Community forum: Certification for poorest farmers

Posted on 3 Jul 2007 by Marcus

The benefits of certification (e.g. organic, Fair Trade) for farmers are obvious. But getting and maintaining certification is not easy. There are problems like

1. How to pay certification cost?
2. How to keep records/ensure traceability?

also in Fair Trade there is a requirement that marketing is done through a Community Based Organization. Some poor communities don’t have the capacity to do this.

Is food certification a good strategy to help the poorest farmers? Does anyone have any relevant thought/experiences?

Posted on 3 Jul 2007 by TanOli

Certification does ensure certain quality and pedigree but helping the poorest? I guess not something very optimistic to start with. For countries like Afghanistan where mere survival is a big enough challenge, getting the proper motivation and resources for sophistication and quality is even a bigger challenge which becomes huge in absence of legislation, procedures, services, infrastructure, community organization and markets.

Was just wondering in wake of poor security across many parts of the country, how can the certifying agencies assure adherence to standards and why shall the poor farming communities be interested in certification business, when they lack knowledge, resources, access to services and marketing outlets.

Certification, while desirable as it seems, is more of a privilege to stable farming communities then a need for the poorest.

Posted on 5 Jul 2007 by Enrique

Certification, when implemented as a component of a rural/alternative development project can be useful. In the Colombian case, a lot of small and isolated coffee producer have found in certifications like Rainforest Alliance, Fair Trade, Utz Kappe, and so on, an opportunity to get better market access, facilitating traceability.

The process of distributing revenues derived from the additional price paid to a certified coffee, implies in all cases the existence of entrepreneurial organizations. This is a key factor to promote community organizations and collaborative work, which are fundamental issues when promoting sustainable and effective income generation models or rural/alternative development.

Certification also calls the attention to farmers and small producer to improve their living conditions, and their productive systems. It usually contributes to increase productivity and produce quality.

It is also a good exercise for communities “to get into the world of marketing”. In the Andean case, one of the main obstacles to rural producer is the access to market, and certification has proved effectively to contribute to facilitate product differentiation.

Is true, some certifications generate additional costs, not in all cases covered with the income they generated. Farm investments, labor intensiveness and the need to establish processing, packing, marketing and managing infrastructure, represent additional investments. If not adequately planned, they can lead to debts and financial crisis.

Is also true certification is not the only way to demonstrate quality. This year, a group of coffee producers from La Vega, Cauca, in the south of Colombia, beneficiaries of a governmental program called Forester Families, managed to sell a share of their best quality produce to the National Coffee Producers Federation, to be commercialized as a special edition called “Cafe Guardabosques” (Forest guard coffee) in the Juan Valdez coffee shops. This edition has called the interest of specialty coffee buyers, some of them from outside Colombia, on the production of this type of communities, some of them formerly involved in coca or poppy production.

Posted on 5 Jul 2007 by Marcus

Enrique- in the Colombian case, how do you manage security issues? Certification schemes always require regular visits from inspectors to the producing communities. Do you only operate these schemes in the areas in which security is not an issue?
My understanding is that there aren’t any international certification agencies operating in Afghanistan yet, but this will be a big issue for them over the next few years, as growth of produce quality and export markets continues.

Posted on 5 Jul 2007 by Marco

Dear All, sorry for joining the discussion a little late … I have been working in China for the past 2 years and one of the things I was looking into was the potential for smallholder farmers to benefit from the quickly growing domestic and export market for organic products. It definitely is a challenge! There are some examples of group certification in China, both organic and Fairtrade (FLO). Certification has become more affordable since group certification became available and IFOAM published a guidance manual for producer organizations in developing countries applying for smallholder group certification in 2004. But in all cases in China it were the export and processing companies that initiated - sometimes together with local government officials – the group certification and paid for all the cost. An internal control system was/is usually not in place or was/is lacking.

However, I have visited the FLO-certified tea producer groups last year and it seems that all sides are quite happy with the arrangement. The farmers are able to access a new market, obtain Fairtrade premium for community projects, don’t have to worry about most of the marketing part and they obtain training (to improve product quality) by the processing and exporting company (that also is FLO-certified). To me it seemed that the tea producers had no desire to take over more control of the process. But in China it is currently nearly impossible for a smallholder producer organization to engage in export business anyway. FLO has been pushing the tea producer association and the export company to engage farmers more in the marketing part. Both sides don’t appear very keen to follow FLO’s recommendation …

Recently at the first BioFach-China conference (BioFach is the leading international fair for organic and natural products), speakers concluded that there is not a single functioning smallholder producer and marketing organization of organic products in China. Some NGOs (such as WWF and World Vision) have been supporting small farmers’ marketing organization for years, but those groups are still far from being able to manage on their own. There are discussions to jointly start a larger “model project” together with Chinese government support.

I don’t have much experience with smallholder marketing organizations in other countries, but for China I have definitely doubts that it could work in the near future. Certification cost may not be the biggest challenge (since there is group certification), but it will need years of capacity building support that can only cover so little ground (through support by the few NGOs that mostly lack solid business skills). And such high-input “model” cannot be replicated easily. Ideally, the government should provide the needed capacity building services, right? So, should we (those of us who are NGO people) rather work with governments, i.e. work together with appropriate government institutions to set up a working “model government support service”?? May-be the Chinese "Farmers & Company model" isn’t that bad either ... – Regards, Marco

Posted on 5 Jul 2007 by Marcus

Marco- what is the objection to the ’farmers & company’ model? Is it that the farmers are not integrating very far up the value chain (because they are still selling to exporters and other intermediaries), or because they are passive in the arrangement (it is more like contract farming with a specially arranged farmers’ group as one of the counterparties)? To me, there is nothing wrong with a marketing organization having ’intermediate industry’ companies as clients- in long value chains with global distribution and lots of value-add that is inevitable.

Posted on 6 Jul 2007 by T. Gibson

I worked in the Wa region of northern Myanmar last year and this issue was raised then (organic farming, community marketing groups, certification standards). I think we felt that the Wa region was not ready for this yet, probably for similar reasons as advanced by TanOli (governance not good enough; survival is first requirement) and Marco (small, community based farmer organisations are not capable/allowed to participate in export markets unimpeded). Perhaps with development sometime in the future, small-holder farmers may be capable of developing such schemes in a more stable environment but survival (producing enough rice to eat) seems the paramount requirement just at present. However, that is not to say that certification and export schemes couldn’t work for the benefit of small-holders in such an environment if administered by a competent, benign, philanthropic authority.

Posted on 6 Jul 2007 by Marco

To respond to Marcus: Yes, I also think the Chinese farmer & company model is ONE good model, and could also be a first step in capacitating farmer groups to slowly learn more about marketing. FLO has no problems with the companies organizing farmers to become a Fairtrade group, but definitely wants to see improvements in terms of farmers’ particpation further up in the value chain (as stated in the FLO progress requirements). But of course in China there is currently only a limited leeway for empowerment. But with China changing so quickly all may be different in a couple of years. But again, if the company is part of the Fairtrade chain of custody, small producers may be happy with the status quo.

Posted on 7 Jul 2007 by Marcus

Marco, I am going to pick on you again....

Let’s take the example of how specialty cocoa or coffee is marketed in Peru. There, you might find ’second level’ associations that have smaller associations as their members, with anything up to 500 families in total. For both these crops they will do a certain amount of processing- with coffee producing at least the dried and fermented bean, and with cocoa producing at least cocoa butter or powder. Now at this point they have two options. The first is to try to go the rest of the distance and make a finished product, and the second is to sell to a specialty buyer in Europe, the US or Japan, like a maker of Swiss chocolate or a small coffee house like Illy.

Now... if they go down route one, they have two problems- (a) quality, and (b) marketing. With respect to (a) even with quite a lot of investment it is hard to get the quality up to the levels needed by in western markets. Even in the Royal Project, here in Thailand, or Bolvia’s El Ceibo, which are exceptionally well-organized and well-resourced, there are still quality issues with processed products. With respect to (b), the problem is that the channels for these products are pretty fixed- it’s very hard to break into distribution of specialty coffee, even if you have the resources to try. The chances are that you would never be able to get the volumes that you would get by selling to a specialty buyer.

Choice two is to sell to the specialty buyer. Now these are in many ways excellent buyers- they have corporate social responsibility programmes, they are 100% on board with Fair Trade and Organic certification, some will even help out in other ways, e.g. by giving early or advance payment if the organization is having a cash crunch. But, if the organization goes this way (and I should say that in Peru they generally do) they will be permanently limited in how far they can go up the value chain. These kinds of buyers must receive semi-processed produce- green beans or cocoa powder, or something like that- certainly not finished chocolate or roasted and packed coffee!

So, which would FLO want? Hard marketing and quality issues, and move up the value chain, or easy marketing and stay stuck in one place in the value chain?

Posted on 9 Jul 2007 by Marco

I cannot answer your question well i’m afraid ... I am just starting ot work with FLO and don’t know that much detail about the organization yet. As far as I know, FLO also deals with situations where there are "second level farmer groups" (in S-America I guess). I should probably not speak for FLO yet, or else I’ll loose my job again ;-)

Posted on 11 Jul 2007 by Marcus

That’s okay, Marco- I should pick on someone else, anyway.