IFC Standards Advisory in Europe and Central Asia

Upgrading food safety

in your business:

a Win-Win for your bottom

line and your customers

In partnership with

the Austrian Ministry of Finance

Why is food safety important

for your business?

Food processors face increasingly more challenges

Why do you need a modern food safety system?

% respondents, large Ukrainian food processing companies

Source: Telephone poll results, IFC, 2010

Consumers care increasingly more about safety

% of respondents-consumers

Source: Deloitte Development LLC, Consumer food safety survey results, 2011

Increasing competition Consumer demands

Price pressures Vague legislation

Retail & supply

chain globalizationMedia scandals

Food

processing

company

38 % 37 % 31 %

To increase production

efficiency

To improve risk

management

To access new

markets and export

57 % 65 %

90 %

Believe the number of

food-related recalls has not

decreased compared

to 2008

Stopped eating a

particular food, temporarily

or permanently,

as a result of a recent

recall

More concerned

about the food

they eat than five

years ago

Researchers speak:

Can you be 100% sure that your

employees care about hygiene?

«97 % of food poisoning

outbreaks involve food handler

error»

Source: Howes et al., 1996

Source: Clayton, D., Griffith C.J.

(2004) Observation of food safety

practices in catering using notational

analysis. British Food Journal,

106(3): 221-227; 29 Businesses;

observation of 31,050 actions

«At most enterprises even the

very basic practices are performed

incorrectly»

Handwashing

Correct

Incorrect

Cleaning

practices

14 % 31 %

86 % 69 %

Researchers speak:

“The challenge is clear — focusing

on food safety programs that pro-

tect your brand and your consum-

ers is not an option; it is a key to

survival. ”

Source: Deloitte Development

LLC, Consumer food safety survey

results, 2011

“Numerous studies have found that

Standards are second only to Capi-

tal Accumulation in their contribu-

tion to growth.”

Source: World Bank, 2007

HACCP* (Hazard Analysis and Critical Control Points) – food safety management system build on

risk-based approach and potential hazards analysis and prevention along the production process

Why does my company need a

food safety system?

Traditional food safety control

• Focuses on the end product

• Reveals problems after they have occurred

• Is based on the outdated approach that falls short of the present day international

requirements to food production

HACCP*-based food safety management system: establishes safeguards to

prevent, eliminate or reduce potential hazards from entering the product at the time of

manufacturing, storage and distribution.

What is a food safety standard?

Although standards are numerous all of them have a common foundation: the

prerequisite programs (basic requirements to sanitation, hygiene, manufacturing etc.),

which typically are the minimum mandatory requirements posed by the government

to food businesses. On the basis of these requirements the “walls” of the food safety

building are built, and a HACCP-based system is designed and implemented. The “roof”

of the food safety building may vary depending on the particular certification standard

selected by the business.

Infrastruc-

ture and

facilities

Premises

and

equipment

Transporta-

tion and

storage

Personal

Pest

control,

wastes

Cleaning

and

sanitizing

Product

recall

Based on — GMP, GLP, GAP…

HACCP System

Additional requirements from different standards

(IFS, BRC, IFSSC 22000...)

Legal requirements

Selected by the Producer

What is my role as a manager?

Unless fully supported by top management, no food safety management system will

be effective.

A food safety management system is first of all includes

• Management’s commitment

• Availability of resources

• Adherence to food safety practices

Empirical evidence suggests that the most difficult thing in building a food safety

management system at a company is to change the employees’ mindsets. That’s

why, key to success is you as the business leader: your commitment, persistency and

systemic approach to change.

What is the manager’s responsibility

Planning Procurement of resources

Goals setting Creation of HACCP team

Policy development Allocation of resources

Personnel awareness Procedures in place

Analysis Setting deadlines

Typical mistakes made by managers working with consultants

• Let them do all the work and distract my employees as little as possible

• We don’t care about what they are doing, we need the certificate

• All my people are busy, I don’t have money or time to do that

• We will never be able to implement all their recommendations

Experience of successful enterprises

• Deadlines clearly set, scope of work and deliverables described in agreement

• Segregated roles of consultants, management and staff at the time of system imple-

mentation

• Understanding and recognizing the consultants’ role: “We help you but don’t do the

work instead of you inside”

• Appreciation that the systems are sustainable only if they are developed with active

involvement of the staff

• Mutual understanding between consultants and owners/management of the goals

and objectives of the anticipated changes

• Seeing future benefits and advantages of food safety systems for your business.

Source: IFC training materials for food safety consultants

Director speaks:

“Within a few months of implementing

the food safety management system at

our company the results were already

visible. Improved controls and extensive

training of personnel have resulted in

better qualified and more effective

personnel. But getting certified accord-

ing to the requirements of international

food safety standards is not the end

of the journey. We need to improve

continuously. We look to the future

with great expectations. Our sales rev-

enue has increased by 17 percent over

the past few months. We have gained

access to new markets, including coun-

tries in the European Union, as well as

increased exports to the United States”.

Akaki Tsopurashvili,

Director, Shumi

(wine producer, Georgia)

Director speaks:

“Food safety is consumers’ major

requirement today, that’s why

implementation of a food safety

management system was our goal

from the outset. Not only will it

enable us to convince the consumers

that our food is safe, gain their

loyalty and trust, it will help us to

expand our export geography,

strengthen our presence in the

domestic market, increase sales,

and improve our competitiveness in

general”.

Sergey Dobudko,

General Director, Morozprodukt

(ice cream and desserts production,

Belarus)

How will my company benefit from

food safety system?

A prudent manager planning investment into his business, is likely to ask in the

first hand: “What’s in it for me? How much will it cost? How fast will these costs

pay back?”

Source: IFC interviews

Success Story: Morozproduct

Morozproduct is Belarus second largest ice-cream and deserts pro-

ducer and the leading importer of frozen foods.

In August 2012, Morozproduct engaged with IFC to help it implement

an internationally-recognized food safety management system based on FSSC 22000.

Once the new production floor is fully operational and certified according to FSSC 22000,

the company will be able to

• Create new jobs

• Become the most technically advanced facility among Belarus ice-cream producers

• Become the largest ice-cream producer in the Republic of Belarus

• Break into European markets

• Increase it presence in the market of the Customs Union

• Become an ice-cream supplier for the Olympic Games in Sochi in 2014

Food safety management system as a business

tool to improve competitiveness of your business

Growing sales

• Trust of consumers and

stronger position in the

current market

• Increased sales through

retail chains

• Access to new markets

Cost reduction

• Greater efficiency and business control,

standardization of procedures and controls

• Reduced waste and re-work expenses

• Enhanced communications, increased

worker morale and loyalty

Risk minimization

• Better protected brand

• Better overall manageability and efficiency of business

• Investors’ interest

How much does food safety system

cost and when will it pay back?

The stronger food safety culture at the enterprise, the easier, cheaper and faster it will

take to build a full-fledged food safety system. As a result, better market position,

stronger brand and thoroughly managed risks make a company much more attractive

for investors.

Main categories of costs

1.Introduction of pre-requisite programs

(start-up costs, fixed costs for new equipment, renovation of premises)

2.

Development and implementation of HACCP action plan

(costs of developing HACCP action plan, staff training,

evaluation of HACCP plan)

3.Maintaining HACCP system (costs of record keeping and verification

of HACCP plan, corrective actions)

Example: In dairy industry it is expected to cost…

HACCP plan development and implementation in Ukraine is around $5,500-$6,500.

Operational costs in the first year are about $6,500.

Pay-back period

Usually one to two years, as evidenced by international practices of implementing the

systems in the dairy industry.

Main categories of benefits

1.Increase in revenues (access to new markets, expansion in retail

chains)

2.Decrease in overall cost (better management, staff motivation and

responsibility, streamlined production process)

3.Increased product stability, shelf-life and product characteristics

(lower wastage and spoilage)

Source: IFC survey findings: Implementing food safety management systems in

Ukrainian food processing enterprises. A cost-benefit analysis, 2010

Director speaks:

“Although we are still in the process

of implementing the system,

we have already appreciated its

benefits. The amount of defected

product at the enterprise has fallen

from 1 percent to 0.1 percent,

enabling us to save $25,000

annually. They say that HACCP is a

ticket to exports to the developed

market. Our company, though,

does not plan to break into external

markets, rather, we are getting

ready to withstand the increased

competition due to growing imports

into Ukraine.”

Vladimir Zavadovsky,

General Director, GALS LTD (juices

and canned fruit and vegetables,

Ukraine)

How can food safety

increase my sales?

A food safety management system helps companies attract new customers and

increase sales.

1.A HACCP-based food safety management system is the minimum

requirement for export to the EU and other major markets

2.A food safety management system increasingly required by large

retailers in Ukraine for suppliers, particularly private label suppliers

3.

Consumers increasingly expect safe products

More and more companies build their brand on food safety and reach

out to new customers

Retailer speaks:

“Food quality and safety assurance

is one of the key criteria in

our cooperation with supplier

companies. In its work METRO

relies on international and local

standards. We expect from our

partners an equally responsible

attitude. Food safety management

systems are the best evidence that

the company has done everything

possible to safeguard our

customers from the risks of food

contamination.”

Jacquot Boelen,

Managing Director,

METRO Cash & Carry Ukraine

Success Story: Georgian Bakers Ltd

Georgian Bakers Ltd. was founded in 2008. The company pro-

duces confectionary products including baby food cookies. This

is a young growing small business employing 56 employees with

annual sales of about $1.3 million during 2011.

Currently the company is selling its products throughout retail

stores across Georgia, with immediate plans to export to neigh-

boring countries. Last year the company management has committed to introducing

good of best international food safety practices by implementing Global Markets pro-

gram basic level requirements at the company. The past year proved to be very suc-

cessful for the company in terms of reaching more customers and increased sales by

over $600,000.

Director speaks:

“Looking at our performance during the last year resulting in 50 percent increase

of sales, I feel that the time, efforts and resources we invested in improving food

safety practices have paid back in a significant way.

With improved personal hygiene, cleaning and sanitation, storage and traceabil-

ity practices combined with more systematized documentation and well trained

personnel we feel more comfortable approaching wider group of customers,

entering new markets, and expanding our business.”

Michael Parulava,

Director, Georgian Bakers Ltd (confectionary, Georgia)

Success story: Globino

A Ukrainian company Globino has been cooperating with IFC

to improve food safety of its product for two years. In this

period the company invested around $140,000 in upgrading

its food safety management system and completely revised its approaches to

customers safety. The investments paid back in just one month!

In just a year, their sales have grown by 10 percent ($3.8 million in money terms),

productivity increased by 30 percent and operational efficiency – by 20 percent. A

total of 8,000 new retail points were opened

“Our company enjoyed tremendous commercial benefits from the introduction of

the food safety management system. These include, primarily, work with large retail

chains, and further – access to international markets. Also, huge economic efficiency

as a result of optimized production processes and inputs flows. In short, the company

moved to a higher level”, says Oleksander Bondarenko, Director of Globino meat

factory.

Globino’s dedication to better food quality and safety sparked IFC’s interest which led

to a $25 million investment into the company. This enabled Globino to become the

unrivaled leader in the industry and create 600 new jobs.

How can food safety system minimize

my risks and attract investors?

In the food business, safety threats can result in instant market loss. Food safety inci-

dents can destroy an entire business that you have developed for years. Investors realize

this very well. For them, a food safety management system is the sign of a sound and

sustainable business and the evidence that risks are identified and controlled.

Director speaks:

”Partnership with IFC means a lot for us. Globino is a quite young company

and we strive for further growth by raising our operational and manufacturing

quality standards. Thanks to IFC consulting help, we are actively upgrading our

food safety management system. IFC became our reliable partner, then soon

became our strategic investor.”

Olexander Bondarenko,

Director, Globino meat factory (Ukraine)

Investor speaks:

“While contemplating an investment

the investor assesses various risks. A

food business operating a modern

food safety management system

sends a clear signal to the investor that

the company treats organization of

production processes responsibly and

makes efforts to minimize operational

risks. As experience shows, gaining

customers’ trust may take a long time,

and one may lose everything in a wink

of an eye, especially,

in the food business.”

Rufat Alimardanov,

IFC Country Manager for Ukraine

and Belarus

IFC Standards Advisory in Europe and Central Asia offers to businesses that wish to

implement a food safety management system:

1.

A special program called Global Markets, developed by the Global

Food Safety Initiative, to guide smaller food businesses through step-

by-step implementation of modern food safety management systems

2.Audits and technical reviews including full-scale action plan and

recommendations based on audit results

3.Complex consulting support of all implementation stages from audit

results to preparation for certification

Developing Agribusiness in ECA

Seventy percent of the world’s poor live in rural areas and agriculture

represents the single most important source of employment in emerging

markets.

IFC has made agribusiness a global priority because of its development

impact and strong role in poverty reduction.

Agribusiness is also a priority for IFC in Europe and Central Asia where

countries such as Ukraine offer tremendous potential to become

leading producers and exporters of agricultural products.

IFC supports businesses across the entire agricultural supply chain,

working with farmers, producers, traders, and consumers.

As of June 30, 2012, IFC’s agribusiness portfolio in Europe and Central

Asia stood at $1 billion.

IFC advisory programs are helping to strengthen agricultural supply

chains, increase food safety, develop agri-insurance, and improve

access to finance for farmers and entrepreneurs.

IFC clients speak:

“IFC’s HACCP Manual and the training

were very useful even for a company

like ours, which already has a function-

ing HACCP system in place. Sector-

specific templates used during the

training were very practical and helped

us reassess and identify improvements

to our Hazard Analysis and HACCP

Plan”.

Madona Nozadze,

HACCP Leader, Nozadze-Gantiadi

(poultry producer, Georgia)

“Our staff is now on board: they see

that their paychecks have increased

since our sales have increased. Our

people are happy!”

Nadezhda Olhovaya,

Director, Olhovyy

(bakery company, Ukraine)

How can IFC help me?

Program participants speak:

“While there was initial skepticism

in the program at our factory, we

are now believers…The program

has allowed us to continue selling

to METRO [Cash & Carry], which

is a very important partner for

us, particularly since METRO is

expanding”.

Lyudmila Chernous,

Deputy Director, Kolos

(meat company, Ukraine)

Welcome to Global Markets Program

A unique new program, designed by the Global Food Safety Initiative* on the basis of

requirements of international standards and global retail chains, is targeted at food op-

erators from countries in transition.

The program consists of two levels: basic and intermediary. This step-by-step approach

helps businesses achieve modern international standards at a minimum cost.

The Program has been successfully tested in Ukraine and other countries worldwide, and

proved to be highly effective.

Benefits of the Global Market Program

1. A step-by-step approach enables businesses to focus on the short list of clearly de-

fined problems and quickly address them (each level of the Program lasts four to six

month on average)

2. This all-purpose program is suitable for enterprises of various levels and offers

optimal price-quality ratio

3. Program addresses typical challenges faced by businesses of the region (trace-

ability, crisis management, good manufacturing practice) and helps achieve the re-

sults quickly, even when starts from zero. Rate of compliance with basic level food

safety requirements at businesses that graduated the program, has risen on average

from 49 to 93 percent

4. Partnership with retail chains transforms into participating businesses’ com-

mitment to the program (METRO Cash and Carry is IFC’s program partner since 2010

in Ukraine, and since 2012 in Kazakhstan). IFC takes care of organizational aspects and

supervises the program delivery.

*Global Food Safety Initiative (GFSI) is a non-profit foundation, managed by the

Consumer Goods Forum, that was set up in 2000 to pursue continuous improvement

in food safety management systems, cost efficiency in the supply chain and, above

all, safer food for consumers worldwide.

www.mygfsi.com

Program participants speak:

“Participation in the program has

significantly contributed to two-fold

increase of sales in our company. We

are now convinced that food safety

is our competitive edge. We revealed

other directions of business develop-

ment, for example, waste recycling.

And now, what has always been an

environmental challenge for us, will

become a source of revenue. We have

reformatted relations with retail chains

and customers. When we tell that we

have graduated the Global Markets

program, we are treated as a solid

company.”

Oleksander Miahivskiy,

Business Development Manager, Koro-

bivsky (meat and poultry, Ukraine)

Program Agenda

Basic Level

Section A: Food Safety Systems

Section B: Good Manufacturing

Practices (GMP)

Section C: Control of Food

Hazards

• Specifications

• Traceability

• Incident Management

• Control of Non-conforming Product

• Corrective Actions

• Personal Hygiene

• Facility Environment

• Product Contamination Control

• Cleaning and Disinfection

• Water Qual

• Control of Food Hazards

• Control of Food Allergens

Intermediate Level

Section A: Food Safety Systems

Section B: Good Manufacturing

Practices (GMP)

Section C: HACCP and additional

requirements

• Management Responsibility

• Document Control and Procedures

• Complaint Handling

• Control of Measuring Devices

• Product Analysis

• Supplier Qualification, Approval and Supplier Performance Monitoring

• Training

• Facility Layout, Product Flow and Equipment

• Facility and Equipment Maintenance

• Staff Facilities

• Waste Management

• Transport and Storage

• HACCP

• Food Defence

Contact us to learn more about participation in the Program:

In Ukraine IFC: tel. +38 044 490 6400

Yury Zvazhenko, yzvazhenko@ifc.org

In Georgia IFC: tel. +995 (32) 223 43 01/02/04/05

Natia Mgeladze, nmgeladze@ifc.org

In Kazakhstan IFC: tel. +7 727 298 0586

Assel Choibekova, achoibekova@ifc.org

Metro Cash and Carry: tel. +7 727 330 3800

Lyazat Sarbassova, lyazat.sarbassova@metro.com.kz

Contacts:

IFC Standards Advisory

in Europe and Central Asia

1 Dniprovsky Uzviz, 3rd floor

Kyiv 01010, Ukraine

Tel.: +38 044 490 6400;

Fax: +38 044 490 6420

2012

In partnership with the Austrian Ministry of Finance (MOF)

External Economic Program

MOF’s external economic program supports the development and transition process in

Southeast and East Europe. The program aims at promoting sustainable investments to

support economic growth, create jobs and improve the business environment. Supporting

local and foreign investments helps to improve the livelihood of people and the progress

towards a stable and prospering region. Our goal is to contribute to private sector growth

through capacity building, SME support, facilitation of investments, and building business

partnerships between Austrian and local investors.

IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments.

This brochure has been produced by IFC through its Standards Advisory Program in Europe and Central Asia

The conclusions and judgments contained in this brochure should not be attributed to, and do not necessarily represent the views of, IFC or its Board of Directors or the World Bank or its Executive Directors, the Austrian Ministry of Finance or the countries they represent. IFC and the World Bank do not guarantee the accuracy of the data in this publication and accept no responsibility for any consequences of their use.

This brochure does not claim to serve as an exhaustive presentation of the issues it discusses and should not be used as a basis for making commercial decisions. Please approach independent legal counsel for expert advice on all legal issues.

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