Traders Meeting on Facilitating Fortified Wheat Flour ... · Traders Meeting on Facilitating...

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Traders Meeting on Facilitating Fortified Wheat Flour Exports to Afghanistan Islamabad, 05 January 2017

Transcript of Traders Meeting on Facilitating Fortified Wheat Flour ... · Traders Meeting on Facilitating...

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Traders Meeting on Facilitating Fortified

Wheat Flour Exports to Afghanistan

Islamabad, 05 January 2017

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A. Specific objectives of the Cross Border Traders Meeting:

o Facilitating engagement, dialogue and negotiations among key stakeholders in order to

stimulate exports of fortified wheat flour and edible oil/ghee to Afghanistan

o Enhancing knowledge-sharing between the two countries on regulations, trade procedures,

requirements, and market preferences among key trade partners

o Identifying and agreeing upon practical measures for quality assurance/control of exported

foods, and on specifications for packaging, labeling and logo design to meet Afghan market

demand and consumer preferences

B. Opening by Faiz Rasool, SPM GAIN Pakistan

o Mr. Faiz mentioned that the expected key outcome of this Trader’s meeting is to start the

export of fortified wheat flour to Afghanistan

o Mr. Faiz gave an orientation on the importance of quality assurance and compliance on

Afghan Standards – certification of fortified products to Afghanistan

o Importance of mandatory labeling based on the food specification was discussed

o Stressing to move forward based on first Cross Border meeting held in Islamabad and need

to evaluate the progress so far.

o Pakistan’s government should review the level of government support to millers and traders

in Iran and Kazakhstan and replicate it in Pakistan

o It was discussed that the key stakeholders of the meeting are the Pakistani Industry on the

manufacturing side and Afghan traders who will place orders, their communication would

be the bases of starting the fortification which won’t happen unless there is a demand

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o The knowledge sharing is another outcome of these meetings, especially for harmonization

of standards, point was made on lack of awareness and harmonized standards exist on

both sides of the border

C. Progress on Key Recommendations of “1st Cross border Meeting” – Faiz Rasool

o Mr. Faiz mentioned the progress on harmonization of Federal and provincial-level

fortification standards for wheat flour by PSQCA and respective Provincial authorities - NFA

and PSQCA are at the final stage for harmonization of standards not only at the country but

also at the regional level, while designing the Pakistani standards the authorities must keep

in view the Afghan standards.

o Meetings of regional technical committee held and recommendations finalized were shared

o The significance of Government of Pakistan should eliminating import the high import tax

on premix was discussed mentioning that NFA with financial and technical support from

GAIN and other partners has successfully facilitated the exemption on premix import

duties/taxes

o The premix import duties/taxes exemption was termed as a game changer as the cost of

premix cited as is one of the major barriers to large scale food fortification

o Costing study & Premix Option Analysis was explained to the audience, and the guidance

those documents will provide to the industry and Government of Pakistan in controlling the

price of premix, and selection of best possible import and distribution mechanism.

o Export/Import verifications were discussed and the role of Governments to implement a

robust M&E system on both sides of the border, GAIN is supporting Punjab Food (PFD)

Department and Pakistan Standards & Quality Control Authority (PSQCA) for strengthening

the regulatory monitoring

o MIS project being initiated with PFD in this regard was mentioned for better managing the

regulatory monitoring, GAIN is working on developing MIS System locally to track the export.

o Mr. Faiz mentioned the importance of advocacy campaigns for the general populations in

Pakistan and Afghanistan to promote food fortification mentioning the roles of FFP and

WFP respectively

o Demand Predictability

o It was suggested that the donors should support the provision of iron premix for wheat flour

for at least a year, during which PFMA/PVMA would advocate for government support

o Another key outcome of the meeting should be the formation of coordination/ negotiation

committee being established among traders from Pakistan and Afghanistan to handle

common problems

o We in collaboration with PFMA may explore this further

o In the application of QA/QC standards to avoid substandard wheat flour and oil trade, the

audience were briefed on the planned Aflatoxin study on the contamination and how to

reduce it, the progress on letter to Afghan Government on mandatory fortification and

progress on product certification was discussed.

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D. Welcome by Dr. Baseer Achakzai, Secretary NFA Pakistan

o Welcome to all participants and shared that it’s a second chance to meet with afghan

delegation appreciating their efforts.

o Discussion on Pakistani industry’s role in improving the micronutrient status of both

Pakistan and Afghanistan

o Explained background of Pak-Afghan for their understanding and mutual consensus

o Discussion on importance of cross border talks on fortification, and its implications

o Commending the central role of GAIN collaborating with industries, traders and government

in Afghanistan & Pakistan

o Labelling the conference as a regional effort to start effective fortification, addressing

malnutrition of millions of people

o In the existing context, Pakistani industry is already actively exporting wheat flour to

Afghanistan and has relations with the Afghan traders; these relations can be converted

into an alliance of fortification import/export.

o On the quality issues raised by the Afghan traders, a strict follow-up of ANSA standards and

regulations was advised.

o National Fortification Alliances of Afghanistan & Pakistan are responsible to facilitate cross

border industries and traders meetings and communicating the recommendations and

decisions

o Discussion on role of GAIN & NFA on Premix tax/duty exemption and its implications to the

fortification and cross border trade.

o Commenting on the increasingly positive interest of Afghan Chamber of Commerce to trade

fortified wheat from Pakistan, Mr. Baseer mentioned the quality concerns of Afghan side

and stressed the Pakistani industry to communicate with Afghan traders to harmonize the

standards of production.

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E. Qaiser Munir – Country Director, GAIN

o Welcome and appreciation to the participants on their efforts to attend the Trader’s

meeting

o Need to build on the traditional cross border trade ties between Afghanistan and Pakistan

and move towards a more structured engagement to improve and sustain cross border

business to business coordination

o Appreciation for Premix Tax & duty Exemption given by the GoP and the leadership role

played by the Ministry of National Health Services, Regulations & Coordination and the

National Fortification Alliance in this regard. Happy to share that the initial order of premix

had been placed and would be available by end January 2017. Also shared that an

industrial assessment has been completed to assess readiness and capacity needs. Mr.

Qaiser stressed on starting the fortification as soon as possible once the premix is delivered.

o Regular meetings between Afghan traders and Pakistani industry were termed the most

important fact of the cross border trade and their frequent occurrence was advised.

o Reservations of Pakistani industry was shared with Afghanistan on the demand issues, it

was mentioned that fortification can only be successful once the Afghan side formally start

ordering fortified wheat

o Mr. Qaiser said GAIN on both sides of the border will continue to support the cross border

collaboration between flour millers and traders.

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F. Presentation by National Fortification Alliance Afghanistan

o Mr. Waleed Ghiasi presented the Nutrition situation of Afghanistan sharing the significant

reduction in stunting & underweight rate of the population, other indicators also improved

including the breastfeeding, minimum acceptable diet, undernourishment, Iron and Iodine

deficiency. The micro nutrient status was also presented showing anemia, iron deficiency,

Vitamin-A&D, Zinc and Iodine deficiency prevailing in Afghanistan

o In policy, guidelines, standards and legislation on flour fortification, the tariff rates were

discussed (5% on wheat and flour)

o National Standards has been developed by support of ANSA (based on new standard only

four micro nutrients ,Vit B12, Folic Acid, Zinc & Iron should be in the premix)

o MoPH/PND provide The micro-feeder and premix including five micronutrients(Iron, Folic

Acid, Vit A, Zinc & Vit B12)

o MoPH/PND conducted training on QC & QA to provincial nutrition officer and millers in five

provinces

o Communication campaign in five big cities started on 29 November 2016

o It was shared that the large scale flour fortification started from 2006 with the support of

WFP and currently there are 25mills functioning in 5 provinces of the country, the annual

production of fortified wheat flour is covering almost less than 5% of the need of people in

5 big cities (Kabul, Herat, Mazar-e-Sharif, Kunduz and Jalalabad)

o The Food fortification regulation has been drafted and waiting in MoJ for Approval

o By endorsement of the regulation all producers of wheat flour and edible oil will become

responsible for mandatory fortification of their products according to national standards,

and

o All imported wheat flour and edible oil should be fortified according to national standards

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o All fortified wheat flour and edible oil will be inspected at the importation sites

o Needed guideline/ procedures will be developed and implemented for conducted quality

assurance and quality control of imported fortified products

o In National and regional standards, the presentation discussed Afghanistan, Pakistan,

Central Asian Region (CAR) countries conducted three meetings in Kazakhstan and

Pakistan , in September 2016 harmonized standards were presented in Kazakhstan

meeting , and agreed by CAR, Afghanistan and Pakistan

o challenges in fortification include Low quality and quantity of locally produced wheat, Weak

attention on importation of wheat instead of flour(which are not fortified), low awareness

and commitment of the traders and producers to import fortified instead of non-fortified

flour from neighboring countries, Illegal import of food items and Weak internal and

external monitoring of flour fortification

o The recommendations included increasing the awareness of traders and producers to

support the import of fortified food, providing technical and financial support to producers

to enhance the production and importation of fortified wheat flour and edible oil instead of

non-fortified foods and strengthening coordination & collaboration among governments to

improve the import of fortified foods (fortified wheat flour & edible oil)

G. Discussions By The Private Sector of Afghanistan

o Discussion on importance of compliance with Afghanistan standards and labelling

requirements, and their significance in fortification, without labeling, it will be difficult for

the traders and government to control.

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o Haji Agha representing the Afghan Private Sector shared that they are all fully aware on the

importance of fortification, and WFP along with Afghan Government is doing advocacy

campaign to increase the awareness.

o The advocacy event launched in Kabul in December 2016 in collaboration of GAIN

Afghanistan was discussed, and termed successful with participation of all relevant

stakeholders and a unanimous consensus was reached to start mandatory fortification

o Afghan traders are willing and ready to import fortified wheat from Pakistan even if it is

costive

o Kazakh vs Pakistani wheat prices were discussed with the former being less expensive and

more readily available all year round compared to Pakistani wheat that only comes when

there is a rebate in place (around 3 months in a year)

o During the rebate system application, some of the traders were not exporting wheat flour to

Afghanistan but making illegal documents, therefore the price of Pakistani flour remained

higher than the Kazakhstani flour in Afghan markets.

o It was informed that the legislation for mandatory fortification is being drafted by the

Afghan Government but suggested to GAIN Pakistan and NFA for following up the

alternative way (letter of Ministry of Foreign Affairs of Afghanistan to the embassies for food

fortification) until there is approved mandatory regulation in place.

o Afghan traders will procured even if the cost of premix increases the total cost of the wheat

flour since the cost of premix is not as big issue as the initial cost of wheat of Pakistan is

more costive compare to Kazakhstan ones , so the cost of fortification is not a mater.

o Formation of cross border committee was suggested to deal with the trade issues and

solutions

o Strengthening internal and external monitoring , the imported wheat flour will

o Pointing on a possibility of mandatory fortification and ban on unfortified flour, Mr. Agha

advised Pakistani industry to start exporting fortified wheat flour as soon as possible

H. Discussions From Chaman Chamber of Commerce, Pakistan

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o Haji Daru Khan stressed on the importance of frequent cross border meetings on trade, as

Afghanistan is the third biggest trade partner of Pakistan buying significant number of

Pakistani exports. This cross border transit trade is the lifeline of many traders and should

be facilitated by both Governments.

o The diminishing trade volume in the past couple of years was discussed owing to the certain

transportation restrictions introduced by Pakistani Government – Afghan Transit trade

issues include bounded carriers and trackers which increase the cost bared by the Afghan

traders.

o There is an urgent need to develop consensus between Afghan and Pakistani Governments

on the reservations of the private sectors from both sides for improving the cross border

trade

o A suggestion was made for Pakistani Government on improving their certifications and

verification procedures to comply with the regional standards

o It was mentioned that the cost of premix is negligible even without the tax exemption and

subsidy, and the industry should be ready to fortify even without the exemptions and

subsidies as they might be withdrawn in coming future

o In Exports, Haji Daru Khan mentioned that the Pakistani traders are a big part of the trade

but they are not taken into consideration while making the trade policy

o Haji Daru Khan was off the view that

I. Discussions from Pakistan Flour Mills Association (PFMA)

o Mr. Kakar representing the PFMA pointed at the importance of the presence of the

chambers of commerce of both Afghanistan and Pakistan in the meeting, and told the

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audience that they take the fortification as a noble cause and are ready to fortify despite

the incremental cost of premix

o There were concerns on the level of awareness and acceptance of fortified flour in

Afghanistan, reservations were showed on possible stereotyping on fortified wheat, a need

of ground level awareness to Afghan public was suggested before the start of the

fortification

o Supporting the traders from Chaman Chamber of Commerce on border shipment delays

and liaison with government by PFMA was also suggested

J. Presentation by GAIN Afghanistan on ANSA

o Mr. Sediqi (SPM GAIN Afghanistan)gave an overview on ANSA - the Afghan authority for

quality control of processed foods either imported or locally produced

o He informed on Afghan concerns on Labelling and packaging, and the need to follow their

standards

o The proper labelling can be easily tracked, and can be easily identified and checked.

o Proper packaging result in safety and hygiene and prevent contamination of the product,

protect the nutrition value and minimizes loss of nutrients, technological qualities of the

products and organoleptic qualities of the product and the food to which is to be applied

o Grinding material Flour should be good quality on nutritional point of view.

o The fortified flour technology is gradually making inroads in Afghanistan.

o Label must contain name, date of manufacturing and expiry; list of ingredients all micro

nutrients including minerals & vitamins etc. should be mentioned along with name, postal

and physical address of the manufacturer of the product

o There should be instructions mentioned for fortified products e.g. label to keep in safe place

under certain temperature.

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o He discuss about registered trade mark. He shared the example of mill in Kunduz that is

producing low quality flour under the Pakistani flour name and the consumer might think

that Pakistani flour quality is low, so registration of the trade mark is very important and will

be mandatory for fortified products.

o In future Afghan traders will not be allowed to import unfortified flour; in this regard a latter

is being drafted for Afghan authorities to be sent to embassies of the neighboring countries

for avoiding the traders to import /export the non-fortified staple food.

o Mr. Sediqi gave an advance invitation to attend the next cross border meeting to be held in

Kabul.

K. H. Open Discussion Forum:

1. Discussion on compliance with Afghan standards and labelling requirements

Detailed session on Afghan labelling standards and requirements was held with the key objective of imports and exports based on quality wheat flour. The Afghan side stressed on the compliance of the standards and labelling according to Codex/WHO requirements.

All the flour should be fortified with a uniform standard, quality and price with one fortified standard for maximum benefit.

Percentage of micro nutrients required as per ANSA /harmonised standard

Low awareness and commitment of the traders and producers to import fortified instead of non-fortified flour from neighbouring countries

The properly labelled imports can be easily tracked leading to effective monitoring,

Various presentations covered in detail the requirements of labelling and packaging, revolving around nutrition friendly and safe packings and proper labelling for better understanding for the regulatory authorities.

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In collaboration of GAIN, PSQCA, NFA and PFMA, Pakistan has now adopted the Afghan standards and now both countries are on the same page in terms of fortification including the recommended dosage of IRON, Folate, Vitamin-B12 and Zinc.

Importance of certification was discussed; PSQCA certification and its acceptance by ANSA will further help not only the standardization but also the smooth exports to Afghanistan

2. Discussion on QA/QC Mechanisms

PFMA suggested that any additive or colour demand from Afghanistan will be taken as positive feedback and will be incorporated in the final exported products.

On the question of Quality issues with Pakistani wheat pointed by Afghan side, PFMA explained that the Pakistani wheat is basically the same as Kazakh wheat. There is high extraction rate wheat from Pakistan (17% Bran, 83% Flour), compared with Kazakh wheat; Pakistani wheat is darker in colour due to presence of Bran and sometimes that is misinterpreted as low quality wheat which in fact is not correct.

For QA, suggestion of Joint labs on the border received mixed response with many suggesting labs either in the industries or at the trader’s end of the Afghan side. This will result in speedy and smooth cross border transportation avoiding lengthy and costly border stops.

PFMA asked Afghan side to list down their exact demand details ranging from taste to colour so that Pakistani side can start production on those demands.

Suggestion was made on the coordination required between PSQCA & ANSA for clarity on quality & compliance. Random quality checks were also suggested for speedy delivery, From Pakistani side it was suggested that PSQCA can check the micro feeders and flour mill samples, while PFMA representing the industry insisted to engage a neutral authority for quality checks.

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A need of robust monitoring system is in need to further strengthen the regulatory monitoring, for that GAIN is developing MIS system for Punjab Food Department for tracking exports and after testing the system, GAIN will replicate it in other provinces.

Fortification awareness campaign – In Afghanistan WFP is launching a media campaign to transfer the message of fortification to the public and stakeholders of Afghanistan which will help the cause.

GAIN’s planned Aflatoxin study with PCSIR was elaborated on the basis of previous study done in Afghanistan on the presence of aflatoxin contaminates in various wheat samples in Afghanistan, the main goal of the study is to determine the sources and incidences of the contamination and prevent them before exporting the wheat to Afghanistan.

3. Discussion on ensuring Predictability on cross border supply & Demand

Afghan traders ordered several times to receive fortified wheat flour to KPK producers but due to no accessibility to micro feeders and premix, the orders had not fulfilled by millers and exported non fortified flour.

Both sides agreed that there is a solid demand of fortified wheat and the moment Pakistani side receive orders they will start exporting.

There is a need to synchronize different view from across the border on supply and demand with frequent meetings like the present cross border traders and industries meeting.

PFMA informed that the total flour demand of Afghanistan is 1.6 million MT and Pakistan has twice as much surplus Wheat available, PFMA has required technical assets and are only waiting for orders.

Afghan traders mentioned that without the rebate system, the price of Pakistani wheat is high, and cannot compete in the market.

Almost 200 plus mills in Pakistan have micro feeders and most of them are already exporting, all the industries have to do is to service their micro feeders and start fortifying their exports.

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Most of those mills/producers in KPK and Baluchistan who export a big part of wheat flour to Afghanistan have not access to micro feeders and premix; therefore instead of those who does not export the wheat flour to Afghanistan, the traders expect the subsidy of premix and micro feeder to be issued a limited/listed exporters only.

The technical utilization of premix and the micro feeder is still a challenge for those producers who have access to micro feeders.

PFMA requested for technical team to check the existing micro feeders for proper calibration and organize trainings before the start of fortification – GAIN will hire technical consultant to train PFMA staff and calibrate the micro feeders.

Premix will reach mid-January and will be distributed immediately to the mills.

PFMA suggested trade expo in Afghanistan on Pakistani wheat products to further facilitate the exports and awareness in Afghanistan on Pakistan Wheat; this can also include the introduction of Pakistani brands.

Suggestion was made to increase the tax rebate time period from the existing one, as without the rebate many of the mills do not export. Pakistani exports usually last 2-3 months in a year because of the rebate time while in comparison the Kazakh export all year long.

4. Discussion on pricing strategy

Both Afghan and Pakistani sides agreed that the cost of fortification and its incremental effects on the price won’t deter the trade and the consumer acceptance will prevail despite the higher price.

The price of premix was concluded to be legible even without the subsidy and tax exemptions.

Rate of Pakistani wheat is high compared to Kazakh wheat (Questions raised on how Pakistani wheat prices will compete with regional prices)

Incremental fortification cost issues – option analysis

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Role of government and industries on keeping the incremental price of premix as low as possible, possibility of subsidy, GAIN’s initial subsidy (30%-70%) will sped up the process, on longer terms the role of government will come in play.

A concern was appeared by Haji Asif the Chairman for Afghan Wheat Flour Traders Association AWFTA about the premix to be distributed to those producers who export flour to Afghanistan only, otherwise it would not be beneficial for Afghan traders

A list of the millers was requested who export the wheat flour to Afghanistan, in case any exporter/miller has problem of pricing that should be specified.

Discussion on tariff on food items and their effect on price, suggestion was made to decrease the tariffs and introduce subsidy.

PFMA suggested that there is no need to mention the cost of premix/fortification separately to the consumer and the cost should be included as a whole in the overall flour price that includes labour cost, grinding and transportation etc. There was a consensus that the fortification cost will be evenly split between flour mills from Pakistan and Afghan traders.

5. Discussion on membership & Terms of Reference of the Cross border Trader committees

Agreement was reached on the formation of coordination and negotiation committee, PFMA suggest that the existing committee with Afghan Chamber of Commerce and Industries can be reorganized and used. Eight members each from Afghanistan and Pakistan (sixteen in total) will be the members.

The committee’s members will be finalized by 13th January 2017, the responsibilities and accountability of the committee will be finalized in the first meeting scheduled by the end of January 2017.

The Committee will discuss with GAIN on all the issues and decisions.

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Members from Pakistan were termed responsible to make sure that the exports are according to the standards of fortification and Afghan members will be primarily responsible to ensure that the imports are according to that standards, this will introduce a double check mechanism.

The committee will decide on the modalities (ToRs, Participants, agenda etc.) of next cross border meeting with the coordination of GAIN, the next event will be held in Afghanistan

Sub committees were also suggested from Quetta-Kandahar and Peshawar-Kabul/Jalalabad groups for local level issues and decisions.

L. Recap of Key points

Premix revolving fund – GAIN is working to develop the Premix Revolving Fund to support the supply of premix and fortification

Pakistan government should review the existing regional governments’ support to miller and traders and replicate that in Pakistan

Pakistani regulations only support the industrialists and not the small scale traders

Afghan Transit Trade issues – bounded carriers and trackers increase cost of logistics bared by the Afghan tradersi

Question was raised on level of awareness and acceptability of fortified wheat in Afghanistan

Expected mandatory fortification from Afghanistan M. Next Steps:

Formation of Pak-Afghan Trading Committee

Meetings after every 2 months

Inputs in next cross border meeting from Trading Committee

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Coordination between PSQCA & ANSA on standards harmonization – including ANSA accepting PSQCA certifications

Fortification should commence in autonomous and relaxed environment free from Government interference.

i This point was made by Haji Daru Khan of Chaman Chamber of Commerce and Industries, the bounded

carriers are fixed transportation mechanism in which certain logistical companies are given quota to

transport the goods from Afghanistan to Karachi, and quite often that put an increased cost as the

traders are not on the liberty to use their own means of transportation. The bounded carrier concept was

basically introduced for security purposes