Bio-security – Moving to a Risk Return Approach

1. Bio-security – Moving to a Risk Return Approach Quin Scalzo Managing Director Scalzo Food Industries President of the Food and Beverage Importers Association

2. Scalzo Food Industries Ingredient Supplier & Manufacturer Imports 3,000 containers annually from 30 countries using 18 international ports. Major Imports: Nuts (USA, India, Vietnam, China, Bolivia, Argentina) Edible seeds (India Mexico, China, Canada, USA, Peru) Dehydrated Vegetables (USA, EU, India, China, Chile) Vine Fruits (Turkey, Iran, USA, Mexico & Chile) Exports: Dehydrated meat, nuts & fruits to 10 countries (NZ, Korea, USA) Customers: global food businesses manufacturing in Australia and major retailers Accreditations: ISO 22000, British Retail Consortium (Global Standard for Food Safety) & HACCP

3. Bio-Security and Supply chain How does Bio-security fit into the international supply, logistics and commercial arrangements? • Major Aspects of Importing • Routine • Commercial • Customs • Transport Security • Non-Routine • Bio-security / Quarantine

4. Globally Integrated • Commercial – routine global integration • International banking protocols • International currency exchange protocols • Purchasing, supply and logistics conditions – banking, freight, commodity specific requirements / compliance (food safety, environment, international agreements), quality • International banking / commercial protocol insist on all conditions being met before the exporter gets paid.

5. Globally Integrated (Cont.) • Customs • World Customs Organisation where regulatory requirements, tariff classifications etc. the same around the world • Transport • International protocols apply world wide through: • International Maritime Organisation • International Civil Aviation Organisation • International Air Transport Association

6. Not Globally Integrated • Quarantine and Bio-security • Conditions are not internationally consistent • As conditions requirements vary from country to country there are no global or regional standards (apart from internationally agreed packing material standards, e.g. ISPM15) • Classification of Commodities • Commodity terms do not mean the same internationally (e.g. dairy product for permit purposes, cooked meat etc.)

7. Not Globally Integrated (cont.) • Interpretation of Conditions • Often easy to misinterpret ICON • Accessibility of Bio-security Information • Quarantine conditions are not displayed in ICON for all commodities (e.g. meat based flavours)

8. How to move to a Risk Return Approach? • The Beale Review outcome of working together very similar to the Nairn Review approach of a shared responsibility • Such an approach has to be underpinned by certainty, uniformity, consistency, transparency of all conditions, requirements across the whole supply chain (along the continuum of bio-security).

9. How to move to a Risk Return Approach (Cont.) • Recommendation 28 of the Beale Review: • “(b) reduced regulatory burdens for businesses that maintain an excellent track record of compliance with co-regulatory agreements; and • (d) Wider adoption of co-regulatory arrangements.” • Bio-security Authority: 1) identify risks, 2) provide options to manage risk and 3) work with import industry to identify most practical measures to meet Australia’s bio-security needs

10. Current management of risk • Pre-Border • Responsibility of importer to provide ICON import conditions to exporter • Exporter controlled goods preparation, loading, inspection, treatment and preparation of commodity and non-commodity AQIS documentation • Constant change to requirements • Goods subject to contamination at export premises, wharves, in container and in vessel • Border • Co-regulatory programs only for certain functions • Investment of major corporations to manage control of risk at border while still strictly monitored by AQIS inspection • Manual process still outweigh electronic options • Delays and Fees for AQIS procedures • Post Border • Co-regulatory management of storage premises • Risk control of rural destinations • Incidences of contamination/pest incursion often found by industry • Government Post border inspection often duplication of industry internal quality processes

11. Global management of riskVision for Future • Importer management of continuum of quarantine • AQIS accredited importer and service provider for offshore control of operations • Single database of global procedures and records of operations • Develop international (phytosanitary) biosecurity standards for the safe conveyance of traded commodities • Quality management of all process elements • Online tracking of each milestone from order placement, cargo arrival, and movement to final delivery including AQIS process points • AQIS management of risk through audit of quality operations rather than direct inspection • Option to automate through EDI implementation of documentation • Importer/Service provider KPI reporting against AQIS risk analysis

13. Some final observations • How realistic are the risk assessment of processed foods • Need for clearer conditions in ICON • Need for speedy permit processing procedures • Beale Review: Working Together • Billions of dollars change hands every day on commercial documents & processes: this should be recognised in management of bio-security risks