Why should we be concerned about standards?

New rules for global trade Differentiation of demand New economic opportunities New economic constraints Potential for supply

disruptions Potential for democracy

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What I will talk about ... What are standards for? What is at stake Negotiating standards Market Access Outcomes Where we go from here Benefits

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What are standards? Standards: Measures by which

products, processes and producers are judged

Grades: Categories used to implement standards

Standards are… for people and things ubiquitous therefore ignored

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What are standards for?

Reducing transaction costs

Transparency Coupling Functionality Ensure well-being

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What are standards for?

Rules of the game Strategies Equity/Social Justice

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What is at stake for agricultural development?

Participation in global markets by firms nations

Disruption of commodity flows Building economic

infrastructure Cultural identities Fairness and equity

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Negotiating Standards Who gets to participate? Do some actors dominate? Who gets to vote? How are standards

modified?

But negotiation continues throughout the process...

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Standards and Market Access

Who can participate? Who is excluded? What biases are introduced

by the standard? Can this be changed?

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What are the outcomes? Who benefits? Who loses? Are risks acceptable? What third party effects? What impact on

environment? Impacts on other standards?

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Standards FormationIndustry leaders

Trade associations

Government agencies

NGOs

Quality, Food Safety, Environment & Labor Standard Setting and Negotiation Process

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Standards Formation

CriticalStandards

Points

Farmers

Transporters

Processors

Final Consumers

Transporters

Exporters

Transporters

Input Suppliers

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What This Means Chain is only as strong as

weakest link Attention must be paid to

standards across the subsector Standards may conflict, e.g.,

environmental and quality standards

Let’s look at some examples...

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Example 1:US Soybeans

Foreign matter in US soybeans

debated for >50 years Millions of $ rest on 1% trash Reputations of farmers, elevator

operators, exporters, processors, retailers rest on 1% trash

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Example 2:Chinese Rapeseed

China wants to export canola-type rapeseed oil

Establishes standards for seed, grain, oil, etc.

Builds modern processing facilities

Project fails for lack of price differential at elevator

No incentive to meet standard

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Example 3:Malian Mangoes

President Chamber of Agriculture of Mali attempted to import Malian mangoes

Malian phytosanitary certificates obtained

Product rejected at US port of entry

Did not meet US phytosanitary standards

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Lessons Learned

One link was sufficient to cause a problem

Incomplete strategies: did not look at each CSP

In Malian case, quality and environmental standards conflicted

So what is needed topromote profitable, fair and equitable agricultural development?

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What is needed?

Education about ... Who are the actors? What are their roles? How do nations and the civil sector

participate? What are the rules? How can standards be used strategically?

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What is needed?

WTO de facto enforcement

International

standards

Codex Alimentarius

OECD

IPPC

OIE

UNECE

Industrialized nations’

standards

United States

European Union

Others

Corporate de facto

standards

Education aboutstandards

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Who needs education? Government ministries Regulatory agencies Input producers Farmers Transporters Processors Retailers Consumers

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What else is needed?

Greater transparency Fair implementation of standards

nationally internationally

Voice for developing nations, consumers

Equivalence of processes, tests Help in meeting international

norms

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Benefits

Smoother flow of traded goods Greater fairness in international

trade Improved quality, safety Better environment Strengthened democratic

processes nationally and internationally