Moldova: Managing Food Safety and Agricultural Health

-- An Action Plan

DRAFT FOR DISCUSSION

Moldova’s Agricultural Potential

• Agricultural growth potential not fully realized

• Exports main driver for growth

• However, export performance is weak

Growth of Agriculture Export 1998-2004 (1998 level =100)

EU15 CEEC CIS World

Bulgaria 175 278 38 154

Czech Republic 245 193 45 177

Estonia 218 140 22 81

Hungary 176 138 73 142

Latvia 339 362 116 221

Lithuania 364 354 103 205

Poland 279 277 88 208

Romania 273 143 106 168

Slovak Republic 304 229 74 218

Slovenia 131 130 112 125

Moldova 133 94 113 115

Agricultural Production and Trade

Recovery and growth • Reform measures of 1990s resulted in recovery and

modest growth• Export products: wine and spirits, fruit, vegetables

and nuts

Market destination• About 75 % to CIS countries• EU fluctuates at about 10 %• CEEC 10-13%

Reasons for Weak Export Performance

• Late start with reforms• Many changes in policies

Poor investment climate

• Standards system inherited from Soviet time not able to meet market requirementsAchievements of food safety, plant and animal health

weakNot suitable for meeting quality requirements Costly system for Government and private sectorNot recognized by market economies

Market Access Challenges

• Growth of domestic supermarkets and their requirements

• Increased competition from imports

• Rapid increase of international requirementsDifficulty in penetrating EU marketWTO accession of Russia and Ukraine and harmonization

with EU standardsEU enlargement: reduced access to CEEC markets

(example: Romania)

• Market with GOST standards will decline in volume and price

Why Action Plan Needed?

• Moldova is member of WTO, but not yet fully benefited from international tradeGet access to more markets Get access to better paying market segments

• Adjust to market economy requirements• Avoid market access risks• Improve food safety and agricultural health

management • Major investment is needed and resources are scarce

How to set priorities?

Main Issues and Recommendations for Future Actions

Risk Assessment and Economic Analysis-- Foundation of Sound SPS Management

• SPS management should be based on cost, opportunities and risks

Moldova has little capacity for risk assessment and cost-benefit analysis

Recommended action: Provide training and technical assistance in risk assessment and economic analysis

Institutional Framework

• Overlap of responsibilities• Too many inspections (Example: Vet inspection at marketplaces. International

practice: MOH responsible for all market points post-abattoir)

• Future direction: two alternatives– Delineation of responsibilities and better alignment

of functions among agencies– Single food agency

Regulatory Framework

• Laws WTO compliant, but no implementation

• GOST regulations still used in practice despite official abolition -- new regulations and standards haven’t been developed

Recommended Actions

• Prepare a work program for the development of new regulations and standards consistent with international standards and suitable for market economy

• Prioritization (products with large export potential)

• Based on risk assessment and cost-benefit analysis

Certification and Accreditation

• Current system adds unnecessary cost of doing business

Recommended actions

• Repudiate mandatory conformity assessment for food products

• Allow accredited private certification bodies to play a greater role

• Ban conformity assessment at borders

• Seek mutual recognition between the Moldova Accreditation Center and EU

Inspection, Monitoring, Surveillance

• System still largely based on GOST

• Not science based (risk assessment, cost benefit analysis)

• Should be better targeted on human and agricultural health and market access

Recommended actions

• Redesign inspection, monitoring and surveillance programs based on priority setting and cost effectiveness.

• Make the CPM responsible for food safety in domestic marketplace with consolidation of authority for market testing and inspection of all food products as well as sales points for food and beverages.

Laboratory system

• Each SPS agency has its own system of central and regional labs

• Laboratories are under-funded and use outdated technologies and equipments

• Same testing repeated by different labs for same product – waste of public resources and extra costs to private sector

Recommended actions

• Design a program for consolidation of lab system

• Veterinary labs need to be reorganized

• Provide training in lab management and testing method

• Upgrade equipment

Border Control

• Border control procedures WTO-compliant or not?

• Veterinary and phytosanitary services unable to keep up with the Customs’ upgrading of technology and efficiency

• Government monopoly in plant quarantine service (fumigation)

Recommended actions:

• Assess whether Moldova’s border procedures meet the WTO rules of nondiscrimination, and develop an action plan for bringing these systems into conformance with international requirements

• Improve computers and ICT of veterinary and plant inspection and quarantine services at border posts

• Privatize fumigation services for plant quarantine

• Modernize the Central Plant Inspection and Quarantine Laboratory and district lab equipment

Plant health

• Contents testing needed for pesticides in market

Recommended actions:

• Assign testing of contents of pesticides to lab with best capacities.

• Registration policy for pesticides should accept information and registration from neighboring countries.

• Design and train staff in risk assessment related to the introduction of new phyto-sanitary means and fertilizers.

Animal health

• Present system of stamping out needs improvement

• Restocking support should be added

• Insufficient capacity to deal with potential avian flu outbreak

• Overstaffing of veterinary services

Recommended actions:

• Design a better system to support the stamping out of livestock diseases, with the understanding that budgetary and technical constraints force Moldova to prioritize carefully; and initially focus on a limited number of diseases.

• Separate public and private functions in veterinary services.

Information and Education

• Awareness raising and education are important elements in improving food safety and agricultural health that appear to be neglected

• Hygiene, botulism, mushroom poisoning are issues for education

Recommended actions:

• Develop and disseminate public programs for awareness raising and education on prevention of food safety and agricultural health hazards.

• Expand anti-parasitic disease campaigns carried out by CPM. These need to be extended beyond human curative treatment to preventive actions with domestic animals (especially dogs) and livestock.

Outdated pesticides, water

• Stocks of out-dated pesticides

• Water quality is major food safety concern

– Drinking– Food processing

Recommended action:

• Disposal of high risk pesticides

• Incorporate additional water treatment and handling investments in the Rural Infrastructure Support program

Private Sector

• Outdated structures, technologies, practices

• Small-scale, under-capitalized

Recommended actions• Develop a comprehensive plan for the convergence toward EU

principles of hygiene in food processing.

• Provide processors with training in good manufacturing practices (GMP), HACCP, etc.

• Improve water treatment for overall hygiene and food safety of processing plants.

• Develop financial tools (lending, guarantees, and grants) to better serve the financial needs of modernizing agribusinesses.

Summary of Action Plan

• A total of 32 recommended actions over 3-5 years

• Covering institutional restructuring, regulatory reform, human skill development, infrastructure and equipment

• Also including actions for the private sector

• Estimated cost:

– Public sector about US$ 9.7 million *

– Private sector > US$ 3 million

– Pesticides, water > US$ 7 million

• Initial investment push needed with support from donors* Tentative estimated ERR for public sector is > 10%

Concluding remarks

• Present capacities form constraints on– market access and competitiveness

– human and agricultural health

• Part of transition to market economy

• Given scarce resources careful sequencing and prioritization is needed

• Regular consultation with all stakeholders required

• Assistance and support from donors is needed

• A basic principle for reform: the SPS system should be used to facilitate business and trade while protecting human and agricultural health, not to tax producers and exporters