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Who Does Bear the Costs of Compliance with Sanitary and Phytosanitary Measures in Poor Countries?

Author

Listed:
  • Shafaeddin, Mehdi
Abstract
This article is a part of a twin study. Drawing on the available evidence, in this paper the author examines the cost of compliance with Sanitary and Phytosanitary (SPS) measures for poor countries with reference to Africa. He shows that the burden of cost of compliance is entirely on the exporters despite the fact that their capacity for the compliance is limited. He further indicate that that, in fact, the literature often disregards the cost of loss of exports, or rejection of products at the border of an importing country, let alone the cost of reorganization of the supply chain; the existing organization of supply chain in poor countries would result in the lack of export expansion. The purpose of the paper is not to have an exhaustive literature survey, but to draw on the scanty evidence related to the main argument of the study. More specifically, it is shown that the main characteristics of the SPS Agreement and the related measures applied by main importing countries are such that they require a complex, difficult and high cost “SPS” system. Such a system involves regulatory measures, policy re-orientation, and development of the necessary infrastructure, re-organization of the supply chain, enhanced capacity building and a forward looking strategy, particularly for exports. The preparation for the compliance is also difficult for the poor countries as it is knowledge intensive, requires a learning period, training and a close cooperation between the public and private sector in various stages of the supply chain. Yet the socio-economic cost of the lack of compliance is enormous. Generally speaking, the operational cost, alone, of compliance is estimated to be between 2 to 11 percent of value of export in the case of Africa; in each case it depends, however, on the type of product, the destination of exports, the capacity of the country for the compliance and the size of farm holdings and exporting enterprises and the organization of the supply chain. Further, the investment cost can be colossal; in some cases (e.g Mozambique) exceeding the total food exports of the country. The available studies provide estimates for the administrative cost of control, inspection, testing and certification at the border; but disregard more important costs such as the costs of delays in exportation or rejection at the port of importing countries. Thus they downplay the need for taking preventive measures and the related cost of reorganization of the supply chain. In a separate paper the author proposes alternative organization of the supply chain for reducing the cost of compliance while increasing its benefits (Shafaeddin, 2007). 2

Suggested Citation

  • Shafaeddin, Mehdi, 2007. "Who Does Bear the Costs of Compliance with Sanitary and Phytosanitary Measures in Poor Countries?," MPRA Paper 6646, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:6646
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    File URL: https://mpra.ub.uni-muenchen.de/6646/1/MPRA_paper_6646.pdf
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    References listed on IDEAS

    as
    1. Fengxia Dong & Helen H. Jensen, 2004. "Challenge of Conforming to Sanitary and Phytosanitary Measures for China's Agricultural Exports.,The," Midwest Agribusiness Trade Research and Information Center (MATRIC) Publications (archive only) 04-mwp8, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. repec:bla:worlde:v:23:y:2000:i:04:p:511-525 is not listed on IDEAS
    3. Henson, Spencer & Reardon, Thomas, 2005. "Private agri-food standards: Implications for food policy and the agri-food system," Food Policy, Elsevier, vol. 30(3), pages 241-253, June.
    4. Jaffee, Steven & Henson, Spencer, 2004. "Standards and agro-food exports from developing countries: rebalancing the debate," Policy Research Working Paper Series 3348, The World Bank.
    5. Jill J. McCluskey & Jason A. Winfree, 2009. "Pre-empting public regulation with private food quality standards," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 36(4), pages 525-539, December.
    6. Hatanaka, Maki & Bain, Carmen & Busch, Lawrence, 2005. "Third-party certification in the global agrifood system," Food Policy, Elsevier, vol. 30(3), pages 354-369, June.
    7. Nin Pratt, A. & Bonnet, P. & Jabbar, Mohammad A. & Ehui, Simeon K. & de Haan, C., 2005. "Benefits and cost of compliance of compliance of sanitary regulations in livestock markets: the case of Rift valley Fever in the Somali Region of Ethiopia," Research Reports 182867, International Livestock Research Institute.
    8. Fulponi, Linda, 2006. "Private voluntary standards in the food system: The perspective of major food retailers in OECD countries," Food Policy, Elsevier, vol. 31(1), pages 1-13, February.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kwamina E. Banson & Nam C. Nguyen & Ockie J. H. Bosch & Thich V. Nguyen, 2015. "A Systems Thinking Approach to Address the Complexity of Agribusiness for Sustainable Development in Africa: A Case Study in Ghana," Systems Research and Behavioral Science, Wiley Blackwell, vol. 32(6), pages 672-688, November.
    2. Agyekum, Michael & Jolly, Curtis M., 2017. "Peanut trade and aflatoxin standards in Europe: Economic effects on trading countries," Journal of Policy Modeling, Elsevier, vol. 39(1), pages 114-128.
    3. DaSilva Glasgow, Dianna & Hosein, Roger, 2018. "Non-tariff Barriers to Trade: What Does the Experience of Guyanese Exporters of Food and Agriculture Products Reveal?," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 19(1), June.
    4. Morris Akiri & Fredrick Mbugua & Rahab Njunge & Charles Agwanda & Negussie E. Gurmessa & Noah A. Phiri & Richard Musebe & Jean Pierre Kalisa & Bellancile Uzayisenga & Monica K. Kansiime & Daniel Karan, 2024. "Intervention Options for Enhancing Smallholder Compliance with Regulatory and Market Standards for High-Value Fruits and Vegetables in Rwanda and Zambia," Sustainability, MDPI, vol. 16(14), pages 1-21, July.

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    More about this item

    Keywords

    SPS; Agricultural development; food policy; economic development; export expansion; trade; Ethiopia;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • F1 - International Economics - - Trade
    • I1 - Health, Education, and Welfare - - Health

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