Memorandum submitted by Dr Richard Baines
EXECUTIVE SUMMARY
This memorandum of evidence mainly focuses on
the role of Private or Voluntary Assurance schemes in defining
and communicating information to consumers and Government about
the food produced under such protocols.
The evidence provided addresses communication
within the supply chain and to consumers of information in relation
to food safety, systems of production and ethical considerations.
It also addresses the implications of Government involvement and
the implications for trade negotiations under WTO.
In terms of food safety, there is significant
harmonisation of approaches beyond the farm gate with the adoption
of HACCP for identifying and managing food hazards. At the farm
level food safety is passively managed through adherence to assurance
protocols. We see this as a weakness in the supply chain. Food
safety is not communicated to consumers overtly and nor should
it as claims over the safety of one product implies that others
are less safe. What is needed though is appropriate risk management
along the chain and effective technical communication from primary
production to retail or food service.
Most farm assurance schemes claim to encourage
or ensure that systems of production meet consumer (or retailer)
aspirations. However, the majority merely underpin legal farming
in terms of environmental protection and animal welfare. This
is why there is no premium for farm assured. Some schemes do require
additional conditions to be met by producers; however, there is
no evidence of this adding value for those who deliver these enhanced
conditions. This is attributed to the fact that most consumers
see environment and animal welfare as public goods.
There is a wide range of information attached
to food products that claim additional assurances such as farm
assured, free-range, local, from small farmers etc. Few of these
are part of the conditions of farm assurance and are therefore
not verifiable. Where they are subject to verification, the standards
often relate to the organisation as opposed to the product. Exceptions
to this include Fair Trade products and worker welfare under the
EUREP schemes. In any event, there is a need for such claims to
be independently audited and then linked to legal labelling.
Finally, it is important for Government to be
cautious over their direct involvement with private assurance
schemes, especially where resultant standards exceed the minimum
levels set by WTO or other agreements. There is an opportunity,
however, for the Government to use private assurance mechanisms
as a way of supporting primary production through green box payments.
The mechanism described would meet the aspirations of consumers
and producers, but would require appropriate labelling and dissemination
of information for it to be successful.
1. TERMS OF
REFERENCE
1.1 The terms of reference of the enquiry are
to look into the ways in which messages about food are communicated
to consumers by the food chain, Government and others. The focus
on food information is in relation to nutritional content, safety,
means of production and any ethical considerations. The inquiry
will also focus on the impact of communicating such information
to consumers on the one hand and on WTO trade negotiations on
the other.
1.2 In relation to these terms of reference,
the author will focus on the following key issues: the role of
private or so called voluntary assurance standards in communicating
food safety, systems of production and any ethical considerations;
and the link between such assurance schemes, Government actions
and WTO issues. The authority to comment on these issues comes
from over five years of benchmarking assurance standards in the
UK and Globally, from completing research and consultancy reports
for a range of clients (UK and other Governments, Industry Associations
etc) and from presenting papers on quality assurance at international
conferences.
2. THE EVOLUTION
OF PRIVATE
ASSURANCE MECHANISMS
2.1 Several factors have influenced the
evolution of private assurance mechanisms. These include globalisation
of food supply (where more food is purchased unseen, requiring
independent certification), the increase in food safety incidents
and scares that have highlighted the limitations of regulatory
surveillance, and the increasing dominance of "chain captains"
who define market access requirements that often go beyond regulatory
inspection alone.
2.2 The main driver for assurance in the
UK was the introduction of the Food Safety Act in 1990 with its
requirement for all those involved in food production, processing
and retail to demonstrate that they have taken all reasonable
care to ensure food safety. The Act also introduced the defence
of "due diligence" to counter the rights of consumers,
through their Environmental Health Officers, to seek compensation
for damages linked to "unsafe food". As the Act comes
into force at the consumer interface, then food retailers and
food service are most exposed to this legislation.
2.3 The UK multiple retailers dominate our
food supply with over 70% of the national shopping basket being
purchased through their outlets—they are the chain captains.
Therefore it was logical that these large businesses addressed
their own food safety management first. Once this was done, the
main risks were perceived to come from their suppliers, so it
was logical for these retailers to demand assurances from their
suppliers to meet the retailers own assurance systems. One consequence
of this was a common approach for all suppliers to retail (apart
from those supplying M&S) known as the British Retail Consortium
Standard. This is based on the adoption of HACCP (Hazard Analysis,
Critical Control Point) as a food safety risk assessment and management
tool plus technical specifications for product quality (that will
vary from retailer to retailer). The BRC standard does not, however,
include any reference to systems of production or any additional
ethical considerations.
2.4 The main integrators who supply our
retailers will be subject to regular audits by independent inspection
bodies against the BRC standard or equivalent. In addition, they
will be subject to the normal regulatory checks carried out by
Government and Local Authority Agencies. It is reasonable to argue
that the BRC HACCP check is considered to be the food safety firewall
between retailers and the rest of the supply chain and that they
require this assurance to address their potential liability in
the event of a food safety breakdown or scare. Integrators, manufacturers
and processors source their raw materials from primary producers
either in the UK or from abroad. It is important to note what
assurance they are buying into and how these relate to the stated
requirements of retailers. It is interesting to note that the
main retailers claim that the producers who supply "their"
integrators are farm assured, however, there is no formal audit
of this in the BRC or equivalent standards. Moreover, in many
of the primary product sectors, the proportion of product assured
and the proportion going to multiple retailers do not equate.
2.5 Imported raw agricultural products will
be subject to regulatory surveillance, however, homegrown produce
is largely unregulated in terms of food hygiene! However, in response
to changes in the supply chain beyond the farm gate, producers
have developed their own assurance systems. In the UK this was
initially in opposition to what retailers were demanding of them,
but through the actions of the NFU and others a national set of
farm assurance standards have evolved under Assured Food Standards
and the British Farm Standard logo of the "Little Red Tractor".
Although food safety is cited in these schemes, management is
merely by following scheme protocols that "should" reduce
hazards. The main focus of these schemes is around legal farming.
As such, the schemes provide the opportunity for independent inspection
of selected environmental attributes as defined in the Codes of
Good Agricultural Practice and animal welfare legislation. Finally,
these schemes do not set minimum product quality limits even though
this is a critical attribute further along the supply chain.
2.6 This brief overview of voluntary assurance
systems along whole supply chains clearly demonstrates that there
is not a consistent approach to food safety, product quality,
systems of production and any ethical considerations of food supply.
Taking each of these in turn, the following picture emerges:
3. FOOD SAFETY
AND ASSURANCE
3.1 The preferred approach of Governments
to managing food safety is the adoption of the 12 steps and seven
principles of HACCP by industry as a tool to actively identify
and safely manage food hazards. Indeed Codex HACCP provides the
international foundation for Government to Government agreements
on food trade and is the basis for WTO arbitration on food hygiene.
Furthermore, HACCP adoption along the whole food chain, including
primary production, is advocated by the EC in the 2000 White Paper
on Food Safety.
3.2 Although stated in the White Paper,
it appears that the EU is moving away from the notion of HACCP
at the farm level. We consider this to be a fundamental mistake
that weakens whole-chain food safety management by industry. As
previously stated, schemes under the British Farm Standard do
not require HACCP to be in place and therefore it could be argued
that safety is not being actively managed at this stage, even
though safe food claims are communicated to consumers through
promotional materials and the "Little Red Tractor" web
site. Similarly, HACCP is not part of any of the organic standards
operating in the UK, so the reservations over farm level food
safety management can be equally applied to organic produce.
3.3 The adoption of HACCP beyond the farm
gate is the norm, including organic food businesses. This is either
mandated by legislation for high-risk foods or is required as
a condition of market access by the chain captains described earlier.
These combined approaches result in a far greater emphasis on
addressing food safety along supply chains along with improved
technical communication of safety and quality between suppliers
and buyers. This communication does not, however, extend to consumers
and nor should it! Food safety should be taken as a given by consumers,
whereas active promotion of one product's safety implies that
other products are less safe! The whole industry should be working
towards preventing unsafe food reaching consumers irrespective
of consumers' ability to pay.
4. SYSTEMS OF
PRODUCTION
4.1 Consumer interest in how food is produced
has grown in the last decade or so. This is in part due to food
scares linked to particular approaches to production and in part
due to the intensification of agriculture as producer's battle
to overcome reducing farm margins. Such consumer concerns have
been reflected in various assurance schemes. Examples of this
include the adoption of integrated crop management in the Assured
Produce scheme and the additional environmental auditing under
the LEAFMarque scheme; higher (than legally mandated) animal welfare
under Freedom Foods; and high environmental and animal welfare
requirements under organic schemes. In addition, Tesco's Natures
Choice and Sainsbury's Living Landscapes schemes require direct
or premium suppliers to develop nature conservation or biodiversity
action plans. All other schemes claim to, and promote, systems
of production that are environmentally and animal welfare sensitive,
yet they merely require members to meet minimum legal requirements
in these areas.
4.2 Overseas suppliers of primary produce
have to meet the equivalent legal requirements of home production
in order to gain access to the EU. This regulatory oversight mainly
focuses on food hygiene as opposed to systems of production, though
the regulations on acceptable and banned medicines and pesticides
do impact on how production is carried out in third countries
(at least those aiming at export markets).
4.3 Like their UK counterparts, overseas
producers also have to meet chain captain requirements to gain
market access. This is also achieved through assurance schemes
like the EUREP schemes. These schemes generally mirror UK schemes
in that they define "legal farming" in relation to the
environment and animal welfare (and address food safety through
general advisory prescriptions).
4.4 Irrespective of the origins of primary
produce, very little information is communicated to consumers
over systems of production where food is produced under recognised
assurance schemes. We consider there are two main reasons for
this. First, although producers are required to be members of
assurance schemes at their own cost, there is no audit trail to
ensure only assured produce reaches and is sold by the retailers.
Secondly, the main multiple retailers aim to promote their own
brands of food. Any additional "assurance label" has
the potential to dilute their own brand and as such retailers
in our view actively discourage and prevent other labels reaching
"their" consumers.
4.5 One area of concern to producers and
consumers is the use of uncontrolled terms in food labelling,
especially where such terms are not verified in any way. Such
terms as free range, barn reared, natural, or local can be misleading.
Also, the use of claims linked to sustainable sourcing such as
the Marine Stewardship Council is confusing mainly because of
the complexity in defining and measuring sustainability. Even
farm assured, when not backed up by a recognised assurance system,
can mislead consumers over what they are paying for. We would
argue that such terms should be subject to some form of control
over their use. Similar arguments can be made for labels claiming
functionality or health attributes of food, however, this is beyond
the scope of this written evidence. Given that such attributes
of food can be defined and become part of legal labelling, then
there would be benefits to consumers and producers alike.
5. ETHICAL CONSIDERATIONS
5.1 Higher environmental or animal welfare
conditions could be considered as examples of ethical considerations.
Others include fair trade, social accountability, worker welfare
and support for overseas and small-scale producers. It could also
be argued that local supply is an ethical consideration if the
impact of food miles is considered to be a significant detrimental
impact on the environment or communities.
5.2 Several of the above ethical dimensions
of food supply are covered by agreed and recognised standards.
Indeed some have developed audit and reporting protocols to "prove"
the ethical stance of organisations subscribing to the standard.
Others are less well defined or measured.
5.3 With reference to voluntary assurance
schemes, none of the UK farm level schemes include any ethical
considerations, though organic standards include the notion of
locally grown and consumed as a principle of organic systems.
The EUREP schemes do include worker welfare conditions aimed at
addressing conditions for overseas workers. More recently, UK
schemes like Assured Produce have had to consider the implications
of worker welfare in relation to some of the illegal practices
associated with gang labour that is controlled from outside the
business.
5.4 Where ethical considerations are included
in assurance schemes, there is little communication of this to
consumers through food labelling. The main exception here being
fair trade. Moreover, many of the ethical standards relate to
overall business strategies and performance as opposed to product
specifications.
6. THE ROLE
OF GOVERNMENT
AND TRADE
IMPLICATIONS
6.1 Both the Government and the food industry
have roles to play in ensuring the safety and quality of our food.
The above evidence defines how the market place has gone beyond
regulatory compliance in developing and implementing private assurance
systems. In doing so, this poses no problems for Government in
relation to WTO rules and barriers to trade. If however, Governments
become actively involved in the development or ownership of assurance
schemes and if these schemes exceed the minimum standards defined
under SPS or TBT agreements, then challenges from trade partners
should be expected.
6.2 The food chain captains are defining
the main market access requirements for food. Although claimed
to be voluntary, the dominance of these chain captains makes these
conditions effectively mandatory. This is not a problem as long
as those delivering the additional requirements are adequately
rewarded. In order to realise this, labelling must differentiate
foods with these extra assurances so those consumers interested
in such foods can identify and preferentially source them. For
such a system to work, however, consumers must be prepared to
pay the added value of the product and this added value must then
flow to those who provided the extra attributes. This raises a
core issue for Governments and the food industry linked to added
value products and assurance systems.
6.3 As citizens we all would subscribe to
higher environmental conditions and animal welfare linked to food
production. Indeed many would also support higher worker welfare,
the notion of fair and ethical trade and even locally sourced
foods. However, as consumers few of us are prepared to pay a premium
through food for these attributes. As such, higher standards attached
to food can be considered to be public as opposed to private goods.
This raises key questions for the industry and Government.
6.4 If such attributes are public goods
and are beyond legal compliance, then the chain captains have
no right to demand them of suppliers unless they are prepared
to directly reward the suppliers themselves. This is not the case
at the moment so suppliers bear the cost of these extra conditions
and retailers benefit from them.
6.5 From the Government's perspective, if
we as citizens want higher standards of say production, then the
Government has two options. They can either tighten legislation
to achieve what society claims it wants, or they provide incentives
to encourage suppliers to meet societies aspirations. The former
option may result in disputes under WTO if legal requirements
result in trade barriers for imports, while the latter would have
to be funded out of government revenue.
6.6 There is a third option that should
be considered. If there is a desire to support agriculture through
rewarding good environmental performance (as outlined in the Curry
Report), then there is a need to ensure only those who deliver
environmental goods are rewarded. If auditable environmental (or
other conditions) are developed, then the existing private inspection
mechanisms could carry out the additional audit points (as is
currently done for LEAF Marque). The cost of this, however, should
be borne by the Government, as the additional benefit is a public
good. Through such a mechanism, only producers who deliver benefits
would be rewarded and the audit burden would not increase significantly.
As a fail safe, Government sampling of private audits could be
carried out along with Government audits of non-assured producers.
Given such a mechanism, appropriate labelling and communication
would enable consumers to select such foods at no extra cost.
The other benefit is that such a mechanism would enable Government
to support agriculture through green box payments without undermining
WTO rules. The Royal Agricultural College would be very interested
in developing this concept further.
6.7 Irrespective of the strategies employed
by the food industry or Government, there is a need for appropriate
communication within the industry and to consumers. This should
be in the form of labelling on products, promotion at the point
of sale and through public promotional and educational activities.
19 April 2004
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