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Experiences with Organic Agriculture

Dr. Sophia Twarog, UNCTAD

Standards and Trade Workshop

16 May 2002

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Opportunities

• Demand growing 10-20% in most major markets

• US$ 17.5 billion market in 2000• Economic,social, health and

environmental benefits for DCS• Possible DC comparative advantage• Over 100 DCs produce certified

organic products

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Production Constraints

• Limited governmental support

• Lack of technical know-how

• Lack of organic inputs

• Little R&D on plant varieties and prod’n methods best suited to DCs

• Conversion period- smallholders have limited financial reserves

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Export Constraints

• High certification costs

• Lack of market information and marketing strategies

• Limited physical transport and storage infrastructure

• Complex import procedures

• Tariff and non-tariff protection

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Certification

• Most DC exporters depend on certification by international certification bodies

• National certification infrastructure limited in most DCs

• Unaffordable for smallholders• Smallholder group certification SGC

not recognized in importing C reg’s

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Standards and import regulations

• Multitude of private standards and government regulations

• No well-functioning mechanisms for mutual recognition

• Multiple certification/accreditation is costly

• Obtaining import permits-cumbersome and time consuming

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Market information and channels

• Limited market information available at producer level

• Sometimes DC certified organic products get sold as conventional

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Other market risks

• Organic market is fairly small (LT 2% of total food market in most dev’d C’s)• Dev’d C efforts to promote OA

production, including subsidies• Eastward enlargement of EU could

increase OA supply• Increasing consumer preference for

locally supplied food

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EU Regulation 2092/91

• Para 1: “third country list” (6 C’s)• Para 6: “importer derogation”– Importer submits documentation that

products are produced and certified according to rules equivalent to EU’s

– Permit takes several weeks or months– Over 80% of EU OA imports, from over

85 countries– Due to expire 31 December 2005

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Other EU Regulations

• No. 1788/2001: aims to harmonize import procedures throughout EU– from 1 July 2002– requires an original certificate of

inspection for each consignment– Is expected to increase delays

• Since July 1999, certification bodies must conform to EN 45011 or ISO 65

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USA Regulations

• Standards adopted December 2000

• Certifiers operating in foreign countries may apply for USDA accreditation.– In first round (April 2002), 37 foreign

certifiers applied, incl. 12 from 10 DCs.– 4 were accepted, including 1 from Peru– The other applications are pending.

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USA Regulations, cont’d

Otherwise, certifiers seek recognition– USDA determines, upon the request of a

foreign gov’t, that its authorities are able to assess and accredit certifying agents as meeting the requirements of the National Organic Programme (NOP),

– Or as meeting requirements equivalent to the NOP under an equivalency agreement

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Costa Rica

• 1.9% of land under permanent cultivation is under organic production or in conversion

• Small producers (94% of certified farms are LT 5 hectares)

• Exports to EU and USA

• Main exports: coffee & bananas

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Costa Rica

• Institutional support– National Programme for OA (est. 1995)– Dept. on Accreditation and Registration

of OA in Ministry of Agriculture, deals with issues related to inspection

– National standards– Procedures for accreditation of

certifiers; regulations for inspection

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Costa Rica

• Good certification and accreditation infrastructure– 3 authorized inspection agencies

(2 national, 1 German)– These have arrangements with import

market-based certifiers

• Expected to be soon included in the EU “third country list”

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India

• National Programme for Organic Production

• National Standards—March 2000

• Tea, Coffee, Spices Boards and APEDA—accreditation agencies for products under their responsibility

• Applied for EU “third country list”

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India

• Key role of NGOs and farmer organizations

• Commodity-specific boards providing some support to OA– Spices Board meets 50% of certif. Costs

• Price premiums—difficult to secure– Ex: organic pepper

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Uganda

• Small scale producers

• Exports include cotton, sesame, coffee, fruits

• No national standard

• No clear government policy or support

• No locally-based certification body

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Recommendations

• Raising awareness and promoting policy dialogues

• Research and development• Training (farmers, agricultural

extension workers)• Development of national legislation

and standards (for C’s with larger OA sector)

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Recommendations, cont’d

• Develop domestic markets

• Improve access to market information

• Develop marketing strategies

• Appropriate government support

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Recommendations, cont’d

• Reducing certification costs– Assistance in meeting certification

costs– Local certification/inspection body– Inspections done by local staff charging

local fees– Provisions for smallholder group

certification based on Internal Control Systems (ICS)

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Recommendations, cont’d

• Reduce expensive multiple certification through harmonization and mutual recognition of OA regulations, standards and certification– Among governments– Among accrediting agencies– Among private/public certifying bodies

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Recommendations, cont’d

Facilitating imports of OA products• Regulations reflecting the needs of

DCs, e.g. provisions for SGC• Transparent and understandable

procedures• Mutual recognition of OA regulations• Providing information (standards,

market opportunities, etc.)

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Recommendations, cont’d

Bilateral and multilateral aid agencies can provide/finance technical assistance to:– Promote OA production– Obtain certification– Identify business partners

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Trade rules issues

• Implications of developed country subsidies to OA production

• Need for transparent and non-discriminatory labelling

• Possibilities to grant special & differential treatment, incl. trade preferences, to OA products fr. DCs

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Trade rules issues,cont’d

• Post-Doha: could the mandated negotiations aimed at reducing or eliminating tariff and non-tariff barriers to environmental goods and services benefit DC exports of OA products?

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Possible follow-up activities

By UNCTAD and UNEP/UNCTAD CBTF, working closely with IFOAM, FAO, ITC and other relevant institutions

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Possible follow-up activities

Assisting DCs in designing and implementing appropriate gov’t support for OA production & export, through

• Studies, including identifying promising products, ways to reduce certification costs, overcoming constraints

• Policy dialogues, incl. to create awareness of benefits of OA and promoting multi-stakeholder committees

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Possible follow-up activities

Exploring mechanisms for recognition of organic guarantee systems of DCs

• Promoting mutual recognition• Examining ways to promote the

practical application of the concept of equivalence, including through Task Force involving Governments, IFOAM, FAO, UNCTAD and others.

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Possible follow-up activities

• Promoting transparent and simple rules governing OA imports

• Exploring trade preferences for OA products from DCs

• Examining market strategies (ITC) incl. disseminating market research to DCs, explore e-commerce opportunities, promoting partnerships w/ buyers, donors