5 Determining Factors for the Fulfillment of Mandatory Halal Certification in the Food Industry

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It’s been almost three years since the mandatory phasing of halal certification for the food industry has been underway, which started on October 17 2019. In less than 30 months—October 17 2024—the obligation for all food business unit actors to be halal certified will come. What are the opportunities and challenges of meeting the target of all food business units having halal certification in 2024? What are the determining factors for meeting these targets?

Based on the business scale, let’s look at business actors who registered with BPJPH between October 17, 2019, and June 4 2022. They are as follows: micro-scale 33,296 registrations, small scale 5,802 registrations, medium scale 3,935 registrations, and large scale 5,471 registrations.

Meanwhile, based on data from business actors released by the Ministry of Cooperatives and SMEs in 2019 per business scale, there are 63,955,369 micro-scale, 193,959 small-scale, 44,728 medium-scale, and 5,550 large-scale. Based on the proportion, business units with a micro-scale are 99.62%, small scale is 0.30%, medium scale is 0.06%, and large scale is 0.01%.

Suppose you compare the data for business actors registered with halal certification and the data for business actors as a whole picture (this data could be corrected due to economic conditions during the pandemic). In that case, large-scale business units are the most likely to meet the target, even though it is still two years away. However, for other business scale categories, especially micro and small scale, where the proportion is more than 99%, there must be complex and massive efforts to ensure that all of them are halal certified for food business actors.

Based on GAPMMI data, the number of food business actors who are association members is 1.6 million business units. Usually, business actors who are members of associations have a higher level of awareness in participating in the halal certification process because they are aware of the benefits and consequences with or without a halal certificate.

There are more food business actors outside the GAPMMI membership. When joining GAPMMI, the business actors have rights and obligations, including membership fees; of course, not all “want” and are “able” to fulfil these requirements.

Therefore, based on these facts, at least to achieve the targeted conditions, a mechanism must be implemented massively to accelerate all food business actors to become halal certified. If we count backwards, the remaining period is about two more years, while business actors who still need to be halal certified are still far from the target.

The following factors greatly determine whether or not the fulfilment of the target of all food industry business actors has been halal certified.

1. Length of Halal Certification Process vs Growth of Halal Certified Companies

The halal certification process consists of four stages: pre-certification, registration, inspection (audit) to PPH, and post-examination (meeting the fatwa commission and issuing certificates).

The pre-certification stage is a preparatory process that business actors must face. At this stage, the company usually participates in a halal certification training or outreach program. It prepares the required documents in the form of material documents and documents on the halal product guarantee system. Companies that understand the procedures and requirements of halal certification well can usually complete the process quickly.

The registration stage is for the company to register its product with BPJPH by attaching the required documents. If it is considered fulfilled, BPJPH will issue a Document Receipt (STTD) as a condition for continuing the Halal Inspection Body (LPH) selection by attaching all the required documents and accompanied by an inspection process by the LPH.

However, the pace of the halal certification process is primarily determined by the combination of the commitment of the two to carry out their respective roles according to their responsibilities. Both being proactive and initiative in responding to any issues that arise according to their respective roles will lead to a faster halal inspection process. The faster the halal inspection, with the same resources, the number of companies examined will undoubtedly be even more.

When the company is deemed sufficient by LPH in fulfilling the requirements, the next step is to prepare an audit report to be submitted to the fatwa commission meeting. Even though there are usually not many reports that are rejected while establishing a fatwa, there is still a chance that they will become “pending matters” when there is information that the fatwa commission considers incomplete. Therefore, the thoroughness in preparing the report by LPH will also determine the process of establishing the fatwa.

If each stage of the process is constrained, then the process of issuing halal certificates by BPJPH will also be delayed, and the growth rate of certified companies will falter.

2. Company Awareness to Follow the Halal Certification Process

A person’s awareness of something arises because the person believes in the benefits or importance of this matter, or if it is not carried out, it threatens him, including halal certification.

The urgency of benefits and interests can arise if the knowledge about halal certification is sufficient, including the consequences if the business actor needs a halal certificate, tips and tricks so that the halal certification process goes smoothly. As well as other relevant matters such as increasing product value in the eyes of consumers and the possibility to compete at the global level. Therefore, programs that increase the level of awareness of business actors need to be intensified.

But therein lies the challenge: getting business actors, especially those on the micro and small scale, to attend socialization, training, or workshop programs is a challenging matter.

For business actors in this category, time is essential because the business owner usually also runs the business. With the presence of the owner, the company will continue. So even though they are given free access to join the program, sometimes they still object. Even if they want, they also ask for compensation for lost income during the event or at least get pocket money or replacement for transportation costs.

Case in point: chicken slaughter workers who usually carry out their duties in traditional markets if invited to participate in halal slaughterer worker training. The response emerged, “Do you want to replace my income up to hundreds of thousands per day during the event?”

True to the words of consumer behaviour experts, a transaction occurs if the consumer voluntarily sacrifices all resources to make the transaction happen; it’s not just the price paid for the product. In the case of socialization, training or workshops related to halal certification, even if it is analogous to a transaction, even with a price of zero rupiahs, they are still reluctant because they have to sacrifice other things, namely business income, on that day.

So there is resistance, and there must be an effort to get around the solution. In the supply chain of halal products, a halal slaughterer is decisive. When a slaughterer fails to meet the requirements as a halal slaughterer, the halal animal he slaughters will have non-halal status, and all parts of the animal will become non-halal.

Imagine a chicken noodle seller buying chicken from a trader who employs a slaughterer like that; then, the chicken noodle becomes not halal. Or other business actors who use chicken meat as ingredients, such as nuggets, meatballs, sausages, chicken satay, lemper, chicken porridge, or chicken restaurants made from chicken; even the product becomes not halal as well.

In the halal certification process, if there is material originating from halal animals that have never been certified and it is material from a company that is being certified halal, then usually the two business units will undergo a halal certification process in parallel so that companies that use materials derived from animals it does not stop the certification process due to unclear halal status. If the halal slaughterman is incompetent, then, of course, the two business units can fail to obtain a halal certificate.

Imagine what will happen if there are many halal slaughterers like that and the side effects on all business units that use meat from them. There will be a bottleneck in the pursuit of all food business units having to be certified until a solution can be found for this problem.

3. Cost of Halal Certification vs Company Capability

The cost of halal certification for micro and small businesses is IDR 650,000 for a validity period of 4 years. If you calculate the expenses of micro and small enterprises for halal certification, it is 162,500 per year. If calculated per month, the cost that must be borne is not up to 15,000 Rupiah.

The problem is that not all of these business units are able and willing to spend this nominal amount of money upfront for the next four years. Therefore ministries/institutions or BUMN/BUMD or LPH such as LPPOM MUI usually bear the cost of their halal certification in a limited amount. Because the number of quotas for free halal certification is limited, the consequence is that more stakeholders must be willing to pay for their halal certification costs.

Even so, usually, the process of recruitment or selection or curation for these business actors also requires time from starting to prepare them through socialization programs, assisting in terms of fulfilling the required documents and having to be willing to be “a little complicated” in implementing a culture of business administration (read: record keeping) that not all actors all “want” to do it.

Imagine if the business actor is engaged in catering or a restaurant that uses up to tens or hundreds of ingredients. Not all ingredients are critical such as rice, vegetables or fruit. However, it must still be recorded as part of the list of elements making up a product or menu in addition to other ingredients such as meat, fish, flour, flavourings, various seasonings, spices, and ingredients for drinks and desserts, the total of which is sometimes hundreds of them.

Indeed, not all actors have to participate in the regular halal certification program; there is a “self-declare” program for non-critical products. However, it still takes time in the PPH assistance program, including ensuring that the product is indeed not critical.

While carrying out the “self-declare” program, there are still documents that must be prepared, although most of the work is done by the “self-declare” program assistants. Again, not all business actors implement a recording culture (even in a simple administrative form). Neat administration is necessary because even for the “self-declare” program, even at the bottom, there must still be a report as material for consideration in establishing a fatwa at a fatwa commission meeting.

4. Acceleration of the Halal Certification Process for Critical Animal Products and their Derivatives

Along the food industry’s supply chain, for the sake of success in achieving the target of all business actors being halal certified, the halal certification of critical animal derivative products in the upstream industry is decisive. Critical products originating from animals must be a priority in efforts to accelerate the achievement of these targets.

The issue of halal certification of animal products and their derivatives is intertwined with problems in the industry. It should be noted that the number of business actors in a halal-certified slaughterhouse, both ruminants and poultry, is still limited.

This is especially true for individual slaughterhouses, such as chicken slaughterhouses in traditional markets or goat slaughterhouses in goat meat processing business units (such as goat satay, goat curry or aqiqah business). Indeed, a mature strategy and plan are needed to create an integrated program to accelerate business units like this to become halal certified. This must also be carried out massively.

As previously mentioned, the most significant task is to guide the slaughterer so that he is competent as a halal slaughterer because the halal certification process for a house/abattoir is highly dependent on the competence of the slaughterer, in addition to the production process being protected from contamination by haram materials.

Another issue is facilities related to animal products and their derivatives, including facilities such as meat mills (which are available in markets) and logistics, as well as retailers of storage and transportation, which are prone to contamination by unclean/haram materials. Also, free from perpetrators who abuse pork which is claimed to be halal meat, by smearing it with cow’s blood or mixing it with beef.

5. Synchronization of Halal Stakeholders

For the success of this acceleration program, all stakeholders must collaborate under BPJPH to achieve the target by empowering 21 Ministries/Agencies, 11 LPH, 131 PPH companion agencies, and 34 provincial halal task forces. (HU)

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