A variety of voluntary social and environmental standards and certification programmes in agriculture have appeared during the past twenty years. Governments have been or become involved in some of them, most obviously in organic agriculture and the related labelling. Other programmes are driven by the agriculture sector itself, such as, again, organic agriculture, or the programmes involved in the COLEACP Harmonized Framework or by the food retail sector, such as EurepGap. However, most social and environmental standards have been developed by non-governmental organizations (NGOs), such as the fair-trade system, the Social Accountability standard SA8000 and the SAN/Rainforest Alliance 'sustainable agriculture programme'.
In terms of markets for labelled products, products labelled "organic" have captured the biggest market shares. For tropical products, market shares of labelled products (i.e. organic and fair-trade together) are typically one to two percent of the total North American and European markets. This ranges from 0.8 percent in the coffee market to two percent for bananas and fresh citrus. Annual growth rates of 20 percent or more in market volume have been observed for many consecutive years. For some products, such as organic bananas, growth rates of close to 100 percent were reported, but peak growth seems to be over. Sales volumes for fair-trade labelled products have been growing at 10 to 25 percent a year, albeit from a low base.
The markets for certified but non-labelled products, such as for Sustainable Agriculture Network (SAN), SA8000 and EurepGap certified products, are only differentiated at wholesale and buyer level, not at consumer level. Consequently there are no figures available on market shares, and development of demand for these types of certification is unknown.
An overview of documented case studies in Chapter 6 gives an indication of the impact of certification at producer level. Traditional low input farmers may expect productivity gains in the long term when implementing organic methods, but these are frequently accompanied by higher production costs, mainly in the form of higher labour demand. In these cases, access to premium markets through certification usually results in increased net profits. The case studies that report conversion to organic from high input systems observed initial yield declines. Yields in general recovered partly or completely over time. Effects on production costs have been very mixed, but very often involved substantial initial investment. In these cases access to premium markets, normally requiring certification, is essential to compensate for yield declines and investments.
For farmer cooperatives that are certified by Fairtrade Labelling Organizations International (FLO), the fair-trade price premium appears to be only part, and often a small part, of the benefits derived from the fair-trade system. Organizational progress, better bargaining positions, credit worthiness and economies of scale seem to be more important. The benefits result from the fair-trade marketing system and the additional support activities by other agencies, which appear to be highly interlinked and mutually supportive. The effect of the fair-trade premium is limited due to the often small part of total output that is sold via the fair-trade market.
Both organic and fair-trade certification seem to lead to general quality improvements, which in themselves are also valuable in conventional markets.
For the other standards discussed in this paper, only a limited number of case studies were available, reporting from only a single country for each standard. Therefore no generalizations can be made on the impact of such standards and certification programmes.
Chapter 7 discusses the voluntary social and environmental standards and labelling programming in relation to WTO agreements. Due to the voluntary nature of the standards and certification programmes discussed, they are not considered to restrict trade and are therefore of relatively little concern to committees of the WTO. What is more, the WTO is an agreement between governments, and has therefore only indirect effect on the actions of NGOs. However, there may be some questions on the discriminative nature of social and environmental standards, as they distinguish based on non-product-related production and processing methods. In addition, some voluntary standards do seem to have an impact on market access.
The report concludes with a brief discussion of some ongoing debates and the potential role of governments with respect to voluntary social and environmental standards. The first issue of debate is local flexibility versus global credibility of certification programmes. Involvement of a variety of stakeholders in standard-setting is important to ensure that the standard does not unintentionally discriminate against some categories of producers or processors. Equally, standard requirements should always be directly linked to the ultimate objective of the standard and not include superfluous criteria or be too prescriptive on how the objective may be reached. Local specificity may be further taken into account through a system of generic standards that are complemented by local or crop-specific standards, or by a system of minimum and progress standards. In the verification systems, special arrangements may be made for smallholders, such as internal control systems.
The increased use of third-party certification has led to the development of a "certification industry", with its own economic interests. Certification is always a means, and should not become an end in itself. All actors involved should continuously work to minimize certification costs and time involved, without compromising quality and credibility.
Developing countries and smallholders may face specific constraints when trying to take advantage of social and environmental certification and the increased market access or price premiums they may deliver. In some countries a lack of local certification bodies increases certification costs. Furthermore, requirements for traceability favour large commercial farms. Some standards, such as SA8000, that focus on the working conditions of hired labourers, are not relevant for smallholders reliant on family labour. In contrast, the fair-trade system is especially developed to help small-scale producers in developing countries, but the potential benefits are curtailed by a limited market. Finally EurepGap certification may become obligatory for those producers wishing to sell to its retailer members. This may pose serious problems for those producers that do not have access to laboratories to execute the tests required, and problems may be expected in fulfilling the extensive documentation criteria.
Governments assume various roles in relation to voluntary social and environmental certification. First of all, they provide the legal environment in which those systems operate. Governments may also legally protect the use of certain terms used for product labelling. More actively, government agencies may act as standard-setting or accreditation bodies. Governments may also actively facilitate certification through: facilitation of local certification bodies; support to organizations advocating implementation of standards; subsidies or tax incentives to producers implementing standards; or through training of extension staff in the requirements of the standards.
