Challenges

For poor farmers in marginal areas, improvements in natural resource management can lead to increased sustainable productivity and reduced poverty. While certification can potentially facilitate improvements in natural resource management, and contribute toward the achievement of the MDGs, there remain several problems which need to be solved. Small-scale farmers live in remote areas with minimal infrastructure, rampant market and institutional failures, and unsecured land tenures. They often lack the technical knowledge needed to comply with complex certification requirements and need external facilitation. The following section highlights some of the key problems that poor farmers face.

A. Organic Certification: “One Size Fits All”

As discussed in the previous section, organic certification evolved from the conditions of farmers in developed countries, where farmers are relatively well-educated and generally involved in largescale agricultural production. In contrast, farming systems of the poor are small-scale, diverse, and complex. The many conditions that certification systems require are not easy for poor farmers to comply with. The requirements for organic certification are also very information-intensive, and require extensive paperwork about farm history, production plans, and most tediously, day-to-day record-keeping of farm inputs and activities. Moreover, in the context of small farms, the required area of buffer zones separating chemical farms from organic farms makes it difficult to receive organic certification without supports from public sector. In addition, since ecosystems in developed and developing countries differ, scientific research is required to make the certification requirements more appropriate for each particular ecosystem.

Nevertheless, there have been successful cases where non-government organizations (NGO) or local governments have effectively facilitated the certification processes of organic farms. The lessons learned from their successful experiences should be documented and disseminated for other farmers to emulate.

B. Who Pays for Third-Party Certification?

The process of organic certification requires third-party inspectors to visit the field to verify compliance. However, certified inspectors often do not exist at the local level, so certification entails the use of inspectors from importing countries or from other regions, thus adding to costs and making the total certification cost unrealistically high for farmers. The inspection fee alone could cost from US$1000–US$4000/year, depending on location, size of operation, and export destination requirements. Frequently, in cases where products are to be exported to multiple countries, more than one certification is required. Thus, experiences in developing countries show that the training costs, as well as the certification costs, could easily exceed the potential profit gained from premium prices. Since this is generally beyond farmers' financial capacity, at least initially, the certification costs are often paid by:

• Private sector firms: Where an international trading firm or multinational retailer is involved, the firm usually pays for the certification.
• Government: Recognizing that organic certification offers positive externalities, governments like those in Bhutan, Thailand, and some state governments in India have either partly or fully covered the cost of certification for farmers.
• NGOs with external support: Many development projects have recognized the potential benefits of organic certification, and so have provided funding through NGOs to support certification costs and including training costs.
• Producer groups: After the initial externally-supported period, many farmers' groups had successfully developed to be able to collectively pay for certification costs. The certification cost is deducted from collective funds of the farmers' group, so individual farmers may not have even been aware that they are paying for the costs of certification.

In the case of fair-trade certification, since it evolved based on existing smallholders' conditions, there are provisions supporting the setting up of certification systems for small-scale farmers. Before 2004, the cost of fair-trade certification was paid by importers, but in early 2004, the FLO decided to introduce a certification fee for producers. Fortunately, producers can apply for financial assistance from the FLO's Certification Fund or from a national FLO member (Fairtrade Foundation 2006). However, certification costs are normally passed on to consumers in the form of higher prices for organic and fair-trade products.

C. Transition Period

In order to be certified organic farmers, farmers who have previously been using agrochemicals on their farm require a transition period of 2–3 years to gain certification. During the transition period, yields may drop and premium prices may not yet be available. External financial support may be required to financially support farmers to go through the transition years.

Fortunately, for marginal farmers in chemical-free areas, the transition period can be shortened, or in some cases avoided. Since most of their farms are “organic by default,” there is a comparative advantage for poor farmers to enter market-oriented organic production.

D. Land Tenure

Farmers without secure land tenure are less likely to obtain organic certification, mainly because the return on investment only becomes apparent in the medium to long-term. Poor farmers often live in areas where land tenure is problematic, and due to unsecured land tenure, farmers are less likely to invest in land improvement measures. In the Philippines, farmers on leased land reported that they were forbidden by their landlords to convert to OA, as it could lead to difficulties in terminating lease contracts if the tenant had already extensively invested in land improvements (Personal field visit 2003). Thus, land tenure is an important factor in using organic certification to achieve the MDGs.

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1. Lauren
   (posted 23 November 2008 / 08:28:08 AM)
   
   The Australian Government needs to listen to this article and put into place an actual timeframe for when they are going to meet all the MDGs.