Economic Impact of Aflatoxin Contamination in Groundnuts Production

Introduction

Aflatoxin is known in chemistry science as a mycotoxin that, thus a micro dangerous chemical substance produced as a secondary metabolites by Aspergillus Flavus and Aspergillus parasiticus fungi. These fungi are widely studied due to their effect on humans and animals, as well as the economic implications thereof (Galvez et al, 2003; Chinnan & Resurreccion, 2013; Kaaya, 2014).

Aflatoxin, like foot-and-mouth disease, hinders the export of African products and agricultural produce to lucrative European, US and rich Asian markets. Often the communities have little knowledge of the existence of such problems and their socio-economic impact. In general, the communities do not have solutions to the problems caused by these diseases, as they do not fully understand them.

Economic Impact of Aflatoxin Contamination in Groundnuts Production

Aflatoxin has been identified as the major problem in groundnuts trade for African countries who are losing about $760 million annually due to contamination of groundnuts (FAO, 1997; Kaaya, 2014).

Smallholder producers suffer the biggest losses both socially and economically, as they lose much of their produce to rotting and contamination caused by moulds and fungi. They are also prone to diseases caused by consuming higher level of aflatoxin.  About 40 percent of burden of diseases in Africa South of Sahara are related to consumption of high levels of Aflatoxin (Kaaya, 2014; Williams et al, 2004).

It is expensive to remove aflatoxin in contaminated groundnuts, raising processing costs. This promotes cost transfer behaviour amongst value chain actors. On the other hand, about 40 percent of disease burden in Africa is related to Aflatoxin contamination, affecting farm labour especially for smallholder farmers, reducing their time and cash investment in their farming businesses, and a threat to their health. Aflatoxin is linked to liver cancer, kwashiorkor, retarded growth in kids and animals, malaria and HIV. Due to pronounced health risks, many countries and trading blocs have imposed strict control measures on international groundnuts trading to safeguard their citizens and improve food safety. However, aflatoxin contamination can be reduced to acceptable levels through raising awareness amongst smallholder producers, investing in quality management as well as crafting and implementing favourable policies that encourage investment in aflatoxin mitigation.

Aflatoxin as a chemical substance is difficult to destroy without destroying the contaminated food. Once groundnuts are contaminated, it will be difficult to eliminate aflatoxin from them. Food processing usually requires low to medium temperatures of between 0 to 180° to cook or roast. Aflatoxin can only be eliminated at temperatures of over 480° (Kaaya, 2014).

Processing aflatoxin contaminated nuts into consumer ready products does not eliminate aflatoxin in groundnuts. If the groundnuts have high levels of contamination, then the end product will also contain higher levels of toxic substances. This in turn exposes the consumers of such products to higher levels of intoxication by aflatoxin and increases the risks of contracting aflatoxin related diseases.

The major economic effect of aflatoxin contamination in groundnuts to smallholder groundnuts farmers in developing countries, including Mozambique is poor marketability of their produce in international markets and poor prices in domestic markets that lead to lower net income to producers and other chain actors.

Taking the case of Zambia, groundnuts is considered one of the most important legumes cultivated on larger farm land area and as a replacement cash crop in place of tobacco that is now facing more stringent regulation in the international markets. Groundnuts are considered a very important source of protein for lower income families in both urban and rural areas, as well as smallholder producers (Times media group, September, 2014). However, higher levels of aflatoxin contamination hinder the exportation of surplus or tradable groundnuts to lucrative markets. Like in Mozambique, less than 5 percent of groundnuts produced are controlled for aflatoxin in the domestic markets, exposing domestic consumers to higher negative health risks (Times media group, 2014). Lack of control by the ineffective Bureau of standards in Zambia and Mozambique means that aflatoxin contaminated ready-to-eat products, floods the domestic markets in both countries. These products can be locally produced or imported.

Aflatoxin contamination lowers the net revenue of all market participants, in an effort to reduce contamination and improve quality of the groundnuts available for processing. This is caused by purchase price dynamics and sorting cost, as in most cases off grades are discarded. Poor post harvesting practices by smallholder producers increases the risk of purchasing sorted but aflatoxin contaminated nuts that will require further processing. The risk factor forces most traders to buy unsorted nuts at lower prices and do the sorting and grading. Higher costs often lead the traders to engage in cost shifting behaviour (Economic Research International, 2012).

Price shifting behaviour often affects two ends; the producer-end through lower prices for their produce and the consumer end through higher product prices due to higher production costs. However, in organic produce marketing linked to ‘fair trade’ markets (often), smallholder groundnuts farmers get higher prices and a premium for supplying quality graded produce that are traceable  back to the producer to certify for quality compliance. Consumers consider organically produce food to be safe and are often willing to pay a higher price for the right quality.

Recommendations

To improve competitiveness in African groundnuts value chains, a number of sticking issues affecting both domestic and international trades must be resolved. The most critical issues border on raising awareness of aflatoxin contamination on groundnuts and the socio-economic impact to smallholder producers.

Smallholder farmers’ awareness and understanding of aflatoxin issues and how they affect their livelihood is critical to aflatoxin mitigation. At present, only 5 percent of groundnuts smallholder producers are knowledgeable on the effect of aflatoxin to their health and rural economies. Health issues can be a driver of behaviour change amongst smallholder farmers, especially aflatoxin links to liver cancer and HIV, two well-known killers in rural Mozambique (SATH, 2014).

A three pronged approach to reduce the impact of aflatoxin contamination can help reduce the socio-economic impact on the whole chain actors. The approach may focus on raising awareness amongst smallholder groundnuts farmers and equipping them with post-harvest knowledge to reduce contamination and infection throughout drying, sorting, selecting, de-shelling and storage. Post-harvesting handling techniques must also be perfected by transporters, traders and processors of consumer ready goods.

Several measures can be applied to reduce contamination, including good agricultural practices, control of moisture and temperature in storage. Total Quality Management toolkit, also known as the ‘Blue Box’ has been successful used by Intertek on World Food Program consignments to keep aflatoxin contamination to desired levels (SATH, 2013; Intertek, 2012).

Quality control by traders and processors is critical in improving aflatoxin compliance in groundnuts. If all trades enforce quality guidance in their business processes including buying policies and practices. It is paramount to incentivize quality compliance when purchasing groundnuts from smallholder producers. This will complement the knowledge empowerment programs aimed at raising awareness of the existence of aflatoxin and its socio-economic impact to smallholder producers and all other actors in the groundnuts value chains.

Governments and regional regulatory institutions must critically look at policy measures that can be used to incentivize or encourage investment in aflatoxin mitigation, improvement of trading in aflatoxin compliant groundnuts, both internationally and intra-regionally. This might include harmonization of aflatoxin maximum acceptable levels applied in the region, as well as procedures for sampling and testing. Administrative documentation can also be simplified to improve free flow of groundnuts in the region.

Policies by individual countries might be used to incentivize private sector companies’ engagement in aflatoxin mitigation by investing in the whole groundnuts subsector to become aflatoxin compliant. This will speed up sector-wide compliance and improve competitiveness in both domestic and international markets. Holistic aflatoxin mitigation, though it will not completely eliminate contamination, will reduce the level of contamination of acceptable regulated levels that reduces health risks and increase Africa groundnuts acceptability in international markets. This will boost Mozambican and Zambian economies through increase forex inflows from exports.

Conclusion

Aflatoxin contamination is the major challenge on groundnuts trading by African countries that produce about 95 percent of the world groundnuts crop. In Southern Africa, in particular Mozambique and Zambia, there is poor awareness of aflatoxin contamination and its socio-economic effects to smallholder farmers. Contaminations that emanate from farm gate affect the whole supply chain. However, more contamination occurs on post-harvest handling and management of groundnuts at all levels of the supply chain. The more the produce exchanges hands and change storage conditions, the more the produce is exposed to contamination risks.

Contaminated nuts fetches less in local markets and are not accepted in the international markets due to strict control levels by the individual countries and trade blocs like the EU and South Africa. Reducing contamination and correct management of the crop at both farm levels will increase the value of the crop, acceptability and quality of final products produced from safer groundnuts. Farmers can do more by improving their farming practises and post-harvesting handling of their produce.

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