Rice fortification: a comparative analysis in mandated settings

Ann. N.Y. Acad. Sci. ISSN 0077-8923 ANNALS OF THE NEW YORK ACADEMY OF SCIENCES Issue: Technical Considerations for Rice Fortification in Public Health Rice fortification: a comparative analysis in mandated settings Carmen Forsman, 1 Peiman Milani, 1 Jill A. Schondebare, 2 Dipika Matthias, 1 and Christophe Guyondet 3 1 PATH, Seattle, Washington. 2 University of Washington, Seattle, Washington. 3 Global Alliance for Improved Nutrition, Geneva, Switzerland Address for correspondence: Peiman Milani, PATH, P.O. Box 900922, Seattle, WA 98121. pmilani@path.org Legal mandates can play an important role in the success of rice fortification programs that involve the private sector. However, merely enacting mandatory legislation does not guarantee success; it requires a coordinated, multidimensional cross-sector effort that addresses stewardship, develops an appropriate rice fortification technology, enables sustainable production and distribution channels through a range of private-sector players, ensures quality, generates consumer demand, and monitors progress. Furthermore, economic sustainability must be built into the supply chain and distribution network to enable the program to outlast government administrations and/or time-limited funding. Hence, mandates can serve as valuable long-term enablers of cross-sector mobilization and collaboration and as catalysts of civil society engagement in and ownership of fortification programs. This paper compares the rice fortification experiences of Costa Rica and the Philippines two countries with mandates, yet distinctly different industry landscapes. Costa Rica has achieved national success through strong government stewardship and active market development key elements of success regardless of industry structure. With a comparatively more diffuse rice industry structure, the Philippines has also had success in limited geographies where key stakeholders have played an active role in market development. A comparative analysis provides lessons that may be relevant to other rice fortification programs. Keywords: rice fortification; fortified rice; micronutrient deficiencies; Philippines; Costa Rica Introduction Micronutrient deficiencies contribute substantially to the global burden of disease, dramatically affect the physical and cognitive development of children, and reduce the productivity of entire populations. Fortification of staple foods is considered one of the most cost-effective and least disruptive strategies for addressing micronutrient malnutrition. 1 A key feature of food fortification is that it does not require people to change their traditional diet; instead, they are able to receive a significant portion of their recommended daily intake of micronutrients by consuming foods they already eat each day (see Appendix I in Supporting Information for definitions of fortification-related terms). For a large [The copyright line for this article was changed on August 1, 2014 after original online publication.] percentage of the developing world, rice is the main staple food. Many countries have long used fortification to increase the micronutrient content of foods, helping to bridge gaps in dietary intake. For many staple food producers, it is quite straightforward to add, for instance, iodine and iron to salt; vitamins A and D to margarine; vitamin D to milk; and vitamins B1, B2, B3, and B9, and iron to flour. Effective technologies for fortifying rice, however, have only become available relatively recently and have also been challenged by a fragmented rice milling industry base. Consequently, fortified rice markets are relatively nascent and the optimal means of market facilitation are not well understood. However, several countries, including the Philippines and Costa Rica, have had longstanding experience with fortified rice from developing legislative mandates to creating market incentives for encouraging doi: 10.1111/nyas.12453 67

Rice fortification: a comparative analysis Forsman et al. private-sector participation. A comparative analysis allows us to better understand the effectiveness of different strategies and helps to draw out important lessons for guiding rice fortification implementation efforts in other countries. Methodology The authors conducted 17 in-person interviews: eight in Costa Rica and nine in the Philippines. These interviews, with representatives from key public- and private-sector organizations involved in rice fortification, form the majority of the information used for this comparative analysis. A list of the key organizations can be found in Appendix II in Supporting Information. In addition, secondary research was conducted by analyzing key policy documents related to rice fortification legislation in both countries. Comparing landscapes This paper contrasts the experiences of fortifying rice in Costa Rica and the Philippines two countries with mandatory rice fortification laws, yet distinctly different industry landscapes. The experience in Costa Rica exemplifies the benefits of centralization and private-sector support, while the experience in the Philippines reveals the challenges of a decentralized industry and shifting multisector support. The defining characteristics for each country are shown in Table 1. 2,3 Costa Rica has two private fortified grain manufacturers (FGMs), one that uses a coating technology and another that uses a cold-extrusion technology. Coating technology involves the coating of ordinary rice with fortification premix in layers, with an alcoholic solution. These fortified grains are blended into traditional rice at a specific ratio. Specifically, the extrusion technology utilizes a mixture of rice flour, minerals, vitamins, and water that are made into dough, which is passed through an extruder to create fortified grains that are then blended into traditional rice at a specific ratio. These two manufacturers supply the country s 11 milling companies, which, in turn, blend fortified grains into their traditional rice and then sell this fortified rice through their distribution channels. Today, all of the country s rice supply is fortified, and approximately 80% meets national standards in accordance with the country s quality-control agency. The price of wholesale and retail rice is controlled through Conarroz, a government-created, but privately funded, organization. 3 The Ministry of Health (MoH) has one full-time staff member dedicated to overseeing and managing the fortification of rice by working with the private sector, which assumes the bulk of the investment needed. Royal DSM, a fortification premix supplier, supported the industry by investing in the development of blending technology. It is important to note, however, that Costa Rica was also able to leverage their previous experience with fortification of other staple foods. In the Philippines, rice fortification efforts are fragmented, due in part to the diffuse nature of the rice milling industry. There are approximately 11,000 mills nationwide; however, at present, few fortify their rice. The lead fortified rice supplier is the government, specifically the National Food Authority (NFA), which supplies approximately 15% of the country s total rice supply for price stabilization and food security purposes; approximately 10 15% of that supply is fortified. 4 The fortified grains are imported from a U.S. company that uses a coating technology. The government s research agency, the Food and Nutrition Research Institute (FNRI), developed an extrusion technology that it licensed to a local miller who produces a limited supply. The southern province of Mindanao produces fortified rice using a coating technology and reportedly fortifies 100% of the local rice supply. A complete list of the key participants and their roles in rice fortification for each country are provided in Appendix II in Supporting Information. Both Costa Rica and the Philippines created mandatory rice fortification laws prior to their market development efforts. Costa Rica mandated fortified rice in 2001, following the fortification laws for sugar, salt, wheat flour, and corn flour. The Philippines was the first nation to mandate rice fortification, with the 1952 Rice Enrichment Law, requiring the addition of thiamine to reduce the incidence of beriberi. The program did not prosper, reportedly because rice millers feared that the government would use the sale of premix to monitor rice volumes and consequently tax earnings. The Philippine Food Fortification Act of 2000 reinstated mandatory rice fortification and added wheat flour, sugar, and cooking oil mandates. Despite these differences, the ecosystems for fortified rice in these two countries are based on the same 68

Forsman et al. Rice fortification: a comparative analysis Table 1. Contrasting rice fortification landscapes Costa Rica versus the Philippines Costa Rica The Philippines Public sector Governmental department Ministry of Health Department of Health Research and development Ministry of Health FNRI Quality-control board INCIENSA FDA Agriculture agencies Conarroz NFA Private sector Fortified grain producers 2 3 a Import versus domestic Domestic production Imports and domestic production Rice milling companies 11 11,000 Rice miller association ANINSA Philcongrains Retailer sales practice Sold in packages Sold in packages and open bins Social sector Not actively involved Multiple organizations involved Year of mandatory fortification law publication 1974 sugar 1952 rice 1989 salt 1995 salt 1997 wheat flour 1999 corn flour 2001 milk, rice 2000 cooking oil, rice, sugar, wheat flour Percentage of national rice supply fortified 100% b 5% c Rice fortificants required Folic acid, thiamine, vitamin Iron B12, niacin, vitamin E, selenium, zinc Per capita rice consumption 51 kg/year 2 119 kg/year 3 Technologies available Extrusion and coating Extrusion and coating a Main supply is from one producer and is imported; there may be smaller operations not included in this review. b According to INCIENSA, in 2011, 100% of samples obtained for quality control were fortified, and 80% met national standards for folic acid concentrations. c This includes supplies from the following fortified rice sources: National Food Authority (NFA), Food and Nutrition Research Institute (FNRI), Herco Agro, and CLG Health Food Product. FDA, Food and Drug Authority; INCIENSA, Instituto Costarricense de Investigación y Enseñanza en Nutrición y Salud; ANINSA, Asociación Nacional de Industriales del Sector Arrocero; Philcongrains, Philippine Confederation of Grains Association. key dimensions: a legal framework, followed by core implementation functions consisting of stewardship, technology development, sustainable production and distribution, quality control and assurance, generating consumer demand, and monitoring and evaluation. Each category will be examined in this review. Figure 1 shows the current stakeholders in each of these categories, organized by sector, for both Costa Rica and the Philippines. It is notable that, in the case of the Philippines, the government is involved in all aspects of market development, from legislation through implementation; while in Costa Rica, the private sector plays a strong role in production, distribution, and quality assurance. The legal framework Researching health needs and creating law The need for fortification legislation often starts with identification of widespread micronutrient deficiencies through nutritional assessments. For instance, in Costa Rica, the MoH conducted national nutritional surveys in 1996 that revealed 69

Rice fortification: a comparative analysis Forsman et al. Figure 1. Rice fortification program dimensions and responsible stakeholders by sector in Costa Rica and the Philippines. that 26.4% of preschoolers (aged 1 6 years) were anemic. 5 Additionally, a study based on data from the nation s Congenital Disease Registry showed that 12 in 10,000 infants had neural tube defects. 6 The decision to develop a rice fortification mandate in 2001 was made on the basis of these data, as well as Costa Rica s prior success with mandatory fortification of other staple foods, such as flour and sugar. Legal mandates proved valuable in mobilizing both public and private resources and ensuring privatesector compliance; moreover, positive health outcomes were achieved. Recognizing the need for continued improvement in nutritional outcomes, the MoH turned to rice, due to high consumption rates in the country. To address the development of neural tube defects, they decided to fortify rice with vitamin B9 (folic acid), among other nutrients. In the Philippines, the FNRI manages nutritional and health surveys. In 1998, they reported that the prevalence of anemia among infants (aged 6 months to 1 year) was 56.6%, whereas among school-age children (aged 6 12 years), it was 35.6%. 7 The Philippines also has one of the highest rice consumption rates globally. Thus, the country s Department of Health (DoH) recognized rice as a strong potential vehicle for iron delivery to reduce the high prevalence of anemia. The Philippines was one of the first countries to develop a legal mandate for rice fortification. However, unlike Costa Rica, at the time that it mandated fortified rice, the Philippines did not have the benefit of prior experience with staple fortification to help shape its implementation program. Critical components of the law Creating legislation that is comprehensive yet concise and easily understood by all stakeholders is important for successful implementation. Table 2 highlights the common elements of mandatory rice fortificationlaws,aswellashowtheyaredefined in Costa Rica and the Philippines. In both countries, the exact nutrition composition is well defined; internal monitoring is assigned to the rice manufacturers and importers; and external quality control and evaluation is assigned to the central health ministry. However, the Philippine legislation is notably more comprehensive than that of Costa Rica in how the market development elements are defined. For instance, the legislation assigns the DoH responsibility for creating consumer demand, lists economic incentives for private-sector participation, and articulates penalties for noncompliance. However, given that only 5% of the domestic rice supply is fortified, it is evident that the country 70

Forsman et al. Rice fortification: a comparative analysis Table 2. Contrasting elements of mandatory rice fortification laws: Costa Rica versus the Philippines a Costa Rica The Philippines Nominated food Pilado rice, long type, excluding gourmet rice (rice prepared with other ingredients) All rice, excluding brown rice and locally produced glutinous rice Nutrient composition (nutrient amount/kg found in final product, before cooking) Folic acid 1.8 mg, thiamine 6.0 mg, vitamin B12 10.0 Ferrous sulfate: minimum acceptable level 60 mg mcg, niacin 50.0 mg, vitamin E 15.0 IU, selenium Fe/kg raw rice; maximum tolerable level 90 mg 105.0 mcg, zinc 19.0 mg Fe/kg raw rice Nutrient standard source and method for calculating composition requirement Source: MoH Source: DoH through the FDA, in consultation with the NFA and Philcongrains Method: added micronutrients and intrinsic level Method: not included must together add to the levels listed above Labeling and advertising Labels must specify fortified rice or enriched rice and indicate nutrients added and final concentrations. Advertising must comply with preexisting nutrition advertising regulations. Quality control and assurance Internal monitoring Assigns responsibility to rice manufacturers and importers External monitoring Assigns responsibility to MoH Monitoring and evaluation Assigns responsibility to MoH Labels must specify nutrients added and final concentrations. Advertising regulations are not included. Assigns responsibility to rice manufacturers and importers Assigns responsibility to DoH through FDA Assigns responsibility to DoH through FDA, NFA, and local governments; requires periodic reviews every 5 years Implementation Assigns responsibility to MoH Assigns responsibility to DoH through FDA Effective date 1 year after law publication 4 years after law publication Fortification responsibility Does not assign responsibility, but states that every Assigns responsibility to rice manufacturers producer, manufacturer, and food merchant must comply Food fortification committee Created in a separate piece of legislation Imports and trade impacts Requires that manufacturers fortify imported rice or importers guarantee fortification prior to importation; allows public authorities to confiscate imports if noncompliant Not included in the legislation Requires that manufacturers fortify imported rice or importers guarantee fortification prior to importation Continued 71

Rice fortification: a comparative analysis Forsman et al. Table 2. Continued Costa Rica The Philippines Quality seal Not included in the legislation Consumer advocacy Not included in the legislation Private-sector incentives Not included in the legislation Noncompliance penalties Not included in the legislation Technology requirements States that micronutrients must be added to rice in theformofextrudedriceorcoatedriceand,in both cases, must ensure homogeneity and resistance to washing Voluntary quality seal available Assigns responsibility to DoH Lists financial incentives Lists penalties Not included in the legislation a According to the Philippine Food Fortification Act of 2000, Republic Act No. 8976, Costa Rica s Decreto Ejecutivo No. 30031 of December 3, 2001, and Reglamento para el Enriquecimiento del Arroz, published in La Gaceta No. 1, January 2, 2002. continues to struggle with market development, thus illustrating that well-defined legislation is only one piece of a successful fortification program. A quality seal is also available in the Philippines, to help raise consumer confidence and enhance demand, while a seal is not used in Costa Rica. This is partly due to a presumed focus on full compliance with fortification requirements and subsequent elimination of consumer choice, and partly out of concern that packages with a quality seal would be used inappropriately for unfortified foods. In general, legislation is viewed by most stakeholders as an important underpinning to the development and implementation of a fortified rice market. Legislation can help (1) facilitate publicsector support for fortification (e.g., establishing a designated budget, conducting research and development, hiring necessary staff); (2) drive privatesector participation; (3) regulate supply and ensure quality control; and (4) facilitate sustainability in the face of changing administrations or private-sector support. Implementation The importance of stewardship One of the key lessons learned from fortification experience globally is the importance of strong leadership to coordinate efforts and maintain progress. Ideally, the government assumes responsibility, though in countries with strong private- or socialsector involvement, a separate entity may take charge. In Costa Rica, the MoH promotes fortification by maintaining a clear message that is continuously and effectively communicated to privatesector stakeholders a key reason for their success. Although the Philippine DoH has similar responsibility, decisive and continuous leadership has yet to be established for staple fortification. This has led to a collapse of national programs and the creation of decentralized programs, as provinces work independently. Organizations, such as the United Nations Children s Fund (UNICEF) and the United States Agency for International Development, have sparked a renewal of progress, yet momentum is often lost when their commitment period ends. To ensure continued stewardship across administrations, several stakeholders recommended the following strategies: (1) provide research that shows the clear health need and impact of the fortification solution; (2) frame the fortification impact with respect to productivity and national economic development; (3) communicate the potential decrease in overall healthcare costs; (4) highlight the increase in potential revenues (e.g., if the government sells fortified rice); and (5) use local businesses over imports to promote domestic production and development. 72

Forsman et al. Rice fortification: a comparative analysis Figure 2. The supply chain for fortified rice. Developing the technology Development of an appropriate fortification technology is often best achieved through multisectoral collaboration. In Costa Rica, the MoH teamed with the private sector to develop an extruded fortified grain technology, whereas a competing private company independently created a coating technology. Both companies recognized the potential for profitability based on implementation of the legal mandate and anticipated market demand for fortified grains. In contrast, the Philippine government s enforcement of the legal mandate was weak and the private sector did not have the same incentive to invest in developing local production capacity. As a result, the public sector alone is developing rice fortification technologies in the Philippines. The lack of private-sector interest in creating a domestic market for fortified grains has led the government to import fortified grains from the United States instead. However, this approach has not yet proved scalable. Sustainable production and distribution Multiple models exist for the production and distribution of fortified rice. The traditional rice supply chain is modified with the addition of a fortification premix supplier and fortified grain producer, as shown in Figure 2. In mass fortification programs, the fortified grains are sold to milling companies that blend them with traditional rice. However, in targeted programs, the fortified grains can be distributed directly to social feeding programs for point-of-use blending. Individual sachets of fortified grains can also be sold to retailers for consumer use in home fortification. Engaging rice millers Engaging rice millers is a defining element of a successful rice fortification program. The mass fortification approach adopted by Costa Rica exemplifies the efficiency of fortifying upstream at the miller level and then leveraging existing distribution channels, thereby obviating the need, logistical challenge, and cost of integrating fortified grains at points further down the supply chain. Although the Philippine government also values this approach, the lack of interest from rice millers has caused alternative models to surface. One such model includes selling individual sachets of fortified grains directly to the consumer to enable fortification during cooking at home. Although this model solves the issue of having to engage millers, it is far more costly with respect to marketing and distribution, and creates an additional problem for the government, as it conflicts with the law that requires fortification within mills. Financial incentives and penalties may also be used to engage millers. The rice fortification legislation in the Philippines includes financial assistance, such as low-interest loans and tax subsidies (see Appendix III in Supporting Information for a complete list), and financial penalties for noncompliance. However, to date, neither has been 73

Rice fortification: a comparative analysis Forsman et al. applied. This is due to limited government budgets to monitor thousands of milling companies and a concern that relationships between public and private stakeholders will be negatively affected if financial penalties are applied. While financial incentives were not made available in Costa Rica, the MoH was able to demonstrate its authority to enforce the legislation. In one example, the MoH closed a salt manufacturer that was noncompliant with iodization requirements. This strong penalty had a spillover benefit for the later enforcement of Costa Rica s rice fortification legislation. Beyond financial incentives and penalties, the value proposition to millers should be well articulated. Some key selling points expressed by both milling companies and fortified grain producers currently engaged in the Costa Rican market include: (1) Increasing in-country market share by competing to gain a new demographic segment with a value-added product. This is a beneficial strategy if fortification is not universal and competing unfortified products are available. (2) Expanding to new markets abroad, either through exportation or developing foreign manufacturing sites. This is a beneficial strategy when operating in a universal fortification setting, such as Costa Rica. (3) Acquiring early market share. This strategy is currently used by private millers in Central American countries that do not fortify their rice and are looking to gain a first-to-market advantage. They are contracting with neighboring fortified grain producers. (4) Partnering with the public sector to help generate legal mandates in other countries and create new markets abroad. However, beyond the above points, what has proven most successful in engaging millers is effective communication and collaboration among the public and private sectors. The following strategies were identified as most instrumental for obtaining rice miller engagement in Costa Rica: (1) Convincing the largest rice millers of the value of fortified rice and then partnering with them to persuade remaining millers to participate. (2) Holding multiple workshops for milling companies to discuss the program, address their concerns, and share ideas on affordable implementation. (3) Creating partnerships between the millers and the government s economic department to create a cost model for millers that detailed expense data and to influence final retail prices. (4) Learning from private-sector experiences of other fortified foods; for example, asking representatives of the salt industry to share their lessons learned with the rice industry. (5) Allowing a reasonable period of time for millers to comply after the mandate takes effect. (6) Sharing research results that demonstrate the positive health impact created after initiation of the program. (7) Recognizing and highlighting incentives beyond profit potential (e.g., manufacturers in this review cited social responsibility, technical and scientific challenges, and foreign development as additional incentives to participate in a fortification program). Strategies for achieving economic sustainability along the supply chain The experience of fortifying rice in Costa Rica proves that an economically sustainable rice fortification programispossible.thecountry sricemarketbenefits from inherent features that predispose it to program success, including, most importantly, a centralized milling industry, as well as domestic manufacturing companies with a relatively high risk tolerance to enter fortified grain production, and a relatively inelastic consumer demand for rice. Yet while these characteristics support the efficiency of market development, they are not required. Costa Rica s success is largely attributable to cross-sector collaboration that recognized cost-sharing opportunities, cost-reduction methods, competitive incentives, and profit potentials. Described below are costs borne by the public and private sectors to implement a successful rice fortification program, as well as the resulting cost premium to the consumer. Public-sector costs Public resources are necessary to finance the development, implementation, and regulation of mandatory food fortification, as well as to provide 74

Forsman et al. Rice fortification: a comparative analysis Table 3. The common potential financial implications of rice fortification for the public sector in both Costa Rica and the Philippines Cost components Studies and technology development Health needs assessment Technology development a Acceptability studies Cost benefit analyses Opportunities to minimize public-sector cost burden Private-sector support Social-sector support a Optional costs based on market need and program structure. Quality control and assurance/monitoring and evaluation Consumer demand a Fortified rice production a Financial incentives for fortification a Financial penalties for noncompliance Academic partnerships funding assistance to the private sector. Table 3 lists the most common forms of financial assistance available in both countries to support the public sector s efforts to engage the private sector. The public budget should, at a minimum, cover those functions required by the government, namely an initial health needs assessment, monitoring and evaluation activities, and a quality-control and-assurance process. Additional functions can be financed outside of government budgets. In Costa Rica, a significant portion of the cost to develop a rice fortification program was covered bytheprivatesector.themohbudgetfinanced the health needs research, but technology development was financed by fortified grain producers seeking profit opportunities. Furthermore, universal fortification eliminated the additional resources that would have been needed to create consumer demand. The government s only costs to maintain the program at this time are labor and equipment necessary for ongoing monitoring, evaluation, and quality-control activities. In the Philippines, the financial burden of maintaining the program is predominantly on the public sector, due to the lack of compliance by the private sector. The government has put significant resources behind generating consumer demand, in the hopes of sparking private-sector participation. Social-sector players, such as UNICEF and Helen Keller International, provide financial and advisory assistance, most notably within demand-generation work. Historically, progress has stalled when such support was withdrawn, and thus stakeholders now recognize the need to develop action plans that maintain progress after assistance ends. Public resources are also still used for technology development, highlighting an additional disadvantage of limited private-sector involvement. Private-sector costs There are two lead cost drivers for the private sector: one is the production of fortified grains by private manufacturers; the second is the cost of equipment for blending fortified grains with traditional rice in milling companies. In markets with established demand for fortified grains from milling companies, manufacturers of fortified grain are incentivized to independently finance operations to create a profitable business. This is true in Costa Rica, where there are two FGMs that financially profit from fortification. Neither company has received direct financial assistance from the government. Anticipated expenses for FGMs vary greatly on the basis of the availability of preexisting equipment, the choice of fortification technology, and capacity limits. The main cost items for manufacturing fortified grains are listed in Table 4. The lead cost driver for producing fortified grains is the extrusion equipment itself. Local pasta manufacturers can be a key asset, as they often already own cold-extrusion equipment, which can be leveraged for production, thereby making capital expenditures less of a barrier to entry. This was identified by the Costa Rican MoH, which targeted a local pasta manufacturertohelpwithextrudedfortifiedgrainproduction. If the preowned equipment does not have the capacity to meet production demands of the market, future capital expenses may be warranted. Although hot extrusion produces a fortified grain that more closely resembles rice (it has a smoother 75

Rice fortification: a comparative analysis Forsman et al. Table 4. Manufacturing cost items related to fortified grain production Extruded technology Capital investments Rice flour production equipment (cleaning tanks, silos, hammer mills, and mixers) Extruders Building space Quality-control technology Conveyers/driers Operational expenses Fortification premix Rice flour (extruded model only) Binders (extruded model only) Adhesives (coated model only) Labor Packaging Quality control Maintenance/repairs Storage Distribution Coating technology Drums Sprayers Building space Quality-control technology Overhead expenses Utilities Water Electricity Fuel Administration/ management Marketing Interest expense Depreciation expense surface and appears more translucent), traditionally, cold-extrusion equipment has been less expensive than hot-extrusion equipment. However, recent hot-extrusion models manufactured in China are demonstrating that the price of these hot extruders is approaching that of cold extruders. Initial capital investments are less prohibitive within the coating technology model, as drums and sprayers are less expensive, though quality differences between coated and extruded grains continue to be disputed. The incremental cost items that a milling company can anticipate when producing fortified rice are listed in Table 5. The equipment costs for blending fortified grains with traditional rice vary on the basis of the type and capacity of the milling operation. In Costa Rica, milling companies using extruded grains have created their own proprietary dosing equipment at their own expense to have more efficient, precise dosing abilities. In contrast, the coated grain producer Grupo NTQ provided its millers with volumetric dosing machines or augerbased blending machines, depending on rice production volumes (e.g., 1 3 kg bag production lines may use volumetric equipment, while 50 kg bag production lines may use augers). Grupo NTQ also supports its millers by covering part of the transportation plus machine maintenance and repair costs. In the Philippines, the government provides its contracted millers with blending machines, yet this has not proven to be a sufficient incentive to garner more widespread support, due to the additional cost of items noted in Table 5, combined with the lack of consumer demand. The cost to consumers In Costa Rica, the incremental cost of fortification is passed on to consumers. This is in a setting of relatively inelastic demand and government-controlled retail and wholesale prices. Fortified grains currently contribute less than 1% of the wholesale price of fortified rice regardless of technology (see Appendix IV in Supporting Information for additional cost data). At program onset, retail prices increased 5 6%, yet dropped to an increment of only 1% after years of improving efficiency and minimizing costs across the supply chain. By achieving universal fortification, there were no competing unfortified rice products available and, consequently, consumers absorbed the added cost. The lowest socioeconomic groups continued to obtain rice through government-sponsored feeding programs, thus benefiting from the fortification. Of note, there was a national decline in sales with the introduction of fortified rice, but the market subsequently rebounded, following a pattern that is commonly experienced when staple commodities undergo retail price increases. In the Philippines, government-supplied fortified rice is subsidized to make it more affordable for the lowest socioeconomic classes. However, to date, this has not proved to be a beneficial strategy. The lower retail prices have not improved sales, as consumers reportedly view the product as lower quality and it stigmatizes purchasers as poor. In addition, publicly funded feeding programs that began in 2007 were at one time the largest purchasers of fortified grains. When the current president took office in 2010, priorities changed, funding for these feeding programs was cut, and the contracts were discontinued. Consequently, inventory remains unsold 76

Forsman et al. Rice fortification: a comparative analysis Table 5. Manufacturing cost items related to rice fortification at the miller level a Capital investments Dosing/blending equipment New packaging design with labeling Quality-control equipment for blending Recurring costs Operational expenses Fortified grain/traditional rice Quality control Transportation Labor Maintenance/repairs Storage of fortified grain Overhead expenses Utilities Water Energy Administration/management Marketing Interest expense Depreciation expense a Main supply is from one producer and is imported; there may be smaller operations not included in this review. and the government has ceased importing fortified grains. Several retailers who purchase the subsidized rice at lower cost than traditional rice are also presenting a challenge. Some of those who sell rice in open bins have removed the fortified grains and sold the remaining rice at a higher retail price for greater profit. This problem can be avoided if rice is sold in its original packaging, but this is a challenging proposal in an industry and culture accustomed to bulk sales from bins. Allowing a free market that passes costs onto consumers is a concern for public officials in the Philippines, who fear that this scenario may jeopardize the important role rice plays in food security and create unintended public health consequences. Establishing quality control and assurance An established rice industry and an associated regulatory body are expected to apply good manufacturing principles and food safety measures. In addition to these components, a rice fortification program requires a systematic quality-assurance process and quality-control capabilities. Within both Costa Rica and the Philippines, the public and private sectors are made responsible by law for ensuring the quality of fortified grains and the final fortified rice. In Costa Rica, FGMs must guarantee micronutrient concentrations in the grains. This function can be contracted out to third parties, as is done by both manufacturers in Costa Rica. Millers are then responsible for monitoring the dosing accuracy of fortified to unfortified grains. For example, a leading rice miller in Costa Rica created a process whereby an employee manually removes and weighs the fortified grains per final retail-ready package, testing one package per production line per hour, and then, if needed, adjusts dosing machines accordingly to obtain the required 1:200 ratio. External monitoring is the responsibility of the government s food authority and quality-control agency, INCIENSA (Instituto Costarricense de Investigación y Enseñanza en Nutrición y Salud). Obtaining samples from retailers as opposed to upstream sampling at manufacturing sites is reportedly preferred, as it allows for quality control across the supply chain. For example, INCIENSA obtains a random sample of each rice brand from each miller annually from retail markets. At this time, they are only measuring vitamin B9 (folic acid) concentrations. This is because this micronutrient is critical for the management of the country s rate of neural tubedefectsandalsobecauseitischemicallyvolatile, thus making it necessary to ensure that requisite levels are maintained throughout the supply chain. If the legal standards are not met, the millers receive notice. If the millers feel their dosing is appropriate and it is a fortified grain problem, they can go directly to their supplier or request INCIENSA to conduct an analysis of their purchased fortified grain. Similarly, if it is a fortification premix problem, then producers can go directly to their suppliers. In establishing a quality-control process, the Costa Rican government considered the following issues: 77

Rice fortification: a comparative analysis Forsman et al. (1) Sampling method (e.g., batch versus continuous, fortified grain sampling versus fortified rice sampling). (2) Sampling frequency (e.g., a less accurate quality-control method requires higher frequency testing). (3) Technology used (e.g., microbiologic method or high-performance liquid chromatography for folic acid testing). (4) Nutrients analyzed (e.g., measure all nutrients mandated or only those deemed critical). (5) Methods for implementing policy modifications (e.g., private notification reports or public hearings). (6) Role of noncompliance penalties (e.g., requiring millers to buy back commercially available products or withholding license renewal requests). (7) Value of a quality seal (e.g., incentive for manufacturers to obtain a competitive advantage over unfortified foods). Notably, the Costa Rican MoH, in an effort to guard against misuse, hasnotapprovedtheuseofaqualitysealby any of the millers selling fortified rice, whereas the Philippine DoH allows for voluntary use of a quality seal to assure consumers that the product is fortified at the requisite levels. In the Philippines, where only a small percentage of rice is fortified, there is no robust national quality-control and -assurance framework in place. The responsibility for quality control/quality assurance of the extruded grain premix lies primarily with individual producers, while the NFA conducts quality checks of the blended fortified rice at the regional level. The national NFA provides guidance to regional NFA offices on how to ensure quality control of the blending process, mainly through color and weight checks in samples of the fortified rice from various producers. It should also be noted that private-sector stakeholders play a significant role in quality control and assurance, and must pay careful attention to the quality of the fortified rice, particularly its appearance, so as not to alienate consumers. For example, the millers in Costa Rica received consumer complaints about the color of the rice early on in the program, which prompted the millers to work with fortified grain producers to change the technology and improve the fortified grain appearance, and consequently increase consumer uptake and satisfaction. Generating consumer demand Costa Rica was able to achieve success without the need to invest in consumer demand creation. By working with supply-side players and ensuring compliance with mandatory legislation, the government was able to reach universal consumption. As all the rice in the market is fortified, there is no choice and consequently no need to create demand for fortified rice. However, generating consumer demand when there is a choice in the market is critical to the success of a fortification program. This is highly relevant in the Philippines. In this scenario, multisectoral collaboration is ideal, capitalizing on pooled resources that include the private sector s commercial marketing expertise and financing capacity. Filipino millers have no incentive at present to support demand-generation efforts. Social marketing is especially necessary when the appearance of the fortified rice is different from that of culturally wellestablished rice. The marketing message must make sure to highlight the values of fortification, but must not stigmatize the product by associating it with the poor. This message can be communicated through a quality seal, which is utilized in the Philippines to help raise consumer confidence and enhance demand. The work completed, to date, between the Philippine government and social-sector organizations also teaches that leadership for the demandgeneration work must be established to coordinate efforts and avoid fragmented campaigns with minimal influence. Overall, without a strongly enforced mandate, the private sector in the Philippines will only support fortification efforts if there is an expected return on investments. The joint World Health Organization/Food and Agriculture Organization of the United Nations published Guidelines on Food Fortification with Micronutrients in 2006, detailing strategies for promoting fortified foods. 8 The rice industry presents unique challenges, however, in executing these strategies. Rice consumption is a culturally ingrained tradition. Consumer preferences are strong, and preparation habits are rituals. In the Philippines, as in many other developing countries, consumers want pure white rice and whole grains. 78

Forsman et al. Rice fortification: a comparative analysis Repeated washing of the rice prior to cooking occurs regardless of rice quality. The private-sector leaders of rice fortification efforts must determine the balance between changing the technology to fit consumer needs (e.g., not using a dusting method that may rinse off with washing) and changing consumer preferences to fit the technology (e.g., convincing consumers not to remove the yellow-colored fortified grain that they believe to be dirty rice). According to interview respondents, opinions are split in the Philippines between developing a better positioned product and increasing consumer education efforts with the current products. Social marketing campaigns are significant investments, further strengthening the need for multisectoral collaboration. With the financial support of UNICEF, the Philippine government launched the irice campaign for its iron-fortified rice. Printed brochures and posters with the campaign s logo were distributed, and community events with educational talks, cooking demonstrations, and taste tests encouraged consumers to choose fortified rice. Retail sales reportedly increased temporarily as a result, although the longterm impact must still be determined. Public distribution through social feeding programs, such as school lunches, welfare programs, and hospitals, can be an effective mechanism to reach large populations and mobilize communities to champion fortification programs. It is important, however, that such programs are positioned correctly andhaveanappropriatecommitmentlevel.this was recognized in the Philippines, where the existing Food for School Program, as part of the country s social safety net, was leveraged for distribution of fortified rice. Children were offered 1 kg of rice daily to bring home to their families, yet they were stigmatized as poor, causing uptake to decline and negating the health benefits. The Department of Education was the largest purchaser of government-fortified rice during the program s 2-year course; however, a change in administration resulted in budget cuts and the program was discontinued. Impact evaluation and monitoring Evaluating the health impacts of a fortification program is critical for maximizing program success. In both Costa Rica and the Philippines, periodic nutrition surveys are conducted at the national level to help monitor progress. In the Philippines, the FNRI reported a decrease in the prevalence of anemia in children (aged 1 5 years), from 29.6% in 1998 to 20.9% in 2008. 9 Similarly, the Costa RicanMoHconductedanimpactstudyontherate of neural tube defects after fortification of foods with vitamin B9 (folic acid) and concluded a decreased prevalence rate of 0.12% between 1987 and 1997 to 0.051% in 2009. 6 These results were shared with millers to encourage continued fortification work. Lessons learned Although both Costa Rica and the Philippines have established mandates for fortified rice, they have vastly different rice industry structures, as well as strategies and tactics for facilitating market development. One key lesson learned through Costa Rica s success at the national level and the Philippines success at the provincial level is that there must be sufficient and active interest in fortification, both from public- and private-sector stakeholders. Legal mandates and financial incentives and disincentives alone are often not sufficient for creating markets. Unfortunately, this interest and leadership are generally not present in staple food markets where profit margins are slim. Therefore, while comprehensive and detailed legislation is often a starting point, active market development through strong government stewardship is required in order to create robust and sustainable rice fortification markets. This is especially true in countries that lack large and powerful private-sector entities that could theoretically bear the risk of creating markets on their own, such as those now emerging in countries such as India and Brazil. A substitute force, generally the government, is needed for assuming some of the risk and taking an active role in market facilitation. Costa Rica has been successful in this regard; its direct strategies for rice miller engagement can apply even to diffused rice industry structures. Focusing on industry compliance and the governments enforcement of their respective fortification mandates is another lesson learned through comparative analysis of the experiences in Costa Rica and the Philippines. Without a strong government enforcement strategy, the private sector may not feel compelled to comply with the mandate. In this environment, significant time and resources need to be expended on generating demand in order to 79

Rice fortification: a comparative analysis Forsman et al. encourage consumer movement from unfortified to fortified rice. Creating demand often requires social marketing campaigns, which are expensive and must be sustained in order to facilitate behavioral change en masse. In the case of the Philippines, their irice campaign currently has limited reach and may not be maintained without continued financial assistance. Although social marketing campaigns can be effective in markets with large private-sector entities to reinforce health messages within their ongoing product marketing, they tend to have limited value in markets composed of smaller players. Instead, if universal fortification of all rice made available to consumers is achieved through enforcement of a mandate, this could reduce the cost and complexity of market development not only for the governments, but for the private-sector entities in the supply chain as well. It should be emphasized that the structure of the milling industry is fundamental to this it is far more feasible, both logistically and financially, to enact and enforce an industry-wide mandate in a country with 11 millers, as opposed to 11,000. We have also learned that the price premium associated with fortifying rice is nominal when the fortification is performed locally and the supply chain is streamlined. In fact, as seen in Costa Rica, the price premium of only 1% greater than the cost of traditional rice is a margin that itself can be absorbed by the ongoing fluctuations in the price of rice. Therefore, the price premium to consumers may be less of a barrier to market development than perception would suggest. The reluctance of millers to engage in the market more likely stems from their lack of assurance about whether consumers would purchase fortified over unfortified rice, irrespective of price, underscoring the need to focus on compliance in order to ensure a level playing field for all millers involved. This strategy not only obviates the need for costly demand-generation work, as described above, but also more efficiently focuses on a key barrier to participation for millers in the supply chain. Finally, we have learned the importance of cost sharing between the public and private sectors in order to build sustainable rice fortification markets. In the Philippines, where the financial burden for market development lies entirely with the public sector, progress is slow and intermittent. In Costa Rica, where both the public and private sectors are investing in the market, there is strong industry participation and continued compliance. This is a strategy that can be equally effective in larger, more diffused markets, such as those of the Philippines. However, in these markets, encouraging the private sector to invest might require a more concentrated effort, such as that demonstrated in the small country of Costa Rica. In fact, in the more fractured markets without large-scale millers with national reach, focusing on achieving full compliance within subnational regions may be the best starting point. Success needs to be modeled before it can be built upon. Conclusion Few countries have established mandates for fortified rice, yet lessons are already emerging from both creating legislation and facilitating market development. The lessons learned from Costa Rica and the Philippines, particularly the virtue of enforcing mandates through direct miller engagement regardless of industry structure, are particularly useful in guiding future rice fortification efforts among the set of global stakeholders poised to add rice to the global fortification agenda. With such powerful tools in hand to combat micronutrient malnutrition in rice-consuming communities globally, we need to share our collective market development experiences in order to move most efficiently and effectively along the pathway to success. Acknowledgments Dan Gundry and Seema Kapoor (PATH, Seattle, Washington) contributed to this article. This manuscript was presented at the World Health Organization Consultation Technical Considerations for Rice Fortification in Public Health, convened in collaboration with the Global Alliance for Improved Nutrition (GAIN) on 9 and 10 October, 2012, at the World Health Organization, Geneva, Switzerland. This article is being published individually, but will be consolidated with other manuscripts as a special issue of Annals of the New York Academy of Sciences, the coordinators of which were Dr. Luz Maria De-Regil, Dr. Arnaud Laillou, Dr. Regina Moench-Pfanner, and Dr. Juan Pablo Peña-Rosas. The special issue is the responsibility of the editorial staff of Annals of the New York Academy of Sciences, who delegated to the coordinators preliminary supervision of both technical conformity to the publishing requirements of 80