COSTS AND BENEFITS OF COMPLIANCE WITH FOOD SAFETY STANDARDS IN NILE PERCH

INDUSTRY IN TANZANIA

By

Z. Mpenda, N.S.Y Mdoe, R. Kadigi and E. Senkondo

Introduction High value food products as new opportunity

for developing exporting countries

Fish is a new opportunity worldwide:

net exports from developing countries reached 18.3 billion US$ in 2003, which compares positively to commodities such as coffee, cocoa, rubber, etc. (Josupeit, 2005).

Over the last decade, developing country exports of fish and fishery products have increased at an average rate of 6 percent per annum.

Introduction: Nile Perch in East Africa

Value of Nile perch exports to the EU by the riparian states (000’€)

Introduction: Nile perch in Tanzania

In 2008 the Nile perch exports amounted to US$ 153 million (equivalent to 1.1% of the GDP)

Direct employment to about 80000 fishermen

Seven processing plants in Mwanza in 2006 employed 2825 casual and 1195 fulltime

Nile perch mongers: daily cash flow estimates in 2009 were TSH 600 million

About 119 000 families depend on lake Victoria for their livelihoods

Introduction cont’ed three intermittent EU import bans

referenced to failed compliance with the EU food safety standards

Low volumes were consumed by other markets in Asia (Japan, UEA)

exacerbated pressure for reform adopting EU fishery regulations on food safety and hygiene. At national and processing levels

Literature on compliance Costs:

High production, compliance and transaction costs Non-conformity costs is enormous

Benefits: Market access, Premium price, Firms’ image, competitive edge

Study objectives

General Objective To assess benefits and costs associated with

conformity to food safety standards in the Nile perch export supply chain.

Specific Objectives To assess levels of compliance with standards

at each stage of the Nile perch export supply chain

To identify and assess costs and benefits associated with conformity to food safety standards at various stages in the Nile perch export supply chain

Methodology Both secondary and primary data were used

Primary data were collected from a total of 239 actors including 5 processing plants, 58 traders (ajenti), 109 boat owners (matajiri) 67 fishers (wajeshi)

Data analysis descriptive statistics, accounting method and

Obj. 1: Level of compliance with standards

Fishing : Non compliance with use of mashed ice, boat partitioning, training and license renewal was found amongst small and medium scale boat owners

Trading: non-compliance with keeping the 3 days maximum limit of mashed ice use. Only 45% of traders spent less than 3 days

Processing: complied with standards; continuous improvement due to proliferation of new standards

Remarks Test Parameters Test methods Units Critical limits

Standards Test Methods

Total plate count/g TZS 118:2002 Cuf/g 1 x 105 Old New

Total coli form/g TZS 119:2002 Mpn/g 4 x 102 Old New

Salmonella/shigella sp/25g TZS 122:2002 P,A/25g Absent Old New

Vibrio cholerae/25g FDA-BAM:1995 P,A/25g Absent New -

Staphylococcus aureus/g TZS 125:2002 Cuf/g 1 x 103 Old New

Enterobacteriaceaea/g ISO 21528 (part 2) Cuf/g 1 x 103 New -

Escherichia coli TZS 731:2002 Mpn/g 1 x 101 Old New

Obj. 2: Compliance costs

Capital investment costs(1) Boat owners: Nile perch costs three times

higher than that of dagaa

(2) Traders: Dealers’ costs increased by 45% Trucks traders’ costs increased by 109% Boat traders’ costs increased by 50%

(3) Processors: the costs increased by 16%

Obj. 2: Compliance costs cont’d Recurrent costs

(1) Boat owners: costs increased by 17.4% compared to 0.2% for dagaa Highest cost is in fuel and oil (65%)

(2) Traders:

(3) Processors: high costs on quality supervisors (27.2%), lab testing (25.2%) and training (11.0%)

Cost item Dealer Factory agent

Boat collector

Truck owner

Percentage Increase in quality cost 1.3% 4.0% 2.1% 2.9%

Percentage of Non-conformity cost 0.0% 70.2% 30.8% 32.2%

% increase total Compliance cost 0.0% 77.0% 33.6% 36.0%

Obj. 2: Compliance Benefits

(1) Boat owners Market access Significant in annual net revenue Premium price (67%)

(2) Traders Market access Price premium (84%) Net revenue increased by 153% when compared to dagaa

(3) Processors Market access

0

50

100

150

200

250

300

350

400

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Amount of fish tons) Average real price

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Weight (tons) Value (US$ '000)

Conclusions High levels of compliance have been achieved

by downstream chain actors (processors) who are closely integrated to fish buyers than upstream actors (fishers)

Compliance is constrained not only by the standards but also depletion of fish resources (distance from the shore line, days stayed at landing sites to collect fish)

standards are associated with high costs but also higher benefits

Major recommendations

it is worth supporting the continuation of efforts to maintain compliance

encourage development partners and non-governmental institutions to finance chain improvement trainings to all players in the Nile perch supply chain

Ensure sustainability of fish resources