Impact of new standards on international market access by African countries

The cost of complying with food safety and agricultural health standards has been a major source of concern in the international development community and among developing countries. Many worry that sanitary and phytosanitary standards will work increasingly to the disadvantage of developing countries that lack the administrative, technical, and other capacities to comply with new or more stringent requirements. However, the available evidence indicates that, in many instances, these challenges are manageable and that the compliance costs are a worthwhile investment, especially relative to the value of exports and associated benefits (World Bank, 2005).

For example, Mbaye (2004) estimated that an added capital investment of FCFA 2 billion (US$ 1 = FCFA 490) for ammoniation to detoxify aflatoxin plus recurrent costs of approximately 15% in the Senegalese peanut oil-mill subsector would yield higher quality products that would attract a 30% price differential relative to non-detoxified products. Exportable quantities of peanut cake would increase from 25,000 tons for the non-ammoniated product to 210,000 tons of an ammoniated detoxified product. After deducting the investment costs to detoxify aflatoxins, the increased quantity of peanut cake sales and the price differential provide an estimated benefit of FCFA 138 billion. Mbaye (2004) also estimated that the adoption of simple management practices to reduce aflatoxin contamination in confectionary peanuts in Senegal would accrue a benefit of FCFA 22 billion. Therefore, investments in meeting quality standards for aflatoxins would have a multiplier effect on Senegal's peanut exports.

African countries need to conform to emerging norms and standards. Only occasionally do sanitary and phytosanitary standards pose an absolute barrier to international market access and then usually in relation to animal diseases and plant pests. Costs of compliance with sanitary and phytosanitary regulations may reduce imports of foreign commodities (Hooker and Caswell, 1999). Otsuki et al. (2001a,b) argue that the European Union standards are unnecessarily stringent given the estimated risk reduction that would result. They used an econometric model to estimate that the impact on African countries of these standards would be a loss of approximately US$ 400 million, while use of the Codex Alimenta-rius standards would result in an increase of approximately US$ 250 million. These results were widely misinterpreted to mean that the European Union regulations would cost African economies some US$ 650 million in direct trade (Annan, 2001). Actual losses appear to be approximately US$ 40 million, with much larger losses occurring in the United States, China and Argentina than in all of the Sub-Saharan African countries combined (Wu, 2004). The major focus relates to the value of exports before and after the adoption of a standard and the lessons that stakeholders take from this example (Jaffe and Henson, 2004).

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