This chapter reflects on some issues around voluntary environmental and social certification that are currently being debated and that have not yet been touched upon in previous chapters. The discussions focus on certification of horticultural and tropical cash crop products where relevant, but most discussions are relevant for any product.
As for most of this paper, this chapter is not exhaustive and tries to give an overview of the most important issues, rather than going into excessive detail.
Farmers operate in a variety of circumstances, in different climates and on different soils, in different socio-economic situations, with different levels of support services and infrastructure. On the other side are the consumers, who are also far from a homogenous group, with varying perceptions and priorities regarding environmentally and socially responsible production and trade. Yet the standards and certification programmes discussed here aim to be applicable and credible worldwide.
It is not surprising, then, that it has been and remains a continuing challenge to take into account local specificity in international standard-setting and in globally-operating verification systems. Standards should not be too detailed, in order to retain sufficient flexibility for more specific interpretations relevant to each local context. However, standards that remain too general and vague are difficult to explain to consumers. Likewise, the inspection and certification procedures might need to be adapted to the local situation, but too much flexibility could run counter to the need for strong credibility.
This has some implications for both standard-setting and the verification system.
Standards developed in one particular country or geographical area may discriminate against producers of other countries or areas if they do not take into account different local conditions. Involvement of a variety of stakeholders in standard-setting is important to ensure that the standard does not unintentionally discriminate against some category of producers or processors. However, there is a trade-off between efficiency and participation in the standard-setting process. It should be made possible to comment on a draft standard for those who wish to do so. To this end, standard-setting bodies could make their work programmes and draft standards public. They could also actively seek participation from stakeholder groups that could be affected by the standard and that would otherwise not be aware of the development of the standard.
In general, the more prescriptive a standard, the more likely that it unintentionally discriminates against certain producers. In contrast, standards formulated in terms of performance towards its objectives are more likely to leave the "how" to the producers. An example can illustrate this. If a standard aims for "no pollution of watercourses", the standard could prescribe what pesticides not to use, the width of buffer zones, etc. It could also set standards in terms of water quality of outflow water (maybe in relation to quality of inflow water), leaving to the producers the decision as to what that means for their pesticide use and buffer zones. However, there may be a trade-off with verifiability and certification costs. To use the same example, an inspector can easily verify the buffer zone, but to measure water quality the producer would have to pay for laboratory tests.
Another possibility for incorporating flexibility into standards is the development of generic standards at the international level, on the basis of which national, sectoral or certification-body-specific standards could be developed. In such a system, accreditation is a way to control if the specific standards are in line and in spirit with the generic standards. The disadvantage of such a system is the existence of different specific standards addressing the same issue, which may hamper trade. A good example is IBS and the accreditation system. Even though accredited by the same accreditation body, the certification bodies do not automatically accept the work by other accredited bodies, partly because some of those bodies have extra requirements. These extra requirements might be due to national legislation or consumer preferences in the market in which these bodies operate.
A different approach to ensure adequate flexibility is division between minimum and progress standards. The minimum standards would be the same wherever the standard is implemented, and would form the basis of the credibility of the label towards the consumer. The progress criteria would also be the same, but they may be implemented on a time scale that takes into account specific local circumstances and priorities. An example of this approach is the fair-trade system. A potential disadvantage of this approach is that it is difficult to sanction producers or facilities who have met the minimum standards but who are not committed to implement the progress criteria.
Some differences in verification systems may be needed to address local circumstances. For example, for smallholders whose holdings are too small to justify certification costs, internal control systems have been developed by organic and fair-trade certification systems. In this case, a group of smallholders sets up an internal monitoring system to make sure all group members adhere to the standard. The certification system then controls whether the internal system works well and re-inspects a certain percentage of the farms.
More generally, certification bodies have been calling for an inspection system that is based on risk assessment, rather than following the same procedures regardless of circumstances. This might involve more unannounced visits to facilities where the risk of non-compliance is perceived to be greater. Or, in the case of organic certification, it may allow for shortening or waiving of the conversion period on grounds of farm history evidence. In the case of social standards, a risk-based approach might lead to more interviews within a certain group of employees, rather than a completely random selection.
However, other differences in verification systems have their origin more in different administrative histories of enforcing organizations rather than that they are accommodating local specificities or specific consumer demand. These may include differences in accreditation rules (e.g. need for certification bodies to be ISO 65 accredited), in inspection frequency, in reporting formats and in traceability requirements (e.g. need for certificates to accompany the products). In the case of organic products, such differences are clearly hampering trade and there is a widely recognized need for harmonization and recognition of equivalence, or both, of guarantee systems.
Bendell[136] argues that standards and certification programmes are part of a wider development. Global business does not have an effective counterbalancing force of internationally enforced environmental rules or globally organized workers. Meanwhile, in most developed countries, personal identity is increasingly determined by how one spends one's money and spare time. Standard-setting NGOs represent a "consumer movement" of consumers demanding better corporate environmental and social performance. Bendell recognizes four types of NGO activity to bring about change: forcing (campaigns); promoting (research and advice); facilitating; and producing. The standard-setting and labelling programmes are facilitating or producing change, through offering market incentives for change or providing an alternative business model (fair-trade).
However, civil society control through NGO activity has its limitations in counterbalancing global business force. First, consumer regulation through certification and labelling is only open to those consumers who have the economic means to choose more expensive "ethical" products. Therefore, this type of regulation would tend to favour their specific interests.
Second, NGOs have their own problematic lack of accountability[137]. It is understandable that trade unions are not always enthusiastic about social accountability standards and certification programmes. They view themselves as the true representatives of the workers, whereas workers may not be directly represented in the membership of the standard-setting NGOs. Only when those certification programmes deliver more space to worker organizations and collective bargaining will they be able to recognize the complementary role those NGOs could play.
Accountability to stakeholders could be - but does not necessarily have to be - assured through NGO membership structures or advisory boards. In any case, it is important to involve actors who will directly be affected in the standard-setting process, as discussed above. Accountability to consumers can be improved through transparency, disclosing information on standard content, verification methods and the organization, and, in the case of labelling, through meaningful labels.
Related to discussion of the accountability of standard-setting bodies is the accountability of certification and accreditation bodies. It is generally accepted that certification by the standard-setting body itself does create problems of conflict of interest. Therefore, most standard-setting bodies discussed in this paper, with the exception of SAN/Rainforest Alliance, have separated those functions, mainly through an accreditation programme.
Standard-setting bodies may feel not to be in the position to judge the competence of a certification body per se. Therefore they may require the certification body to be accredited by another accreditation body (usually a member of the International Accreditation Federation) against one or more ISO guidelines for the functioning of certification and inspection bodies (ISO Guides 62, 65 and 66). In such cases, the accreditation by the standard-setting body evaluates only the specific aspects of the verification of their standard, such as verification indicators.
In the ISO system, even accreditation is completely separated from the standard-setting process, and as a result ISO has no control over the use of its standards (e.g. ISO 14001). Although conflicts of interest are avoided, this has the disadvantage that when verification is not thorough, the standard may become meaningless in practice and the standard-setting body has no means to improve the situation.
Agriculture is not the only sector addressed by an increasing number of standards and certification systems. Economic activities are increasingly "codified" and adherence to codes is increasingly controlled through third-party certification. This has led to the growth of audit, testing and certification companies, which now form a profit making sector in their own right.
Although this third-party certification model does provide for greater independence in certification decisions, the model is not completely free from conflicts of interests. First of all, if the certification body is a commercial company, it will have interests in performing as many inspections and issuing as many certificates as possible, while keeping costs down. This might compromise the quality of the inspections. Second, if more certification bodies offer the same certification service, being too strict may encourage clients to go to the competition. A the same time, competition may also provide incentives to increase the quality of the service to preserve the "good name". Any scandal as result of fraud that has not been detected by the certification body not only harms the market for the labelled product but also harms the image and market of the certification body involved.
Another frequently heard complaint about the "certification industry" - standard-setting bodies included - is the focus on details. The very act of describing a more-or-less ideal situation in the form of a standard, and performing inspections, leads to "implementation to the letter" at the cost of "the spirit". Instead of commitment to reach the ideal through continuous improvement, it encourages viewing the certificate itself as the goal. As a consequence, original "minimum" standards become the "maximum".
However good the system, the quality of the verification system will greatly depend on the capacity and motivation of the inspector. The inspector should not only have knowledge about the standard and certification requirements, but also sufficient knowledge about the crop and production system, the local socio-economic situation, and preferably speak the local language. There is ongoing debate about how much "sufficient" is in this respect. The anecdote of the organic inspector who in the middle of the coffee field asked where the coffee plants were is an example of incapability of both the inspector and the certification body. At the same time, there are also limits to what can be required of inspectors, who have to cover a multitude of production systems, countries and standards. Especially in the case of "new" standards, it might not be possible to find an inspector with experience in both the standard, the production system and the country.
The use of local or regional inspectors is to be preferred over inspectors from elsewhere, as they should be more familiar with the local situation, and this also reduces the cost of inspection significantly. However, local inspectors will have to be able to report in a language understood at the certification body's office, which might be in another country. Furthermore, conflicts of interest must be avoided: the inspector should not have familial or economic ties with the facility to be inspected, nor be otherwise liable to bribery or coercion.
Auditing of social and labour criteria pose specific challenges. Boundaries between compliance and non-compliance with certain standards are often more vague than with environmental criteria. This leaves a grey area in which the interpretation of the standard on the spot by the auditor is more important. Some people argue that it is impossible to be perfectly objective, and that this should be acknowledged by the certification bodies. Participatory workplace assessments have been proposed as a possible tool in monitoring social standards. However, such methods are time consuming and increase inspection costs considerably. To address these specific problems, the Social Accountability in Sustainable Agriculture (SASA) project, mentioned in Chapter 4, seeks to identify best practice in social auditing.
An important means of ensuring reliable and serious verification is the accreditation of certification bodies. As mentioned earlier, accreditation may have two aspects, which may be monitored through two different accreditation services. One aspect is the monitoring of the general operation and organization of the body, for which ISO has developed guidelines. Another aspect is that accreditation for social or environmental standards concentrates on indicators, particular auditing methods and special auditing skills, defined by the standard-setting body.
A final issue concerning the certification industry is that of the fees asked for certification services. There seems to be huge differences in the costs of certification, depending on the certification body. However, it is difficult to compare fees, as each body calculates them differently. Some calculate on the basis of services delivered. This inevitably makes certification more expensive for remote producers because travel time and hotel costs increase. Others count on the basis of acreage. For extensive production systems, this may result in very high certification costs compared with turnover. Most bodies use a combination of service- and acreage-based calculations, and it might be worthwhile for a producer to investigate which body offers the best deal for their facility. In this respect, it is not only the price that counts, but also the services delivered. Differences in services offered might occur with respect to the possibility for multiple certifications (number of accreditations the body has), equivalency agreements with other bodies to facilitate trade, knowledge about other export and import requirements, transparency in decision-making, and timeliness of updates on changes in standards and certification procedures[138].
Related to the cost of certification services is the discussion about who should pay. The costs associated with social and environmental certification are, first, the costs of implementing the standard (compliance costs), and, second, the certification fees. The costs of documentation and record keeping are usually considered part of the compliance costs, as they are normally part of the requirements of the standards. However, the documents themselves will not contribute to more environmental friendly or socially just production methods, but serve more as verification tools. Therefore, they could also be viewed as part of the certification costs.
In most cases, both compliance and certification costs are in first instance born by the producer or facility being certified. Where these costs have a notable impact on total production costs, they will probably be passed on through a higher farmgate price, if market conditions allow. For some programmes, the possibility of obtaining a price premium, as with organic and fair-trade certification, may be the main reason to pursue certification. In the case of fair-trade, the certification costs are borne by the trade, through the payments of licence fees to the national fairtrade initiatives. Still, the costs of compliance are the responsibility of fair-trade producer groups. The case studies in Chapter 6 give the impression that those compliance costs are mainly in the development of a democratic organization and more than compensated for by the fair-trade minimum price and price premium.
The discussion on who should pay for more environmentally friendly and socially just production is more debated when a label and price premium are absent, in particular when a buyer is trying to convince suppliers to implement a certain standard, as with EurepGap, the SA8000 corporate involvement programme and ETI. As shown by the case studies in South Africa, adjusting minimum wages or housing conditions may be very costly. If a buyer in Europe or the United States of America asks their suppliers to conform to these norms, should they not also pay for it? And may these buyers then pass on the costs to the consumers? How would you persuade consumers to pay more without a label to demonstrate compliance? Or would shareholders be prepared to receive less dividend, and would retailers be content with a lower margin?
Maybe the first question to ask in this discussion is why those buyers ask suppliers to implement these standards. Somehow, they must value products from complying sources more than from non-complying sources. This may be a genuine interest in the environment and the welfare of workers, or more a question of corporate image. In both cases, it could be argued that their appreciation of compliance should be expressed also in the trade relation. This could be in the form of a higher farmgate price, or in other, more favourable, terms of trade, such as longer-term contracts, better pre-finance arrangements, etc. However, in an oversupplied market, buyers, especially supermarkets, can impose requirements without providing compensation. The only appreciation of standard implementation could be that the buyer is unlikely to shift to other suppliers.
If the costs of compliance and certification are not passed on along the supply chain, it may well be that only the larger and wealthier producers will be able to implement such standards. This in turn will lower the impact of the standards on the environment or working conditions. Or, if a standard becomes the rule rather than the exception, it may exclude small-scale and poor producers from the market altogether.
As can be discerned from Chapter 5, on markets, and Chapter 6, on impact at farm level, the standards and certification programmes discussed offer both potential benefits and challenges for producers in developing countries in general, and for smallholders in particular.
A general constraint for producers and exporters in many developing countries is the lack of a local certification body, or a local office of an internationally operating body. This means operators have to turn to foreign certification bodies. As discussed in the section on the certification industry, the use of local inspectors is generally preferred, not only to lower certification costs but also because of greater local knowledge. However, a certification body needs to invest time and financial resources in finding a competent local inspector and educate that person in the details of the standards and verification methods.
Therefore, when the number of operators to be inspected in a certain country is few, foreign bodies may send inspectors rather than hiring a local consultant for short periods. This results in higher certification costs, because travel and hotel costs are part of the fee. When there are enough clients, a foreign body may employ a locally-based inspector on a more permanent basis. Only when the "certification market" is big enough can operators justify a local office that can handle the payments through local banks and with somebody to answer the phone in the local language.
Some standards require laboratory tests for soil analysis, water quality assessment or pesticide residue analysis. If these tests are requested, the laboratory itself usually need to have an accreditation, much the same as the certification body. Some developing countries do not have a laboratory with enough capacity, or a laboratory that is not officially accredited. In other cases, they are too far away, too expensive or otherwise not accessible for operators who wish to be certified. Because comparable tests are increasingly needed for other purposes (for example, to meet SPS Agreement requirements), the laboratory capacity in developing countries has steadily improved over the years. Still, in some countries, producers may find it impossible to comply with such certification requirements and standard-setting and certification bodies should consider alternatives so as not to discriminate against those producers.
In general, the voluntary social and environmental standards and certification programmes offer the potential of greater access to markets. These may be in the form of "preferred supplier" status for some large buyers, a better image in the market place in general, or access to a specific niche market with price premiums. However, such potential is not a static fact, as market requirements can change rapidly, and what may be a valued certification today may lose importance in future. For example, the ISO 14001 certificate initially made a difference in negotiations with buyers, but after almost all large- and middle-sized companies had obtained this certificate, it lost its advantage.
With respect to organic agriculture, both markets and impacts are variable. With respect to exporting organic products to European supermarket chains, Harris and colleagues[139] point to the fact that some supermarkets are moving to a Category Management System for purchasing, whereby one company is given the responsibility for sourcing all produce in their particular category, both conventional and organic. The requirements for uniformity and traceability favours use of single, large commercial farms. However, in some senses, the rigours of organic certification make small-scale organic farmers more likely to be acceptable as a source of produce than smallholder conventional farmers. Buyers can be sure the production facilities have been visited once a year, and problems with pesticide residues are not likely to occur.
What can be learned from the case studies is that organic methods may improve traditional farming systems and increase yields. However, whether it is worth going through a certification process depends greatly on the market for certified organic products, and whether price premiums compensate for certification costs. For farming systems that make intensive use of external inputs, adopting organic practices may, initially, reduce yields. Effects on cost of production depend a lot on individual circumstances, such as local wages for unskilled labour. Certification may be essential to obtain a premium to compensate for lower yields. In particular for export markets, care should be given to the choice of certification programme, and multiple certification may be necessary. Furthermore, the organic market is developing rapidly and both oversupply and undersupply situations may appear and disappear rapidly. It is difficult to judge what will be the market after the mandatory conversion period.
The fair-trade system is especially developed to offer access to export markets for what they call "disadvantaged" producers in developing countries in order to improve their livelihoods. However, even fair-trade may pose challenges in the form of organizational requirements for farmer associations. Furthermore, the fair-trade market is quite limited, which in turns limits the number of producers that can benefit from it.
The standards and certification system of the SAN/Rainforest Alliance have been developed for implementation in developing countries. However, their banana standards were developed for plantations, and smallholders may have difficulties with the extensive documentation requirements and the certification costs. At the same time, their coffee standards are implemented on farms with a range of scales of operation.
As labour standards, SA8000 and the ETI Base Code are especially geared to facilities that make significant use of hired labour. It would not make much sense to implement the standard on small farms that depend on family labour only. However, this does not mean family farms are discriminated against, as buyers are not likely to demand conformity with SA8000 from those farms. It is merely that some may prefer large suppliers with a SA8000 certificate rather than large suppliers without SA8000.
The retailers promoting EurepGap have been widely criticized for imposing more requirements on producers without remunerating them for the extra costs involved. It was feared that producers in developing countries, especially smallholders, would find it impossible to comply with the standard and would lose their market. Indeed, the number of smallholder farmers certified EurepGap is very limited, and they are mostly outgrowers for whom the certification costs and part of the documentation is taken care of by the exporter. However, retailers seem to realize that suppliers in developing countries might need additional time. Some observers noted that they were in general satisfied if commitment was demonstrated and improvements made, even if certification was not yet obtained. It was also observed that certification bodies often spread unsubstantiated messages that producers are about to lose their European market if they do not obtain EurepGap certification, without explaining who exactly the retailers are that are supposedly requesting EurepGap. It is frequently mistakenly understood that EurepGap is an EU regulation, and most certification bodies seem to make no effort to correct this view and to explain that EurepGap is an entirely private standard.
Governments have various potential roles in relation to certification programmes. First of all, national legislation has an impact on any programme advocating the implementation of certain standards, as it establishes the legal environment in which such implementation takes place. More specifically, governments may legally protect the use of certain terms on product labels. Government agencies may take on the role of standard-setting body or accreditation body, or both, and even that of certification body. Governments may also stimulate the adoption of certain standards through information provision, tax incentives or subsidies. In this section, each of these potential roles is briefly considered.
Providing the legal environment
Almost all standards require that companies and producers adhere to national legislation, and to environmental or social legislation in particular. Often, certification programmes provide an alternative mechanism of enforcement of national laws where governments lack the means - financial or otherwise - to exercise effective enforcement. Problems may arise when requirements of voluntary standards conflict with national regulations. In any case, voluntary certification programmes can not require that stakeholders act against national legislation.
Protection of terms
In the case of organic agriculture, many governments have decided to legally protect the terms "organic" "biological" or "ecological", and have restricted the use of those terms to those production systems and products that comply with organic standards. For terms like fair-trade, ethical trade, integrated agriculture, integrated pest management, etc., such legal control does not yet exist. The organic movement in the past has actively sought such legal protection. However, nowadays, opinions are divided on whether this has been wise. Many feel they have given control out of their hands.
Government agencies as standard-setting or accreditation bodies
The legal protection of the terms associated with organic-type production methods has resulted in governments developing their own organic regulation and becoming de facto standard-setting bodies. This is, however, not necessary; governments may also choose to recognize standards set by others. For ISO and organic standards, government agencies often do take the role of accreditation bodies, through which control can be exercised over the quality of certification services. Sometimes this role is delegated to a tripartite agency in which industry, consumers and government are represented (no unions, as such agencies do not normally deal with labour standards). If governments feel a certain standard or verification system is discriminating against certain producers or processors within its jurisdiction, it might wish to signal this to the relevant body.
Providing infrastructure
Governments may provide laboratory services that are accessible for producers against reasonable fees. They may also stimulate the setting up of local certification offices, providing one or multiple certification services. For example, Costa Rica has required all organic certification bodies operating in Costa Rica to open an office in the country. Other measures in this respect could be to ease administrative procedures or to provide tax incentives. Governments may also actively invite international bodies to organize inspector training in the country for those certification programmes they consider most important.
Giving incentives to adopt standards
If a certain voluntary social or environmental standard is in line with government policy, a government might wish to stimulate adoption of those standards. To this end, the government might provide funds to the organizations advocating those standards. Governments might also subsidy farmers who implement such standards, such as by paying for the certification costs during conversion periods, or for pre-audits in preparation for certification. Tax incentives for producers complying with the standard could be another option. This could be justified by arguing that those producers on average would cost less to society in terms of environmental pollution costs or health care for occupational health problems of workers.
Capacity building
Governments may train extension officers in the standards and the certification requirements. They may also ensure that consideration of standards is included in teaching programmes in agricultural schools and universities. Finally, they could develop public information campaigns for producers or consumers.
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[136] Bendell,
2000. [137] Simmons, 1998. [138] See also Van Elzakker, 2002, for a "wish list" of what producers and exporters require from certification bodies. [139] Harris et al., 2001. |
