West's Obsession With Origin Hurts Local Growers

"Some experts see the craze of following a product from “farm to fork” as a potential hindrance to free global trade, that could hurt developing countries." - Business Daily Africa

The concept of traceability is intertwined in the Starbucks-Ethiopia coffee trademark agreement as well. Stay tuned for an assessment of the trademark dispute resolution and the threats “traceability” might pose to the success of the trademark project.
------------------------

West's Obsession With Origin Hurts Local Growers
by Ole Turana
Business Daily Africa, Kenya

June 27, 2007

Kenya’s agricultural produce industry is losing millions of shillings in export earnings because overseas buyers are not paying premium prices.

Kenyan exports, especially tea, coffee and horticultural products are under scrutiny as customers in the West query origin of produce.

The issue of traceability has become a major factor in deciding prices paid for agricultural exports to the West, says Francis Stevens George, a consultant for NB Partners, a Norway-based produce tracking company.

“Consumers are checking out the produce to ensure they conform to standards such as organic farming ensuring that farmers are not using chemicals and also child labour,” said Mr George in an interview.

The changing consumer concern for how and by what means a piece of fruit or a vegetable arrives to their supermarket could end up reducing Kenyan producers’ access to EU markets. And those picky customers are often among the most lucrative.

“Products that can be traced right to the grower through the value addition chain are attracting a premium price,” said Mr Stevens George.

“Kenyan farmers or their respective bodies need to take advantage of this,” he said.
Traceability has moved beyond a niche concept in the West into something more urgent following a health scare over imported products such as a cat poisoning outbreak in the US. The pet deaths were blamed on imported pet food from China.

In the past, traders would be forced to destroy whole consignment of such products. However, businesses are now able to filter out the affected products saving businesses from incurring huge losses.

Other African countries have made more strides towards making their products traceable and have reaped the rewards of doing so.

Namibia and Botswana have both profited from selling beef in Europe, accompanied by an assortment of information about the distance the slaughtered cows travelled, the date of slaughter and the time of packing.

Those livestock exports even affix a global positioning system (GPS) bar code that allows importers to track the shipment from slaughterhouse to port.

Some experts see the craze of following a product from “farm to fork” as a potential hindrance to free global trade, that could hurt developing countries.

“By demanding such minute details, the developed world is adopting non trade barriers, which are fast replacing the trade barriers being dismantled under World Trade Organisation trade regime,” said Felix Okatch, a WTO trade consultant. But with consumer awareness on the rise, Mr Okatch agreed that Kenyan producers must move quickly to avoid losing out big on the trend.

“Lack of value addition can be attributed to lack of information on the value chain hence low prices accruing from products that have the potential to attract good returns,” he said.
Globally agricultural trade is shifting from a commodities market to one of branded and added-value goods.

Ethiopia has pushed hard to brand its various coffees in the hopes of earning more, and recently came to a settlement with cafe giant Starbucks to earn royalties from the chain’s use of indigenous Ethiopian coffee names.

But such moves face a major test when it comes to the cost of implementation.

While large scale tea farmers such as Unilever are currently adding value to their produce by aiming to certify their plantations in Kenya and elsewhere as environmentally and socially sound.

But most Kenyan tea is grown by the over 400,000 small-scale farmers, many of whom have less than an acre, and earn little.

“Such farmers may not be able to carry out any value addition hence cannot obtain the benefit accruing from the costly exercise,” said Mr Stevens George.

The Kenya Tea Development Agency (KTDA) which buys and markets the tea from small-scale growers however could shoulder much of the cost, but that is unlikely to happen at the level of the farmer’s small plantation.

KTDA is currently implementing a bar code program at the factory level, according to the agency’s quality assurance manager, Joseph Mwathi.