Emerging food standards: Ceylon Tea - a cause for concern
By Janaka Wijayasiri
Over the past two decades, there has been a tightening of public
standards, a shift from product standards to process standards, an
increase in the importance of private standards and a widening scope of
standards.
These developments have raised concerns among developing countries,
as standards can become non-tariff measures with falling tariffs.
Failure to comply with standards could potentially result in loss of
international market, a decrease in employment opportunities and a
decline of an industry.
However, compliance offers the possibility of enhancing international
competitiveness and encourages the advancement of an industry. Sri
Lanka's tea industry, which is predominately export-oriented, is
increasingly governed by strict and complex standards.
Standards
This reflects the evolving trends in the standards environment
globally. The main standards that affect tea exports from Sri Lanka can
be classified according to public or private, product or process, and
mandatory or voluntary.
To export tea, companies have to comply with local and foreign
standards and regulations pertaining to food quality and safety. These
are usually mandatory product standards.Tea has to comply with ISO3720
product standard for black tea.
In addition to ISO3720, the Sri Lanka Tea Board calls for tea exports
to comply with other product standards, including foreign matter,
micro-biological contamination, heavy metal and pesticide residue
limits, which are specified and monitored by the Tea Board.
International food assurance standards such as Hazard Analysis and
Critical Control Point (HACCP) and ISO22000 (Food Safety Management
System) are also increasingly becoming important in the tea trade. While
these standards are voluntary at present, compliance with either HACCP
or ISO22000 is becoming necessary and considered de facto mandatory
standards.
Initially, companies selected ISO9001, which is a quality management
system (QMS) but with the introduction of HACCP and later ISO22000,
which are more relevant to the food industry, tea exporters are
switching to HACCP and/or ISO22000 certifications.
The drive towards obtaining these standards in the tea industry
gathered momentum when the EU stipulated in 2006 that food imports
including tea into Europe must meet the HACCP standard.In addition to
the mandatory and voluntary public standards, there are a number of
private standards which have been voluntarily adopted by tea exporters.
These go beyond the realm of public standards in food quality and
safety, and cover a gamut of issues including social and environmental
concerns. Commonly stated private standards by tea exporters include:
BRC (British Retail Consortium) Global Standard, Organic, Fair Trade
(FT), Ethical Tea Partnership (ETP) and Rainforest Alliance (RA), which
have been collectively set and monitored by third party agencies.
There are also private standards or private codes of conduct,
specific to individual buyers. For example, supermarkets (i.e., Japanese
supermarkets) and fast-food chains (i.e., McDonalds) have their own set
of standards and needs. The emergence of private standards reflects a
growing interest by buyers, and ultimately consumers, about the
conditions under which tea is produced.
Challenges
Tea exporters from Sri Lanka meet various standards and ship tea to
some of the most stringent markets in the world.
However, they still face a number of difficulties in complying with
such standards, which needs to be addressed to ensure that Sri Lanka
remains one of the leading tea producing and exporting countries.
Infrastructure and human resources
Although there are a number of laboratories operating in the country
- government and privately run - they are not accredited to undertake
tests for certain chemicals. For example, the Tea Board has set up a
state-of-the-art laboratory, but it is not accredited while the
government-run Industrial Technology Institute's (ITI) laboratory can
analyse only certain chemicals.
Similarly, private laboratories are not accredited for certain
chemicals. As a result, it is sometimes necessary to send tea samples
abroad - to either to Singapore or to India - for testing. The absence
of fully-accredited laboratories is compounded by lack of qualified
scientific personnel to conduct tests.
In the case of the Tea Board, not only is the laboratory not
accredited but the Analytical Laboratory Division does not have
qualified staff to do testing despite the huge demand to get tea samples
screened.
Compliance costs
The most common challenge faced by the exporters was the compliance
cost which involved upgrading factories, audit and certification fees,
consultant fees and training costs.
All these add up to a substantial amount and contribute towards
increasing the cost of production. They are unable to pass this cost to
the buyers as it makes them uncompetitive in the market.
While exporters were willing to bear various costs associated with
standards, they were frustrated about the lack of monetary return for
compliance.
Changing the mindset of workers
Apart from implementation costs, many companies faced internal
resistance to their adoption. Initially, exporters found it difficult to
change the mindset of workers to fall in line with the standards,
although today they are more or less compliant. Training has to be
continuous as workers tend to revert back to their old ways.
Proliferation of standards
This is also becoming increasingly challenging for exporters, as
there is multiplication of costs (certification and audit fees) and
effort (in maintaining various documents). Exporters are also
disillusioned that different versions of the same standard are brought
out regularly, making them continuously upgrade to comply with the
latest version of the standard.
Assistance
While there have been some efforts towards harmonisation between
various private standards, proliferation of private standards will
continue in the foreseeable future.
While tea exporters have complied with standards and regulations,
they still have to overcome a number of challenges to stay competitive
in international markets. In this regard, exporters need assistance to
comply with the changing standards environment.
Forms of assistance needed include financial assistance (loans at low
interest rates and longer pay back periods) and technical assistance to
comply (training).
There is also the need to harmonise standards as there is duplication
of costs and comply with different needs of various countries and buyers
and obtain accreditation for laboratories operating in the country.
Given that standards are likely to multiply and become further
complicated in the future, the Government and the industry should
provide exporters support to comply with such standards and ensure
continued access to the global tea value chain.
The writer is a Research Fellow and the Head of International
Economic Policy Research at the Institute of Policy Studies of Sri Lanka
(IPS). This article is based on his PhD thesis on 'Food Standards and
Governance in the Tea Industry in Sri Lanka: A Value Chain Analysis'
from Monash University.
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