Prof. Dr. Bustanul Arifin

barifin@uwalumni.com

Professor of Agricultural Economics at UNILA

Board of Founders and Senior Economist with INDEF

Head of Focus Group on Food and Agriculture at PP ISEI

Presented at the International Seminar on Food Traceability at MIICEMA Conference, on 5 October 2017 in Bogor

Economic Points of View on Food Safety

Outline of Presentation

1. What is Food Safety?

2. Food Safety in Indonesian Export Products

3. Trend: Food Choices and Food Perception

4. WHO Vision and Share Responsibility

5. International Trade Issues on Food Safety

What is Food Safety?

• Food safety refers to the potential hazards associated with food that can cause ill-health in humans.

• Certain of these hazards are naturally-occurring (e.g.: aflatoxins in groundnuts), whilst others occur through contamination (pesticide residues in fruit, etc).

• The potential hazards associated with food (WHO, 2002):• Microbial pathogens: micro-organisms that occur naturally in humans,

animals and/or the environment. Salmonella, Campylobacter and E. coli. Microbial pathogens are associated with diarrheal diseases.

• Zoonotic diseases: transmitted from animals to humans through food products, for example tuberculosis and brucellosis.

• Parasitic organisms, intestinal worms, can be transmitted through contaminated food and water.

Potential Hazards Associated with Food

• Physical contaminants and adulterants can occur in food through normal modes of contamination. Examples include glass, metal animal feces etc.

• Naturally-occurring toxicants occur in food naturally or through normal biological processes: mycotoxins, alkaloids, lechitins.

• Agro-chemical and veterinary drug residues, can occur in food as a result of the purposeful use of these substances in agricultural production

• Prions, the agent causing bovine spongiform encephalopathy (BSE) are associated with human disease, consumption of meat from infected animals

• Persistent Organic Pollutants, are compounds that accumulate in the environment and the human body, e.g. Dioxins and polychlorinated biphenyls.

• Heavy metals such as lead and mercury cause neurological damage in infant and children. Exposure to cadmium can cause kidney damage, etc.

• Genetically-modified organisms may contain allergens or toxins that are not found in conventional foods.

Food Safety in Indonesian Export Products

• Cases of Ochtratoxin (OTA) in Lampung coffee, possibly causes by cherry picking and post-harves process of the coffee bean. Indonesia has argued that OTA contamination of Lampung coffee is 2.7 ppb, far below the limit of 5 ppb, the importing countries have concerned on this issues;

• Cases of Anthraquinone (AQO) in Indoneain tea, possibly migrating from the packing to the tea, heating process using fire wood, besides other unknown sources. Eight pesticides were acetamiprid, bifenthrin, carbendazim, chlorfenapyr, clothianidin, endosulfan sulfate, p,p'-DDT and its' metabolite p,p'-DDE.

• Cases of Histamine or Scombroid in Indonesian fish and shrimp, due to post harvest handling and cold-storing facilities during transportation. As histamine is also the natural agent involved in allergic reactions, scombroid food poisoning often gets misidentified as a food allergy.

Food Chains and Food Safety

• Supply of Agricultural Inputs: Fertilizer, pesticides, animal feed, veterinary drugs, etc

• Primary Production: Farming, fishing, aquaculture, etc

• Primary Food Processing: On-farm, milling, slaughtering

• Secondary Food Processing: Canning, freezing, drying

• Food Distribution: National, imports, exports

• Food Retatiling: Supermarkets, local shops, markets, etc

• Catering: Restaurants, street food, schools, hospitals etc

Trend: Food Choices and Food Perception

Source: Rabobank Estimates, 2015

Consumption pattern changes substantiallyMeat consumption increases significantly Demand for packed foods has increased

Sources: Processed from FAO and USDA data (2014)

WHO Vision of Shared Responsibility

Food Safety

Food Legislation and

Enforcement

Educated and

Knowledgeable Public

Good Practices by Primariy

Producers/Distributors

Advice for Industry/Trade Discriminating and

Selective Consumers

Quality Assurance and

Control of Processed Food

Consumer Education Safe Food Practices in the

Home

Appropriate Processes and

Technology

Information Gathering and

Research

Community Participation Trained Managers and

Food Handlers

Provision of Health Related

Services

Active Consumer Group Informative Labelling and

Consumer Education

Government Consumers Industry/Trade

National Commitment to Food Safety

Food Safety is a Must: No Execuse?

• Avoiding financial loss due to loss of business.

• Avoiding unexpected expenses on recalls, disposal, and penalties.

• Avoiding legal costs due to foodborne outbreaks.

• Maintaining the reputation of the company.

• Maintaining consumer’s confidence and loyalty.

• Meeting government regulations and standards.

• Ensuring supply of safe food products.

• Increasing sales and exports.

Food Safety Issues in Poultry Industry

Outbreak of avian influenza could occur anytime, due to weak implementation of bio-security and surveillance system

Structural Problems in Poultry Industry

• Chicken production have exceeded consumption, thanks to Livestock Revolution since the 1980s. Chicken meat serves as buffers and substitute for unstable beef price.

• Small-scale livestock farmers are the majority, but not strong in business management. Restructuring program of poultry industry is quite slow.

• Perrenial problems of price instability in day-old chick (DOC), live birds, and chicken meat have increased the tense among small-scale and large scale producers;

• This is a serious call for the government to finalize the design of poultry industry structure and competitiveness.

Food Infrastrucres, Handling, Processing

Even in the most modern traditional market in Jakarta,

live birds are on sold at the same spot with chicken meat

Food Safety Outbreak: Economic Loss

Year Contamination-Food Product (US $) Estimated

Economic Loss

Region/Country

2013 Food Poisoning 78 million Indonesia

2013 Clostridium botulinum/Whey concentrate Unknown New Zealand

2009 Salmonella/Peanut products 70 million USA

2008 Salmonella/Tomatoes 250 million USA

2008 Mad cow disease/Meat 177 million USA

2007 Salmonella/Penaut butter 133 million USA

2006 E. Coli/Spinach 250 million USA

1992 E. Coli/Hamburger 160 million USA

Source: Hossain and Dawson (2013) for USA and New Zealand, Rahayu et al (2016) for Indonesia

Non-Tariff Measures on Import• Technical Measures

Sanitary and Phytosanitary Standard (SPS)

Technical Barrier to Trade

Pre-shipment Inspection or other custom formalities

• Non-Technical Measures (Finance measures, non-automatic licensing, quotas, prohibition than SBS or TBT)

Notes on SPS:

• SPS measures are applied to organize and facilitate international trade. It

ensures the safety of the products by preventing the entry of diseases of

animals and plants from abroad.

• High level of tightness, complexity and differences in national standards and

inspection system of this measure applied by importing countries really give

difficulties for exporting countries.

• SPS measure may affect trade because of its role as a non-tariff barrier that

could hinder exports.

International Trade Issues on Food Safety

• Food safety standards (SPS) imposed by developed countries have a negative impact on processed food exports from developing countries.

• SPS is less transparent than tariffs or quotas.

• Developed countries tend to tweak the standards more strongly than necessary to achieve optimal levels of social protection,

• Developed countries tend to twist related testing and certificationprocedures to make their competing imports more competitive.

• Resources and institutional constraints are more binding for developing country exporters to overcome safety standards.

• SPS could diverge considerably across importing countries, making meeting standards costly and cumbersome for exporters.