Conclusions and Recommendations

The growth of ethical consumerism in developed countries has led to increased imports of environmentally and socially certified products from developing countries. Organic food and beverage have been some of the most rapidly growing sectors in international “ethical trade,” providing links between the global market and poor farmers in developing countries. In the past two decades, organic certification has expanded to include a sizable portion of poor farmers in remote areas, due to the support of NGOs, donors, and governments of developing countries that have increasingly recognized the benefits of supporting organic agriculture.

The practice of OA is uniquely pro-poor, as it builds on the comparative advantages that poor farmers have, such as the relatively chemical-free land, the abundance of labor, and the traditional knowledge of chemical-free production methods. These comparative advantages the poor farmer posses have allow cost effectiveness in producing organic and thus encouraged the private sector firm, which previously had little interest in reaching out to poor farmers, to set up contract farming operations in remote areas to produce certified OA products for export and for local urban markets Setboonsarng, 2008). This private sector arrangement with the poor located in areas in developing countries where chemical farming is not feasible appears promising in contributing toward the achievement of the MDGs.

The global use of certification systems to guarantee the quality and production process of OA products, including environmental and social characteristics, is rapidly growing and is emerging as a norm in international trade. While these systems could have a discriminatory effect on small farmers, if effectively facilitated, it could provides opportunities for them to participate in an open, rule-based, non-discriminatory trading system, which is one of the targets of the MDGs. Farmers who choose to comply with certification requirements are compelled to engage in a number of activities that can benefit the environment and improve their income sources.

In this review of the organic certification conditions and their impacts on the MDGs, we conclude that organic certification most directly contributes to MDG1 (poverty and hunger) and MDG7 (environmental sustainability, including climate change), and indirectly contributes to health-related MDGs through the elimination of the risk of exposure to toxic agrochemicals. Organic certification also enhances health and living conditions by improving sanitation and water quality. In terms of carbon credits, certified organic farmers are better equipped to claim payments than non-certified farmers, as they have undergone the process of detailed farm monitoring and record keeping. This can be an added incentive for farmers to adopt certified sustainable practices which contribute to global public goods. Organic certification however, does not directly address social aspects, so its contribution to the non-income aspects of MDGs is indirect.

The review of fair-trade certification conditions proves that it directly deals with social justice and community strengthening. In addition, by addressing the special needs of smallholders in marginal areas, fair-trade certification adequately complements organic certification in enhancing the social and non-income impacts of the MDGs. Fair-trade contributes directly to MDG8 (develop global partnerships in development), in particular targets 12 and 13, that address the needs of the poor in developing countries under rule-based, non-discriminatory trading systems. Since the primary objective of fair-trade arrangements is to promote social justice and accountability, it satisfactorily supplements organic certification, which mainly deals with the technicalities involved in the production process. Thus, a combination of organic and fair-trade certifications would contribute to the comprehensive achievement of the MDGs.

The review also shows that national standards are less strict than international standards, which can have interesting implications on poverty reduction and the MDGs. While it is possible that more extensive standards can generate even greater direct impacts on poverty and the MDGs, these benefits might not be justified by the corresponding compliance costs, particularly since standard organic certification requirements need further adjustment for farming systems of the poor in marginalized areas. Due to multiple standards in organic agriculture, additional effort in harmonizing standards is important. It would also be useful for developing countries to develop a comprehensive database, such as www.organicrules.org, as groundwork for standardization.

While there is a need for further research to fine-tune organic certification requirements, other options promoting organic certification should also be explored. Pioneer NGOs in this movement should further improve innovative “trust-based” certification arrangements, such as extending faceto- face communication through the use of information and communication technology (ICT). Community-based certification and franchising of agriculture are other options that could be further explored.

While both organic and fair-trade certification have significant poverty reduction potential, so far their large-scale impacts on poverty have yet to be realized. This is due to the high costs associated with certification, particularly for organic certification, which does not have built-in mechanisms to assist smallholders with certification costs.

With the current setting with limited public support, large food retailers emerge as the most effective actors in expanding the international trade potential of organic products. They are positioned to facilitate certification for large number of poor farmers. The private sector also holds the key to translating effective demand and technical solutions into practical advice for poor farmers to adopt certified OA. The scale of poverty reduction impacts of organic certification will be largely determined by the extent to which large food retailers will enter the organic sector in developing countries.

In order to increase the impact of “ethical trade” on poverty reduction, the public sector needs to play an active role in bringing down the costs of working with the poor, and join forces with media create a demand shift for “ethical trade” products. The role of the public sector could include but is not limited to the following:

• Harmonizing standards and/or the developing pro-poor regional standards;
• Developing alternative marketing and certification systems;
• Building up the private sector's capacity as a certifying body;
• Strengthening the capacity of the local government to oversee certification bodies and standards;
• Developing rural infrastructure i.e., road, cold storage, etc.;
• Addressing land tenure issues;
• Supporting farmers' organization;
• Strengthening institutional arrangements which are inclusive of the poor i.e., various form of direct and non-direct contract farming
• Supporting research and extension of OA for marginal ecosystems
• Supporting the carbon credit process for OA and support OA to be included under the Clean Development Mechanism (CDM);
• Providing incentives to firms, i.e., risk guarantee; and
• Creating a competitive environment for the private sector to work with the poor, e.g., promoting organic contract farming.

The task of achieving the MDGs through the use of ethical trade certification such as organic and fair-trade will require further cooperation among all stakeholders: farmers, committed private entities, national and local governments, donors, NGOs, and academic communities.

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Comment(s)

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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.