Certification Benefits for Small Scale Farmers
Written by guest blogger: Emma Blackmore - Researcher, Sustainable Markets Group
IIED - International Institute for Environment and Development www.iied.org
Consumers today are confronted with a growing array of certification labels – from organic and Fairtade to Rainforest Alliance and Starbucks’ CAFÉ Practices. The market for certification is growing: in general sales are increasing and new products are entering the certified market and some certification schemes are also entering the mainstream.
Certification is often proposed as a means to avoid the traps associated with low and volatile commodity prices, environmentally unsustainable farming practices and poor market access. But IIED’s new report demonstrates that the costs and benefits of these schemes vary greatly, and certification may have little to offer the poorest producers.
It’s important for retailers, manufacturers and consumers, as well as NGOs, to fully understand the opportunities and limitations of certification for embedding sustainability into the supply chain and improving the lives of small producers.
We reviewed several certification schemes in a study that focused on coffee, tea and cotton produced in China, Vietnam, Indonesia and India. The Asian settings are interesting because they are dominated by small-scale production systems, where economic and agricultural opportunities are often quite limited, but are also important sources of a number of commodities – particularly tea and cotton.
Schemes such as Rainforest Alliance, UTZ Certified and CAFÉ Practices offer no minimum prices, no guaranteed premiums and do not aim to address price volatility and inequity in the value chain, though they are less bureaucratic than other schemes and do help to connect small-scale farmers to markets. These schemes are associated with actors with considerable market power (Kraft Foods, Sara Lee and Starbucks respectively). They are not as strong on social criteria, and their basic aim is not to transform inequitable trading relations.
Other schemes include organic and Fairtrade labels, both of which have different emphases and costs and benefits. While organic labelling schemes are likely to create environmental benefits, the social and economic benefits are less clear, particularly where no co-investment or support from other players in the value chain is forthcoming. The conversion periods associated with transition to organic agriculture can be challenging, as it can take three to five years to convert, and some farmers may benefit from a safety net such as Fairtrade certification in the meantime. The social or economic benefit of organic may quickly be eroded by buyers or customers pushing for lower prices, expecting the farmers to carry the financial and technical risks of compliance.
Though Fairtrade certification can act as an important safety net by guaranteeing minimum prices for poor farmers, Fairtrade premiums have fallen in real terms over time and will need to be adjusted to make any significant different to the livelihoods of small-scale farmers.
For small scale farmers, the benefits of certification can include long-term relationships with buyers and therefore potentially better returns, and greater negotiating power in schemes – such as Fairtrade – that require farmers to form democratic producer organisations. But there are challenges to being organised and in some cases farmers may be suspicious of group formation.
Certification can also promote improved farm practices, better quality produce, and training and other opportunities for farmers. Certification can mean improved access to information, training and support – either from donors, NGOs, private sector players such as exporters, government or certification bodies themselves.
But it is unlikely that all farmers will be able to benefit from certification.
Farmers have to absorb the lion’s share of the costs of certification – both direct costs such as certification fees, and indirect ones, such as the costs of establishing the structures needed for traceability. Farmers with larger asset bases who are already producing quality products are better placed to meet certification requirements. For many farmers certification is simply too costly, certification may therefore be a driver of rural differentiation which serves to improve the livelihoods and market opportunities of farmers who are not the poorest. Finding ways to reduce the costs of certification for small-scale farmers is vital. IFOAM’s participatory guarantee system, for example, is a cheaper alternative to conventional verification systems.
Our study concludes that it is unlikely that any certification scheme will emerge as a clear pro-poor winner or the best and only option for firms who wish to embed sustainability in their supply chains. While certification can be an important part of a toolkit for sustainability risk management and ethical consumerism, it’s important to recognise the exclusive nature of certification and its limited market coverage. It’s important for other value chain players to support certification attempts as well as for certification bodies to find more affordable ways for small-scale farmers to get certified, and stay certified.