Monday, February 9, 2015

A new food standards regime coming to vogue-Will it cause disruption of global trade?

Every country in this planet has a food industry of its own which seeks to meet the food needs of the citizens through processing of native raw materials or imported ones if not available within the country. Besides some foods are always imported because no nation can be expected to be 100% self sufficient in terms of its needs making global trade a necessity rather than a luxury. Like any buyer-seller arrangement, country to country trade also involves negotiations, bargaining and agreed standards regime under which export-import is managed. International agencies like WTO, WHO, FAO, ISO etc do provide guidelines and recommendations regarding food safety and standards but ultimately the trade will take place only based on mutually agreed upon prices and consensually arrived quality parameters. In any market place buyer has invariably an advantage if there is over-supply while supply shortage will give advantage to the seller. Recent promulgation of a new set of standards in the Gulf countries for food imports follows the same reality and these mandatory standards under the banner of Halal Food Certification are expected to be the basis on which imports of foods from non-Islamic countries into the gulf region are going to be regulated. Here is a take on this new development in the global food trade front.   

"Halal food products from Australia and New Zealand are the first imports to be subject to the UAE's new standards, which aim to create a global mark of quality for the Islamic food industry. The halal mark was unveiled by the Emirates Authority for Standardisation & Metrology (Esma) at Gulfood yesterday, following a three-year development process that is part of Dubai's push to become the global capital of the Islamic economy. The new halal certification covers the full process from farm to slaughter to additives and ingredients used, Esma said. The standards are backed by the Organisation of Islamic Cooperation, the 57-country body that aims to preserve Islamic social and economic values. Within two years all food imports will need the mark to pass through the country, Esma said. About a fifth of the global food trade is halal, according to Datamonitor, and it is forecast to be worth US$10 trillion by 2030, a Global Futures and Foresights study says. Halal food imports into the GCC will reach $53.1 billion by 2020, according to the Economist Intelligence Unit. "More than 85 per cent of the food we import comes from non-Muslim countries," said Dr Rashid bin Fahad, Minister of Environment and Water, who is also chairman of Esma. "We need new standards of transparency and security for halal customers. There will be no disruption to the food chain, it will be an incremental change with Australia and New Zealand the first countries to fall under the new standards."

Probably there is logic in promoting Halal Foods Certification in a big way as Muslims constitute a very sizable segment of world population and most of them are religiously conservative in following Islamic traditions and culture as originally evolved over so many centuries ago. It is to the credit of the Gulf countries, especially Dubai, that Halal Food Standards have been codified with no ambiguity keeping in view the knowledge generated by modern science. That these standards are not radically different from international ones and can be easily met by all countries with least disruption of their existing industrial landscape must be appreciated. If countries like Australia and New Zealand can export their products with no difficulty as per the new Halal Standards global trade will have no impact if other Islamic countries also follow the same guidelines for food imports into their countries. 


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