Introduction

The rise of ethical consumerism, where people are putting their money on healthier, greener, and more social-friendly production systems, has rapidly expanded “ethical trade” in developed countries. Among the ”ethical trade” items, organic food has been one of the most rapidly growing items, having started from a small base in the 1980s and 1990s, global sales of organic food and drink grew to over US$40 billion in 2006 (Willer, Yussefi-Mensler, and Sorenson 2008). In 2007, the market for fair-trade products also expanded by 47% (US$14 million) (Organic Monitor 2008). The rapid growth of ethical consumerism translates to the direct involvement of the private sector in poverty reduction and thus can potentially lead to the attainment of the Millennium Development Goals (MDGs).

Majority of poor worldwide depend upon agriculture for their livelihood. In Asia alone, more than 600 million jobs are related to agriculture. Although poor farmers can potentially play a major role in providing environmental services while improving their livelihood, they do not do so due to the lack of incentives in the current agriculture trade system. Since the current trading system undervalues the potential social and economic services of products, there is a pressing need to put appropriate incentives into place. The public sector has traditionally provided support for the poor to protect the environment through development assistance projects and programs. However, there have been mixed results and most of the projects are not sustainable beyond the period of implementation. Private sector involvement using market-based instruments which internalize externalities of products has recently been viewed as a more sustainable solution.

The rapid increase in the demand for organic and fair-trade products has provided new income generating opportunities for poor farmers in developing countries, particularly in the export market. Specific certifications, and the fulfillment of their corresponding certification guidelines, are required in order to participate in such trade. In return for fulfilling the requirements under certifications, producers receive price premiums for their products. An estimate done by the Export Promotion of Organic Products from Africa (EPOPA) project suggests that 44% of the total benefits from organic agriculture come from farmers' premium (ESCAP 2001). Another study estimated that half of the farmers' accrued premiums directly benefitted the farmers themselves (Harris et al. 2001). Thus, ethical trade appears to be an effective market-based development strategy which incorporates incentives for the poor to improve their income while potentially contributing to the MDGs (Setboonsarng 2006).

This paper examines two popular certification systems, organic certification and fair-trade certification. It presents an initial attempt to explore whether the conditions set out under organic certification contribute to the attainment of the MDGs, and provides a platform for sounding out the problems that hinder its success.

This paper is organized into six sections. An overview of organic agriculture (OA) and the process of organic certification follow the introduction. The next sections present the standards covered in this review, their links to the MDGs, and the problems faced. The last section summarizes the findings and discusses policy recommendations.

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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.