Importation of Agricultural Products from Africa to the EU

Importation of Agricultural Products from Africa to the EU The Role Certification, including Grading and Standards Play in the Importation of Organic Agricultural Products from Africa to the EU CHAPTER ONE INTRODUCTION Abstract What are standards?; what is organic produce? What factors drive the economic climate in Africa and the EU? What is certification? What is the purpose of certification? and how important is the exportation of organic agricultural produce from Africa to the EU in terms of their economic relationship?, are all questions which go to the heart of this thesis. Accordingly they will be extrapolated throughout the thesis enquiry and where they intersect and overlap this will be explained throughout the thesis. Various themes will be incorporated into the thesis since these, too will be relevant to the answering of the above named questions. These themes include; the economic climate in Africa; poverty in Africa; the importance of the organic produce exportation market to African farmers; why regulation is important in the EU; supply chain management issues and their importance; business good practice; traceability of produce; pricing; productisation and marketing strategies. These themes an d the answers to these questions will highlight the role that certification, including grading and standards play in the importation of organic products from Africa to the EU. The purpose of these processes will be looked at throughout the course of the thesis and this will elucidate their role also. The place of certification, grading and standards processes will be assessed; and their overall contribution to the economic climate in Africa will be examined. In this sense, through analysis of contemporary and historical, economic and political issues, both in the EU and in Africa, a greater perspective on the role of these processes may be derived. Also, the importance of organic produce to consumers in the EU will be examined and the reasons for its growth in popularity will be analysed, since this too will shed light on the role played by certification, grading and standards processes in the importation of organic produce from Africa to the EU. Introduction The economic relationship between Africa and the EU is complex (Ake, C. (1996); p1), and may be described as of key economic significance to Africa, and, albeit to a lesser extent to the EU. The economic relationship in terms of organic commodity trade and exportation is also important. The market for organic produce in the EU is developing at an exponential rate. The reasons for this will be looked at in more detail, as the thesis progresses, but for the moment is is suffice merely to support this point in the following way: the Centre for the Development of Industry in the EU has estimated that the annual growth rate of the organic products market in global terms exceeds 20% (CDI, 1999; p1). Some more figures may put this statistic into perspective. This industry for organic commodity produce produces sales of an estimated 4.1 billion Euro, in Europe (as estimated in 1997) (CDI, 1999; p2). This is all the more significant for the EU, given that according to EPOPA (2006; Section 3.1 .1) the connections between Africa and the EU in the arena of organic exportation of agricultural produce are far more developed that those between Africa and Japan or between Africa and the United States[1]. This evidences the importance of the relationship between the EU and Africa, and the importance of sustaining this economic relationship by keeping standards of produce in terms of quality and integrity at a high threshold. This is one of the functions of the the process of certification, which will be examined in greater detail as the the thesis progresses. The European Union have strict regulations which apply to the importation of organic products from Africa into the EU, and this is particularly true of organically produced commodities such as coffee, vanilla and other foodstuffs produced by African farmers. Certification is one of these processes of regulation and it is a requirement which is just one of an amalgam of requirements which must first be satisfied before organic agricultural products may be exported from Africa to the EU. Many programmes and organisations have been established with the specific purpose of encouraging African farmers to export organic produce to the EU. Organic produce which is to be exported from Africa into the EU is required to be checked rigorously to ensure that its standards are acceptable for consumption in the EU. These standards, procedures and programmes and their purpose will be explained and discussed throughout this project. In particular, there will be a focus on the role that grading and standards play in the importation of organic agricultural products from Africa into the EU. The methodology which will be used throughout the thesis will be qualitative in nature and will revolve around the evaluation of secondary sources. Some quantitative material will be used but this will be evaluated qualitatively, in keeping with the emphasis which is to be maintained on the qualitative arm of research methodology. Research Aims and Objectives The objectives of the research are fairly straightforward. The primary concern of the research is to answer the thesis question as clearly and as concisely as possible. The writer wishes to formulate an originally conceived thesis and to draw conclusions on the basis of what has been discovered through the research enquiry. The limitations of the research will be assessed, and the best ways to lessen the effects of limiting factors will be identified and implemented. Therefore the writer wishes the thesis to contribute to research in the field and to be a source of information for others interested in researching the same field. It is the ultimate aim of the writer, to fully understand the role of certification (to include the process of grading and standards) in the importation of organic agricultural produce from Africa to the EU. Therefore these processes will be examined in depth and explained in full, with reference to academic publications and internet based resources. The socio-political and economic environment in which these processes operate is of crucial importance to the thesis, and accordingly it is the aim of the writer to fully explain these and the give illustrations of theory, where appropriate. A means of doing so effectively has been identified as the use of a case study. Accordingly, the country of Uganda has been chosen as the basis for the case study, and the socio political environment and the points made in relation to this will be illustrated through this mechanism. CHAPTER TWO METHODOLOGY Methodology This project will involve a qualitative evaluation of published and well known texts in the field. These will be secondary sources, as the topic is so far removed from Western culture and the resources available to the writer are such that credible primary research is perhaps not a feasible option. Nevertheless in depth and comprehensive insights will be gleamed from books, articles and web based resources. The methodology will therefore use secondary sources. Qualitative research mainly focuses on an interpretation of the world around the researcher. The researcher themselves is used as a mechanism of research and their observations form key elements in the research (Bryman, A. (1992); p45). Quantitative research, conversely focuses on scientific extrapolations of data (Bryman, A. (1992); p11) and quantitative research tends to predict and hypothesis about results whereas qualitative research results tend to be more malleable and subjective in their extrapolation. The focus on qualitative research was chosen for this project as it seemed more compatible with the ultimate aims of the thesis enquiry. A dearth of literature is available on the subject at hand and this may be explored through many means such as library based and internet based research. Therefore views and opinions, as well as the research of others were consulted in the course of the research. In the course of research of this nature, to preserve the integrity of the research; objectivity is obviously a prime concern. The writer must be careful not to extract views that are biased, or to formulate their own views through examination of biased material. Therefore a very wide scope was introduced to the research and a wide selection of texts were consulted. Where possible more than one text were used to substantiate points that are to be made. This scope will assist the writer to accumulate a more biased and open minded view of the issues which the research question will address. The objectivity of the research was also preserved as the writer consulted a wide range of sources published by interested parties, such as development agencies, non profit making organisations, government endorsed material and material available from the world of academia. The website of the European Union was also consulted as this is probably quite a reliable source of information, and reliability, like objectivity was paramount in the pursuit of the research objectives. Therefore sources that were disseminated through reliable and well recognised media like on-line book databases were consulted. In this sense therefore the qualitative research which was the objective of the project was gathered systematically and in a planned and structured manner. Potential drawbacks and potential problems for the thesis enquiry were also considered. Limited resources were obviously a primary concern, as any research project may be indefinitely improved upon through expenditure of money and availability of resources. However, since this is a university project and one which has a limited time scale, such investment was not feasible. Therefore the writer attempted to compensate for this by ensuring that the research objectives were identified clearly from an early stage of the research, so as to enable the writer to devote as much time as possible to the gathering of material for the project. The research was therefore well planned and executed in a consistent and methodical manner, adding credibility and depth to the finished piece. Ethics are also of primary concern to any credible researcher. Therefore, the writer ensured that they familiarised themselves with ethical research practices, prior to the execution of the research. In terms of ethics, for this research, which does not involve contact with human research subjects, the ethical concerns of the writer were probably much less onerous, as great care must be taken when human subjects are involved in research. Nevertheless, ethical concerns played a substantial part of the research skeleton and the themes of objectivity and reliability of sources were given much consideration, as has been explained above. The emphasis was on producing a wide, comprehensive, well thought out and ethically complied thesis and this is obvious from how the piece has been approached. CHAPTER THREE AFRICA, FARMING AND THE EU African Farmers and the EU Thousands of African farmers operate small farm holdings and they are, in many respects reliant upon these agricultural practices in terms of maintaining a healthy, or even subsistence standard of living. Poverty among this sector of Africans (the agricultural sector) has been explained in many ways, some of which are described in this passage: 'Tiffen et al.'s (1994) much-admired study of Machakos District, Kenya, demonstrates much success in agricultural development and improved rural welfare over the last 40 years. But there is precious little in that work about differentiation. Instead, we have had to wait for Rocheleau et al. (1995) for reports of increasing social differentiation in the District. This has been reinforced by the detail in Murton's recently published work (1999), based on surveys in one village in upper Machakos, supported by rapid appraisal for other villages.Forty per cent or more of households have not had the capital to invest in cash crops of coffee and French beans(Belshaw and Livingstone (2002); p110)'. The EU plays an important part in maintaining higher living standards for the African farmers, and a large part of this involves supporting the practice of exportation of organic produce from Africa to the EU. This supporting function engaged in by the EU involves the support and maintenance of various agencies and initiatives. The agencies to whom the responsibility of ensuring that the importation of organic agricultural products from Africa to the EU runs smoothly conduct research and gather data in relation to the operation of importing organic produce from Africa into the EU. They also offer advice to African farmers wishing to improve their circumstances through growing and exporting their products to the EU. Examples of the agencies and initives mentioned above include EPOPA (Export Promotion of Organic Products from Africa), Fairtrade and EFTA. EPOPA This is an organisation which is called a development agency. It was originally set up by the Swedish International Development Agency in 1997, and its aim is to educate African farmers about business strategy and awareness of the regulations which are involved in exporting their organic produce to Africa (EPOPA, 2006; p1). Specifically, this agency targets small holder farmers as this sector of the African population stand to gain the most from this education, advice and information provision service (EPOPA, 2006; p1). EFTA EFTA was established in 1990 and this term stands for the European Free Trade Association (http://www.efta.int/). This organisation operates as part of a network which involves eleven different Fair Trade organisations in various European countries, who import fair trade products from almost 500 economically disadvantaged countries, including Africa (http://www.efta.int/). Its head office is based in Maastricht in the Netherlands and its main official mission statement is to ensure that Fair Trade is conducted more efficiently and effectively; part of its role is also to disseminate information to farmers in Africa and to organise networks between farmers to ensure that they can exchange ideas and experiences of producing products, including agricultural products for sale in the EU (http://www.efta.int/). Markets for Organic Products It is important to be aware that the market for organic produce is limited when compared with the markets for more generic produce. Although it has been argued above that the market for organic produce in the EU is quite large, it is important to understand that this market is not comparable in terms of size with other markets, selling globally recognised merchandise and products such as Mc Donald's food and mobile phones. This puts the pressing need for quality standards in the organic food market into perspective, and highlights the need for processes of certification and quality control. In terms of organic trade the US, the United Kingdom and Germany have the biggest markets for the sale of organic produce; whereas the most significant per capita consumption can be found in Switzerland, Sweden and Denmark (EPOPA, 2006; Annex 2). This limited size exemplifies the importance of putting high quality produce into these markets; as often what drives the demand for organic produce is the perception that organic produce is of a superior quality and is more healthy for the purposes of consumption. Outlets for Organic Produce A look at the food outlets for organic produce throughout the EU will also allow the writer to gain perspective on the importance of quality and standards. This analysis will introduce the main thrust of the thesis, which is the role of certification, grading and standards in the importation of organic produce from Africa into the EU. In the EU, most organic produce tends to be marketing through hypermarkets and supermarkets (EPOPA, 2006; Annex 2). The emphasis is on cleanliness and presentability. This is an indication of the growing demands there are in the EU for organic produce. The features of organic produce are very marketable within the EU, in the face of public concerns about food safety and health issues connected with foodstuffs. The genetically modified food market has also perhaps strengthened the demand for organic foodstuffs within the EU, since this controversial issue has highlighted and contributed to the growing concerns there are among members of the public about the long term health impacts which may be the result of eating an unhealthy or overly chemically ridden diet. There are proven links between diet and cancer; proven links between some chemicals and cancer and obviously these health issues make the public image of organic foodstuffs very important. These factors have put organic food onto the shopping lists of many people within the EU, who perhaps traditionally would have regarded organic food as a luxury which was extravagant and unnecessary. The next section will focus on how Africa came to be one of Europe's main suppliers of these organic foodstuffs, that are growing in importance. CHAPTER FOUR AFRICA'S DEVELOPING ECONOMY Africa's Economic Climate and the Developments Which Have Affected the Agricultural Industry The Africa economy has undoubtedly become more sophisticated in recent years (http://europa.eu/pol/agr/index_en.htm) (Hanna, J. and Hanna, W. (1981); p81). Like the Republic of Ireland, Africa has seen a process of diversification. The age old dependency upon commodities for the economic well being of the country has been lessened through the process of diversification (Barber, W. (1961); p44) (Hyden, G., Kates, R. and Turner, B. (1993); p41). Mauritius is just one example; South Africa, Botswana, Senegal and Uganda are others. Commodities such as sugar cane, minerals and gold and diamond exportation and the manufacturing industries which have seen more investment have contributed to this emboldened leap forward(Arnold, G (2000); p91) (Konadu-Agyemang, K. (2001); p11). Strengthening political structures has also played a large part in the economic progress that has been seen to affect the commodity markets in particular in these countries (Yudelman, D. (1983); p3) (Ottaway, M. (1997); p15). Ottoway gives us some important detail here: 'The economy that the new democratic elites inherit in most African countries has typically suffered from two decades of mismanagement, exogenous shocks, and inappropriate policies, resulting in a growing debt crisis and a semipermanent process of negotiations and debt rescheduling with international creditors. In addition, the democratic transition itself has occasioned large economic costs, either because of extensive civil unrest and sometimes violence, or because of the fiscal recklessness of authoritarian leaders trying to hold onto power. Thus, the governments that emerge from the process of democratization face the daunting tasks of consolidating pluralist institutions and undertaking urgent economic reform simultaneously(Ottaway, M. (1997); p17)'. During the 1960s, when most African countries obtained independence from colonial rule, many commodity industries were subject to a process similar to the nationalised industry strategies we saw immediately prior to the Thatcher era in Britain (Aryeetey, E., Court, J., Nissanke, M. and Weder, B. (2003); p201). The commodity industries in most African countries therefore were heavily influenced by politicians often engaged in undemocratic practices (Reynolds, A. (1999); p28). Also, the absence of private enterprise which these national led economies fostered led to huge market inefficiency. These processes are slowly becoming more sophisticated, and African countries have moved from selling raw produce to packaging and marketing their own. Africa farmers are also engaged in direct trading with the West(Federici, S., McLaren, J. and Mwaria, C. (2000); p3); the EU in particular as we have seen explained in the introduction. Better investment in the economies of African countries has led to the availability of more education for more people. Interventions from agencies, described above have also contributed greatly to the increasing sophistication of the economies of African countries, paying dividends in terms of a strengthened economy and better stability for small holdings farmers (Abubakar, A. (1989); p83). Better roads have also been a dividend of this growing economic fervour, as these have led to better economic stability for producers who are able to sustain their own supply chains for private enterprise commodity exportation to the EU, and further afield. Specifically, this is of relevance to organic producers of agricultural produce for ultimate distribution in the EU. Sea and air freight are the most common forms of transportation used by African farmers to deliver their products to the EU (EPOPA, 2006; Section 3.1.3). However there are countries such as Uganda and Zambia, which may be descried as landlocked countries, and as such they need to rely upon established and well constructed roads in order to ensure that there business supply chain is uninterrupted and reliable. This is so that they may be able to reach ports and airports with their produce. What is Quality/What are Standards? This refers to a measure of how much value the product may be seen as having. Higher quality products tend to have higher values. Standards, in the context of the certification process refer to a measure of quality. Quality is important in the context of organic commodity export from Africa to the EU as it allows producers to measure how valuable their produce is in a comparative sense. In this sense, quality informs the end consumer of the product and it also informs each and every actor who has contact with products along the supply chain which brings the product to market. Quality is therefore of key significance to all concerned with the presence of organic agricultural commodities from Africa in the EU and global markets. Specifically, quality in the production of organic commodities in Africa is measured with reference to particular characteristics. These are: origin, service, volume, and reliability of exporter (EPOPA, 2006; Section 3.5). CHAPTER FIVE THE CERTIFICATION PROCESS AND WIDER ECONOMIC ISSUES Factors which an African Farmer Must Take into Account: The Certification Process Before an African farmer may export organic agricultural goods for consumption within the EU, the farmer must first obtain a certificate in Organic Standards (EPOPA, 2006; Section 2.2). The purpose of the certification process is to ensure that the farmer is producing organic products that are of a high enough standard to enter the EU market and the homes of EU consumers. It is illegal for an African farmer to export goods from their farms, for distribution in the UK, without first obtaining such certification, and the organic certificate is only issued for a period of one year (EPOPA, 2006; Section 2.3). While obtaining the appropriate certification, is often time consuming and expensive, there are many ways this certification can be obtained and the two major categories are external certification and internal certification (EPOPA, 2006; Section 2.3). The farmers may engage in what is known as an Internal Control System or ICS. Small farmers can obtain certification in groups, which ameliorates the constraint of expense on the farmer in question (EPOPA, 2006; Section 2.3). This system of internal certification is advantageous to farmers also as it maximises contact between farmers in similar situations and enables networks to the established between the farmers and therefore facilitates the building of economic relationships and the sharing of experience and expertise. These groups need to be monitored internally. External certification involves an external certifier gathering much information about the farmers who wish to export their agricultural organic produce to the EU. In order for standards and grading to be conducted in a fair and consistent manner the farmer in question must provide much information about their business and agricultural practices (EPOPA, 2006; Section 2.3). The external certifier may organise inspections of the produce (and where quality suspicions have been raised, more inspections may be carried out at the certifier's discretion) which has been grown by the farmer wishing to export organic goods for sale and consumption in the EU and the certifier may make certain recommendations to the farmer; accordingly the external certifier holds much power and influence (EPOPA, 2006; Section 2.3). What Does the Certifier Look For in the Pursuit of Consistent Standards of Product Integrity? The certifier will look at a number of issues before the issue of a certification which will enable the farmer to distribute his organic agricultural produce for consumption in the EU. Firstly there will be a need to ensure that organic and non-organic produce is keep separate; secondly there will be a need to ensure that products are traceable; thirdly the technologies which are used in the growth and production process are strictly monitored, and lastly there will be a need to ensure that controls are imposed on agents used in the production process of the goods (EPOPA, 2006; Section 2.4). These are the main issues which a certifier will look at before a certificate will be issued to the farmer who wishes to export his agricultural produce to the EU. Perhaps the most important of these processes is the need for traceability. This process refers to the identification of foodstuffs and an ability to trace where the product has come from (EPOPA, 2006; Section 2.3-2.4). This process is particularly important, where there are quality or health and safety issues with the organic foodstuffs. This process therefore involves a registration programme, where farmers are required to to register the full origin of the produce, including any supply chain transitions, so that the origin of the foodstuffs are always clearly identifiable (EPOPA, 2006; Section 2.3-2.4). In terms of the monitoring of technology and the other factors identified above; these are also very important in the process of standards and grading of the produce. Ethical factors are key here. Organic agriculture is often viewed by those who purchase and consume organic products as a safer and more environmentally friendly option. The certification process has to ensure that these standards are retained on a level which is commensurate with the levels of faith that consumers of organic produce place in them. Therefore technologies and production enhancement through the use of technology is strictly monitored in the standards/grading and certification process. The Need for Certification in Terms of Quality Control of Organic Agricultural Produce There is quite a broad spectrum of quality which may be expected from African producers of organic agricultural produce. This diversity exists even in spite of the checks which are imposed at certification level. The agencies which work closely with African farmers aim to eliminate these problems with quality. The certification process is just the first step, since even the checks which may be imposed at certification level can only guarantee a standard level of quality. In some cases, also the certification inspections may not be frequent enough to identify and eliminate sub standard produce. The long term solution to this problem therefore is arguably to attempt to look at why some African farmers are producing lower grade produce and in doing so to attempt to identify some possible solutions to this problem. Organic farming is also highly labour intensive and attracts very high distributions expenses. Also, in terms of organic produce from Africa, the African distributors often obtain very low prices for their products in EU markets and this encourages or even necessitates lower quality produce to be distributed (EPOPA, 2006; Annex 3). This is due to a number of factors, one of which is that the image of Africa and African produce is quite poor. Consumers are often very concerned with the origin of the products in question and, while this is an intangible issue, which is essentially reputation orientated; this does not imply that it cannot be addressed at source, by African farmers. One way to address this problem is to build rapport with the customer, by attaching recognisable names and personas to the produce, creating continuity and trust between producers and the end consumer. Examples of these 'personas' have been identified by EPOPA (2006; Section 3.2.1) as Tasty Toms, De l Monte Pineapples and Chiquita bananas. Branding therefore is a crucial part of the commodity market for sale of organic produce between Africa and the EU, as it builds trust and encourages the African farmers producing such commodities to maintain their reputations through strengthening the quality of the products they can distribute to end customers. The Fair Trade Certification Process This is a particular course of certification which may be acquired mainly for agricultural products (EPOPA, 2006; Section 3.3.3). It is similar to the generic process of certification, although it is perhaps not as widely recognised by exporters of produce to the EU, which is because this particular method of certification seeks to target small and disadvantaged commodity producers in Africa (EPOPA, 2006; Section 3.3.3). What is the Grading and Standards Process? The grading process is an essential part of the organic exportation business. It may be done by both farmers themselves and by exporters (EPOPA, 2006; Section 3.2.2). It ensures that minimum standards are adhered to and that there are levels of consistency in terms of quality instilled in the quality control processes surrounding the exportation of organic produce to the EU. Grading may be carried out in conjunction with other processes that are linked to the grading system. Bulking, cleaning, grading and packing are usually undertaken at the same time (EPOPA, 2006; Section 3.2.2), as this enables the grader to identify and separate lower quality produce, and to ensure that the produce is fully prepared for exportation. For example, if a certain commodity is packaged in a particular way, it may be graded in a better category, since it is to be expected that the packaging may preserve the produce better than inferior packaging or no packaging at all. Grading and its Links with Better Infrastructure Grading is inherently linked with economic and infrastructure development in African countries. It makes sense that processes like this should not be regarded as isolated processes. For example, the grading of produce may be significantly affected by the length of time it takes for their produce to reach points where exportation may begin. Therefore the point that economic processes may be seen to be intertwined so crucially with more macro economic