The benefits that can be achieved through compliance may be
extensive and justify the efforts required to obtain certification.
Institutional support can deliver improved outcomes for producers
and exporters by helping them to both understand the advantages of
voluntary standards and meet these standards.
Voluntary standards (or 'private standards') are standards
developed by non-governmental entities such as businesses,
not-for-profit organizations or initiatives involving multiple
stakeholders. Some of the better-known voluntary standards include
Fairtrade, Organic, Rainforest Alliance and GlobalG.A.P. Contrary
to governmental standards, which can be either mandatory or
voluntary, private standards are voluntary by definition. As such,
compliance to these standards is not legally required by national
governments or multilateral regulations. Therefore, these standards
fall outside the World Trade Organization framework.
Voluntary standards vary widely in their objectives and scope.
Some standards address a single commodity while others apply to
dozens of products. Standards also have various objectives, such as
protecting social rights, ensuring a minimum price, conserving the
environment, promoting good agricultural practices, regulating
supply or ensuring food security.
Since the 1990s voluntary standards have become increasingly
important in international trade and a considerable share of
agricultural exports comply with them. Growth rates of markets
associated with sustainability claims have doubled or tripled that
of 'conventional' markets in many categories. For example, between
2002 and 2007, sales of certified organic products doubled and
Fairtrade-labelled products, driven by bananas, flowers, sugar and
coffee, increased sales by 38% over the period from 2003/04 to
2007/08. While the growth rates are high, these markets still
represent only a small share of the total world trade in these
goods. Nevertheless, according to the Codex Alimentarius
Commission, company-specific labels accounted for 14% in 2000 and
roughly 22% of total retail food sales at global scale in 2010.
Factors favouring voluntary standards are, among others, the
emergence of a 'conscious consumer', who demands more product
information, and the globalization of supply chains.
But how much do producers and exporters profit from
participating in voluntary standards? Although results from impact
assessment studies remain inconclusive and research lacks broadly
comparable data, compliance to voluntary standards can potentially
benefit producers and exporters in many ways. The implementation of
certification requirements leads producers to improve management
and monitoring systems, increase productivity, implement good
farming practices, improve resource management and have a better
access to credit. Access to credit is fundamental to pre-finance
certification costs, investments in agricultural inputs and
equipment. As small farmers faced difficulties in accessing credit,
cooperatives started providing credit at affordable rates to their
members using a percentage of the fair trade premium. But better
access to credit might also be the result of an improved credit
rating due to increased incomes and long-term contracts.
Compliance with voluntary standards might also facilitate
stronger integration in global value chains providing opportunities
to improve post-harvest processing, product quality and supply
capacity.
While researchers and practitioners seem to agree that voluntary
standards are a tool to improve livelihoods and foster export
opportunities in developing countries, it is the producer's
specific circumstances and the certification options at hand that
largely determine whether certification to a voluntary standard is
worthwhile.
As the resources required to comply with a standard depend on a
number of factors, and might be substantial, producers first need
to assess whether certification is worthwhile given their market
and company characteristics and, if so, which standard represents
the best choice. For example, a cooperative of organic cocoa
producers in Ghana had difficulties to sell its produce as
certified and was forced to stock the cocoa in 2009. Small farmers
find themselves in a particularly difficult situation, as they have
higher per unit costs and cannot harness economies of scale. For
this reason, a number of standards, including GlobalG.A.P.,
introduced group certification schemes, which allow small producers
to form a group and share certification costs. Groups may enhance
knowledge-sharing activities, allow for joint training and
collaborative compliance with requirements (e.g. building storage
facilities or developing management systems). It is essential to
provide producers with critical information, decision-making tools
and training to enable them to understand the key differences
between voluntary standards and to assess and select the most
appropriate option for their specific circumstances.
Voluntary standards make most sense when they represent an
opportunity for producers to become integrated into global value
chains, enhance income predictability and build closer
relationships to buyers providing upgrading opportunities.
Commoditized 'sustainable' product markets, with prices dominating
buyers' choices, have little potential to benefit producers
complying with voluntary standards. The role of retailers,
manufacturers and importers is, therefore, crucial in determining
the success of voluntary standards.
National institutions constitute another important element in
supporting producers and exporters. They can play an active role in
providing and/or coordinating efforts to increase producers' and
exporters' ability to meet requirements set by voluntary standards.
This can include training on good production practices, efficient
and productive farm management, quality improvement and general
business skills, such as financial risk management. Surveys of
smallholders in the GlobalG.A.P. certified export crops chain were
conducted in Zambia, Kenya and Uganda and found improved produce
quality, better knowledge of pesticide use and wider farm
management benefits. One of the most important results of forest
certification in Bolivia was the elimination of financial
mismanagement leading to an increase of efficiency and transparency
of sawmill resources administration. Participation in fair trade
has enabled members of the Kagera Co-operative Union in the United
Republic of Tanzania to better adapt to market demands and to
understand how to access organic and gourmet markets. Fair trade
coffee producers in Bolivia improved their understanding of the
coffee business through an increased knowledge of coffee production
processes, being involved in processing activities and training on
coffee markets, administrative and financial management.
Institutional support can also facilitate regional and national
producer organizations (e.g. knowledge sharing, organizing
transport, pooling volumes), improve infrastructure (such as
storage facilities) and enhance strategic decision-making by
providing critical market information to producers. It is also
important that producers and exporters gain easier access to
credit, national extension services, testing equipment and
laboratory facilities. The establishment and enforcement of
national standards linked to market requirements should also be
supported.
In some sectors, certified production and trade have already
moved beyond market niches and these growth rates are likely to
continue. An increased awareness and understanding of how voluntary
standards influence developing countries' exports and the
opportunities and the risks they entail will be central in
designing policies and support mechanisms that enable producers and
exporters to effectively deal with this new paradigm in trade.
ITC will release a web-based analysis tool on voluntary
(private) standards called StandardsMap. This tool will centralize,
organize and disseminate information on voluntary standards and
related research results to strengthen the capacity of producers
and exporters to participate in more sustainable production and
trade.
OBTAINING CERTIFICATION
Five Steps
Attaining certification varies according to the standard, but
the steps below give basic information on how to obtain
certification.
- Identify the certification bodies that operate in the
region/country. Information on accredited certification bodies is
available on the websites of the organizations developing these
standards. Contact one or several accredited certification bodies
offering certification services for the respective standard.
- Ask for a first estimate regarding cost and time
needed to get certified. Decide which certification body you would
like to work with.
- Some standards require a self-assessment evaluating
the current situation of the production unit against the
certification requirements. Perform a self-assessment and provide
the results to the certification body. Prepare for inspection.
- Auditors from the certification body visit facilities
and an initial certification audit takes place to assess compliance
with the standard requirements.
- Data collected at the audit are the basis on which
the certification body makes its decision. In case of compliance
with requirements, a certificate is issued.
FACTS & FIGURES
Certification
About 22% of global banana exports are certified (Giovannucci,
ISEAL Alliance Conference, 2010)
Mars committed to certifying its entire cocoa supply by 2020
(Mars Corp, 2010)
About 50% of Fairtrade-certified coffee is also certified
organic (FLO Annual Report, 2009)
The target set for European Union members is 50% 'green public
procurement' by the end of 2010 (European Commission, 2010)
StandardsMap will be available to the public at the
beginning of 2011 and will be accessible from the ITC Market
Analysis Portal. It will complement ITC's Market Analysis Tools,
including Trade Map, Market Access Map, Investment Map, Trade
Competitiveness Map and Product Map.