The lack of commonly accepted standards among global certification bodies has resulted in duplicated certification costs and added complexity.
“Halal certification is a necessary step to addressing Muslim needs, but remains a challenging, complex process,” said the report produced by Thomson Reuters.
Globally, there are more than 300 officially recognised halal certifiers.
The report urged a “global concerted effort to upgrade halal certification”, which starts with the acceptance of a new framework, putting in place a single accreditation body, and compelling certifiers to sign up to the new accreditation program.
In the Middle East, the UAE is seeking to cement its role in the halal food industry.
It has initiated the International Halal Accreditation Forum (IHAF) that currently has a list of 25 members. Its role is to facilitate mutual recognition between member accreditation bodies to enhance global halal trade.
It is seeking to build a halal corridor with Malaysia’s International Halal Authority Board (IHAB), which was also built to harmonise global halal authorities and certification bodies.
Currently, both countries are taking the lead in building a halal regulatory system.
However, it remains unclear how coordination between IHAF and IHAB will take place.
A key milestone will be achieved when IHAB becomes a signatory with IHAF, said the report.
Elsewhere in Turkey, the Halal Accreditation Authority (HAK) was established this year to 1) accredit halal-compliance evaluation institutions and to 2) ensure that their operations are in compliance with national and international standards.
The report also lauded the formation of more accreditation bodies, commenting that “the establishment of accreditation bodies around the world in key exporting markets will be a key step towards harmonised regulation.”
Based on previous cases of successful regulatory alignment in other food industries, the report opined that there was “a very clear path for halal to become a leading global standard.”
An example is the kosher industry, which managed to align 300 certifiers in the US under the Association of Kashrus Organisations, said the report.
Blockchain’s success lies in regulations
Besides cutting costs, a set of aligned halal accreditation standards is also crucial for blockchain to work successfully.
“Standards and accreditation bodies still need to push for a global alignment and rationalisation of halal standards, which will be critical to a successful application of blockchain.”
“The blockchain technology will need to be adopted across the supply chain ecosystem and incorporated into the work of certifiers as well as customs agencies and governments.”
“Governments and investors play a critical role in supporting the technology’s scalable development.”
In turn, a successful blockchain system will also help to raise the status of halal regulation.
“The technology can quickly confirm halal compliance at each stage of the production, such application can eliminate fraud, and with support from regulators, can raise the market perception of halal relative to other certifications within the food industry.”
Turkey tops Middle East’s spending on halal food
Turkey is the biggest spender of halal food in the Middle East, recording an expenditure of US$127bn.
Globally, it is only behind Indonesia, which spent US$170bn on halal food.
Pakistan took the third spot with an expenditure of US$118bn.
Other countries which made it into the top five list are Egypt (US$86bn) and Bangladesh (US$76bn).
Muslims’ spending on food and beverage was valued at US$1.3tr last year. It is expected to reach US$1.9tr in the next five years, a 6.1% growth.
Multinationals seize opportunities
More multinational food companies are seizing the opportunities in the halal market as part of their portfolio diversification strategy, the report noted.
The largest investment by far, was Brazilian BRF S.A. joint investment with Qatar Investment Authority in Turkey’s leading poultry supplier, Banvit.
Other multinational players included Mitsubishi Corporation, which bought a minority stake in the UAE’s Al Islami Foods.
“Company portfolios diversify to cater to increasingly sophisticated taste buds, from burgeoning demand for halal-certified mozzarella, to growing demand for organic food,” said the report.