1. 1 Standards Issues in Agricultural Development Lawrence Busch R. James Bingen Craig Harris Thomas Reardon Institute for Food and Agricultural Standards Michigan State University Paper presented at USAID Washington, February 2000

2. 2 Why should we be concerned about standards? n New rules for global trade n Differentiation of demand n New economic opportunities n New economic constraints n Potential for supply disruptions n Potential for democracy

3. 3 What I will talk about... n What are standards for? n What is at stake n Negotiating standards n Market Access n Outcomes n Where we go from here n Benefits

4. 4 What are standards? n Standards: Measures by which products, processes and producers are judged n Grades: Categories used to implement standards n Standards are… u for people and things u ubiquitous u therefore ignored

5. 5 What are standards for? n Reducing transaction costs n Transparency n Coupling n Functionality n Ensure well-being

6. 6 What are standards for? n Rules of the game n Strategies n Equity/Social Justice

7. 7 What is at stake for agricultural development? n Participation in global markets by u firms u nations n Disruption of commodity flows n Building economic infrastructure n Cultural identities n Fairness and equity

8. 8 Negotiating Standards n Who gets to participate? n Do some actors dominate? n Who gets to vote? n How are standards modified? But negotiation continues throughout the process...

9. 9 Standards and Market Access n Who can participate? n Who is excluded? n What biases are introduced by the standard? n Can this be changed?

10. 10 What are the outcomes? n Who benefits? n Who loses? n Are risks acceptable? n What third party effects? n What impact on environment? n Impacts on other standards?

11. 11 Standards Formation Industry leaders Trade associations Government agencies NGOs Quality, Food Safety, Environment & Labor Standard Setting and Negotiation Process

12. 12 Standards Formation

13. 13 What This Means n Chain is only as strong as weakest link n Attention must be paid to standards across the subsector n Standards may conflict, e.g., environmental and quality standards Let’s look at some examples...

14. 14 Example 1: US Soybeans n Foreign matter in US soybeans debated for >50 years n Millions of $ rest on 1% trash n Reputations of farmers, elevator operators, exporters, processors, retailers rest on 1% trash

15. 15 Example 2: Chinese Rapeseed n China wants to export canola- type rapeseed oil n Establishes standards for seed, grain, oil, etc. n Builds modern processing facilities n Project fails for lack of price differential at elevator n No incentive to meet standard

16. 16 Example 3: Malian Mangoes n President Chamber of Agriculture of Mali attempted to import Malian mangoes n Malian phytosanitary certificates obtained n Product rejected at US port of entry n Did not meet US phytosanitary standards

17. 17 Lessons Learned n One link was sufficient to cause a problem n Incomplete strategies: did not look at each CSP n In Malian case, quality and environmental standards conflicted So what is needed to promote profitable, fair and equitable agricultural development?

18. 18 What is needed? Education about... n Who are the actors? n What are their roles? n How do nations and the civil sector participate? n What are the rules? n How can standards be used strategically?

19. 19 What is needed? n WTO de facto enforcement n International standards u Codex Alimentarius u OECD u IPPC u OIE u UNECE n Industrialized nations’ standards u United States u European Union u Others n Corporate de facto standards Education about standards

20. 20 Who needs education? n Government ministries n Regulatory agencies n Input producers n Farmers n Transporters n Processors n Retailers n Consumers

21. 21 What else is needed? n Greater transparency n Fair implementation of standards u nationally u internationally n Voice for developing nations, consumers n Equivalence of processes, tests n Help in meeting international norms

22. 22 Benefits n Smoother flow of traded goods n Greater fairness in international trade n Improved quality, safety n Better environment n Strengthened democratic processes nationally and internationally