Small Food Producers Need State
19 July, 2012
Small Food Producers Need State

Support for Adopting Safety Standards

To help Georgian food producers improve food safety management systems, International Finance Organization (IFC) of the World Bank worked out a toolkit, providing all due information. However, experts believe the costly standards elaborated by the guideline can become available to small food producers only through special state programs. 

 

Having researched Georgian food market for years, IFC launched a toolkit to help food producers improve their food safety systems, thus increasing their competitiveness and exp

anding access to local and international markets.

The IFC Food Safety Toolkit provides stakeholders including company managers and government inspectors with guidelines on how to ensure products are safe for consumption. It provides guidance for businesses, consultants, regulatory authorities, non-governmental organizations, consumer organizations, and academics.  It helps companies identify gaps in existing systems and develop more efficient food safety management practices. The toolkit has been successfully tested in South Eastern Europe, Ukraine, Belarus, and Georgia.

“This is a very good food safety guideline that creates a good informative basement for all the food producing chain participants like food producing, reprocessing, retail network unit, consulting or state controlling organizations in line with international standards,” Maia Tevzadze, The IFC Georgia Food Safety Improvement Project Manager said in the interview with Georgian Journal during the guide-line presentation event on July 6, 2012.

Her project has been working in the food sector for 3 years and discovered an increasing demand for food safety standards in Georgia. IFC experts work with four companies to adopt safety systems and provide trainings but it is impossible to cover the entire sector completely therefore a guide-line was issued and put on the web-site free of charge. It is tailored to Georgian legislation, however also provides with the essential EU regulations for the export-oriented enterprises.

Georgian food market is quite vulnerable at the moment as far as the legislation of food safety suspended since 2005 to 2011 to enable business adopt cost-taking safety systems gradually is enforced partly since 2011 – only the EU export-oriented enterprises have an obligation to have due systems while the local-market providers are still exempted. The governmental standpoint is that imperative standards demand might ruin food producers for only few can afford such big expenses.

Georgian consumer right defenders find discriminating preferences for local-market-providers for business should not develop on the expense of consumers’ health. They believe if the local market food safety is streamlined through strict safety control the export-oriented enterprises will be streamlined automatically for there are no only export-oriented enterprise in Georgia.

Tevzadze assures most part of big enterprises is eager to establish expensive safety norms to get an access at export markets ultimately. The problem is resistant with smaller companies that cannot afford costly safety systems demanding millions.

According to  Tamaz Edisherashvili, Director of  poultry farm Kumisi LLC covering 15% of egg and chicken market, he spent several million dollars to adopt due international safety standards [however he did not specify how much] from the very outset of his business founded in 2007 but the expense is worth of it for he already could export eggs to Iraq past year.

“There was no Euro standard demand before but as soon as we started production in 2007 we tried to get closer to EU standards at the very beginning, acquired due equipment, we knew that it [obligation of safety standards] would have happened sooner or later. It is very expensive but very necessary,” he told GJ.

Tevzadze says the amount of safety related expenses depend on the size and sector of the food producer therefore it is hard to name average figure. According to Rusudan Barkalaia, cattle breeding specialist at Elkana, a bio-product oriented non-governmental organization, the food safety standards related to investments take at average USD 2-2.5 million for the state-of-the-art  milk plant with 300-500 cattle farm that includes all milk-processing chain in line with the best world practice. While most petty farms in Georgia run just 50 cattle and adopt expensive safety systems there cannot be profitable, for the state-of-the-art farm is profitable only if it has at least 300-500 cattle.

Only few milk companies Sante, Ecofood, Wimm-Bill-Dunn operating at Georgian market and couple of farms in regions have due Hazard Analysis Critical Control Point (HACCP) systems. Meantime small farms make 90% of Georgian market; that means the market is not protected in fact. Therefore Barkalaia thinks one of the best solutions will be if the state works out complex targeted programs for each food producing sector amalgamating small enterprises and making cheap and long-term credit access available.  In Poland for example farmers get credits for 2% while in Tsalka, Georgian cattle breeding region, credits are available only at 26-27% and the actual rate reaches 42% for the yield calculation takes into account insurance and risk factors.

“USD 2 million is just impossible to small farms in Georgia that only have a chance to get in line with standards through the state-supported special complex programs,” she said. “Some targeted programs should come from agriculture ministry and one of the best solutions can be amalgamation of small enterprises otherwise petty entrepreneurs based on their meager resources may never afford adoption of the safety standards.”

According to Barkalaia, the targeted programs should be complex including all chains of the targeted food processing. Meat producing for example cannot lack the pasture management as well as disease controlling chains, as milk processing cannot miss cattle farming and milk collecting. If even one chain of the program fails it will not work.

“Handling with each chain separately is very difficult and cost-taking. Only in complex project food producing can be profitable, the cost-price - cheaper and product sold to reasonable price to consumers. Small farms cannot do that alone,” she said. “But agriculture ministry has not drafted any program as of yet.”

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