Organic farming is a production system in which farmers are expected to comply with certain guidelines and standards; therefore, a certification system is necessary.
The need to market organic products separately and to make a clear distinction between organic and conventional products throughout the organic distribution and processing chain necessitates the establishment of a certification system to ensure that organic products have been produced according to organic standards.
The main objective of such a certification system is to assure consumers that products have genuinely been produced organically.
As there is no obvious way for consumers to distinguish whether a product is organic, a price premium for organic products can only be achieved if confidence in the organic quality is ensured.
This makes clear standards, certification, and labelling of products important factors for the economic success of organic farming.
A clear and comprehensible system of standards, certification, and labelling exists in different parts of the world.
A typical example is found in the European Union (EU), where existing council regulations 2092/91 and 1804/1999 (EC 1999a) define the standards to which farmers must adhere in order to produce organically.
While sometimes complicated in detail, these standards provide a clear basis for all organic farmers in Europe.
Anyone intending to sell products as organic can only do so by complying with the rules laid out in the European regulations and submitting to an elaborate inspection system that has been set up to ensure that the products have been produced according to the standards. These standards also apply to those who want to import products into the European Union.
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Standards and Regulations Governing Organic Farming
Organic farming methods are internationally regulated and legally executed by many countries, based in large part on the standards set by the International Federation of Organic Agriculture Movements (IFOAM), an international umbrella organization for organics established in 1972.
The new EU regulation on organic production, as well as the Canadian organic standard, came into force in the year 2009. Furthermore, the Australian domestic organic standard was implemented.
Canada and the U.S. concluded the world’s first fully reciprocal agreement between regulated organic systems, and the EU introduced procedures for approving certification bodies from outside the EU.
The standards and regulations are set in place to ease trade in organic products and foster the future growth of the sector. The standards set by the EU can be seen as a minimum level within the Union.
These standards explicitly state that stricter rules may be used. A number of stricter standards set out by national farmers’ organizations also belonging to the organic farming sector exist.
From a marketing point of view, stricter standards can be seen as the basis for further market segmentation within organic farming in an attempt to receive an additional premium for being the ‘most organic’ among organic farmers.
Prior to European regulation of organic farming, most national standards were set by private sector bodies. The common standard introduced by regulation has had a major positive impact on both market transparency and trade opportunities, and clearly counteracts any attempt at fraud.
The number of countries with organic standards has increased to 73, and there are 16 countries in the process of drafting legislation.
In 2009, FAO, IFOAM, and UNCTAD started the Global Organic Market Access (GOMA) project. The aim of GOMA is to facilitate equivalence, harmonization, and other types of cooperation in order to simplify the process for trade flow of products among the various organic guarantee systems.
There has been modest growth in the number of certification bodies, with the total being 488, up from 481 in 2008. Most certification bodies are in the European Union, the United States, Japan, South Korea, China, Canada, and Brazil.
A growing number of organic producers are certified through Participatory Guarantee Systems (PGS) across the world. PGS are locally focused quality assurance systems. It is estimated that around 10,000 small operators are involved in PGS worldwide.
The leading countries with regard to PGS are located in the global South. Several organic standard setters have also developed draft standards for climate “add-ons” for organic certification, and it is expected that the use of carbon labelling by retailers will grow considerably in the future.
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Regulatory Mechanism for Organic Product Certification
To have quality assurance, a country must have an internationally acclaimed certification process in place for export, import, and domestic markets.
The National Programme on Organic Production (NPOP) defines the regulatory mechanism and is regulated under two different acts for export and domestic markets. NPOP, notified under the Foreign Trade Development and Regulation Act (FTDR), looks after the export requirement.
The NPOP notified under this act has already been granted equivalence by the European Union and Sweden. USDA has also accepted the conformity assessment system of NPOP.
Due to this, the product certified by any Indian accredited certification agency under NPOP can be exported to Europe, Sweden, and the USA without the requirement of re-certification.
To address the requirement of import and domestic markets, the same NPOP has been notified under the Agriculture Produce Grading, Marking and Certification Act (APGMC).
The regulatory body of NPOP under the FTDR Act is the Agricultural and Processed Foods Export Development Authority (APEDA) under the Ministry of Commerce, and the regulatory body of NPOP under the APGMC Act is the Agricultural Marketing Advisor (AMA) under the Ministry of Agriculture.
Accreditation of Certification and Inspection Agencies is granted by a common National Accreditation Body (NAB). A total of 18 accredited certification agencies oversee the certification process. Among these, 4 agencies are under the public sector, while the remaining 14 are privately managed.
Labeling of Organic Products For Market Recognition
Logos, labels, and brands help consumers recognize organic products. For a long time, this was a concern only for some national governments and not for European policy.
In December 1999, however, a European logo was introduced to communicate the organic character of a product clearly to consumers.
Unfortunately, this logo has not gained wide acceptance in the marketplace. Instead, various logos and labels are used throughout Europe. Most of these are supported by farmers’ organizations; others are government-supported.
Typically, these logos and labels designate specifics of the country of origin. A few exceptions try to emphasize the international transferability of organic products, such as the Demeter logo indicating biodynamic production.
The existence of too many logos is not only confusing for consumers but tends to produce an ‘information entropy’ effect: consumers do not recognize any logo because no one logo is sufficiently widely known.
A number of supermarket chains have started specific brands for organic products that are sold only in their stores. In this area, national approaches also predominate.
The difference between brands on the one hand and logos and labels on the other is quite important. A brand name is a ‘private product’ for which cost and benefit are borne by the respective supermarket chain, whereas logos and labels have the character of ‘club goods’.
Anyone who joins the club by paying dues and abiding by the club’s rules can enjoy the benefits. The bigger the club, the more difficult it becomes to coordinate the diverging interests regarding the logo or label.
As the club gets bigger, individual members become less likely to promote the good of the club. The more members the club has, the smaller the exclusivity of its benefits.
Thus, an organic farmer who intends to use the European logo will only benefit from it if the logo is already widely recognized by consumers.
Promoting a logo or label to establish it in the market and achieve wide recognition demands collective action by the ‘owners’ of the logo. This is very expensive and demands a long-term approach.
The European logo for organic farming has two major advantages:
i. It is free of charge. Anybody who produces certified organic products may use it at no additional cost.
ii. It is applicable in all EU countries, thus facilitating trade.
On the other hand, the European logo also has severe drawbacks:
iii. It is neither actively promoted nor supported by a marketing campaign.
iv. It is very similar to other European logos under the ‘designated origin’ legislation (Council regulations 2081/92 and 208
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