Technical Assistance Consultants' Reports

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

Project Number: 38421 December 2008

Kingdom of Cambodia: Cambodia Sanitary and Phytosanitary Quality and Standards Report (Technical Report under Private Sector and Small and Medium-Sized Enterprise Development Program Technical Assistance No. 7056-CAM)

Technical report prepared by:

David Parsons

ABBREVIATIONS

AB - Accreditation body ADB - Asian Development Bank

APLAC - Asia Pacific Laboratory Accreditation Cooperation ASEAN - Association of South East Nations

CAB - Conformity Assessment Body Camcontrol - Import-Export Fraud Suppression Department

CB - Certification body CCA - Central Competent Authority DTIS Diagnostic Trade Integration Study EU - European Union

FDA - Food and Drug Administration FiA - Fisheries Administration

FVO Food and Veterinary Office of the EU GAP - Good Agricultural (Aquaculture) Practice GC - Gas Chromatography

GHP - Good Hygiene Practices GMP - Good Manufacturing Practice

HACCP - Hazard Analysis Critical Control Point HPLC - High Performance Liquid Chromatography

IAF - International Accreditation Forum ILCC - Industrial Laboratory Center of Cambodia ISO - International Organization for Standards

ISPM - International Standards for Phytosanitary Measures LMQSPS - The Law on Management of Quality and Safety of Products and

Services MAFF - Ministry of Agriculture Forestry and Fisheries MBPI - Merit Based Performance Incentive MIME - Ministry of Industry, Mining and Energy MoC - Ministry of Commerce MoH - Ministry of Health

OECD - Organization for Economic Cooperation and Development OH&S - Occupational health and safety

QA - Quality assurance SME - small and medium-size enterprise SOA - Special Operating Agency SPS - Sanitary and phytosanitary measures

SSOP - Sanitation Standard Operating Procedures TA - Technical assistance

TBT - Technical Barriers to Trade WTO - World Trade Organization

UNIDO - United Nations Industrial Development Organization USAID - United States Agency for International Development

NOTES

i. In this report “$” refers to US dollars ii. The Government is the Royal Government of Cambodia. iii. The Fiscal Year (FY) of the government ends 31 December.

CONTENTS

Page EXECUTIVE SUMMARY ii

I. INTRODUCTION 1

II. SPS, STANDARDS AND CERTIFICATION 1 A. Standards 1 B. Market-driven Voluntary Standards 3 C. International Accreditation 4 D. Traceability 5 E. Due Diligence Defense 5

III. INSTITUTIONS, PRIVATE SECTOR AND DONOR SUPPORT 6 A. Government Institutions 6 B. Tourism 10 C. Private Sector 11 D. Donor and Lender Support 14

IV. LEGAL FRAMEWORK 18 A. Draft Sub-decrees 20

V. ISSUES 21 A. Institutional Responsibilities 24 B. Potential exports 24 C. Plant and Animal Health 24 D. SPS Awareness 27 E. Standards and Standard Setting 27 F. Accreditation and Mutual Recognition 28 G. Laboratory Issues 28 H. Legal Framework 29 I. Staff Remuneration and Incentives 32

VI. OPPORTUNITIES AND PROGRAM INTERVENTIONS 34 A. Proposed Interventions and Activities 34 B. Justification 37

APPENDIXES Appendix 1: List of persons and organizations met Appendix 2: Relevant standards Appendix 3: Laboratory test prices Appendix 4: Cambodian standards Appendix 5: ISC staff auditor and training received Appendix 6: Tourism statistics Appendix 7: Cambodian agro-based production processing enterprises Appendix 8: MoH registered cases of food and water borne diseases Appendix 9: Detailed description of project interventions Appendix 10: Terms of reference of consultants Appendix 11: Intervention Budget and Costs

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EXECUTIVE SUMMARY

With the country’s accession to the WTO during October 2004 and full SPS implementation within the five year transitional period, Cambodia’s drive for full SPS compliance is a priority. An inter-ministerial committee was established to enhance the coordination of inspection and quality of safety of products and services in Cambodia under a Sub-decree entitled “Establishment of an Inter-Ministerial Committee Coordinating Inspection of Quality and Safety of Products and Services (IMCCIQSPS). MAFF has the responsibility for animal, plant and fish health. The Department of Animal Health and Production (DAHP) is responsible for the inspection of animals and animal products leaving Cambodia and the issuance of an Animal Health Certificate as required under the OIE convention. The Department of Agronomy and Agricultural Land Improvement (DAALI) is responsible for the issuance of phytosanitary certificates and the Fisheries Administration (FiA) formally the Department of Fisheries is responsible for issuing fish product export and import licenses. The Law on the Management of Quality and Safety of Products and Services (LMQSPS) provides the mandate for Camcontrol, which provides the Department with a broad mandate to conduct official inspection of goods in international trade, both imported and exported goods and products on the domestic market and provides laboratory services undertaking 800 tests of which 100 were food and water related during 2007. The Ministry of Health (MoH) has responsibility for public health and also food safety, the latter through Food Safety Bureau (FSB). FSB has a program in food hygiene advice in restaurants in a targeted area of Sihanoukville and MoH undertakes food and water testing as well as certain analysis procedures for fish and fish products for FiA. The Ministry of Industry, Mining and Energy (MIME) regulates and inspects agro-based processing facilities. MIME Institute of Standards of Cambodia (ISC) has developed 72 standards of which 14 are related to food hygiene and food products, and 4 are concerned with quality and environmental management systems, another 14 food product standards are in draft form. ISC has been certified ISO65/EN45011 (General requirements for bodies operating product certification systems). MIMEs Industrial Laboratory Center of Cambodia (ILCC) undertakes food and water bacteriology and chemical analysis with on average 2,000 tests per year. Trade and the private sector: the main agricultural export is rice with a production volume of 6.7 million tons during the 2007-08 season, with 1.48 million tons exported. The Cambodian fishery industry has an estimated production of 300,000 - 400,000 tons per annum with a farm gate value of $250 - $300 million; there was a total catch of 517,000 tons (2006). Other agro-based commodities include cashew ($5 million) soybean and cassava ($5 million). Oil seeds principally oil palm is an increasingly important export crop. Agro-based processed products account for less than $0.5 million, similarly fruit, vegetables and meat product export volumes and values are negligible and do not account for more than $250,000. The tourism industry has seen a rapid rise in visitor numbers from 466,000 (2000) to over 2 million (2007) with expected annual increases in excess of 15% per annum. Hotel occupancy is rapidly rising past the previous year levels of 55%. International visitors spend approximately $90 million on food and beverages in the country. The agro-based production and processor sector is characterized by medium to small scale family-based enterprises. There are 51,357 SME recorded with an average sales revenue of $28,494. There are 1,500 SPS product sensitive industries, where frequent

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laboratory product testing is required and at least 312 bottled/purified water companies. In addition there are 85 private sector slaughterhouses and 222 slaughter “sites” in the country, within which 609,000 animals were slaughtered during 2007, 88% were pigs. Only 30% of all slaughtered animals are recorded and no slaughterhouses are exporting meat or meat products. Donor and lender support: For SPS measures and standards, the main recipients of donor projects and TA have been Camcontrol, MIME and MAFF and to a lesser extent MoH. Cambodia has received or is going to receive approximately $16.9 million of aid on SPS related technical assistance (includes food safety $0.6 million, animal health $1.8 million, avian flu $14.1 million) for the period 2005 – 2013; this is in comparison to Lao PDR $37.37 million and Vietnam $ 188.40 million. Legal and regulatory framework: There is a considerable amount of legislation in the process of elaboration or revision. The Law of the Management of Quality and Safety of Products and Services (LMQSPS) is the basis for inspection and regulating quality, safety and standards in the country and the principal instrument for the program of activities of Camcontrol, the Law on Cambodia Standards establishes the “Institute of Standards of Cambodia” within MIME which has the mandate to develop national standards and operate conformity assessments. The Law on Fisheries provides for the Fisheries Administration to move towards a central competent authority (CCA). In the last 18 months Sub-decrees have concentrated on the implementing of standards and SPS measures and infrastructure development, such as slaughterhouse management and hygiene, the development of a conformity assessment body and CCA in fisheries. In order to achieve efficiency through incentives a Royal decree and a Sub-decree have been elaborated for the setting up of Special Operating Agencies and the use of merit based performance incentives (MBPI) respectively. Issues There is an overlap in administrative arrangements concerned with SPS measures. The monitoring and regulating of the production of agricultural raw materials (crops, livestock and fish) and first stage processing lies firmly with MAFF. There is overlap in the inspection of products that may cause risks to animal and plant health and human health being imported into the country to which MAFF, Camcontrol and MOH have responsibilities. Camcontrol has a legal mandate to inspect food products at the border and export certification amongst its list of responsibilities and is the SPS enquiry point. MAFF has effectively withdrawn from the border apart from staff that is working on Avian flu surveillance. Although MAFF is the principal regulating agency of agricultural chemicals, Camcontrol examines shipments in relation to whether the chemicals conform to the specifications and the products satisfy environmental standards. The added problem is the definition of processing for example fish processing which is detailed as primary processing, can with the ever increasing processing sophistication be considered secondary processing leading to both FiA and MIME inspection. For the secondary stage agro-based product processing both Camcontrol and MIME are involved in monitoring production and regulatory oversight. Camcontrol’s main national responsibility is monitoring the domestic food supply, which can lead to overlap of MoH's role in food safety. MoH FSB is the focal point within the ASEAN Food Safety Network. FSB is targeting its work on establishing sanitary procedures in catering. The Ministry of Environment and Ministry of Tourism also has an inspection role in hotels and restaurants. Camcontrol has a significant role to play at the border with import and export inspections. The inspections of animal and plant products should be undertaken by MAFF Phytosanitary Officials and the Animal Health Inspectors but they appear to have been

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effectively withdrawn from the international border gates, entry points and seaports during 2001. DAHP returned to the border as part of avian flu emergency measures. Plant health: Cambodian rice exports to China have not been possible, China requires rice grown in pest free areas, and MAFF could not challenge the rationale. The Department of Plant Health has collected 300 pests and 100 disease samples and specimens to date 20 pests and 5 diseases have been identified, the equipment and staff numbers are not adequate for the work. The presence of moulds primarily aflatoxins in raw cashew nuts can cause health problems in humans if the post harvest and processing treatments are not appropriate. There is concern on the part of Viet Nam’s Plant Health Department of the spread of pests in Vietnam that are claimed to come from Cambodia. Although the pests are identified, there is no scientifically based information of the pest’s distribution for the Government to repudiate any such claims. Animal health: The prevalence of various animal diseases, including Foot and Mouth Disease (FMD), Classical Swine Fever (CSF), Newcastle Disease, Highly Pathogenic Avian Influenza (HPAI) and more recently Blue Ear (porcine reproductive and respiratory syndrome) are of concern. Cambodia reported 20 outbreaks of HPAI in the period 2005 - April 2008 and a total of seven human fatalities in the same period. With the transit of live animals (Thailand to Viet Nam) the trans-boundary animal disease control project to set up disease free zones across the region is ambitious and will be impossible to achieve by 2010 – 2012. Fish health: A barrier for export growth into high value OECD countries, relates to sanitary conditions in the Cambodian fisheries sector. Cambodia is not included in the list of countries approved for the export of fish to the EU. The country’s fish exports to the EU ceased during 1997. To satisfy EU and to some extent other country’s import requirements, FiA has to prove it is a central competent authority (CCA) primarily through clarity in the CCA’s role and its competence to have oversight/traceability of the whole supply chain (boat to table). Human health: The incidence of food and water borne diseases is high. Recently the number of diarrhea and dysentery cases has increased with 672,600 health center and hospital out patient cases and in-patient admissions (2006), which is assumed to be only 10% of all cases. There have been seven confirmed fatalities of the human infection with the H5N1 avian influenza virus, in comparison to Viet Nam’s 103 cases and 43 deaths. Excessive use of pesticides in fresh vegetable and fruit production presents a very serious hazard for farmers as well as consumers in Cambodia and there is no laboratory in the country that can analyze for pesticide residues, although the equipment exists. SPS awareness: Sanitary and phytosanitary awareness varies, the companies that have the greatest awareness are those that export and the hotel and restaurant chains that are part of multinational corporations. Below that “upper strata” awareness is poor. There are processors and manufacturers that cannot distinguish between quality and safety parameters and have limited knowledge of standards and systems certification. No national SME processors have QA programs in place and will rely on government inspections and laboratory analysis. Standards and standard setting: ISC is developing standards and although they are approved they have not gained equivalence and are not recognized internationally. There is still a need for the development of more standards both voluntary and mandatory for (i) high risk SPS food products (ii) hygiene systems – Sanitation Standard Operating Procedures (SSOP) and Good Hygiene Practices (GHP) and (iii) laboratory analytical procedures. Certification, accreditation and mutual recognition: There is no internationally recognized process/systems conformity assessment body (CAB) in Cambodia; ISC does

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have trained auditors in HACCP, Quality Management and Environmental Management Systems, but as yet systems certification is not in place which signifies that any company that wishes to gain, for example HACCP certification has to contract a foreign company to undertake the work at international rates. No government laboratory has gained ISO 17025 certification and the accuracy of tests in government laboratories can be considered spurious based on limited inter-proficiency laboratory testing. The testing procedures and the range of tests required is increasingly more complex, particularly as food laws and SPS standards globally become stricter, the range of tests will have to include the presence of toxins and mycotoxins, minute levels of stabilizers, preservatives, sweeteners, additives and colorants in food and feed or the presence of antibiotics and pharmacological active substances in meat and fish products and pesticides in agricultural crops. The legal and regulatory framework: With entry to WTO many new laws have been promulgated, there has been limited oversight of their effects on the private sector, the overlap of responsibilities, enforcement and above all the cost implications of implementing the laws. The process of elaborating a law or sub-decree rests with ministry staff that has limited legal or regulatory writing skills. It is very important when elaborating such a document that the person that makes the drafts will take into consideration (i) focus (ii) framework (iii) rights to appeal (iv) administrative powers (v) clarity and repetition (vi) enforcement and (vii) ease of compliance. The rationale of the proposed interventions include: (i) they must target specific activities that will have an impact in the supply chain (ii) supporting ministries and their departments where there is a clear responsibility and no or very limited overlap within SPS measure’s framework (iii) activities that are not supported fully by any donors or lenders or are to provide continuity in previous donor activities, building on previous work (iv) be trade facilitation orientated but not ignoring domestic SPS constraints (v) the targeting of monitoring and surveillance to ensure hazards are identified and if possible removed and (vi) wherever possible interventions are designed to become sustainable. Intervention A: To support key individuals in the ministries concerned with the drafting of SPS related laws and regulations to coordinate their activities, harmonize drafts with ASEAN member countries and ensure that the policy and legal framework has a national perspective, with particular emphasis on clearly defined delineation of responsibilities. At the same time, gain equivalence with bilateral and multilateral agreements. Intervention B: Support to the laboratories that are concerned with food safety under MIME (agro-processing), Camcontrol (domestic wholesale and retail markets) and MoH Department of Drugs and Food (fish and fish products) to strengthen the analytical capacity and capability and gain internationally recognized ISO17025 certification and mutual recognition for microbiology (food and water) chemical (heavy metals, pesticides, preservatives and colorants) and for TVB-N and TMA-N, histamines, biotoxins for fisheries and improve test accuracy through inter-proficiency laboratory testing. This intervention will also assist laboratories where possible to become commercially oriented, with the possibility of setting up Special Operating Agencies (SOA). Intervention C: To assist ISC in national product and systems standards development and to gain international recognition of those standards, recommending the further development of standards for (i) high SPS risk foods, (ii) SSOP and GHP for slaughterhouses wet markets and food processors and preparation outlets and fishing boats and (iii) analytical laboratory procedures. Supporting ISC to become an internationally accredited conformity assessment body for process systems under ISO 17021 guidelines. Financing the feasibility of establishing a National Accreditation Board/Body under ISO17011

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guidelines, drawing up an action plan for the formation of an AB and to achieve mutual recognition in systems certification. Intervention D: An awareness program to ensure that; (i) ISC works with processors so that they are aware of the importance of standards, quality and safety and the use standards compliance as a means of gaining comparative advantage, (ii) there is consumer awareness of domestic retail and market food safety issues by strengthening the monitoring role of Camcontrol and development of a food complaints hotline, (iii) MoH restaurant and hotel caterer inspection scheme is supported and used to advise consumers and tourists on safe eating places, through the use of a “safe food" scheme and (iv) slaughterhouse veterinary inspectors and fishing boat operators are provided with SSOP awareness and GHP training respectively, once the standard has been developed by ISC. Intervention E: To Support Fishery Administration (FiA) in becoming the central competent authority (CCA) to gain EU List 1 recognition under Commission Decision 97/296/EC by supporting the capability and funding of the staff to go into the field to train and advise, have the equipment to undertake rapid diagnostics and on the spot field analysis to strengthen monitoring and surveillance activities and through Intervention B support MoH laboratory to undertake the specialist analysis required for fish and fish products. Intervention F: Support to the Plant Health Department to establish a pesticide residue analysis unit with existing HPLC and GC equipment and expand the capacity with further equipment procurement and to undertake a fresh produce pesticide residue survey in the market place and trace back to the origin any problems encountered. Together with assistance to the laboratory to provide support to fresh produce exporters that require maximum residual level (MRL) tests. An estimated project budget amounts to $9.3 million for the 4 year period of which there is a project contribution of $5.3 million, a government contribution of $0.7 million and private sector beneficiary’s contribution of $3.4 million. The support for the aforementioned interventions includes consultancies, vehicles, running costs and support staff which are estimated to be $1.9 million being part of the project contribution.

I. INTRODUCTION

1. The sanitary and phytosanitary (SPS) consultant’s mission took place from 7 April until 4 June 2008; some of the stakeholders met during the mission are listed in Appendix 1.

2. Cambodia has been a member of the World Trade Organization (WTO) since 13 October 2005 and as such is committed to conform to the Sanitary and Phytosanitary (SPS) agreement. Cambodia was selected as one of three pilot countries to receive integrated framework attention as part of a pro-poor trade strategy and was one of the first countries to receive “fast track” accession. Cambodia has committed itself to institutional and legal reforms that will need to take place during a transitional period of five years and agreed under the Doha Agreement on a least developed country accession.

3. The task of the consultant was to (i) review the policy and institutional framework for SPS measures, highlighting constraints and overlapping responsibilities that can cause a duplication of limited resources, and recommend ways in which a future program could address such factors (ii) collate and review the laws, decrees and sub-decrees that relate to SPS measures, outline ambiguities and gaps that may exist in the existing legal framework and (iii) determine factors that are inhibiting agro-based product export quality and which may impede greater penetration in existing markets and entry into future markets and in parallel evaluate the existing domestic food safety framework.

4. The overriding objective of this study is to determine targeted policy and investment interventions which could have the maximum impact in providing the private sector agribusiness with a competitive advantage, particularly within food safety. The main thrust of the consultancy was to determine the capacity and capability of government institutions to become compliant, monitor, oversee, accredit and certify the standards relating to SPS measures and at the same time evaluate the current situation regarding the private sector’s interpretation of SPS measures and factors that effect the non compliance status of agro-based product processing and catering business’s.

II. SPS, STANDARDS AND CERTIFICATION

5. The WTO Agreement on the application of SPS measures specifies that countries should base their technical regulations and sanitary and phytosanitary measures on international standards. If they conform to the standards laid down, then by implication the international standards will not form barriers to trade. Compliance with the requirements is mandatory in many countries. Imported products require certificates issued by internationally accredited third party conformity assessment bodies or, more typically in SPS matters by official bodies in the exporting country.

A. Standards

6. Cambodia is committed to complying with a range of international agricultural compliance/quality standards in line with such standard setting organizations as International Standards Organization (ISO), International Plant Protection Convention (IPPC), Office Internationale des Epizootics (OIE) or World Organization for Animal Health and Codex Alimentarius Commission (CAC) to all of which Cambodia is a member and all aforementioned standard setting organizations have nominated government department contact or focal points.

7. Standards for food and agriculture are generally used to: (i) facilitate commerce and trade (ii) ensure acceptable levels of safety to consumers, producers and handlers and/or (iii) protect the environment.

8. As trade agreements reduce tariff trade barriers there is heightened interest in other potential barriers to trade particularly SPS and TBT measures. Although the restriction in

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trade is not their stated objective, there is sufficient evidence that such measures can act as significant barriers to trade expansion. However standards have come to be crucial elements facilitating transactions and trade both within and between countries. Standards and technical regulations stipulate what can and cannot be exchanged and they define the procedures and processes that must be followed for the exchange to take place. Thus, the ability to comply with standards in overseas markets is a major factor determining access to those markets and more broadly the capacity to export. This is true both for mandatory regulations, set by governments to meet their objectives regarding health, safety and the environment, and for market-driven voluntary standards, set within the private sector, to reflect the demands and tastes of consumers or the technological or management requirements of supply chains.

9. It is important to distinguish between product standards and process standards. Product standards refer to the characteristics that goods should possess, for example, size, shape, appearance, and maximum pesticide residues etc for agricultural products or performance requirements for equipment. Process standards relate to the conditions under which products are produced and packaged, as in the case of methods of production and hazard avoidance, pesticide application, organic agriculture, halal meat and ethical and Fairtrade norms.

1. SPS Standards or Measures

10. The recent outbreaks of food borne diseases and food scandals have added pressure for greater regulation and stricter enforcement of current safety measures and therefore greater emphasis on SPS measures. In many cases import/export bans and voluntary export suspensions have been used as a means to limit the spread of pest and diseases. Nothing can highlight the issue of disease outbreaks and import bans and its effect on world trade more than the example of Bovine Spongiform Encephalopathy (BSE) commonly known as "mad cow disease" in cattle and Avian Flu in poultry. Because of the disease outbreaks, import bans and quarantine measures were implemented throughout the world. During 2003-04 half the world poultry exports were stopped and a quarter of the global trade of beef was halted. This is equivalent to approximately 6 million tons of meat with a value of $10 billion. Additionally during the Avian Flu outbreak tourism declined in South East Asian as a direct result of the outbreak.

11. Greater emphasis has been placed on SPS standards, in order to manage risks associated with the potential spread of pests and diseases or the risks to human health from adulteration, contaminants or disease-causing organisms. The SPS standards include laying down the conditions under which products must be produced and processed and/or the characteristics of the end product or labeling and other information requirements, for agro-based products there is overlap with TBT standards. To strengthen SPS measures and to achieve improved product quality and safety the private sector has developed a range of standards with which an exporter may have to comply to when exporting agro-based products, such standards are termed market driven voluntary standards and they are now an integral part of trade.

12. The SPS Agreement encourages governments to establish national SPS measures consistent with international standards, guidelines and recommendations. International standards are often higher than the national requirements of many countries; the SPS Agreement stipulates and allows governments to choose not to use international standards. However if the national requirement results in a greater restriction of trade, a country can be asked to provide scientific justification to demonstrate that the relevant international standard would not result in the level of health protection the country considered appropriate.

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B. Market-driven Voluntary Standards

13. A number of private sector market driven standards are in existence for agro-based products, they are primarily concerned with achieving improved quality assurance and safety to gain access into OECD markets and into wholesaling networks or retail chains that in many countries “control” the food business. All voluntary standards are demanded by the importers and can be considered business to business (B2B) requirements which may or may not be part of the destination country’s legal framework. For any trade facilitation work compliance with voluntary standards cannot be ignored, many of which strengthen SPS conformity.

1. International Organization of Standardization

14. The International Organization of Standardization (ISO) standards can present a “level playing field” to the agribusiness community by making transparent the requirements that products must meet on world markets, as well as the conformity assessment mechanisms for checking that those products measure up to standards. As a result, suppliers from developed and developing countries can compete on an equal basis globally. ISO has a strategic partnership with the World Trade Organization (WTO) aiming to promote a free and fair global trading system. Signatories to the WTO Agreement on Technical Barriers to Trade (TBT) commit themselves to promoting and using international standards of the type developed by ISO. The ISO has at present over 16,000 standards and the standards that would be relevant to the food safety/environment, quality management and conformity in accreditation and certification are ISO 9001, ISO17011, ISO 17025 and ISO 22000 all of which are described in more detail in Appendix 2:

(i) ISO 9001: Quality management (ii) ISO14000: Environmental management (iii) ISO17011: General requirements for accreditation bodies accrediting conformity

assessment bodies. (iv) ISO 17021: General requirements for bodies providing audit and certification of

management systems. (v) ISO 17025: General requirements for the competence of testing and calibration

laboratories (vi) ISO 22000: Food safety management system

2. Hazard Analysis Critical Control Point

15. HACCP is a natural extension of Good Manufacturing Practices (GMP) and sanitation operating procedures. In the food industry HACCP is the primary weapon in ensuring food safety and HACCP certification is taken into account during any risk assessment of imported fresh and processed foods, drugs and pharmaceuticals. Increasingly national food and drug agencies and administrations perceive HACCP certification of production and processing plants as an important tool to ensure food safety in the domestic market. The system of HACCP allows for the recognition, control and prevention of hazards which could occur in a production process of agro-based food and feed products. A hazard may be described as anything which as a consequence of its existence can cause a health problem to the end user.

16. The European Union introduced new food hygiene regulations on 1 January 2006 that requires all food businesses within the EU, except primary producers, to operate food safety management procedures based on HACCP principles. The US Food and Drug

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Administration is considering regulations that would establish HACCP as a food safety standard through out the food industry1.

17. The benefits of HACCP provides confidence to the consumer, importer and customs agencies that the product is safe, the possession of HACCP certification verifying compliance will improve the free movement of the product across borders (HACCP can be part of Custom Agencies risk assessment) such agencies as the EU Food and Veterinary Office and US Food Safety Inspection Services take note of HACCP compliance when they undertake their audits of companies that wish to export to the EU and US respectively.

3. Halal

18. The requirement for exports to be halal compliant is increasing particularly within Asia and the Middle East. Already some companies in Cambodia are encouraging their suppliers to supply halal food. Halal standards do exist; the Thai National Bureau of Agricultural Commodity and Food Standards (ACFS) and the Institute for Halal Food Standard of Thailand have established Thailand’s halal food accreditation system, which complies with international standards and the halal food standard of the United Arab Emirates (UAE) and the Department of Standards Malaysia, Institute of Islamic Understanding Malaysia. The Malaysian Institute of Industrial Research and Standards (SIRIM) has developed a comprehensive halal food standard MS1500:2004. The MS1500:2004 standard covers the standard - guidelines of Food Safety Principles (MS1514) and Hazard Analysis Critical Control Point (HACCP-MS1480).

4. OHSAS 18001

19. OHSAS 18001 was developed through international cooperation from a number of the world’s leading national standards bodies, certification bodies, and specialist consultancies. The main reason was to remove confusion in the workplace with the proliferation of certifiable occupation health and safety schemes (OH&S). The OHSAS specification is applicable to any organization that wishes to (i) establish an OH&S management system to eliminate or minimize risk to employees and other interested parties who may be exposed to OH&S risks associated with its activities (ii) assure itself of its conformance with its stated OH&S policy (iii) demonstrate such conformance to others (iii) implement, maintain and continually improve an OH&S management system (iv) make self-determination and declaration of conformance with this OHSAS specification and (v) seek certification/registration of its OH&S management system by an external organization. Essentially, OHSAS18001 helps to minimize risk to employees/etc; improve an existing OH&S management system; demonstrate diligence; gain assurance; etc.

20. OHSAS 18001 has been developed to be compatible with the ISO 9001 (Quality) and ISO 14001 (Environmental) management systems standards, in order to facilitate the integration of quality, environmental and occupational health and safety management systems by organizations.

C. International Accreditation

21. In line with the International Accreditation Forum (IAF) the Multilateral Recognition Arrangement (MLA) works in conjunction with expert committees, in which a national accreditation board/body or national conformity assessment bodies can be internationally recognized. The purpose is that any accreditation work or conformity assessments undertaken by national accreditation and certification bodies, in this case Cambodian institutions or private sector enterprises, will be recognized internationally and there would

1 At present HACCP standards are only fully established in the meat, poultry and sea food processing industries

and in low-acid canned food processors.

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be no need for outside audits (apart from regular peer reviews) and assessments or duplication of the work, unless the importing country specifies it.

22. The IAF has already granted Special Recognition to two Regional Accreditation Groups, the European co-operation for Accreditation (EA) and the Pacific Accreditation Cooperation (PAC) the latter includes China National Accreditation Service for Conformity Assessment (CNAS), the National Accreditation Council of Thailand (NAC) and the Vietnamese Directorate for Standards and Quality (STAMEQ). Therefore on that basis China, Thailand and Vietnam already have MLA’s in place.

D. Traceability

23. Greater emphasis is being placed on traceability commonly known as “farm to fork” or “boat to table” depending on the product. The concept of involving all linkages in the food supply chain is important in order to prevent risks in any of the stages from production, marketing, processing, retailing through to consumption. Traceability plays an increasingly important part of hazard avoidance for importing countries to determine where foods and food ingredients were produced, how they were produced, when and where and how they were handled etc. Traceability is the ability to trace, follow and identify a product unit, or batch, through all stages of production, processing and distribution. In recent years the EU has introduced several non-tariff trade rules including traceability, according to EU regulation EU Regulation (EC) No. 178/2002, Article18 which although should have come into force during 2005 will become more prominent in future years. The US Food and Drug Administration has implemented the Bio-terrorism Act of 2002, the regulations include (i) registration of all food facilities (ii) prior notifications for imports (iii) additional product detention authority (iv) more processor record accessibility and (v) declared country-of-origin labeling of foods.

24. Traceability is achieved only if each single part of the supply chain complies with the rules of identification enabling it to go back to its upstream supplier or suppliers. The information that accompanies goods and raw materials when they leave each stage in the supply chain must be maintained by each downstream user. In the ideal supply chain, for example a chain composed entirely by ISO 9000 certified companies, traceability will be always guaranteed, as every single step of the chain will have been documented, in practice different identification rules may apply for upstream and downstream users.

E. Due Diligence Defense

25. As far as risks to human health from unsafe food and agro-based products are concerned the private sector importers in not only the EU but other OECD countries have to prove that the importing company or retailer has taken all reasonable precautions and exercised all due diligence to avoid any hazards that may be detrimental to human health2. The due diligence requirement means if they haven’t taken every precaution then the individuals and the companies concerned will have greater liability under the law. As part of a good food safety program, private sector companies have to undertake their own risk assessment and this is usually by:

(i) Inspections of the production zones and processing plants, to determine production and processing protocols.

(ii) Evaluate the traceability system and at times undertake “mock recovery” to test the system and the reaction of the supplier’s crisis team.

(iii) Review the standards and determine compliance. (iv) Reviewing production records and raw material supplier records. (v) Determining whether their suppliers have certification (particularly HACCP,

ISO 22000 and GMP) and that it is current. 2 Due Diligence Liability Art.17 Regulation (EC) number 178/2002.

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(vi) Working with suppliers to improve or rectify any non compliance identified.

III. INSTITUTIONS, PRIVATE SECTOR AND DONOR SUPPORT

A. Government Institutions

26. With the country’s accession to the WTO during October 2004 and the implementation full SPS implementation within the five year transitional period, Cambodia’s drive for full SPS compliance is a priority.

27. An inter-ministerial committee was established to enhance the coordination of inspection and quality of safety of products and services in Cambodia under a Sub-decree entitled “Establishment of an Inter-Ministerial Committee Coordinating Inspection of Quality and Safety of Products and Services (IMCCIQSPS).” With WTO accession in mind the Cambodia National Codex Committee (CNCC), also called CODEX Alimentarius Commission (CAC) Inter Ministerial Committee was formed in 2001. Eight members have been appointed to the CNCC. The CNCC considers matters relating to policy on safety and quality of products and services, consumer protection and fair trade and to ensure coordinated action by relevant ministries. The Codex Contact Point is located within Camcontrol (Cambodia Import Export Inspection and Fraud Repression Department) of the Ministry of Commerce and serves as the SPS enquiry point; however the animal and plant health oversight is implemented by the Department of Animal Health and Production and Department of Agronomy and Agricultural Land Improvement of MAFF respectively.

1. Ministry of Agriculture, Forestry and Fisheries

28. The entry and exist of agricultural products at the border is supposed to be supervised by MAFF officials. There is an inspection and quarantine facility at the international airport Phnom Penh and there are planned to be 71 animal and plant health checkpoints throughout the country and their locations are specified in the revision of Sub-decree 64. At present there are limited inspection or quarantine activities for animal and plant products and as such the country relies on the SPS management measures of its neighbors. Since the outbreak of avian flu the Animal Health Department has presence at some of the border crossings. The MAFF Departments relating to plant, animal and fish health are:

29. The Department of Animal Health and Production (DAHP) serves as Office International des Epizooties (OIE) contact point for animal health in Cambodia. Institut Pasteur carries out most of the animal health tests on behalf of DHAP; the National Veterinary Research Institute has the capability to test for H5N1 using polymerase chain reaction (PCR) real time equipment, but the results still need cross checking by Institut Pasteur. DAHP is responsible for the inspection of animals and animal products leaving Cambodia and the issuance of an Animal Health Certificate as required under the OIE convention, laboratory analysis is required if non conformity issues are identified or the risk assessment is inconclusive. DAHP will issue import licenses for animals and meat products, one license is needed for each country of origin and based on risk assessment and export licenses are also issued.

30. The Department of Agronomy and Agricultural Land Improvement (DAALI) serves as the IPPC (International Plant Protection Convention) contact point for plant protection. The Plant Protection and Phytosanitary Inspection Office (PPPIO) located within DAALI, is the technical arm of the Ministry. There are three sections within PPPIO consisting of administration, plant protection (support services) and the phytosanitary section, PPPIO was supported by World Bank (Agricultural Productivity Improvement Plan) and undertakes phytosanitary inspection and issues phytosanitary certificates. The office is still in the process of setting up its limited laboratory capability and with support from Australia and New Zealand is beginning to undertake pest categorization but does not have the capacity to

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undertake long term pest distribution work. To export to some countries fumigation is required prior to shipment and MAFF’s pest control and fumigation service can carry out that task, together with issuing a certificate to confirm that fumigation has taken place.

31. The Fisheries Administration (FiA) formally the Department of Fisheries is responsible for issuing fish product export and import licenses. FiA is the designated Central Competent Authority (CCA) for fish and fishery products and FiA has to satisfy EU CCA standards if Cambodia’s fishery industry is to be included in the European Commission List as stipulated in Decision 97/296/EC. FiA will issue import licenses for fish and fish products, one license is needed for each country of origin and based on risk assessment.

32. Within FiA the Post Harvest Fishery Institute has been established which has the aim to achieve CCA status. Although there is no laboratory capability at present the Institute has MOUs with Institut Pasteur and the MoH National Laboratory for Quality Drugs Control to undertake certain tests3 on their behalf. For more complicated analysis such as fish biotoxins this is undertaken by internationally accredited laboratories in Vietnam.

33. The Bureau of Agricultural Material Standards (BAMS) has activities that include registering and enforcing measures to control the quality of agricultural materials such as pesticides, fertilizers, seeds and planting material, veterinary products, feedstuffs and animal feed additives. This includes a business registration, establishing quality standards, monitoring materials in the market place and advising distributors and suppliers on the safe storage and handling of the agricultural inputs.

2. Camcontrol

34. The law on the Management of Quality and Safety of Products and Services (LMQSPS)4 provides the mandate for Camcontrol. It has a broad legal mandate to conduct official inspection of goods in international trade and goods on the domestic (retail) market. The activities of the Department include:

(i) Food safety (ii) Consumer protection (iii) Border control and protection (iv) The official export certification agency (v) Pesticide control agency (vi) Commercial inspection agency, inspecting both imported and exported goods. (vii) The provider of laboratory services (viii) Revenue collection

35. Camcontrol’s inspection activities center around the import inspection of petroleum products, food, agricultural chemicals, garments and on other commodities. Export inspection includes mainly garments and agricultural products. On the domestic market the Department undertakes surveillance of food and petroleum products. The agency levies fees for its inspection service for example, cargoes inspected attract a fee, set at 0.1% of the CIF value, with a minimum fee of $6.0 that cover costs and contributes to Government revenues at approximately 1% of consolidated revenue 5. There are 10 to 20 inspectors in each province and Phnom Penh.

36. Camcontrol does undertake non-regulatory inspections for exporters, primarily in relation to export shipments of rice and other agricultural products, in order to gain certification in accordance with the requirements of the importing country authorities.

3 Bacteriology, organoleptic tests, Total Volatile Basic Nitrogen (TVB-N) and TryMethylAmine – Nitrogen (TMA-

N). 4 Ratified by the Senate June 2000. 5 Gascoine D, 2006, Reform of Camcontrol’s inspection activities on goods other than food. Phnom Penh. EU.

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Certification tends to concern issues such as moisture levels, freedom from foreign matter, and similar quality attributes.

37. Regarding SPS and food safety Camcontrol’s priority is surveillance of the domestic market in the targeting of smuggled food products. Legitimate imported food products are principally inspected for the type and condition of packaging and the expiry date. Camcontrol's monitoring program is targeted to prevent certain chemicals entering the food chain which includes borax, sodium hydrosulfite and salicylic acid. For in-country produced food Camcontrol’s role is to ensure that the national production units are hygienic and products are tested for microbiological load and chemical contamination. MIME also has a role in factory inspection.

38. Camcontrol has a central laboratory that has limited testing capacity in microbiology and chemistry for water and foods and can test for compliance with petrol and cereal standards. During 2007 testing was undertaken on 800 samples of which 100 were analysis of food or water products. There is no charge for the testing6 as it is a Government service; some tests are carried out for the private sector for a fee which on average is $8 per test. The Department has attempted to prosecute suppliers on 2 occasions7, but confidence in the laboratory work and the recognition of any results has been put in doubt to make a strong legal case. Where equipment and media are available the laboratory has taken part in inter-laboratory proficiency testing monitored by Quacert (Vietnam).

3. Ministry of Health

39. The Ministry of Health (MoH) has responsibility for public health and food safety issues as detailed in Sub-decree No. 67, which does include publicly traded goods. The Department of Drugs and Food is the agency that is responsible for food and drug control and is the ASEAN focal point on food safety. The Department consists of five Bureaus (i) Registration and Cosmetics Bureau (ii) Essential Drugs Bureau (iii) Pharmaceutical Trade Bureau (iv) Drug Regulation Bureau and (v) Food Safety Bureau (FSB).

40. The Food Safety Bureau is working towards being a Special Operating Agency (SOA) for food safety. The activities the Bureau undertakes are:

(i) A pilot project in food hygiene advice in restaurants in a targeted area of Sihanoukville, providing basic guidelines on sanitation operating procedures with the eventual aim of issuing food hygiene certificates and rolling out this activity to cover the whole of Sihanoukville, Phnom Penh and Siem Reap. The training is undertaken using FSB and public health inspectors. It is hoped that in the long term the work will include street food vendors.

(ii) Chemical analysis 8 and biological analysis 9 of certain food products and beverages, in the MoH National Quality Control Laboratory, which charges $40 - $50 per test. The more sophisticated tests are undertaken in Vietnam particularly when it concerns products that are exported10. Appendix 3 illustrates the prices charged in comparison with Institut Pasteur and international laboratories.

(iii) Risk assessment work utilizing the 2 recently AusAID trained risk assessors.

(iv) Participation in Codex and ASEAN food safety matters.

6 In fact Camcontrol has to pay for the sample that is taken away for test, in practice this does not happen. 7 Soft drinks and noodles. 8 Testing for additives; Saccharin, Benzoic acid and sulfur dioxide. 9 MPN coliforms, E coli, Staphlococcus, Clostridium perfrigens and Salmonella. 10 3-MCPD presence in soy sauce.

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4. Ministry of Industry, Mining and Energy

41. The Ministry of Industry, Mining and Energy (MIME) regulates and inspects manufacturing industries, which include agro-based production activities under Sub-decree No. 4. MIME inspects and samples foods and agro-based products for conformity and safety in order to issue product licenses. Analysis of the products is undertaken by MIME’s analytical laboratory; MIME inspectors from various departments; (i) Institute of Standards Cambodia (ii) Department of Industrial Technologies and (iii) Department of Water Sanitation, as well as sanitation authorities in the municipalities will visit manufacturing and agro-processing plants. MIME inspects as a rule every 3 months and advises on hygiene and safety issues, takes product samples for testing and following the site assessment will give permission for the processing plant to continue production if non-compliance issues are not identified.

a. Institute of Standards Cambodia

42. The Industrial Standards of Cambodia which under the new standards law (March 2007) is now the Institute of Standards of Cambodia (ISC) has the responsibility to develop and issue standards which include food standards based on Codex standards11 and has been supported by UNIDO in standard setting activities. To date ISC has developed 72 standards of which 14 are related to food hygiene and food products, and 4 are concerned with quality and environmental management systems, the remainder are for electrical and electrical appliance standards and another 14 food and product standards are in draft form (see Appendix 4). No standards have been submitted to WTO for international recognition to seek equivalence12. ISC is beginning to develop standards for laboratory analysis techniques for the identification of heavy metals and trace elements and microbiological laboratory techniques.

43. ISC has been certified by Norwegian certification under ISO65/EN45011 (General requirements for bodies operating product certification systems). In this case it applies to ISC product standards development and ensuring that conformity assessment by ISC of the elaborated standards is in line with ISO6513.

44. ISC and other departments of MIME particularly the Industrial Laboratory Center of Cambodia (ILCC) have staff that has been trained, during 2007, in systems conformity as auditors and trainers the latter by participating in “Train the Trainer” courses. A total of 16 staff members have received staff training in one or a number of the following (see Appendix 5):

(i) Auditor for Quality Management Systems (QMS) – the ISO 9000:2000 series (ii) QMS train the trainer for auditors (iii) HACCP auditor (iv) Auditor for Environmental Management Systems (EMS) – the ISO 14000

standard (v) EMS train the trainer for auditors

b. Industrial Laboratory Center of Cambodia

45. Previously a number of MIME departments had laboratories; the Department of Industrial Techniques, Department of Water Sanitation, Department of Metrology and the new UNIDO sponsored Food and Microbiology Test Laboratory. During June 2005, in order

11 Sri Lankan standards have been referred to for frozen shrimps, cashew kernels and carbonated beverages. 12 Article 4 of SPS Agreement. 13 Bottled water manufacturers have their products tested and are then allowed to have the CS009:2005 mark on their product labels, the standard is mandatory and those that have non-compliance issues are not allowed to produce bottled water until the product becomes compliant.

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to optimize limited resource utilization, avoid duplication and minimize operational expenses the laboratory function was amalgamated to establish ILCC which now has two main testing laboratories at the same site:

(i) Food Microbiology and Chemical Division with a Food Microbiology Laboratory, Water Chemical Testing Laboratory, Food Chemical Testing Laboratory and Chemical Testing Laboratory and

(ii) Scientific and Industrial Metrology Division consisting of a Mass Laboratory, Volume Laboratory, Temperature Laboratory, Pressure Laboratory, Dimension Laboratory and Electricity Laboratory.

46. The staff consists of a quality manager, 2 deputy quality managers, 6 technical managers, 11 supervisory staff and 17 technical and support staff and during 2007 undertook a little over 2,000 microbiology and chemical tests.

47. ILCC has been supported by UNIDO, to upgrade the facilities and testing procedures and to work towards ISO 17025 certification. Progress has been slow and UNIDO support terminates June 2008. Gaining ISO1705 certification for certain laboratory tests is moving forward with the completion of the quality manual. The laboratory has constraints regarding the range of tests which is severely restricted due to (i) lack of appropriate equipment and (ii) the shortage of reagents, culture media and reference samples. The latter as a direct result of insufficient funding and the laboratory being run on a non-commercial basis with water and food test costing $4 - $10 depending on the test or group of tests. Spending on reagents and media averages $400 per month. ILCC is of great importance as many processors and manufacturers rely on the quarterly laboratory tests for their QA assessment.

B. Tourism

48. The tourism industry has seen a rapid rise in visitor numbers from 466,000 in the year 2000 to over 2 million during 2007 (Appendix 6) the increase in numbers is expected to rise at rates in excess of 15% per annum. Already hotel occupancy is rapidly rising past the previous year levels of 55%14. There were drops in visitor numbers in 2003 as a direct result of the outbreak of Avian Flu (highly pathogenic avian influenza) and severe acute respiratory syndrome (SARS) fears. As a result of the increase in tourism and foreign visitors the number of hotels and guesthouses has increased substantially in the year 2002 there were 240 hotels and in 2007 the number of hotels increased to 395, with 63% of all hotels located either in Phnom Penh or Siem Reap. The number of guesthouses in the country during 2007 totaled 891 of which 56% are located in Phnom Penh and Siem Reap. Likewise the number of restaurants has increased and there are now officially recorded 920 such establishments in the country.

49. Tourism can be considered an export owing to the foreign exchange revenues received. It has been estimated that visitors spend approximately $90 million on food and beverages whilst in the country15 and the larger hotels will spend $20,000 to $35,000 on fresh produce (fruit, vegetables, meat and flowers) per month. At a conservative estimate hotels across the spectrum of ratings would spend a little over $100 million on fresh and perishable produce per annum.

50. The hotels and restaurants do practice Sanitation Standard Operating Procedures (SSOP) at various levels of competence from a weekly 40 - 60 point check of kitchens and product storage facilities using a internal team of auditors, to infrequent cursory checking. The hotels that belong to chains will go one stage further and conform to Occupational Health and Safety Guidelines (OH&S). MoH inspectors will inspects kitchen and food

14 Ministry of Tourism has stated that during this high season hotel occupancy rates have exceeded 80%. 15 Ministry of Tourism, 2007.

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preparation facilities but the extent of their inspections in terms of SSOP in each enterprise and number of enterprises inspected is limited.

51. Traceability of food stuffs is again dependant on the hotel or enterprise. Food and water supplier premises are checked by hotel and restaurant buyers, but not to the depth required, only few suppliers will have full traceability namely those associated with international chains. Fruit and vegetable supplies have one-up traceability (market to outlet), rightly meat and fish products have a stricter regime with many food preparation companies buying directly from farm or suppliers that are in control of the farmer suppliers quality assurance program. At the top end of the market meat products are usually imported from developed countries. Traceability in fruit and vegetables is limited as most fruit and vegetable products are imported from Vietnam or Thailand with a long supply chain and at times passing through a number of intermediaries.

C. Private Sector

1. Agro-based Product Processors

52. At present the agro-based production and processor sector is characterized by the presence of medium to small scale family-based enterprises. Most manufactures of soy bean juice, fish sauce, soy sauce, chili sauce, tomato sauce, noodles, ice-cream, vinegar, soft drink, fruit juice, syrup, jelly, dry fruit and vegetable, cake and cake product, alcoholic beverages, ice, meat products, etc. are entirely oriented and restricted to supplying the domestic market. Appendix 7 provides details of the SME that exist. There are 51,357 SME’s recorded16, with an average sales revenue of $28,494, however producers of dairy products, sweets, meats and sauces have lower than the average sales revenues and are mainly cottage industries. The enterprises with the above average sales revenues are bean millers, potato dehydrators, salt producers and bottled water plants. There is no categorization between in rice milling however commercial mills rather than custom mills would have above average sales revenue.

53. Few companies are export orientated with production processes being of limited complexity. Machinery is basic and in many cases antiquated there is a need for investment not only in machinery but also improving the sanitation of the production units. When interviewed most owners are aware of quality but do not relate safety as a quality issue and the only time the product is subject to any quality control is when MIME inspectors or MAFF inspectors (depending in the product processed) visit to take away samples for testing the inspection and sampling is on a quarterly basis. Testing product batches after production runs or after washing down is limited and therefore not satisfactory. When products are taken away for testing by government occasionally the test results are not submitted to the company concerned.

54. All companies listed would need some form of hazard avoidance certification to ensure that there are no risks to human health, it is estimated that the SPS sensitive industries, where frequent laboratory testing of products is required, would amount to 1,500 enterprises. But it is recognized that not all agro-based industries have been recorded, for example 161 bottled water companies are listed, there are at least 312 companies registered, therefore the figure for sensitive industries would on that basis be increased by at least 50%.

2. Bottled Water and Ice Production

55. Bottled drinking water is one of the main commercial processing activities, there are 312 companies that have an investment between $3 million to $10,000. Most have invested in reverse osmosis technology and or ultra violet or ozone treaters. Other units do have less 16 MIME 2008.

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costly filtration equipment. The water off take is either from surface water or from the municipal system17. Depending on the size of the plant between 350 M3 to 10 M3 of water is processed daily18.

56. MIME inspects the production and processing plants every 3 - 4 months and takes water samples for testing charging approximately $15 - $20 per test and following testing will give approval to continue production. It is rare that test results are given. Quality assurance laboratories are rare in most plants only the units with large investments that have been built to international standards have either (i) basic laboratory analysis equipment which is usually for chemical analysis or (ii) they send samples for testing to the Institute Pasteur19 frequently.

57. Bottled water has a mandatory standard CS 009:2005, of which the standard mark is printed on the label. However awareness of what is the significance of the standard and hazard avoidance certification is limited. The standard is not internationally recognized and would not satisfy reputable importers. Cambodian bottled water exports are negligible and informal. There is a misconception that quality means safety, for example some owners and managers are aware of ISO 9000 which is a quality management certification, but their thinking is that ISO 9000 will help to improve plant processing safety this is not the case HACCCP or ISO 22000 is required.

58. Maintaining a cold chain through the use of cold stores and reefer containers is limited in the country. Extending or maintaining shelf life through chilling is undertaken by the use of packing ice around or on the product to be stored or transported. The quality of the ice will reflect on the safety of the product if at a later stage the product is not subjected to a hazard avoidance control point i.e. boiling, washing and sterilizing.

59. The quality and more important the safety of ice together with the tools and equipment used to make and cut the ice is important when undertaking a HACCP audit. With fish being packed in ice, exports to EU have to comply with the community standard20 to gain market access. Ice plants visited would not comply with SSOP; there is plenty of “scope” for cross contamination.

3. Fruit and Vegetable Importer/Exporters and Distributors

60. Most enterprises that manage food distribution are primarily importers, the majority of the fresh fruit and vegetables will come from Vietnam or Thailand, with many importers being of Vietnamese extraction, mainly located within the wholesale markets or in its proximity. The importers have their traditional trading partners or suppliers in the country of origin and will specialize in one type (pineapples) or group of products (vegetables). There is limited traceability with “one step down” being the norm and no due diligence work is practiced; knowledge of safety and sanitary and phytosanitary issues are low in the fresh produce market. Shelf life of the fresh produce is limited as none have a full cold chain and it is only suppliers at the upper end of the market that will have cold stores and refrigerated vehicles, however the hygiene standards in both are not acceptable and would not pass any sanitation operating procedures. It appears that as the products enter the country very few consignments are inspected, perhaps on the basis of risk management, as relationships have been made with the border inspection agencies.

61. The importers that purchase and import higher risk foods from OECD countries do have a better knowledge of product quality and facilities in maintaining a cold or freeze chain and are aware of food safety issues and the importance of due diligence. 17 Reverse Osmosis will remove chlorine that is added to the domestic water supply. 18 Reverse Osmosis wastage rates vary between 3 liters to 10 liters processed for 1 liter bottled depending on raw material quality. 19 Tests will include Microbiology: Total coliform, thermo coliform, Enterobacteriaceae, Sulfite reducing anaerobes, and Pseudomonas, Chemical includes; Turbidity, pH, Chlorine, Ammonia, Nitrites and Nitrates. 20 Chapter IV of the Annex to Directive 91/493/EEC and Annex I to Directive 92/48/EEC.

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62. The main agricultural commodities exported are rice ($20 million), fish and fish products ($10 million), cashew ($ 5 million) soybean and cassava ($5 million). Oil seeds principally oil palm is becoming an increasingly important export crop. Agro-based processed products only account for less than $.5 million of export revenue, similarly fruit, vegetables and meat products volumes and values are negligible and do not account for more than $250,00021.

4. Slaughterhouses and Meat Processors

63. All slaughterhouses are in the “hands” of the private sector. There are 85 slaughterhouses and 222 slaughter “sites” in the country. In Phnom Penh there are 20 slaughterhouses. The number of units in Cambodia is gradually being reduced22 due to licenses not being re-issued by the Department of Animal Health Production on grounds of sanitation non compliance. The number of animals slaughtered daily depends on the size of the unit and varies from 8 to 1,000. There is a move towards getting fewer and larger units and any new units have to be up to international standards. At present the granting of licenses to establish slaughterhouses is on hold until the recently approved Sub-decree on Slaughterhouse Management, Sanitary Inspection of Animal, Meat and Animal Products is complimented by circulars that detail the process to gain licenses and the license fee structure.

64. The sanitary facilities in the slaughterhouses are very poor and DAHP realizes that fact and has a desire to improve the situation through the gradual withdrawal of licenses of non-compliant unit. The process will have to be gradual as no slaughterhouse at present will comply, from a hygiene, sanitation and animal welfare viewpoint.

65. Veterinary inspectors come from provincial animal health and municipal public health departments. The inspectors are present at the time of slaughtering through to meat distribution i.e. wholesalers picking up their consignments. The inspector’s role is primarily to check the live animal health certificates and their actual physical health, the slaughtering process and postmortem meat quality, not so much emphasis is placed on sanitary procedures as most units would not be compliant. Each animal slaughtered will cover a tax or payment of 25 UScents, revenue during 2007 was $152,000. No other fee for veterinary services is charged. The numbers of animals slaughtered during 2007 was 69,950 beef cattle, 2,717 Buffalo and 536,114 pigs, goats and sheep are not recorded and it is estimated that only 30% of all slaughtered animals are recorded. No slaughterhouses are exporting meat this has a lot to do with limited cold chain facilities, unsanitary conditions and as a result live animals being the preferred form of export with value addition taking place in the importing country.

5. Wet Markets

66. The food retail and wholesale markets or wet markets of Cambodia, lack many basic sanitation standards that are required of such markets. Market stall holders do pay fees to the market committee and municipality for outlet rental, market administration and sanitation. However the markets visited were congested, cramped, poorly ventilated and illuminated and the waste from the day before or the night was evident being piled up outside the market or in the roadways. Refuse collection is undertaken by the same company23 that has the contract with the Phnom Penh Municipality and collection in the market is not daily. Sanitary standard operation procedures were not in place; live animals and meat products and fish were close to raw foods, there was no segregation of meat, fish poultry, dry goods and groceries leading to cross contamination risks and furthermore sellers sit amongst the meat and fish products. Although large animals were not slaughtered at the market (pork and beef

21 Of official exports. 22 In Phnom Penh alone 20 slaughterhouses are operational in comparison to 37 units a few years ago. 23 Cintri Ltd.

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came from the slaughterhouses) poultry and fish were slaughtered with no demarcation between retail and slaughtering (dirty and clean) and water for the slaughter process spilt into the very narrow and uneven walkways leading to difficulties in cleaning.

67. Any meat or fish products that are not sold on that day are repacked in ice and placed in cool boxes until the following day.

D. Donor and Lender Support

68. In SPS and standards, the main recipients of donor projects and TA have been Camcontrol, MIME and MAFF and to a lesser extent MoH, the types of TA and support provided are detailed in the box below.

Camcontrol • Training to strengthen food laboratory accreditation • Awareness and planning risk management, single inspection joint

agency examination. • Seminars in food safety and management. • Training in GAP, GHP and HACCP, drafting food inspection manual and

awareness creation MIME • Training in standards development and elaboration, including

compliance with EU entry. • Training lead and internal auditors for certification services, applying and

managing EU certification. • Preparing documents for ISO 9001, ISO14001, ISO 22000 and HACCP

certification • Training in ISO/IEC Inspection guide 17011 and 17020; product

certification guides 65, 28, 53 and 67; system certification guide 62. • Food, chemical and microbiology testing laboratory establishment and

personnel development • Supporting TBT enquiry point • Strengthening Cambodia Rubber Research Institute laboratories • Establishing industrial metrology laboratories, standards developed and

staff trained. • Seminars in food safety and management, training in GAP, GHP &

HACCP, drafting food inspection manual and awareness creation MAFF • Awareness and planning risk management, single inspection joint

agency examination. • Phytosanitary department human resource training and pest risk

analysis development. • Development of national phytosanitary database • Capacity building in transboundary animal disease control, upgrading

laboratories and training staff in diagnostics and epidemiology, creating public awareness.

• Seminars in food safety and management, training in GAP, GHP & HACCP, drafting food inspection manual and awareness creation

• Training in meat inspection and meat processing technology MoH • Seminars in food safety and management, training in GAP, GHP &

HACCP, drafting food inspection manual and awareness creation. • Training in risk assessment and management, with risk assessors

trained

69. The update of the Diagnostic Trade Integration Study (DTIS) as part of the Integrated Framework was completed in 2007. The study identified nineteen priority product sectors that have export potential; nine were agri-based products (cashew nuts, cassava, corn,

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fishery products, fruits and vegetables, livestock, rice, rubber and soybeans). DTIS seeks to assist the Government and development partners in identifying priority areas for action and intervention and aid for trade support. The implementation of Cambodia’s Trade Development strategy is being undertaken on the basis of a Trade Sector Wide Approach (Trade SWAp) priority areas which have been identified jointly by the Government and development agencies and are segregated into three pillars, SPS measures and activities cut across each pillar: Pillar I assisting producers in being more competitive by meeting SPS standards looking into ways to improve the Government and NGO infrastructure to deliver trade-related support services at the provincial and local level and strengthening the delivery of SPS services at the farmer, producer-association, and trader level; Pillar II strengthening SPS support services and Pillar III capacity development. The Trade SWAp recognizes that the Government trade development effort must be inter-ministerial (with MoC taking the lead) and requires a high level of interministerial coordination and that development partners must also coordinate their aid across a number of ministries and agencies to increase the effectiveness of their support in this area. The Sub-decree to nominate officers from the various ministries to work with the three pillars has not been elaborated24.

70. The Cambodia multi-donor trust fund (MDTF) on trade related assistance (TRA) has the goal of maximizing the contribution of trade to economic development and poverty reduction in Cambodia. The purpose of the activities to be funded by the MDTF is to increase efficiency in policy implementation, transparency in trade-related transactions, export competitiveness, and enhance institutional and human capacity; the initial value of the fund is $9.5 million.

71. World Bank/IFC: With the use of MDTF, IFC is planning to implement a SME agribusiness orientated project to improve the business enabling environment by developing and implementing policy reforms and capacity building activities with key SME development institutions and organizations in Cambodia at both national and local level and to enhance the development of SMEs in the domestic agro processing industry on the basis of a value chain approach for selected agro – industry sectors (rice, cashew, rubber, fruit and vegetables). A scoping team will be fielded during June to determine if there is demand for IFC-Mekong Private Sector Development Facility (MPDF) interventions to (i) support/develop SMEs and improve the value chain in the four agri-sectors (ii) what are other existing interventions affecting and impacting the value chains, (iii) why IFC-MPDF interventions would be required and justifiable (vi) what specifically IFC-MPDF can and should do given its competencies, and what would be the project outline and strategy and (vii) is the choice of the agri-sector appropriate, if not are there alternatives?

72. Previously the WB Agricultural Productivity Improvement Project (APIP) supported integrated pest management and pest identification and categorization. FAO and DANIDA have also supported integrated pest management development. WB will also support the construction of a new MoH laboratory, no TA is planned.

73. European Union: Through the Multilateral Trade Assistance project the EU has been involved in creating awareness of the EU legislation on food safety so that the private sector can export to the community. Much of the TA in Cambodia has looked at (i) the reform and or revitalizing and strengthening capacity particularly with respect to the import and domestic food inspection programs (ii) reform of Camcontrol’s inspection activities on goods other than food and (iii) efficient and effective food safety arrangements. Within the region support is being given to the establishment of a rapid alert system under an ASEAN program that will be linked into the EU rapid alert system, initially for fish products only. Support is given to ASEAN members with training in risk management, awareness and the significance of SPS and TBT measures and support to the enquiry and notification points in the ASEAN member countries that are WTO members. Under EU-ASEAN Regional Integration and Support Program (APRIS) of which Phase II started late 2007 there is the development and 24 As of May 2008.

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implementation of common ASEAN standards, conformity assessment, SPS standards and other technical regulations in specific sectors in line with the Vientiane Action Program and modeled on EU systems where applicable. The outcomes will be supported by harmonization with international standards and the establishment of an ASEAN Post Market Surveillance system to ensure the technical regulations and conformity assessment procedures are implemented in practice. The work has already included inter-proficiency laboratory testing for selected bacteriological analysis.

74. AusAID: AusAID has and is providing TA in risk management to Camcontrol, MIME, MAFF and MoH; the latter has now proficient risk assessors which will be the nucleus of a special operating agency (SOA) in the food area. CAVAC is a central part of AusAID's new program of support to the Cambodian agricultural sector, and will run from March 2007 to 2012, with an expected total value of $42.8 million. The overall purpose of the program is to deliver practical benefits including improved food security, increased income, and reduced vulnerability to disruptions for rural poor farmers in rice-based farming systems. This will be undertaken by promoting market-oriented agricultural development and product diversification with initial focus on the rice and vegetables-fruits value chains. Agribusiness development will be undertaken and will include SPS activities.25 The Program will initially focus on three target provinces: Kampong Thom, Takeo and Kampot.

75. NZAID: The New Zealand’s Agency for International Development (NZAID) manages a multi-year project “Phytosanitary Capacity Building Project for the Mekong Region”. And continues to work with DAALI to build capacity in pest and disease surveillance and diagnostics, specimen preservation and management of collections and train staff through diagnostic workshops that are directly linked to field surveillance activities (rice is the target crop) to make the training more relevant. At present Cambodia exports little pest surveillance sensitive material. In 2009, the technical work will continue, as will the field surveillance and the project activities will move on to a high value crops i.e. mangoes. There will be greater coordination with agribusiness’s that want to export to OECD countries. Under the auspices of that project, NZAID outsourced legal assistance to the Government of Cambodia, to the FAO Legal Office. The objectives of FAO assistance for this project are: (a) to assist the Government in the review and assessment of existing legislation on phytosanitary matters; and (b) to draft, in collaboration with national counterparts, a model regional law (for Laos, Myanmar and Cambodia) on phytosanitary matters to enable the four countries to meet their international obligations.

76. FAO: The Food and Agriculture Organization has a program to improve food safety and its management in Cambodia, Lao PDR and Vietnam, the activities include (i) obtaining ministerial level endorsement for a coordinated “farm to fork” approach for protecting food safety and quality and enhance government capacity to implement the approach (ii) strengthening the regulatory framework for food control (iii) upgrading the scientific, technical and managerial capability of food laboratories and inspection services to provide a sound basis for monitoring, compliance and enforcement activities (iv) increasing awareness about food safety among rural communities and enhance the safety and quality of food produced by small and medium food enterprises to facilitate trade and reduce health risks and (v) initiate or expand food-borne disease surveillance. FAO has been given the responsibility for the redevelopment of the legal framework for food control in Cambodia and the FAO is directed out of Rome. FAO also implements the trans-boundary animal disease control program, to establish a regional network on the surveillance of diseases and a disease control program with an ambitious target of establishing disease free zones by 2010 -2012 in both the Upper Mekong (including 8 Northern Provinces of Cambodia) and Lower Mekong (Southern Vietnam and Lower Cambodia), concentrating on food and mouth disease (FMD) and classical swine fever (CSF) and the containment of avian flu.

25 It is estimated that a third of the project budget will be allocated to agribusiness development.

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77. UNIDO: Under the UNIDO technical assistance program (funded by the Switzerland and Norway) it aims to facilitate SMEs market access and export capabilities by reducing technical barriers to trade through the strengthening of standards, metrology, testing quality and conformity assessment, institutional structure and national capacities. Relating to SPS and systems conformity the project with Norwegian donor support of $2.5 million, within the region, has over the past 3 years assisted MIME in (i) the formulation and publication of Cambodian standards (ii) the development of certification capability in HACCP, ISO9001 and ISO14001 and (iii) the first steps of an accredited product development scheme. The existing project will be completed in June 2008.

78. USAID: Have launched a $7.5 million value chain scoping study concerned with ASEAN integration targeting existing and potential value chains in Cambodia, Lao PDR and Vietnam. At present possible work in Cambodia will include tourism, textiles and apparel. USAID will look at ways that they could collaborate with other projects, with the provision of TA.

79. DANIDA and DIFD under the Natural Resources Management and Livelihoods Program do support FiA in TA capacity building, in order that FiA can provide training to SME fish farmers and fisher folk through a service-orientated support unit, with pro-poor fisheries management systems developed and piloted and development of technical standards and regulations.

80. Cambodia has received or is going to receive approximately $16.9 million of aid on SPS related technical assistance for the period 2005 – 2013; this does not include multi-country assistance (Cambodia, Lao PDR and Vietnam support or GMS projects). An overview of that assistance as compared with neighboring countries is detailed in Table 1.

Table 1: SPS Related Technical Assistance Spending in CLV 2005 – 2013 ($ million)

Cambodia Lao PDR Viet Nam CLV Region Total

Food Safety 0.60 - 103.60 2.00 106.20

Plant Health - - 1.10 3.40 4.40

Animal Health 1.80 18.80 35.00 4.20 59.50

Avian Flu 14.10 16.50 38.00 97.80 166.40

Others 0.30 2.40 10.80 - 13.40

Total 16.90 37.70 188.40 107.30 350.30Source: L. Ignacio, Standards and Trade Development Facility, 2008.

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IV. LEGAL FRAMEWORK

81. Most Cambodian government departments can be considered fledgling as a consequence of the recent history. Regulatory powers are often ill defined and many of the legal processes are under review together with a considerable amount of legislation in the process of elaboration. The relevant regulations that have an impact on SPS measures are detailed below in chronological order.

(i) Sub-decree No. 4 (February 1992) Management and Quality Control of Industrial Products of Factories and Handicrafts, provides for the operation and functioning of Ministry of Industry, Mining and Energy (MIME). To register and inspect processing facilities to determine product standards and production systems.

(ii) Sub-decree No 54 (September 1997) The Organization and Functioning of the Ministry of Commerce, which empowers MOC via Camcontrol to (i) inspect and repress goods with fraudulent quality in circulation at markets (ii) analyze the quality of foodstuffs and consumer goods (not medical products, equipment and cosmetics) (iii) inspecting and certifying the quality, safety and labeling of food and consumer goods for conformity with national standards and (iv) inspecting imported and exported goods.

(iii) Sub-decree No. 67 (October 1997) Nominates the Ministry of Health with the responsibility for controlling food safety and the management of food, in conjunction with cosmetics and pharmaceuticals 26 . The Sub-decree unambiguously defines the mandate of MoH to control the safety (and wholesomeness) of the food supply.

(iv) Sub-decree No. 69 on Standards for and Management on Agricultural Materials (October 1998), which requires that whoever is dealing with manufacture, formulation, import, storage and sales or transactions of agricultural materials (including pesticides and fertilizers) in the country, register their products with MAFF. Six companies have registered all of which are international agribusinesses.

(v) Sub-decree No. 17 (April 2000) The Organization and Functioning of Ministry of Agriculture, Forestry and Fisheries, which has no reference to food safety responsibility, but the subsequent Sub-decree No.105 (September 2005) mandates MAFF to inspect food safety of all agricultural products from crop production to the last stage of primary processing.

(vi) Law of the Management of Quality and Safety of Products and Services - LMQSPS (June 2000). This is the principal legal instrument for the program of activities of Camcontrol; The law covers all enterprises including manufacturing, trading and service provision. It covers the health and safety to the consumer of commercialized products and specifies descriptive and quality labeling which includes all labeling in the Khmer language. Camcontrol has the duty to inspect to determine product conformity against the norm and the law provides for the establishment of National Standards System and provides the powers of enforcement for any contravention of the Law. However non compliant products can be exported to other countries if their sales are legal in the importing country.

(vii) Sub-decree No. 42 (May 2001) on Industrial Standards of Cambodia defines MIME mandate in managing the standardization process in elaborating standards, certification of ISO 9000 and ISO 14000 and laboratory certification and MIME has the powers to monitor, enforce standards and test

26 This was further strengthened citing letters from the Council for the Development of Cambodia (No. 2175/05

KAK dated 4 June 2005 and No. 1788/05 dated 7 June 2005 to the Ministries of Environment and Health assign them the responsibility “to collaborate in examining the hygiene and environment at restaurants and foodstalls to ensure cleanliness to avoid contagious diseases.

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products and sanctioning those individuals or companies that are not compliant with fines. MIME can award certificates of registration (which is not internationally recognized) for ISO 9000 and ISO 14000.

(viii) Sub-decree No. 64 (June 2001) Designation and Management of International Points of Entry/Exit.

(ix) Sub-decree No. 15 (March 2003) Phytosanitary Inspection which relates to the prevention of entry of plant pest and diseases into the country through Department of Plant Health inspection and quarantine facilities and the issuance pf phytosanitary certificates, transit arrangements plant health inspectors powers and enforcement penalties.

(x) MoC Declaration No. 141 (Prakas or ministerial decision) on Formation of SPS Enquiry Office (Point) under Camcontrol (May 2003), nominating Camcontrol as SPS enquiry point and to work closely with the National Codex unit and to create SPS awareness within country.

(xi) Sub-decree No. 47 on Hygiene of Food for Human Consumption (June 2003) which refers to general procedure of hygiene of products destined for human consumption through the supply chain, stipulating basic hygienic production, transport and manufacturing processes including solids and waste water management, water and raw material supply, staff hygiene, with an overlap in inspection by MOC and MoH. The annexes provides guidelines for temperature controls and microbiological testing.

(xii) Sub-decree No. 21 on the Facilitation of Trade through Risk Management (March 2006). The sub-decree specifies inter agency cooperation to become more effective in risk management and to avoid duplication. Camcontrol, MoC, MoH, MAFF and MIME are to establish clear risk based criteria for specific commodities, with any decision to inspect a consignment to be justified based on risk. The Customs Department to call on other agencies when specialist expertise is required, with all specialized agencies to evaluate import and export operations and procedures to publish interagency guidelines after consultation with the private sector.

(xiii) Sub-decree16 on Sanitation Inspection of Animal and Animal Products -1983 which was amended on March 16, 2003) to comply with WTO measures.

(xiv) Sub-decree 15 on Plant Quarantine-1983 which was amended on March 13, 2003 to comply with WTO measures.

(xv) Sub-decree 6 on Management of International Airports in Cambodia (March 2000) provides for plant and animal health officials to be present at airport gates, airport lounges and warehouses to ensure that SPS measures are adhered to.

(xvi) Declaration (Prakas or ministerial decision) No 210 MOC (September 2007) pursuant of Sub-decree 91 (August 2007) promulgating the law on the Organization and Functioning of Camcontrol, which provides the Department with the following duties and responsibilities; (i) Inspection service of import and exports jointly with Customs and Excise Department based on trade facilitation through risk management (ii) consumer protection through product safety and suppression of fraud (iii) export certification to meet importing country requirements (iv) check compliance with international standards (v) review health and safety of products from production through to commercialization and submission to competent authorities (vi) the control of products and services on the markets (vii) manage MOC laboratory product testing facilities (viii) provide a commercial inspection service (ix) collect inspection fees relating import/export quality testing (x) be secretariat of National Codex Committee and SPS National inquiry Point and (xi) any other duties empowered by leaders

(xvii) Law on Cambodia Standards (March 2007) Under Sub-decree No. 12 (11 February 2002), the Management of Standardization and Technical Regulations activity in Cambodia is conducted through the Department of

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Industrial Standards of Cambodia (ISC), a Department within the Ministry of Industry, Mining and Energy (MIME.) The Law on Standards of Cambodia, establishes the “Institute of Standards of Cambodia” within the same Ministry to supersede the Department of Industrial Standards of Cambodia (ISC) which will have undertake to (i) develop national standards (ii) operate conformity assessments (iii) establish and maintain laboratories, libraries etc. (iii) certify conformity for products for export and the domestic market and conformity of management system standards (iv) suspend, withdraw and cancel licenses for non-conformity issues (v) undertake research in standards (vi) enhance standards awareness and (vii) cooperate with international organization and foreign associations that are related to standards development, testing and certification.

(xviii) Law on Fisheries (March 2006) which provides for the Fisheries Administration of MAFF to be the central competent authority and has the role of (i) managing and organizing fishery activities and development (ii) scientific research in production, processing, conservation, business practices and the promotion of aquaculture and (iii) enforcement through inspection, monitoring and surveillance.

(xix) Sub-decree No. 108 Slaughterhouse Management, Sanitary Inspection of Animal, Meat and Animal Products (August 2007) Sub-decree includes (i) the definition of slaughterhouses according to animal or poultry to be slaughtered and size of the unit (ii) location and licensing arrangements (iii) sanitary inspection procedures and (iii) stipulation on hazard avoidance clothing to be used by inspector and workers. It will need a number of circulars to implement and enforce this sub-decree’s scope.

A. Draft Sub-decrees 82. Other Sub-decrees that are being drafted and are relevant to SPS issues include (i) the Organization and Functioning of the Institute of Standards of Cambodia (ii) Slaughterhouse Management, Sanitary Inspection of Animal and Meat Products.

(i) The Organization and Functioning of the Institute of Standards is drafted and is waiting for endorsement by the Council of Ministers. The Sub-decree is in furtherance to the Law on Cambodian Standards. The main activities of ISC will be (i) to research into and set national standards (ii) certify standards compliance for both products and systems (iii) disseminate standards and create awareness (iv) work with international bodies to achieve international recognition of national standards and gain accreditation for national conformity assessments and (v) license, regulate or revoke product and systems certifications. In order to undertake the work ISC will consist of four departments (i) Information Department (ii) Standards Development, (iii) Training and Advisory Department (iv) Certification Department and Regulatory and Accreditation Department.

(ii) There is a Prakas in draft form on the Hygiene of Fish and Fishery Products, which may or may not be endorsed during 2008. The general provisions include those that will be required for FiA to become a CCA in line with EU requirements governing all stages of the supply chain from harvesting (catching) to export and or delivery to consumer, to ensure traceability (“boat to table”).

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V. ISSUES

83. During the mission a number of issues were identified that are related to SPS measures which include the country’s legal and institution framework and impediments to increasing the exports of Cambodian agro-based products and constraints in domestic competence in agro-based product analysis, inspections and development of national standards.

A. Institutional Responsibilities

84. The overlap in administrative arrangements concerned with SPS measures and in particular food safety is not exclusive to Cambodia; all countries have the difficult task in accommodating cross cutting SPS measures within the national institutional framework.

85. The Law on the Management of Quality and Safety of Products and Services (LMQSPS) has a wide application and is the basis for inspection and regulating quality, safety and standards in the country. The issue is the area of responsibility for the various government ministries and agencies, this is subject to the Law’s interpretation and that of each Ministry or agency for them to determine at what stage of the supply chain or import/export activity does each ministry or agency consider relevant to their role? Article 2 of LMQSPS defines the stages in the supply chain; what is production and manufacturing, which is detailed as (i) raw material production (animal production, crop production and fish production or wild catch) and primary processing and (ii) “commercialization” is considered post production operations (secondary production, storage, transport, wholesaling and retailing). The law does not determine which ministry or agency has which role at what stage of the supply chain and within Chapter 6 “Inspection Procedures for Quality and Safety of Products and Goods and Service” stipulates the setting up of what will be Camcontrol and only emphasizing cooperation between ministries, this has led to Government and ministries developing parkas and Sub-decrees based on the loose terminology of LMQSPS and to widen as much as possible their individual responsibilities, which causes overlap.

86. The monitoring and regulating of the production of agricultural raw materials (crops, livestock and fish) and the first stage processing27 lies firmly with MAFF and its various departments; (i) plant production lies with the Plant Health Department (ii) animal husbandry with the Animal Health Department and (iii) fisheries and aquaculture lies within the responsibility of Fisheries Administration. The work includes inspecting products for export to prepare an animal health or phytosanitary certificate, but also determining hazards at the first stage of production together with pest and disease surveillance. Where there is overlap is the inspection of products that may cause risks to animal and plant health and human health being imported into the country to which MAFF, Camcontrol and MOH have responsibilities. Camcomtrol has a legal mandate to inspect food products at the border and Camcontrol has export certification amongst its list of responsibilities, but it is impractical for it to perform such a role efficiently and effectively in relation to foods for which it has not been intimately engaged in the supervision of the primary production processes i.e. fish products. To add further overlap Camcontrol is the SPS enquiry point.

87. Although the Ministry of Agriculture, Fisheries and Forestry (MAFF) is the principal regulating agency of agricultural chemicals, Camcontrol examines shipments in relation to whether the chemicals conform to the specifications and import licenses issued and whether the products satisfy environmental standards. MAFF issues licenses for the importation of agricultural inputs in accordance with Sub-decree 69 Standards for and Management of Agricultural Materials.

27 Washing, cleaning; husking; peeling, cutting and slicing; threshing and winnowing; animal and fish slaughter,

but also traditional preservation techniques.

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88. The added problem is the definition of processing for example fish processing which is considered primary processing by FiA can with the ever increasing processing sophistication be considered secondary processing as some of the fish products are fried, bread crumbed or cooked, leading to both FiA and MIME inspection. If FiA doesn’t have complete control of fish products processing then this will have implications when the sector is inspected again by the EU FVO, the central competent authority i.e. FiA should have sole responsibility of the complete supply chain (boat to table).

89. For the secondary stage agro-based product processing both Camcontrol and MIME are involved in monitoring production and regulatory oversight. MIME and staff from the Ministry’s various departments ISC and the Department of Industrial Technologies will inspect and monitor possible hazards, take samples and assess compliance with standards and provide some standards and safety advice. Camcontrol’s main national responsibility in the domestic food market to ensure fraudulent, adulterated, out of date and unsafe products are not present in the market place. If domestically produced products are identified then Camcontrol should notify MIME so that the latter can “track back” and identify the source of the problem in the processing units. However Camcontrol has scope to inspect processing plants on the basis of Prakas 210 through article 5 to undertake research on hygiene in food processing and Article 7 to conduct assessment in production technology. Factory visits are said to be conducted in support of market surveillance, not as part of a program to ensure that such establishments comply with relevant laws.

90. The MoH has responsibility for licensing and regulating pharmaceuticals and cosmetics together with public health and food safety issues as detailed in Sub-decree No. 67 which indicates that there is duplication with Camcontrol’s role in food safety particularly monitoring the food supply chain. The MoH Food Safety Bureau is targeting its work on establishing sanitary procedures in restaurants and hotels providing advice to kitchen staff on safety and sanitation procedures. At present it is a scheme targeting establishments in Siahanokville only. Because of the geographical spread of these establishments the administrative responsibility may be divided between two or more authorities, with local government bodies taking the lead in villages and smaller towns. An added complication is that the MoH FSB is the focal point within the ASEAN Food Safety Network.

91. The Ministry of Environment has also “to collaborate in examining hygiene and the environment at restaurants or food stalls”, and the Ministry of Tourism has an inspection role in hotels, restaurants and canteens throughout the country “to assure food safety for national and international tourists”, so there is now even more scope for overlap and duplication of activities in relation to restaurants, canteens and hotels. Where MoH has no duplication is (i) monitoring outpatient cases and hospital admissions to gather data on disease incidence, (ii) undertaking epidemiological studies on sources and spread of food-borne diseases and (iii) managing outbreaks of food-borne diseases (in cooperation with other Ministries), including coordination of emergency preparedness and emergency response.

92. Although MoC MAFF, MIME and MOH have keys roles to play in SPS measures other government ministries are on the periphery as Royal Government Circular No. 03 SR (Annex 1) and other documents stipulate that the four “lead” ministries must also cooperate with others, including the Ministries of Education, Youth and Sport, Tourism, Environment, and Economy and Finance (Customs and Excise Department), as well as the municipal and provincial authorities. Figure 1 below provides a schematic view of the various ministerial responsibilities and overlap.

MAFF (OIE &IPPC contact point, CCA fisheries)

AT BORDER Animal and plants & agro-based products SPS Inspection &

Animal Husbandry Crop Production Aquaculture Post harvest practices

Primary processing (grading, cleaning, slaughter, packing etc)

Secondary processing (cooking, extraction, smoking, bottling, canning dehydration etc)

Transport storage and distribution

Food wholesale and retail outlets

Restaurants, hotels, caterers and street food

MIME (TBT enquiry point)

Camcontrol (SPS enquiry point, Codex contact point)

MoH (ASEAN Food Safety focal point)

MoT &

CCD MIME FiA

CCD MoH

MoH MoT MEYS

Figure 1 Schematic Representation of Ministry Responsibilities for SPS

CCD MAFFMo

= duplication CCD = Camcontrol

93. Camcontrol has a significant role to play at the border with import and export inspections. The inspections of animal and plant products should be undertaken by MAFF Phytosanitary Officials and the Animal Health Inspectors but they appear to have been effectively withdrawn from the international border gates, entry points and seaports during 2001 subsequent to the Sub-decree 64 being approved. However there is a move for the relevant MAFF staff to be inspecting bodies for the bilateral, international border gates, seaports and international airports gates.

B. Potential exports

94. The DTIS highlighted a range of crops and agro-based products that would have the export potential. At present that potential has not been tapped although the agricultural land that Cambodia possesses is an attractive proposition for neighboring country’s agribusiness corporations as the production base for value addition in Thailand, Vietnam and China. Access to high value markets in developed countries where there are strict SPS control regimes is limited by virtue of the countries inability to provide acceptable sanitary and phytosanitary certification from CCA and the lack of pest risk analysis to provide importing countries with the information required for their risk management work. The latter is even more difficult when considering the porous borders that the country has.

C. Plant and Animal Health

95. During the study a number of issues were brought up and identified concerning plant, animal, fish and human health.

1. Plant Health

96. Rice is the main Cambodian agricultural export with a production volume of 6.7 million tons during the 2007-08 season rice harvest of which 1.48 million tons was exported28. There are pest, pathogen and weed problems associated with rice; however the principle phytosanitary problems in the opinion of Chinese inspectors are nematodes and the parasitic weed Striga. Importer countries are particularly wary of notifiable pest and disease issues when paddy or brown rice is the imported item. In polished rice the phytosanitary problems are negligible. Cambodia would like to export rice to China; as yet this has not been possible. Following inspection by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) China, the inspectors and the subsequent elaborated import standard insisted that pest free areas be established for two species of Striga and 2 species of nematode, the recommendation is impractical and Cambodia does not have the resources to question the validity of the import standard which can be considered discriminatory. The nematodes and Striga will not be an issue with polished rice and 3 of the notifiable pests are said to be widespread in China. To export to Malaysia the rice has to be fumigated with Phosphin in-country and the Malay authorities will fumigate with methyl bromide at entry to kill the seed embryo.

97. The Department of Plant Health has collected 300 pests and 100 disease samples and specimens to date 20 pests and 5 diseases have been identified, the equipment and staff numbers are not adequate for the work. This is a constraint when the department has to issue phytosanitary certificates as the reliability in pest and disease identification is low.

98. Raw cashew nuts (RCS) are identified in the DTIS study as being a product with medium export development opportunities primarily because the capacity of the country to add value i.e. roast and crack the nuts is limited. Vietnam is the world’s second largest cashew processor with an estimated processing capacity of 0.30 - 0.40 million tons per annum. Worldwide demand is expected to increase 5 - 8% annually over the next 5 years29.

28 MAFF, 2008. 29 MSME program, Value Chain Assessment Report, January 2006.

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Productivity is low at 1 t/ha30 and pest and disease problems include Cashew Stem and Root Borer, the Tea Mosquito Bug and Citrus Black Fly. The presence of moulds primarily aflatoxins in RCN can cause health problems in humans if the post harvest and processing treatments are not appropriate. The Vietnamese buyers will grade on size only and will reject if moulds are present. There is one processing unit in the country with a capacity to process 1,500 t of RCN per annum and there are negotiations taking place for the establishment of another processing unit.

99. There is concern on the part of Viet Nam’s Plant Health Department of the spread of pests in Vietnam that are claimed to come from Cambodia, such as the brown plant hopper and coconut beetle. Although the pests are identified, there is no scientifically based information of the pest’s distribution for the Government to repudiate any such claims.

2. Animal Health

100. The prevalence of various animal diseases, including Foot and Mouth Disease (FMD), Classical Swine Fever (CSF), Newcastle Disease, Highly Pathogenic Avian Influenza (HPAI) and more recently Blue Ear (porcine reproductive and respiratory syndrome) are of concern. Animal diseases affect domestic trade and public health through lower productivity and reduced income for producers as well as through risks to human heath associated with zoonoses. Cambodia reported 20 outbreaks of HPAI in the period 2005 - April 2008 and a total of seven human fatalities in the same period. Piglet mortality rates can be high as 70% primarily caused by paratyphoid and more recently Blue Ear has also caused significant losses in some fattening units, the farmers blame the import of diseased pigs from Vietnam imported with no animal health controls and then sold at low market rates. Opportunities for official exports of ruminant, pig and poultry products are severely limited by the animal diseases which lead to informal trade through the porous borders. Transboundary animal disease control is being supported by FAO to establish disease free zones across national borders, work is slow and it will be impossible to achieve the ambitious target as having such zones by 2010 - 2012 as proposed in the project plan. Instead most work in Cambodia is concentrating on disease surveillance, and monitoring the transit of live animals between Thailand and Viet Nam. One step forward is the harmonization and recognition of animal disease control practices between Cambodia and Thailand.

3. Fish Health

101. The Cambodian fishery industry has an estimated production of 300,000 - 400,000 tons per annum with a farm gate value of $250 -300 million. Globally Cambodia is the fourth largest producer of inland fish after China, India and Bangladesh31. Statistics show that the total catch in 2006 was 517,000 tons, of which 422,000 ton was inland fisheries, 60,000 was from marine fisheries and 35,000 from aquaculture. There was an almost 30% increase in Cambodia's fish exports recorded between 2001 and 2005.

102. A barrier to further export growth in the fisheries sector, in particular to high value OECD countries, relates to sanitary conditions in the Cambodian fisheries sector. Cambodia is not included in the list of countries approved for the export of fish to the EU. The country’s fish exports to the EU ceased during 1997. To satisfy EU conditions FiA as the CCA still needs (i) approved food control legislations on fish and fishery products (ii) clarity in the CCA’s authority to have oversight of the whole supply chain (boat to table) (iii) systematic inspection, certification and sampling and monitoring to be established and (iv) analytical laboratory testing to have ISO 17025 accreditation and inter-proficiency laboratory testing fully implemented. Although the EU is unique in assessing the CCA before allowing fish and

30 Brazilian dwarf cashew tree plantation can produce yields in excess of 2.5 tons three years after planting. 31 Chhuon Chamnan, Current Status of Fisheries Quality and Safety Management in Cambodia, Phnom Penh,

2008.

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fish products exports into union member countries32 the USA through FDA or the Food Safety Inspection Service33 audits also assess the competence of CCAs.

103. Other SPS issues include the monitoring of poisonous fish in the national catch and checks on marine biotoxins (ciguatera, muscle paralyzing toxins) and the checking of fish parasites.

4. Human Health

104. Although there is surveillance of food and water production in the market place it is extremely limited and inspections are cursory. The incidence of food and water borne diseases is high (Appendix 8). During the last 5 years diarrhea and dysentery amount to 5.4 - 9.2% of total health center and hospital out patient cases and in-patient admissions. Recently the number of cases has increased with 2006 having 672,600 cases reported34, across all age groups. Bearing in mind the population of Cambodia is a little over 14 million and it is assumed that those individuals that go to the hospital are 10% of all cases35; therefore the majority of the population will have a bout of food poisoning each year. As a comparison in the USA a total of 17,883 food-borne infection cases were reported in 200736, up slightly from the 17,252 reported in 2006, with Salmonella being predominant followed by Campylobacter, Shigella, Cryptosporidium, E coli O157:H7, Shiga toxin–producing E coli (STEC) non-O157:H7, Yersinia, Listeria, Vibrio and Cyclospora.37

105. There have been seven confirmed cases of human infection with the H5N1 avian influenza virus. The first case was recorded in Kampot Province January 2005, all have been fatal. Other cases were identified in Kampong Cham and Prey Veng Provinces located on the border with Vietnam. This is in comparison to Vietnam’s 103 cases and 43 deaths from the virus.

106. Excessive use of pesticides in fresh vegetable and fruit production presents a very serious hazard for farmers as well as consumers in Cambodia. Although not studied scientifically the consumer is wary of pesticide residue levels in imported and domestically supplied fruit and vegetables on the market. It has been highlighted in the EU Food and Veterinary report38 and there is a tendency for farmers to apply pesticides prior to harvest (ignoring harvest intervals if known) and applying pesticides that are not labeled in Khmer so farmers are unable to read the instructions. An FAO IPM Programme survey in 2000 in Cambodia found nearly 90 percent of farmers using pesticides had experienced symptoms of pesticide poisoning during or after spraying39. Pesticide and their uses that are banned in other countries are still available in market place, for example methyl parathion and the highly toxic Methamidophos (Phosdrin). There is no capability in the country to analyze for pesticide residues in the market place; however laboratories do have HPLC and GC equipment but not the range of reference samples that are required for pesticide residue determination.

32 Other countries will allow exports of fish and fish products from individual companies and processing plants

providing the importing country quality and safety requirements are met. 33 At present most audits are carried out on CCA involved with meat and poultry products under the Federal

Meat Inspection Act and The Federal Meat Inspection Regulation (which includes pathogen reduction and HACCP regulation).

34 Ministry of Health 2008. 35 The vast majority of the population will use traditional medicines or go directly to the Pharmacy to purchase

drugs. 36 Those that seek medical care and or submit laboratory specimens. 37 FoodNet Data 2008. 38 European Commission DG (SANCO)7765 September 2005. 39 Shanahan M & Trent S, Death in Small Doses – Cambodia’s Pesticide Peril, www.pan-

uk.org/pestnews/Issue/pn56/pn56p6.htm.

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D. SPS Awareness

107. Sanitary and phytosanitary awareness varies considerable in the country. The companies that have the greatest awareness are those that export and the hotel and restaurant chains that are part of multinational corporations or those caterers that cater for international tourists and are relatively knowledgeable on food safety and will have SSOP in place. Agribusiness companies that are again part of multinational chains have begun to take responsibility and “ownership” of their supply chains40 using outside technical expertise to improve SPS measures41.

108. Below that “upper strata” awareness is poor. There are processors and manufacturers that cannot distinguish between quality and safety parameters and have limited knowledge of standards and systems certification. The bottled water producers have little idea what is the CS009:2005 standard and its application. No national SME processors have QA programs in place. For market stall owners that buy ice their quality/safety perception is based on air bubble content, the standard of ice transport is poor and selling is unhygienic often cutting the ice with rusty and unhygienic tools that lead to cross contamination.

109. Many farmers do not know what pesticides they are spraying, with no knowledge of harvest intervals and the inherent dangers of mixing cocktails. Pig farmers have in the past bought diseased pigs42 for fattening and fish farmers buying wild catch fingerlings running the risk of disease entry into their ponds43 because the wild catch fingerlings are cheap. Cashew farmers having little knowledge of post harvest practices leading to aflatoxin build up in the sample.

110. The average consumer on the street rightly or wrongly buys on price in markets that lack sanitation and does not consider food safety as an issue, so much so some local processors have cheaper less wholesome products for the national consumer as compared with the same product type for the international tourist. The Cambodian consumer also has misconception regarding certain post harvest procedures for example fish packed with ice and frozen meat are considered not to be fresh.

E. Standards and Standard Setting

111. ISC is developing standards and although they are approved and drawn-up they have not been officially endorsed by government and therefore cannot be sent to WTO for international recognition, this limits the purpose and advantage of using standards. At present few Cambodian processing companies understand the relevance of using standards and the utilization of a standard as a marketing and sales tool. There is misconception of what quality is and what is safety? Many processors believe that ISO 9001, which is a management tool, will provide a safer product which is not the case.

112. There is still a need for the development of more standards both voluntary and mandatory, at present ISC has elaborated a little over 70 standards this is in comparison to Thai Industrial Standards Institute that has now elaborated over 2,700 standards. For certain foods where standards do not exist, then for laboratory analysis Malaysian food standards are used. There is a need to develop further product and systems standards; (i) for products particularly those products that can be considered high risk foods for example ice, dairy products, mayonnaise, tomato sauce, vegetable oils, fruit juices and squashes; most of those products are imported into the country as caterers and retailers do not have

40 CP in pigs and chicken and KFC in Chicken. 41 CP utilizes the services of Thai Veterinary specialists and KFC contracts a Malaysian company to audit

sanitation procedures. 42 Pigs with Blue Ear from Viet Nam. 43 Also running the risk of buying fingerling of varies species and having the of fish predators in their ponds.

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confidence in locally produced products (ii) for systems SSOP (as a pre-requisite to HACCP) for good hygiene practices for slaughterhouses, and fishing boat owners and (iii) laboratory analytical procedures.

F. Accreditation and Mutual Recognition

113. To comply with SPS measures all animal, plant and food products have to conform to international recognized health and safety standards. The assessment of that conformity, which will include bacteriological and chemical laboratory analysis, has to be internationally recognized. At present there is no internationally recognized process/systems conformity assessment body (CAB) in Cambodia; however ISC does have trained auditors in HACCP, QMS and EMS and is certified for ISO 65 for operating product certification. As yet systems certification is not in place which signifies that any company that wishes to gain, for example HACCP certification has to contract a foreign company to undertake the work at international rates44.

114. For all Cambodian agricultural products (timber, rice, soybean, cashew nuts, cassava flour, fish etc.) destined to markets that adhere to SPS measures, the conformity assessment is now undertaken by the importer or buyer as part of their due diligence process, which can mean the importer/buyer finances the product or production unit certification.

115. It is therefore important that in the medium term CABs exist in Cambodia, to provide flexibility to exporters to gain their own certification and standards conformity requirements. In many countries the CABs are in the government and the private sector. Without national CABs that are not internationally recognized the one major implication is that testing reports or certification documents will not be acceptable to international trade partners with resultant adverse effects in penetrating export markets.

116. The CABs would need to be accredited by internationally recognized accreditation bodies; there is no accreditation body or board in Cambodia. In the long term if export volumes rise substantially and more national CABs enter the market there will be a need to establish an accreditation board or body recognized by the International Accreditation Forum (IAF).

G. Laboratory Issues

1. Laboratory Capability and Accreditation

117. For the issuing of phytosanitary and animal health certificates and the monitoring of hazards in agro-based product production, processing and retailing, laboratory analysis is required to identify SPS risks. As with systems certification the analysis and staff competence have to comply with internationally recognized standards, in this case ISO17025. As yet no government laboratory has gained certification; Institut Pasteur is claimed to have ISO certification for certain tests. This signifies that any company exporting and needs laboratory analysis will have to send samples to Institute Pasteur for certain tests or dispatch samples to international laboratories, Intertek 45 does provide that service however the costs are high.

118. Many Cambodian processors do not have their own QA facilities and rely on government laboratories for their quality control. Without taking account the lack of ISO17025 certification, the accuracy of tests in government laboratories can be considered 44 Assessors for one day can charge between $1,000 to 3,500 per day, with pre-assessment, initial assessment

and additional days a straight forward HACCP certification without non compliance issues would cost $10,000 -$20,000 not including airfares and subsistence.

45 Intertek does have an office in Phnom Penh but no laboratory, all samples received are dispatched to either Thailand or Singapore for analysis.

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spurious based on (i) limited inter-proficiency laboratory testing is undertaken to calibrate certain tests (ii) the lack of finance and availability of reagents and media to cover all tests required (iii) variable laboratory room temperatures (iv) glassware washing and (v) electricity voltage fluctuations, all will effect the number of tests performed and results.

119. The testing procedures and the range of tests required is increasingly more complex, particularly as food laws and SPS standards globally become stricter and the labeling requirements increasingly becoming a barrier to trade, in so much that many developing countries cannot or do not have the laboratory equipment to determine presence of Genetically Modified Organisms (GMO) toxins and mycotoxins (aflatoxins, ochratoxins, patulin, trichothecene (T-2) mycotoxin and DON) minute levels of stabilizers, preservatives, sweeteners, additives and colorants in food and feed or the presence or not of a range of antibiotics and pharmacological active substances in meat and fish products and pesticides in agricultural crops, many of which require an extensive range of reference samples.

120. The range of laboratory equipment required to cater for the ever increasing complexity of testing together with the need to detect minute levels of contaminants, will include gas chromatography, high performance liquid chromatography (pesticides and toxins) ELISA46 (mycotoxins) and atomic absorption spectrometry (pesticides etc), mass and atomic spectrometry (heavy metals, trace elements etc), electrophoresis equipment (plant and animal health) and Polymerase Chain Reaction (for GMO and virus identification) and the procurement of reference (standard) samples particularly for pesticide and toxin identification.

121. Although some laboratories have GC, HPLC and mass spectrometry equipment, all of which can test for pesticide residues in crops and food, not one laboratory has the capability to do so.

2. Test Standardization

122. The confidence in testing i.e. the uniformity of test results between Cambodian laboratories is necessary and inter-laboratory proficiency testing schemes will have to be carried out. Proficiency testing is where the right results are estimated by a fully calibrated laboratory and known by the body conducting the testing and in the case of Cambodia the laboratories will have to take part in international programs, i.e. utilizing the service of one internationally accredited laboratory in a third country in which the test has been fully calibrated. Limited inter laboratory testing has been undertaken with Institut Pasteur for bacteriology work and with Vietnamese laboratories under the EU-ASEAN Economic Cooperation Program on Standards, Quality and Conformity Assessments for food tests.

H. Legal Framework

123. The legal system is relatively new, drafting of new laws has been stepped up since the country’s membership of the WTO in order become compliant however in the “rush” to promulgate new laws and sub-decrees there has been limited oversight of their effects on the private sector, the overlap of responsibilities, enforcement and above all the cost implications of implementing the laws particularly when there are infrastructure and recurrent expenditure costs involved. Furthermore the process of elaborating a law or sub-decree rests with ministry staff that has limited legal or regulatory writing skills. It is very important when elaborating such a document that the person that makes the drafts will take into consideration (i) focus (ii) framework (iii) rights to appeal (iv) administrative powers (v) clarity and repetition (vi) enforcement and (vii) ease of compliance

46 Enzyme-Linked ImmunoSorbent Assay.

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1. Food Hygiene and Safety

124. Although LMQSPS covers some aspects of food control and safety, responsibilities and provisions are subject to interpretation depending on the government ministry view. There is no food control law in Cambodia and no ministry has been given a mandate to exercise a lead coordinating role in relation to food safety. There will have to be a traceability (farm to table) approach to any food safety controls and which ministry or agency has the mandate, at present there is a lot of ambiguity in the roles of the various ministries. A Prakas to “implement efficient and effective arrangements within government for food safety in Cambodia “has been drafted with assistance from EU and FAO consultants47, it needs to be considered and any amendments made if required. Any legislation will need to be equivalent to a number of EC regulations48, which will meet ever stringent import SPS requirements throughout the world.

125. Further to Ministerial responsibilities, sub-decree 47 relates to food hygiene and is very much process and regulatory related, which could be considered a food hygiene standard, even laboratory testing protocols are detailed for frozen foods and refrigerated foods with microbiological criteria. There is a need for a food law to provide general principles to provide risk analysis and obligations of the food trade which includes animal feed suppliers, reference to international standards, food safety requirements, traceability, private sector responsibilities (due diligence) and liabilities, emergencies and crisis management. Food safety is extremely emotive and ways to avoid hazards are becoming important. So much so that there is an obligation as part of the ASEAN Food Safety Improvement Plan (AFSIP) that ASEAN members should have by 2010 hazard avoidance procedures for food processors in the form of Hazard Analysis Critical Control Point (HACCP) incorporated in the member nations legal framework. The European Union introduced new food hygiene regulations on 1 January 2006 that requires all food businesses within the EU, except primary producers, to operate food safety management procedures based on HACCP principles and the USA will request importers to ensure that the foreign processing plants are HACCP certified and it has led to HACCP principles being incorporated in the Codex quality and food safety codes.

2. Animal, Plant Health and Fisheries

126. The Sub-decree on Sanitation Inspection of Animal and Animal Products will need to provide greater reference to disease surveillance and emergency procedures for disease outbreaks to harmonize with SPS measures relating to containment and buffer zones and notification. OIE World Animal Health Information Database (WAHID) interface provides guidelines and disease status for each country which can be used in any risk management clauses. All could be elaborated with an up-to-date veterinary law that is harmonized with international principles and that provide a basis for good regulatory framework for control of animal diseases.

127. The roles of MAFF Phytosanitary Officials and the Animal Health Inspectors were effectively withdrawn from the international border gates, entry points and seaports subsequent to the Sub-decree 64 being signed (9 July 2001). However, Sub-decree No. 15 (March 2003) on Phytosanitary Inspection has tasked MAFF to set up checkpoints subject to permission from the Government; and Sub-decree 16 (March 2003) on Sanitary Inspection of Animal and Animal Products provided the mandate to establish checkpoints where necessary, animal health officials are manning certain border checkpoints as an emergency response to Avian flu. A new Sub-decree to amend the Sub-decree 64 drafted by MoC is being reviewed at the Council of Ministers. The roles of MAFF are expected to be inspecting

47 Roles and Responsibilities of Ministers and Ministries in Relations to Food Safety. 48 854/2004 (organization of official controls on products of animal origin intended for human consumption);

882/2004 (official controls to ensure verification of compliance with feed and food laws, animal health and animal welfare rules) etc.

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bodies for the bilateral, international border gates, seaports and international airports gates. There have been some concerns from MAFF officials who were involved with the drafting of the sub-decree that the new sub-decree to amend Sub-decree 64 does not address compliance with the WTO requirements since it has focused mainly on revenue collection. The technical requirements for risks management on imported animal and plants are not envisaged in the new sub-decree.

128. Although Sub-decree 15 on Plant Quarantine (Phytosanitary Inspection) exists there is no law to comply with WTO measures and the Sub-decree deals solely with inspection and quarantine there is no reference to plant protection. A plant quarantine (or plant protection) law is needed that is harmonized with international principles in line with IPPC measures under the International Standards for Phytosanitary measures (ISPM) guidelines and these guideline should be referred to, at present the Sub-decree refers to “conventions” that provides a basis for a good regulatory framework for control of plant pest and the use of pesticides.

129. The fisheries law is needed that is harmonized with international principles and that provides a basis for a good regulatory framework for controlling food safety and health in fish and fisheries products. The Fisheries Law does not make reference to aquaculture when referring to out of season production which makes harvesting farmed fish technically illegal for parts of the year when it is close season for wild catch. Furthermore any new law needs to be drafted that allows for Cambodia’s fish and fish product export access to EU markets, FiA will need to have full authority throughout the supply chain in order to demonstrate full surveillance and traceability. The draft Prakas on the Hygiene of Fish and Fishery Products will not be sufficient, there is a need to develop a number of guidelines, product standards, monitoring and surveillance program etc, at this moment FiA as the CCA has only responsibilities from primary production to final stage of primary processing, which cannot satisfy the requirements of becoming a CCA to export to the EU that needs “boat to table” supply chain traceability and as before there is overlapping responsibilities between ministries particularly MoC, MoH and MAFF (FiA).

130. The Sub-decree on Slaughterhouse Management, Sanitary Inspection of Animal, Meat and Animal Products lays down parameters for management, procedures, licensing and fees. However for full implementation the Sub-decree is dependant on a series of circulars to be developed; (i) slaughterhouse standards and design (ii) licensing and bureaucratic procedures (iii) management practices and slaughterhouse regulations (iv) transport and marketing of meat (v) sanitary procedures and inspections (vi) quality control and the use of stamps (vii) inspection fees and (viii) incentives to inspectors to identify fraud. The Sub-decree is inclined towards process - Chapter 4 as Article 14 and Article 15 refers to protective clothing and hygiene. The reason for process description is understandable as there is no Sanitation Standard Operating Procedure (SSOP) developed in Cambodia as a standard for slaughterhouses, possibly wet markets and fishing boats. If SSOP exists reference would be made to it in the sub-decree. Article 21 stipulates renewal of licenses within 6 months of the Sub-decree’s endorsement, it is now 10 months since approval and there is no licensing mechanism in place which signifies all slaughterhouses are operating illegally. Finally the incentive is for inspectors appears to be geared towards identifying fraud, incentives to reward inspectors for hygiene and quality monitoring and non-compliance is also necessary

3. Standards, Accreditation and Certification

131. The draft Sub-decree relating to the organization and functioning of ISC provides for the establishment of four departments concerned with standards development and monitoring, accreditation and conformity assessment, together with registration. ISC is a standards body which has the role of elaborating, coordinating, revising, culling, amending, reissuing, interpreting and maintaining standards. According to international standards and

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guidelines such as ISO, IEC, IAF and ILAC. The activities involving conformity assessment, accreditation or recognition as well as consultancy services, should not coexist within the same organization. ISC not only is the standards body but can be the certification body (although not internationally recognized) for process standards such as HACCP, ISO 9001 and ISO 14001 this can be considered a conflict of interest when the standard to be certified is assessed by the organization that issued the standard in that particular country.

132. An accreditation body assesses the competence of a conformity assessment body to certify products and processes. The accreditation body has to be independent to be mutual recognized globally. Therefore if in the future Cambodia moves towards an internationally recognized accreditation body or board then the Sub-decree will have to be revised at a later stage. In the ISO system, even accreditation is completely separated from the standard-setting process and as a result ISO has no control over the use of its standards. Although conflicts of interest are avoided, this has the disadvantage that when verification is not thorough, the standard may become meaningless in practice and the standard-setting body has no means to improve the situation, therefore there are advantages and disadvantages. What has to take place is that advisors and consultants that work with farmers and enterprises to become compliant prior to certification should be fully independent and not in anyway be associated with the CAB taking the audit or assessment for that particular standard. At present the only qualified auditors in the country are part of ISC.

I. Staff Remuneration and Incentives

133. It is evident that for SPS measures much support is required in capacity building and infrastructure and to achieve greater SPS awareness. However if ADB was to support certain interventions the limiting factor for success is poor government staff remuneration49 and lack of incentives and little or no recurrent expenditure budgets in order to provide efficient and effective SPS analytical, inspection and monitoring activities. Unless and until ministries on the “front line” of monitoring, surveillance and ensuring SPS measures are complied with are able to implement merit-based recruitment, remuneration and promotion of staff, then all infrastructure investment and training will not resolve deficiencies in SPS measures. At present staff have to look for other forms of income for financial support and will look for gratification with little attention paid to their tasks. In direct relation to poor pay a number of laboratories are understaffed, and therefore running at low capacities.

134. The Government realizes that the lack of incentive through poor remuneration of key technical personnel is a limiting factor in achieving results and as such two legal documents have been promulgated (i) Royal Decree on The Common Principle of the Establishing and Functioning a Special Operating Agency (SOA) and (ii) Sub-decree No. 29 on the Implementation of Merit Based Performance Incentive

135. The Royal Decree on the Common Principle of the Establishing and Functioning a SOA (NS/RKT/0308/346 – March 2008) allows the setting up a Special Operating Agency (SOA) to improve the quality and the delivery of public services when and where needed. A SOA is an agency of a ministry or institution which has a separate structure from that of its parent ministry or institution in order that (i) procedures and bureaucracy in service delivery is reduced (ii) the SOA head has the right to manage both finance and human resources (iii) is responsible and accountable for the management and expected results to the parent ministry or institution and (iv) will have clear terms of reference, a management contract, and has the obligation to write annual reports. What is important is “user fees and the portion of user fees may be retained by the SOA”, this will provide budgetary sustainability. The establishment and operation of SOA can be made by the issues of a Sub-decree with the detailed TOR and Management Contract elaborated as annexes.

49 Inspectors and laboratory staff will receive $30 -50 per month and heads of department $60-90 per month.

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136. Sub-decree No. 29 (April 2008) on the Implementation of Merit Based Performance Incentive (MBPI) is a payment Incentive for civil servants who are working with projects of ministries and institutions but only those that are financed by Development Partners. MBPI is an incentive paid to civil servants in addition to base salary and other allowances who participate in the management, implementation and provision of technical skills involved in the implementation of strategic development priorities of ministries and institutions through agreements between Development Partners and the Royal Government of Cambodia. Each civil servant who is selected to work in a MBPI scheme shall (i) have an appointment contract that specifies objectives, activities, quantitative and qualitative outputs, and mechanisms for monitoring and evaluation (ii) be evaluated at least once a year according to the procedures specified in the appointment contract and (iii) benefit from capacity development. To gain MBPI status a proposal has to be submitted to the Council of Ministers of which the General Secretariat of the Council for Administration Reform acts as Secretariat, and the Ministry of Economy and Finance. Incentives to salaries vary between $450 - $1,800 depending on the position and responsibility of the employee. It is noted that MBPI schemes end when the financing from the development partners terminate or the project closes, which signifies MBPI is a “stop gap” initiative, another issue the purpose of this Sub-decree is only to harmonize fee structures for donor project staff.

137. Moves are taking place in a number of Ministries with the most advanced being FiA which has the support of donors who have introduced MBPI, whereby the donors have financially supported the increase of salaries and are committed to assisting increases in pay over a period of time, however the commitment reduces through time and the financial commitments are then the responsibility of MEF, Camcontrol is reviewing a Camcontrol Merits and Ethics Program (CMEP) and MoH Food Safety Bureau is considering SOA status.

138. It is noted in Sub-decree 15 Phytosanitary Inspection, Article 36 it stipulates rewards to encourage officers to do their work to be defined in a Prakas of MAFF and MEF.

139. Complementary to staff payments is the fees charged for inspecting and testing which are comparatively low and any fees charged have to be transferred to the national treasury. Recurrent expenditure is problematic and it is evident the laboratories that undertake water and food testing cannot carry out all the tests that they are capable of undertaking particularly Listeria, Salmonella, Staphloccoccus, Chlostridium etc because funds are not available to purchase media and reagents. Furthermore although equipment is available in some laboratories for pesticide, additives and heavy metal testing, no testing is carried out. For pesticide residue analysis because of the cost of reference samples and the number of reference samples required tests together with replacing solvents and gases, analysis is not carried out although all laboratories visited have HPLC and GC equipment.

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VI. OPPORTUNITIES AND PROGRAM INTERVENTIONS

140. Under the proposed Private Sector Development Program, Component 2 relates to Trade Policy and Trade Facilitation within which a number of SPS related interventions are recommended over the project’s four year period. For the purpose of selecting interventions the following parameters were utilized;

(i) The scope of SPS measures is wide (“farm to fork” and “boat to table”) and any interventions recommended must target specific activities that will have an impact in the supply chain, strengthening wherever possible existing activities.

(ii) Only support the ministries and their departments where there is a clear responsibility and no or very limited overlap within SPS measure’s framework.

(iii) Interventions recommended are not currently supported fully by any donors or lenders or are to provide continuity in previous donor activities and building on previous work.

(iv) They will be trade facilitation orientated but any trade facilitation work cannot ignore domestic SPS constraints which will indirectly affect exports. Domestic production and SPS measures cannot be ignored as few enterprises are 100% export orientated; many enterprises that need support do not export at the moment.

(v) For any project recommendations to go back to production is impractical and would take major resources, the interventions will target monitoring and surveillance at the processing and marketing (commercialization) stage to ensure hazards are identified and if possible removed.

(vi) Wherever possible interventions recommended are designed to become sustainable through supporting work that can be placed on a business footing.

A. Proposed Interventions and Activities

141. A full description of proposed project interventions and activities are detailed in Appendix 9 and TOR of the proposed experts and consultants are detailed in Appendix 10. The main objective of the proposed interventions is to ensure that there is internationally recognized laboratory capability and standards development in the country and the agro-based product producers and processors become fully complaints with greater awareness of all key players including consumers what are the implications of achieving conformity to SPS measures. The objectives of the interventions are detailed below.

142. Intervention A: To support key individuals in the ministries concerned with the drafting of SPS related laws and regulations to coordinate their activities, harmonise drafts with ASEAN member countries and ensure that the policy and legal framework has a national perspective, with particular emphasis on clearly defined delineation of responsibilities. At the same time, gain equivalence with bilateral and multilateral agreements.

143. Intervention B: Support to the laboratories that are concerned with food safety under MIME (agro-processing), Camcontrol (domestic wholesale and retail markets) and MoH Department of Drugs and Food (fish and fish product analysis) to strengthen the analytical capacity and capability and gain internationally recognized ISO17025 certification and mutual recognition for microbiology (food and water) chemical (heavy metals, pesticides, preservatives and colorants) and for TVB-N and TMA-N, histamines, biotoxins for fisheries. At the same time improve test accuracy through inter-proficiency laboratory testing. This intervention will also assist laboratories where possible to become commercially oriented, with the possibility of setting up Special Operating Agencies (SOA).

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144. Intervention C: To assist ISC in national product and systems standards development and to gain international recognition of those standards, recommending the further development of standards for (i) high SPS risk foods, (ii) Sanitation Standard Operating Procedures and Good Hygiene Practices for slaughterhouses wet markets and food processors and preparation outlets and fishing boats and (iii) analytical laboratory procedures. Supporting ISC to become an internationally accredited conformity assessment body for process systems under ISO 17021 guidelines. Financing the feasibility of establishing a National Accreditation Board/Body under ISO17011 guidelines, drawing up an action plan for the formation of an AB and to achieve mutual recognition in initially systems certification where there is national competence namely HACCP, ISO 9001 and ISO14000.

145. Intervention D: An awareness program to ensure that; (i) ISC works with processors so that they are made aware of the importance of standards, quality and safety and use standards compliance as a means of gaining comparative advantage, (ii) there is consumer awareness of domestic retail and market food safety issues by strengthening the monitoring role of Camcontrol and development of a food complaints hotline, (iii) MoH restaurant and hotel caterer inspection scheme is supported and used to advise consumers and tourists on safe eating places, through the use of a safe food" scheme and (iv) slaughterhouse veterinary inspectors and fishing boat operators are provided with SSOP awareness and GHP training respectively, once the standard has been developed by ISC.

146. Intervention E: To Support Fishery Administration (FiA) in becoming the central competent authority (CCA) to gain EU List 1 recognition under Commission Decision 97/296/EC by supporting the capability and funding of the staff to go into the field to train and advise, have the equipment to undertake rapid diagnostics and on the spot field analysis to strengthen monitoring and surveillance activities and through Intervention B support MoH laboratory to undertake analysis required for fish and fish products.

147. Intervention F: Support to the Plant Health Department to establish a pesticide residue analysis unit with existing HPLC and GC equipment and expand the capacity with further equipment procurement and to undertake a fresh produce pesticide residue survey in the market place and trace back to the origin any problems encountered. Together with assistance to the laboratory to provide support to fresh produce exporters that require maximum residual level (MRL) tests.

148. An estimated project budget is detailed in Appendix 11 and amounts to $9.3 million of which there is a project contribution of $5.3 million, a government contribution of $0.7 million and private sector beneficiary’s contribution of $3.4 million. The support for the aforementioned interventions includes consultancies, vehicles, running costs and support staff is estimated to be $1.9 million being part of the project contribution. The consultant mobilization plan is detailed in the Figure 2 below.

Figure 2: Consultant Mobilization Plan

Consultant PMInternationalTeam Leader -SPS Management 48

Micro and Chemical laboratory 18

SPS Legal Framework 3

Conformity Assessment and Accreditation 6

Compliance Economist 3Sub total 78

DomesticMonitoring 18

TOTAL 96

Year 1 Year 2 Year 3 Year 4

B. Justification

149. Compliance services are costly and any investment costs will not be recovered in the short term. They need to be established with the public good in mind considering both the cost and importance to the national economy. If solely taking in the context of supporting the present value of agro-based product exports that are SPS sensitive which is estimated to be $55 – $65 million per annum, then a number of the project interventions will not be justified. The potential and future trends in exporting have to be taken into consideration as well as domestic SPS issues; export orientated SPS measures cannot be supported in isolation.

150. A barrier to further export growth in SPS sensitive products such as fish and fish products, meat and livestock and certain cops (particularly rice and cashew) into the high value OECD country markets relates to sanitary conditions, analytical surveillance, the lack of certification and product traceability. The interventions recommended will address some of the aforementioned constraints.

151. Cambodia is committed to moving towards ASEAN harmonization in food safety and standards. Food safety is extremely emotive and ways to avoid hazards are becoming important. So much so that there is an obligation as part of the ASEAN Food Safety Improvement Plan (AFSIP) that ASEAN members should have by 2010 hazard avoidance procedures for food processors in the form of Hazard Analysis Critical Control Point (HACCP) incorporated in the member nations legal framework and the formulation of food standards to be adopted by Cambodia. Furthermore the GMS Economic Cooperation Program is also promoting (i) the adoption of regional safety standards for agricultural food products and (ii) the development of food safety protocols for wet markets. The interventions recommend supporting the development of international standards and the establishment of CABs in HACCP as well as the elaboration of SSOP’s for wet markets and processors.

152. With over 2 million tourists visiting the country during 2007 and the increase in numbers is expected to rise at rates in excess of 15% per annum, improved food and water hygiene and knowledge of contaminants in the food chain are important. It is expected that monitoring and surveillance of processing plants, wholesale and retails outlets and catering facilities will be improved through the interventions recommended leading to greater tourist confidence in food and agricultural products on the market place.

153. On average 300,000 cases of food and water borne diseases of the 15 - 49 year olds are reported annually as outpatient and inpatient cases which realistically are only 10% of all cases recorded. The loss of working days nationally can be estimated conservatively to be in excess of 1 million days. For a population of 14 million, Cambodia’s production efficiency is undermined by such figures. Reducing the number of cases will be achieved through interventions recommended.

154. With the majority of agro-based products processing companies not having quality assurance programs and not hazard avoidance certification there is a demand for increased testing and for the production units to become hazard avoidance compliant. It is estimated that the SPS sensitive industries, where frequent laboratory testing of products is required, would amount to 1,500 enterprises. But it is recognized that not all agro-based industries have been recorded, for example 161 bottled water companies are listed, there are at least 300 companies registered with MIME, therefore the figure for sensitive industries would be increased by at least 50%. The testing requirement for food and water testing would be at least monthly intervals indicating a demand for fully compliant agro-based production companies to be around 25,000 –

30,000 tests per annum, creating revenues of at least $1.25 million in year 3 or 4 of the project cycle.

155. Once hazard avoidance in the form of HACCP or SSOP was in the legal framework there would be a demand for certification in agro-based product processing units, wet markets and catering facilities for at least 3,000 certifications that could generate an income of approximately $3 million for the certification and depending on the number of non-compliance audits between $1.8 - $4.5 million and that figure would not include re-assessment costs.

156. Once the national SSOP and general hygiene standards are elaborated and approved then training can be undertaken by ISC staff which will assist in reducing hygiene hazards in slaughterhouses and fishing boats. For slaughterhouses this would be one step towards the export of meat products instead of live animals creating in-country value addition and with fishing boats one of the improvement “building blocks” required to gain list 1 addition for the Cambodia fishing industry to be able to export to EU.