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Demand for Tracibility from Food Produced in Southeast Asia Provides Opportunities at Regional Level, Perils for Small Farms

According to Noviscape, ASEAN member countries will soon have to make the food they export traceable "from farm to fork" to meet market demands. This will require coordination between ASEAN countries, which is challenging in itself, but could pay off in the long run with increased revenue. However, the region's poor may not see benefit and, instead, suffer.

"The burden of mandatory traceability requirements could exacerbate existing inequities through marginalizing smallholders and impeding their integration into regional and global value chains... The export orientation of traceability systems could lead to neglect of small farmers who predominantly supply local markets."

The Noviscape article highlights the need to find "new ways of organizing small farmers to minimize costs, ease compliance burdens and help them participate in value-added production."

The article lists several reasons why ASEAN countries must make traceability a priority:

Growing consumer demand and government regulation in ASEAN's export markets (developed world: EU, US, Japan):

"Traceability brings added benefits for producers and exporters in verifying the authenticity of high-value niche products such as organic or fair-trade produce- an increasingly important source of value-added in Asian agriculture. Authentication is therefore the key to building and sustaining value addition through facilitating product differentiation [and satisfying] increasing safety consciousness among consumers."

Growing consumer demand in domestic markets and Asian countries:

"Today, Asian consumers are increasingly interested in the ‘story’ behind the food they eat, and will often pay a premium, basing purchasing decisions on provenance or production system."

"Increasing food safety consciousness among ASEAN consumers will make food traceability schemes a universal requirement, and will be regarded by producers as a de facto price of market entry."

Increasing feasibility of technological will increase demand:

"Two technological innovations can be credited with bringing [globally accepted standard IT platforms and inter-operability standards] within reach - the GS1 barcode identification system, now ubiquitous and fundamental to commerce, and more recently, passive and active Radio Frequency Identification, or RFID tags... which enable seamless product tracking at each transaction along the supply chain. For the future, we can expect technological convergence between enhanced RFID
technology and other innovations such as smart sensors to further extend the range of applications and simplify processes."

"Consumers can now use their smartphones to scan product barcodes and instantly obtain product information."

Noviscape also lists ASEAN’s economic integration into a single market- the ASEAN Economic Community (AEC) as a pressing reason to adopt a region-wide traceability system:

"[While this] will greatly boost intra-regional trade... the prospect of free
circulation of food and feed products among ASEAN countries greatly heightens food safety concerns... Historically, individual companies rarely survive a food contamination incident, and the consequences of EU import bans on export-led economies in Asia can be far-reaching and long-lasting."

This could be hampered by "failure among counties to agree on inter-operability standards" and "lack of monitoring, analytical and enforcement capacity within relevant authorities, especially in
responding rapidly to health alerts generated by traceability systems."

Of prime importance for companies will be "how to ensure free exchange of essential data on a ‘need to know’ basis, whilst protecting commercially sensitive proprietary information." One proposed solution is limiting the scope of traceability requirements "to recording movement of food one step back and one step forward in the supply food chain, thus giving some degree of protection and commercial confidentiality to companies.`"

To confront this challenge, ASEAN has already established "the ASEAN Food Safety Network (AFSN) to provide a cohesive approach for regional and national-level bodies to help harmonize food safety regulations among member countries and ensure transparency in sharing food safety information between exporting and importing countries, both within ASEAN and other trading blocs."

Individual member countries are also taking action:

"Thailand is now implementing a traceability system as a strategy to add value to Thai rice and boost consumer confidence."

"The Philippines is investing in a US$5 million Traceability Center for
Agro-Industrial Exports (P-TRACE), supported by the United Nations Industrial Development Organization (UNIDO)."

"Malaysia has a well-established traceability system for palm oil, driven by the Roundtable on Sustainable Palm Oil (RSPO), and aimed at sustainable production and protection of tropical rain forests
and wildlife."

"Vietnam, fronted by the Vietnam Association of Seafood Exporters and
Producers (VASEP) and the Vietnamese State Agency for Technological Innovation (SATI) introduced a food traceability system for aquaculture based on RFID technology, in collaboration with IBM."

Implications:

If able to pull this off successfully, traceability will likely "boost farmer income by encouraging shifts in production from low-cost commodities to niche markets for value-added premium produce with non-tangible attributes (e.g. ‘organic’, ‘fair-trade’ and ‘sustainable’ produce)."

However, what remains un-adderessed is that "Smallholders still lack capacity to comply with stringent standards... and to provide data electronically to buyers."

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Sources:

Noviscape_July2011 page 8, 9, 10:
http://newsletters.clearsignals.org/Noviscape_July2011.pdf#page=8