Compliance to food safety and quality assurance standards could make or break a small and medium agribusiness. But getting it right is daunting, indeed. Dr Mahlogedi Thindisa has suggestions on how we can streamline the South African system and increase the likeliness of agripreneurs embracing the opportunities that food safety compliance offers.
The recent recall of canned vegetable products in South Africa has magnified the role of food safety and quality assurance in the food system. An estimated 20 million cans, produced from May 2019 to May this year, were recalled over potential defects and subsequent safety concerns.
The financial impact of the recall – counting stock write-off, transport cost, storage and profit loss – is estimated at R650 million. A leading, large and dynamic company might be able to absorb the losses but a situation like this could mean the end of a small or medium agribusiness.
The company concerned indicates that the recall was voluntary to safeguard against illness and injury from the consumption of potentially contaminated products. This voluntary recall is likely an indication of a functional food control system.
Different food control systems
According to the United Nations Food and Agriculture Organisation (FAO) food control systems vary in structure, function and legislation. Three categories of food control systems are recognised: a single authority or agency system, an integrated system and a multi-agency system.
In a single authority food control system, functions and activities are confined to a single agency. These functions include the drafting of food laws and regulations, inspection and analytical services, laboratory services, information, education, communication and training.
In the integrated food control system various functions and activities are coordinated but handled by different departments and private organisations.
The multiple agency food control system involves the segregation of functions, structure and legislation among various spheres of government.
An effective and efficient food control system is as good as its weakest link, however, irrespective of the type of the system.
South Africa’s complex food control system
The Mzansi food control system is classified as a multiple agency food control system. It locates the legislation, structure and functions to different spheres of government. The Constitution of the Republic of South Africa, Act 108 of 1996, Schedule 4 depicts functional areas of concurrent national and provincial legislative competence, such as agriculture and health services.
The department of health regulates safety of food through the Food, Cosmetics and Disinfectant Act 54 of 1972 and subsequent food control regulations. Some of these functions are delegated to provincial and local spheres of government for enforcement, considering their closer proximity to value-chain actors.
Further, the National Regulator for Compulsory Specifications regulates processed meat and fish products.
Control over the sale and export of certain agricultural products such as fruits and vegetables are in turn regulated by the department of agriculture, land reform and rural development. This, through the Agricultural Standards Act 119 of 1990.
The Inter-Governmental Relations Framework Act 13 of 2005 provides the legislative framework for alignment and coordination of the various puzzle pieces above.
But further to this, globalisation has necessitated an effective food control system across countries for alignment and compliance with international standards and trade agreements. The Africa Continental Free Trade Area, for one, opens up entrepreneurial opportunities for agribusinesses that comply with applicable food control frameworks.
An advantage in a competitive market
In the context of agribusinesses, compliance to preventative and risk-based food standards has gained importance as an instrument towards competitive advantage.
Scholars have found that Consumers prefer to purchase certified and branded products whose safety and quality is assured.
Agribusinesses that comply with preventative and risk-based standards are likely to quote and charge premium prices. Therefore, risk-based and preventative standards are vital for price discovery and efficient functioning of the markets.
Failure to adhere to and ensure food product safety is likely to result in product failure and the inability to access domestic-export markets. Brand and reputational damage is also likely. Compliance to food safety and quality assurance standards could thus make or break a small and medium agribusiness.
The decision to appreciate, adopt and implement applicable food safety and quality assurance management systems hinges on the burden of barriers vs the likely competitive benefits and advantages.
A study by the FAO and World Health Organization indicates factors that influence adoption and implementation of food safety management systems:
• Inertia (the inability to overcome rigid routines due to a lack of desire to change).
• The inability to anticipate latent financial benefits from implementing the system.
• The high cost, multiplicity and complexity of the scheme requirements.
• A lack of self-efficacy rooted in the lack of belief that the agribusiness has the capacity and capability to execute the required actions.
Enhancing entrepreneurial orientation
The levels of entrepreneurial orientation (EO) by the agribusiness are therefore likely to determine its appetite to adopt and implement a food management system. EO is the ability of businesses to decide and implement entrepreneurial endeavours through proactive, innovative and risk-oriented actions.
Implementation of food safety management systems by small and medium agribusinesses requires a multifaceted approach that is cognisant of both business capabilities and market conditions.
The critical factors
First, the ability of the agribusiness to learn is a key strategic capability in modern markets. Learning is a forerunner to the ability of the agribusiness to adapt to evolving market conditions with potential for product differentiation options. Learning by doing is among the best channels of imparting knowledge and capabilities to organisations.
Second, there is an urgent need to expand the traditional function of agricultural extension services to include food safety and quality assurance capacity-building programmes.
An appreciation and understanding of risk-based and preventative standards by extension officials is critical to a train-the-trainer approach.
Third, a standard certification portal should be established to disseminate the standard certification requirements to a wider audience. This can also mitigate information asymmetry and ease the challenge of multiplicity and complexity.
Fourth, agribusinesses should use different logics around entrepreneurial and marketing orientation – and inter-phase them – to learn, integrate and implement food safety management systems onto their operations.
Lastly, a supportive environment needs to be created by the state and industry value chain actors. Consistent with New Institutional Economics (NIE), agribusinesses do not operate in a vacuum. They are subject to the institutional framework of the country. The ineffectiveness and inefficiency of institutions are likely to be accompanied by institutional void and distance. Challenges of fragmentation, a lack of coordination and duplication of functions among various spheres of government should be eliminated.
Gear your own business first
In conclusion, small and medium agribusinesses should augment EO and be geared to respond and take advantage of the institutional dynamics.
Institutional forces are not always constraining but may act as enablers when opportunities are opened for agribusinesses that appreciate and make the most of the local institutional regime.
Agribusinesses should keep abreast, learn and adapt to the regular, continuous and rapid changes in food safety and quality assurance standards to benefit from the first-mover advantage. Risk-based and preventative standards are not static but dynamic in nature.
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