IFC Standards Advisory in Europe and Central Asia

Upgrading food safety

in your business:
a Win-Win for your bottom
line and your customers
In partnership with
the Austrian Ministry of Finance
Why is food safety important
for your business?
Food processors face increasingly more challenges
Why do you need a modern food safety system?
% respondents, large Ukrainian food processing companies
Source: Telephone poll results, IFC, 2010
Consumers care increasingly more about safety
% of respondents-consumers
Source: Deloitte Development LLC, Consumer food safety survey results, 2011
Increasing competition Consumer demands
Price pressures Vague legislation
Retail & supply
chain globalization
Media scandals
Food
processing
company
38 % 37 %
31 %
To increase production
efficiency
To improve risk
management
To access new
markets and export
57 %
65 %
90 %
Believe the number of
food-related recalls has not
decreased compared
to 2008
Stopped eating a
particular food, temporarily
or permanently,
as a result of a recent
recall
More concerned
about the food
they eat than five
years ago
Researchers speak:
Can you be 100% sure that your
employees care about hygiene?
97 % of food poisoning
outbreaks involve food handler
error
Source: Howes et al., 1996
Source: Clayton, D., Griffith C.J.
(2004) Observation of food safety
practices in catering using notational
analysis. British Food Journal,
106(3): 221-227; 29 Businesses;
observation of 31,050 actions
At most enterprises even the
very basic practices are performed
incorrectly
Handwashing
Correct
Incorrect
Cleaning
practices
14 %
31 %
86 % 69 %
Researchers speak:
The challenge is clear focusing
on food safety programs that pro-
tect your brand and your consum-
ers is not an option; it is a key to
survival.
Source: Deloitte Development
LLC, Consumer food safety survey
results, 2011
Numerous studies have found that
Standards are second only to Capi-
tal Accumulation in their contribu-
tion to growth.
Source: World Bank, 2007
HACCP* (Hazard Analysis and Critical Control Points) food safety management system build on
risk-based approach and potential hazards analysis and prevention along the production process
Why does my company need a
food safety system?
Traditional food safety control
Focuses on the end product
Reveals problems after they have occurred
Is based on the outdated approach that falls short of the present day international
requirements to food production
HACCP
*
-based food safety management system: establishes safeguards to
prevent, eliminate or reduce potential hazards from entering the product at the time of
manufacturing, storage and distribution.
What is a food safety standard?
Although standards are numerous all of them have a common foundation: the
prerequisite programs (basic requirements to sanitation, hygiene, manufacturing etc.),
which typically are the minimum mandatory requirements posed by the government
to food businesses. On the basis of these requirements the walls of the food safety
building are built, and a HACCP-based system is designed and implemented. The roof
of the food safety building may vary depending on the particular certification standard
selected by the business.
Infrastruc-
ture and
facilities
Premises
and
equipment
Transporta-
tion and
storage
Personal
Pest
control,
wastes
Cleaning
and
sanitizing
Product
recall
Based on GMP, GLP, GAP
HACCP System
Additional requirements from different standards
(IFS, BRC, IFSSC 22000...)
Legal requirements
Selected by the Producer
What is my role as a manager?
Unless fully supported by top management, no food safety management system will
be effective.
A food safety management system is first of all includes
Managements commitment
Availability of resources
Adherence to food safety practices
Empirical evidence suggests that the most difficult thing in building a food safety
management system at a company is to change the employees mindsets. Thats
why, key to success is you as the business leader: your commitment, persistency and
systemic approach to change.
What is the managers responsibility
Planning Procurement of resources
Goals setting Creation of HACCP team
Policy development Allocation of resources
Personnel awareness Procedures in place
Analysis Setting deadlines
Typical mistakes made by managers working with consultants
Let them do all the work and distract my employees as little as possible
We dont care about what they are doing, we need the certificate
All my people are busy, I dont have money or time to do that
We will never be able to implement all their recommendations
Experience of successful enterprises
Deadlines clearly set, scope of work and deliverables described in agreement
Segregated roles of consultants, management and staff at the time of system imple-
mentation
Understanding and recognizing the consultants role: We help you but dont do the
work instead of you inside
Appreciation that the systems are sustainable only if they are developed with active
involvement of the staff
Mutual understanding between consultants and owners/management of the goals
and objectives of the anticipated changes
Seeing future benefits and advantages of food safety systems for your business.
Source: IFC training materials for food safety consultants
Director speaks:
Within a few months of implementing
the food safety management system at
our company the results were already
visible. Improved controls and extensive
training of personnel have resulted in
better qualified and more effective
personnel. But getting certified accord-
ing to the requirements of international
food safety standards is not the end
of the journey. We need to improve
continuously. We look to the future
with great expectations. Our sales rev-
enue has increased by 17 percent over
the past few months. We have gained
access to new markets, including coun-
tries in the European Union, as well as
increased exports to the United States.
Akaki Tsopurashvili,
Director, Shumi
(wine producer, Georgia)
Director speaks:
Food safety is consumers major
requirement today, thats why
implementation of a food safety
management system was our goal
from the outset. Not only will it
enable us to convince the consumers
that our food is safe, gain their
loyalty and trust, it will help us to
expand our export geography,
strengthen our presence in the
domestic market, increase sales,
and improve our competitiveness in
general.
Sergey Dobudko,
General Director, Morozprodukt
(ice cream and desserts production,
Belarus)
How will my company benefit from
food safety system?
A prudent manager planning investment into his business, is likely to ask in the
first hand: Whats in it for me? How much will it cost? How fast will these costs
pay back?
Source: IFC interviews
Success Story: Morozproduct
Morozproduct is Belarus second largest ice-cream and deserts pro-
ducer and the leading importer of frozen foods.
In August 2012, Morozproduct engaged with IFC to help it implement
an internationally-recognized food safety management system based on FSSC 22000.
Once the new production floor is fully operational and certified according to FSSC 22000,
the company will be able to
Create new jobs
Become the most technically advanced facility among Belarus ice-cream producers
Become the largest ice-cream producer in the Republic of Belarus
Break into European markets
Increase it presence in the market of the Customs Union
Become an ice-cream supplier for the Olympic Games in Sochi in 2014
Food safety management system as a business
tool to improve competitiveness of your business
Growing sales
Trust of consumers and
stronger position in the
current market
Increased sales through
retail chains
Access to new markets
Cost reduction
Greater efficiency and business control,
standardization of procedures and controls
Reduced waste and re-work expenses
Enhanced communications, increased
worker morale and loyalty
Risk minimization
Better protected brand
Better overall manageability and efficiency of business
Investors interest
How much does food safety system
cost and when will it pay back?
The stronger food safety culture at the enterprise, the easier, cheaper and faster it will
take to build a full-fledged food safety system. As a result, better market position,
stronger brand and thoroughly managed risks make a company much more attractive
for investors.
Main categories of costs
1.
Introduction of pre-requisite programs
(start-up costs, fixed costs for new equipment, renovation of premises)
2.
Development and implementation of HACCP action plan
(costs of developing HACCP action plan, staff training,
evaluation of HACCP plan)
3.
Maintaining HACCP system (costs of record keeping and verification
of HACCP plan, corrective actions)
Example: In dairy industry it is expected to cost
HACCP plan development and implementation in Ukraine is around $5,500-$6,500.
Operational costs in the first year are about $6,500.
Pay-back period
Usually one to two years, as evidenced by international practices of implementing the
systems in the dairy industry.
Main categories of benefits
1.
Increase in revenues (access to new markets, expansion in retail
chains)
2.
Decrease in overall cost (better management, staff motivation and
responsibility, streamlined production process)
3.
Increased product stability, shelf-life and product characteristics
(lower wastage and spoilage)
Source: IFC survey findings: Implementing food safety management systems in
Ukrainian food processing enterprises. A cost-benefit analysis, 2010
Director speaks:
Although we are still in the process
of implementing the system,
we have already appreciated its
benefits. The amount of defected
product at the enterprise has fallen
from 1 percent to 0.1 percent,
enabling us to save $25,000
annually. They say that HACCP is a
ticket to exports to the developed
market. Our company, though,
does not plan to break into external
markets, rather, we are getting
ready to withstand the increased
competition due to growing imports
into Ukraine.
Vladimir Zavadovsky,
General Director, GALS LTD (juices
and canned fruit and vegetables,
Ukraine)
How can food safety
increase my sales?
A food safety management system helps companies attract new customers and
increase sales.
1.
A HACCP-based food safety management system is the minimum
requirement for export to the EU and other major markets
2.
A food safety management system increasingly required by large
retailers in Ukraine for suppliers, particularly private label suppliers
3.
Consumers increasingly expect safe products
More and more companies build their brand on food safety and reach
out to new customers
Retailer speaks:
Food quality and safety assurance
is one of the key criteria in
our cooperation with supplier
companies. In its work METRO
relies on international and local
standards. We expect from our
partners an equally responsible
attitude. Food safety management
systems are the best evidence that
the company has done everything
possible to safeguard our
customers from the risks of food
contamination.
Jacquot Boelen,
Managing Director,
METRO Cash & Carry Ukraine
Success Story: Georgian Bakers Ltd
Georgian Bakers Ltd. was founded in 2008. The company pro-
duces confectionary products including baby food cookies. This
is a young growing small business employing 56 employees with
annual sales of about $1.3 million during 2011.
Currently the company is selling its products throughout retail
stores across Georgia, with immediate plans to export to neigh-
boring countries. Last year the company management has committed to introducing
good of best international food safety practices by implementing Global Markets pro-
gram basic level requirements at the company. The past year proved to be very suc-
cessful for the company in terms of reaching more customers and increased sales by
over $600,000.
Director speaks:
Looking at our performance during the last year resulting in 50 percent increase
of sales, I feel that the time, efforts and resources we invested in improving food
safety practices have paid back in a significant way.
With improved personal hygiene, cleaning and sanitation, storage and traceabil-
ity practices combined with more systematized documentation and well trained
personnel we feel more comfortable approaching wider group of customers,
entering new markets, and expanding our business.
Michael Parulava,
Director, Georgian Bakers Ltd (confectionary, Georgia)
Success story: Globino
A Ukrainian company Globino has been cooperating with IFC
to improve food safety of its product for two years. In this
period the company invested around $140,000 in upgrading
its food safety management system and completely revised its approaches to
customers safety. The investments paid back in just one month!
In just a year, their sales have grown by 10 percent ($3.8 million in money terms),
productivity increased by 30 percent and operational efficiency by 20 percent. A
total of 8,000 new retail points were opened
Our company enjoyed tremendous commercial benefits from the introduction of
the food safety management system. These include, primarily, work with large retail
chains, and further access to international markets. Also, huge economic efficiency
as a result of optimized production processes and inputs flows. In short, the company
moved to a higher level, says Oleksander Bondarenko, Director of Globino meat
factory.
Globinos dedication to better food quality and safety sparked IFCs interest which led
to a $25 million investment into the company. This enabled Globino to become the
unrivaled leader in the industry and create 600 new jobs.
How can food safety system minimize
my risks and attract investors?
In the food business, safety threats can result in instant market loss. Food safety inci-
dents can destroy an entire business that you have developed for years. Investors realize
this very well. For them, a food safety management system is the sign of a sound and
sustainable business and the evidence that risks are identified and controlled.
Director speaks:
Partnership with IFC means a lot for us. Globino is a quite young company
and we strive for further growth by raising our operational and manufacturing
quality standards. Thanks to IFC consulting help, we are actively upgrading our
food safety management system. IFC became our reliable partner, then soon
became our strategic investor.
Olexander Bondarenko,
Director, Globino meat factory (Ukraine)
Investor speaks:
While contemplating an investment
the investor assesses various risks. A
food business operating a modern
food safety management system
sends a clear signal to the investor that
the company treats organization of
production processes responsibly and
makes efforts to minimize operational
risks. As experience shows, gaining
customers trust may take a long time,
and one may lose everything in a wink
of an eye, especially,
in the food business.
Rufat Alimardanov,
IFC Country Manager for Ukraine
and Belarus
IFC Standards Advisory in Europe and Central Asia offers to businesses that wish to
implement a food safety management system:
1.
A special program called Global Markets, developed by the Global
Food Safety Initiative, to guide smaller food businesses through step-
by-step implementation of modern food safety management systems
2.
Audits and technical reviews including full-scale action plan and
recommendations based on audit results
3.
Complex consulting support of all implementation stages from audit
results to preparation for certification

Developing Agribusiness in ECA
Seventy percent of the worlds poor live in rural areas and agriculture
represents the single most important source of employment in emerging
markets.
IFC has made agribusiness a global priority because of its development
impact and strong role in poverty reduction.
Agribusiness is also a priority for IFC in Europe and Central Asia where
countries such as Ukraine offer tremendous potential to become
leading producers and exporters of agricultural products.
IFC supports businesses across the entire agricultural supply chain,
working with farmers, producers, traders, and consumers.
As of June 30, 2012, IFCs agribusiness portfolio in Europe and Central
Asia stood at $1 billion.
IFC advisory programs are helping to strengthen agricultural supply
chains, increase food safety, develop agri-insurance, and improve
access to finance for farmers and entrepreneurs.
IFC clients speak:
IFCs HACCP Manual and the training
were very useful even for a company
like ours, which already has a function-
ing HACCP system in place. Sector-
specific templates used during the
training were very practical and helped
us reassess and identify improvements
to our Hazard Analysis and HACCP
Plan.
Madona Nozadze,
HACCP Leader, Nozadze-Gantiadi
(poultry producer, Georgia)
Our staff is now on board: they see
that their paychecks have increased
since our sales have increased. Our
people are happy!
Nadezhda Olhovaya,
Director, Olhovyy
(bakery company, Ukraine)
How can IFC help me?
Program participants speak:
While there was initial skepticism
in the program at our factory, we
are now believersThe program
has allowed us to continue selling
to METRO [Cash & Carry], which
is a very important partner for
us, particularly since METRO is
expanding.
Lyudmila Chernous,
Deputy Director, Kolos
(meat company, Ukraine)
Welcome to Global Markets Program
A unique new program, designed by the Global Food Safety Initiative* on the basis of
requirements of international standards and global retail chains, is targeted at food op-
erators from countries in transition.
The program consists of two levels: basic and intermediary. This step-by-step approach
helps businesses achieve modern international standards at a minimum cost.
The Program has been successfully tested in Ukraine and other countries worldwide, and
proved to be highly effective.
Benefits of the Global Market Program
1. A step-by-step approach enables businesses to focus on the short list of clearly de-
fined problems and quickly address them (each level of the Program lasts four to six
month on average)
2. This all-purpose program is suitable for enterprises of various levels and offers
optimal price-quality ratio
3. Program addresses typical challenges faced by businesses of the region (trace-
ability, crisis management, good manufacturing practice) and helps achieve the re-
sults quickly, even when starts from zero. Rate of compliance with basic level food
safety requirements at businesses that graduated the program, has risen on average
from 49 to 93 percent
4. Partnership with retail chains transforms into participating businesses com-
mitment to the program (METRO Cash and Carry is IFCs program partner since 2010
in Ukraine, and since 2012 in Kazakhstan). IFC takes care of organizational aspects and
supervises the program delivery.
InitiaI diagnostics
day day day 2J days
On-site
consuItations
FinaI
assessment
of the enterprise
Training
*
Global Food Safety Initiative (GFSI) is a non-profit foundation, managed by the
Consumer Goods Forum, that was set up in 2000 to pursue continuous improvement
in food safety management systems, cost efficiency in the supply chain and, above
all, safer food for consumers worldwide.
www.mygfsi.com
Program participants speak:
Participation in the program has
significantly contributed to two-fold
increase of sales in our company. We
are now convinced that food safety
is our competitive edge. We revealed
other directions of business develop-
ment, for example, waste recycling.
And now, what has always been an
environmental challenge for us, will
become a source of revenue. We have
reformatted relations with retail chains
and customers. When we tell that we
have graduated the Global Markets
program, we are treated as a solid
company.
Oleksander Miahivskiy,
Business Development Manager, Koro-
bivsky (meat and poultry, Ukraine)
Program Agenda
Basic Level
Section A:
Food Safety Systems
Section B:
Good Manufacturing
Practices (GMP)
Section C:
Control of Food
Hazards
Specifications
Traceability
Incident Management
Control of Non-
conforming Product
Corrective Actions
Personal Hygiene
Facility Environment
Product Contamination
Control
Cleaning and Disinfection
Water Qual
Control of Food
Hazards
Control of Food
Allergens
Intermediate Level
Section A:
Food Safety Systems
Section B:
Good Manufacturing
Practices (GMP)
Section C:
HACCP and
additional
requirements
Management
Responsibility
Document Control and
Procedures
Complaint Handling
Control of Measuring
Devices
Product Analysis
Supplier Qualification,
Approval and Supplier
Performance Monitoring
Training
Facility Layout, Product
Flow and Equipment
Facility and Equipment
Maintenance
Staff Facilities
Waste Management
Transport and Storage
HACCP
Food Defence
Contact us to learn more about participation in the Program:
In Ukraine IFC: tel. +38 044 490 6400
Yury Zvazhenko, yzvazhenko@ifc.org
In Georgia IFC: tel. +995 (32) 223 43 01/02/04/05
Natia Mgeladze, nmgeladze@ifc.org
In Kazakhstan IFC: tel. +7 727 298 0586
Assel Choibekova, achoibekova@ifc.org
Metro Cash and Carry: tel. +7 727 330 3800
Lyazat Sarbassova, lyazat.sarbassova@metro.com.kz
Contacts:
IFC Standards Advisory
in Europe and Central Asia
1 Dniprovsky Uzviz, 3rd floor
Kyiv 01010, Ukraine
Tel.: +38 044 490 6400;
Fax: +38 044 490 6420
2012
In partnership with the Austrian Ministry of Finance (MOF)
External Economic Program
MOFs external economic program supports the development and transition process in
Southeast and East Europe. The program aims at promoting sustainable investments to
support economic growth, create jobs and improve the business environment. Supporting
local and foreign investments helps to improve the livelihood of people and the progress
towards a stable and prospering region. Our goal is to contribute to private sector growth
through capacity building, SME support, facilitation of investments, and building business
partnerships between Austrian and local investors.
IFC, a member of the World Bank Group, creates opportunity for people to escape
poverty and improve their lives. We foster sustainable economic growth in developing
countries by supporting private sector development, mobilizing private capital, and
providing advisory and risk mitigation services to businesses and governments.
This brochure has been produced by IFC through its Standards Advisory Program in
Europe and Central Asia
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