WEBINAR 2

What will be the ‘new normal’ for the Halal Industry?

Organised by: In Strategic Partnership with:

Whitepaper14 JULY 2020

A G E N DA

Disruptions to international trade during the coronavirus pandemic have majorly impacted producers of halal products. Making halal goods is a multistage process that involves multiple locations globally. This diverse supply chain has suffered substantial delays as each process undergoes stringent sterilization procedures according to local health and safety rules. Certification bodies have also found it tough to authenticate and certify halal produce in a shortened timeframe. In this webinar, halal industry experts discussed the challenges that businesses face, from production to delivery, and how they can overcome these difficulties and adapt to the “new normal”.

M O D E R ATO RRAFI-UDDIN SHIKOHFounder and CEO, DinarStandard

S E S S I O N PA R T I C I PA N T SSALEH ABDULLA LOOTAHChairman, UAE Food & Beverages Manufacturers Group

ASMA AHADDirector of Halal Market Development, Islamic Food and Nutrition Council of America – IFANCA

PROF. IR. SUKOSOHead of the Halal Product Assurance Agency of Indonesia - BPJPH

DR REHAB FARAJ AL AMERIDirector of National Accreditation Department, Emirates Authority for Standardisation & Metrology – ESMA, and Secretary General of the International Halal Accreditation Forum - IHAF

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S U M M A R Y P O I N T S• Halal pharmaceuticals and food were among the least

impacted industries by Covid-19, thanks to the strong support of regulators and government entities worldwide. Halal pharmaceuticals and supplement sales have grown as consumers seek products to enhance their immunity and improve physical health.

• The biggest risk lies in the meat and poultry industries, where there is lots of human interaction in confined spaces, not only at the point of slaughter but also during processing. The long-term impact of the wider economic crisis will depend on how well science manages the pandemic.

• The UAE Food & Beverages Manufacturers Group launched the UAE Food Platform three years ago to integrate the value chain and bring stakeholders together in a collaborative model, based on data sharing.

• Data is crucial for stakeholders in the food value chain. The question is how the industry can capture and digitise information and utilise it through blockchain technology, which is what the UAE Food Platform is trying to promote.

• Under Indonesia’s new Halal Product Law, many consumer products and related services that enter the country and are traded within Indonesia must now be halal certified. The compulsory halal labelling law will initially apply to food and beverages, while cosmetics, drugs and other consumer goods and services must comply by 2022.

• Covid-19 has had a significant impact on Indonesian micro and small enterprises (MSMEs) in the halal sector, which is why BPJPH has prioritized MSMEs in its economic support policies.

• The UAE’s halal accreditation platform IHAF has onboarded 38 members globally since its launch in 2016. It is now in the midst of adopting Organisation of Islamic Cooperation’s (OIC) SMIIC standards.

• There is a need for role models to promote the Islamic economy, raise the bar in terms of delivery, and represent the correct Islam as individuals, companies, and countries.

The Covid-19 crisis has affected the various sectors of the Islamic economy to varying degrees, with Islamic finance and Muslim-friendly travel being the hardest hit, and halal cosmetics and modest fashion disrupted to a lesser extent, according to DinarStandard. The least impacted sectors were halal food, Islamic media and recreation, and halal pharmaceuticals.

The three countries most affected by Covid-19 – India, the United States, and Brazil – also happen to be among the top four halal-product exporters, with exports worth $16.1 billion, $15.7 billion, and $15.1 billion respectively as of July 2020. This suggests the pandemic will have disrupted halal food value chain and halal trade.

W E B I N A R D I S C U S S I O N

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I M PA C T E D S E C TO R SAccording to Asma Ahad, Director of Halal Market Development at the Islamic Food and Nutrition Council of America (IFANCA), an organization dedicated to halal certification and promoting the halal industry, the disruption to halal exports varies considerably according to industry. “When we are looking at ingredients such as flavours, and products such as grain, we don’t see a lot of disruption. Many of the companies in the U.S. that export these products are used to disruptions. They are companies that existed for a long time, so they know when to anticipate risk and how to manage it.”

IFANCA has observed substantial growth in health and wellness areas. For instance, there has been huge interest among consumers, especially halal consumers, to find products including supplements and pharmaceuticals that can enhance their immunity and improve their physical health during the pandemic...

Similarly, Dr Rehab Faraj Al Ameri, Director of National Accreditation Department, Emirates Authority for Standardisation and Metrology, and Secretary General of the International Halal Accreditation Forum (IHAF), said pharmaceuticals and food were among the least-impacted industries due to strong regulatory and governmental support .

On the other hand, the greatest risk lies in the meat and poultry industries, where there is considerable human interaction in enclosed environments, not only at the point of slaughter but also during processing. “We have seen a lot of Covid-19 cases in meat and poultry plants. There is some disruption, and it is probably reflected in the price of those commodities, but the long-term impact of that will be dependent on science and how they are able to manage the pandemic,” explained Ahad.

If Covid-19 remains a threat, the meat and poultry industry will have to create alternative working scenarios to enable them to deliver products to key markets, which in turn, will determine how reliably they can supply clients.

“Despite the lockdown and disruption during Covid-19 across the supply chain, we still have the confidence to maintain and sustain the flow of halal goods, with the assurance that we are fulfilling the requirements. This is a success we need to celebrate. The crisis has taught us a lot, so now we have a kind of a leap in how we can ensure competency, using Covid-19 as a model for us to learn from,” explained Dr Al Ameri.

F O O D S U P P LY A N D T H E VA L U E O F D ATASaleh Abdulla Lootah, Chairman of the UAE Food and Beverages Manufacturers Group, and Managing Director of Al Islami Foods, noted that while Covid-19 has disrupted the overall supply chain, the UAE government has taken a proactive role to ensure food and medical supplies were not interrupted. For instance, the government created a committee for food security to determine the amount of food available and how long it could sustain the country. However, the information was difficult to find and required numerous visits to wholesalers, manufacturers, and retailers.

The UAE Food and Beverages Manufacturers Group launched the UAE Food Platform three years ago to integrate the value chain and bring together stakeholders into a collaborative model, based on data sharing. According to Lootah, Covid-19 has shown the enormous opportunity that data offers the food supply chain. The question is how to capture this information, digitise it, and utilise it through blockchain.

“Data is crucial for all stakeholders in the value chain. Governments will be able to regulate the industry based on the stock they have in the country, wholesalers will understand how much stock is in available so they don’t end up overstocking and liquidating their goods as expired products, and retailers and manufacturers will benefit. Imagine how much waste we have in the value chain. If we have this available as data, the whole value chain will benefit, and this is what we are trying to promote with our food platform,” explained Lootah.

Ahad noted that IFANCA was at the early stages of developing a blockchain-based system to facilitate the compliance process. The organisation is evaluating the potential of the technology, examining areas where it would make most sense to use.

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H A L A L C E R T I F I C AT I O N D E V E L O P M E N T SWhen it comes to auditing and certifying halal producers during the pandemic, especially those producing meat and poultry, Ahad said IFANCA has long-term and close relationships with many of its clients and so knows how these companies process products. These clients are usually well-versed with the certification process and that facilitates IFANCA’s work.

“Certification not only starts at the point of slaughter and manufacture of ingredients, but at the point of procurement. We have all the documentation that precedes the production or processing. Having that information upfront enables us to make vital decisions as to how to proceed in certification. There are a lot of different ways and methodologies, but it depends on the relationship we have with the client,” explained Ahad.

In Indonesia, which is home to the world’s largest Muslim population, businesses requiring halal certification must go to the Halal Products Certification Agency (BPJPH). Established in October 2017 under the Ministry of Religious Affairs and mandated by the Halal Product Law, BPJPH issues halal certificates through a one-stop-shop system.

Under Indonesia’s new halal law, many consumer products and services that enter the country and are traded within Indonesia must now be halal certified. According to BPJPH, the compulsory halal labelling law will initially apply to food and beverages, while cosmetics, drugs, and other consumer goods and services will have to comply by 2022.

Prof. Ir. Sukoso, Head of the Halal Product Assurance Agency of Indonesia (BPJPH) noted that Covid-19 has had a significant impact on applicants for halal certifications, especially micro and small enterprises (MSMEs).

Indonesia’s MSMEs have been especially vulnerable to changing consumer habits and are finding it expensive to digitize their business models, according to Prof. Sukoso. As the lockdown started, the agency saw a drastic decrease in these companies’ marketing activities . With Indonesia home to more than 58 million MSMEs, BPJPH has prioritized MSMEs in its policy to support economic activity.

In the UAE, the Dubai Islamic Economy Development Center and Emirates Authority for Standardization and Metrology established IHAF in 2016 as a joint initiative to harmonize accreditation practices in the global halal industry. Since then, the halal accreditation platform has onboarded 38 members worldwide, all of which are also members of peer organisations such as the International Laboratory Accreditation Cooperation (ILAB) and International Accreditation Forum (IAF).

“There is a tremendous need for an organisation that can manage, organise, communicate and collaborate (in) different national economies to ensure we have multilateral recognition and acceptance of halal certifications issued by different certification bodies across the globe. For that reason, the UAE took the initiative to establish IHAF to be the platform that can organise all activities related to accreditation bodies,” explained Dr Al Ameri.

In late 2018, IHAF signed a memorandum of understanding with ILAB and IAF to ensure that the UAE-based platform was not duplicating work. Moreover, around 50 percent of IHAF’s members are members of the Organisation of Islamic Cooperation (OIC), and five IHAF directors are also directors of the OIC’s Standards and Metrology Institute for the Islamic Countries’ (SMIIC) accreditation council.

SMIIC works to harmonise standards among the 57 member states of the OIC. The Turkey-based organisation published its latest editions of the OIC/SMIIC halal standards in 2019, including standards for Halal Tourism Services, Halal Food, and Halal Cosmetics. According to Dr Al Ameri, the presence of SMIIC is very important because it is harmonising standards across OIC countries and these standards can also be used by the rest of the world. She added that IHAF closely collaborates with SMIIC and that the UAE-based platform was in the process of adopting the SMIIC standards.

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T H E N E E D F O R R O L E M O D E L SSpeaking on the future of the Islamic economy, Lootah said there was a strong need for role models who can promote halal sectors and raise the bar in terms of delivery. “It is a big responsibility on people in the halal industry to provide hope for the 1.8 billion Muslims all over the world. We need to be a role model for these people so that they have something to look up to. With the perception of Islam in the world, we need to be our best to represent the right Islam as individuals, as companies, and as countries.”

“We have a great opportunity now because of social media to represent who we are, promote the Islamic economy and engage our consumers in what we are doing. These consumers will become your ambassadors and fight for your companies,” suggested Lootah.

One of the best role models in the Islamic economy was Haj Saeed bin Ahmed Al Lootah, former chairman of Dubai-based S.S. Lootah Group, which owns ventures across key industries including real estate, energy, financial services, and food and hospitality. Haj Saeed, who passed away on June 29, 2020, was instrumental in establishing the Dubai Islamic Bank in 1975, the world’s first Islamic bank, as well as Al Islami Foods in 1981 and the Islamic Education School in 1983, among many other leading companies.

“Haj Saeed was a unique role model in the halal industry. Halal business for him was how we dealt with people and how we practiced our values,” recalled Lootah. “He was the pioneer behind most of the halal industry we see today. He believed that to have a role-model society, we need to focus on three segments: education, to make sure people are continuously learning new things; food to make sure we are feeding people proper halal food; and financial services in terms of banking. These are the most important pillars in any society.”

HAJ SAEED BIN AHMED AL LOOTAH

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