Case Study on Trade and Environment Dimensions of the Food and Food Processing Industries in Sri Lanka

Transcription

1 Case Study on Trade and Dimensions of the Food and Food Processing Industries in Sri Lanka Asha Gunawardena Institute of Policy Studies of Sri Lanka 1 Outline A al Considerations in Trade in Food and Food Processing Products in Sri Lanka A.1 Importance of the Selected Industries A.2 Entry barriers to export markets based on environmental and health considerations A.3 Domestic al Impacts and Considerations B C National Experience in Improving Export Competitiveness and al Sustainability Recommendations C.1 Government policies C.2 Role of public private partnership C.3 Regional corporation mechanisms and modalities 2 1

2 A.1 Industries selected for the study 1. Tea Industry Private sector 60% Corporate management sector 37% State t sector 3% Number of People Employed: 650,000 (EDB, 2003) Major Tea Markets Export Year Earnings As a % of As a % of (Rs Exports GDP Million) Other, 35 Middle East, Europe, 8 Russia, Desiccated Coconut Industry Private sector/ small holding majority State sector a few large holdings Number of people employed: 10,000 (EDB, 2002) Major DC Markets Year Export Earnings (Rs Million) As a % of Exports As a % of GDP India 21% Other 36% Spian 4% 3% 5% Germany France 6% Saudi Arabia 10% UAE 15% Egypt

3 3. Prawn Industry Majority of producers comes under small and medium scale Number of people employed: 8,000 (EDB, 2000) Major Markets of Prawns USA 22% EU 6% Japan 72% Year Export Earnings (Rs Million) As a % of Exports As a % of GDP A.2 Entry barriers to export markets based on environmental and health considerations 1 Tea Industry Main markets for Sri Lankan tea- Russia and Middle East Black tea - ISO 3720 Pure instant tea - ISO 6079 Eight percent of the Sri Lankan tea exports are destined for Europe. EU Regulation (EC No. 852/2004 )on HACCP will be implemented in the tea processing and packaging industry. Currently this is not a mandatory requirement. Only 7 exporters and 4 tea factories are currently following HACCP standards. 6 3

4 2 Desiccated Coconut (DC) Every desiccated coconut mill maintains a laboratory to test quality under the supervision of the Coconut Development Authority (CDA). Supervise the warehouse standards of the DC exporters regularly l CDA coordinates with Sri Lanka Standard Institution (SLSI) in providing quality certificates for DC. CDA (Coconut Development Authority has taken an initiative to promote DC millers to follow HACCP procedure by providing grants and loans. Three big DC exporters are currently following a HACCP procedure which is demanded by EU. 7 3 Prawn Industry The national regulations on exporting fish products are the Fish Product (Export) Regulations of 1998 and the Aquaculture (Monitoring of Residues) Regulations of HACCP is a mandatory requirement to export to the EU, but not for Japan and the US. In General.. Sri Lanka has been able to set domestic regulations and standards in line with the market access requirements in export markets. Despite these initiatives, Sri Lanka is not yet prepared to follow some of the new standards which are mandatory in key export markets, such as HACCP in the EU. Sri Lanka has not experienced bans or restrictions due to non-compliance with health and environmental standards 8 4

5 1 Specific Constraints in Tea Sector Small and medium-size exporters (SMEs) and processors are facing several problems in implementing HACCP procedures, such as Lack of up to date information high cost of investment for complying quality standards lack of technical capacity. Tea Board is also facing difficulties due to lack of funds to support small and medium scale tea factories and warehouses. 9 2 Specific Constraints in DC Sector Lack of incentives for DC millers to follow HACCP procedures due to several reasons EU is not the main market for all DCs produced in Sri Lanka. High cost of compliance with new HACCP procedures Lack of capacity in preparing documents, Technical skills in following procedures Problem of utilizing full capacity of their factory machinery due to lack of coconut in certain period of the year 10 5

6 3 Specific Constraints - Prawns Sri Lanka complies with HACCP procedures Rejections of prawn exports due to high residues of veterinary antibiotics (not banned) No procedure to register prawn farmers and monitor their activity during the production period to ensure the quality of larvae No procedure to monitor the use of antibiotics Very costly for prawn processors for testing for antibiotics 11 A.3 Domestic environmental impacts and considerations 1 Tea Industry Majority of tea lands in are managed by the private sector Short-term profits by extracting higher yields Heavy use of inorganic fertilizers and other agrochemicals Replanting, infilling and bush management have been neglected to a greater extent Main domestic environmental problems Soil erosion Degradation of land Loss of productivity A long Term Management Plan is Needed 12 6

7 2 Desiccated Coconut industry Effluents (coconut sap) released from coconut mills al damage to vegetation, ground water resources and water bodies Energy use in coconut mills lower efficiency in traditional mills Gas emissions Results due to stack emissions from boilers Gaseous emissions: CO, 2 CO, SO 2, NO 2 Higher in traditional mills 13 3 Prawn Industry Disease Outbreaks due to uncontrolled expansion, deterioration of water quality Three Disease Outbreaks %-70% production loss poor farming practices, poor water quality, poor soil conditions and larval imports Loss one billion of Sri Lankan Rupees of export income In addition, Frequent localized outbreaks in farms due to bacterial infections. 14 7

8 Other environmental issues related to prawn farming such as Destruction of ecologically sensitive habitats such as mangroves Adverse effect on agricultural lands, wild fish population Loss of ground water due to over extraction of large volumes (FAO) Lack of supply of fresh drinking water in the prawn-farming areas 15 B National Experience in Improving Export Competitiveness and al Sustainability Phasing out of Methyl Bromide in tea plantations Minimizing the residue levels of Sri Lankan tea TRI has found cost effective alternative / alternatives to Methyl Bromide through research activities Minimizing the residue levels of Sri Lankan tea Pesticide Control Act (1980) - allows only importing of acceptable pesticides. Alternative methods (biological control and use of IPM techniques) Coordinated effort of tea growers 16 8

9 Plans by Sri Lankan Government to conform to international standards in tea such as HACCP, MRL Minimizing Soil Erosion in Tea Plantations Crop diversification Growing cash crops for short term financial benefits Standardisation of MRLs in Tea The Indian and Sri Lanka Tea Boards have been discussing the harmonisation of maximum residue levels (MRLs) for pesticides in black tea Coconut waste water treatment 17 Actions to overcome disease outbreaks and other problems in prawn industry After the third outbreak of disease in prawn farms, NAQDA has 1. Established a monitoring unit to monitor and regulate the existing iti prawn farms 2. Took an actions to screen the existing brooder stock to get a disease free stocks 3. Trained prawn farmers to adhere to the best management practices 4. Cleaned of the Dutch canal which is the main source of water for prawn farms 5. Introduced a Zoning plan and a crop calendar for the farmers to reduce the risk of spreading diseases 18 9

10 C: Recommendations C.1.1:Government policies to improve export competitiveness of SMEs on the basis of environmental and health standards Improve the awareness and level of understanding regarding international trade agreements related to health and environment E.g. TBT, SPS. Incentives should be offered to encourage the industry to adhere to voluntary standards in additions to the mandatory requirements to enhance commercial advantage and secure market access. 19 A mechanism with the partnership of other relevant sectors to provide market information to all industry stakeholders regularly The Government should study trade regulations and coordinate with relevant private and public institutions with the technical capacity to inspect and monitor exportrelated standards Adapt various strategies to improve technical capabilities of the relevant local institutions to ensure compliance with international trade standards Improving the physical infrastructure facilities to minimize food post harvest losses The Government should help to improve the competitiveness of SMEs in export markets by providing financial and technical support to comply with standards and obtain certification 20 10

11 C.1.2 Government polices to improve environmental sustainability of these industries The Government should have long term development policies and plans to ensure the sustainability of environment C.2 Role of Public Private Partnership In Sri Lanka, the tea sector is highly organised compared with other sectors. Partnerships between the private and public sectors in the prawn industry have a potentially important role to play and should be encouraged. 21 C.3 Regional Cooperation Mechanisms and Modalities Regional cooperation and assistance is required to improve the national technical capabilities Financial support is also essential improve the processing, manufacturing and other standards of SMEs Getting financial support of donor agencies to improve the national R&D 22 11

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