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COMMON FUND FOR COMMODITIES
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SOME ISSUES RELATED TO COMMODITY CERTIFICATION STANDARDS

Over the last 20 years, consumer and retailer-driven certification has entered onto the global agricultural commodity markets and has since become part of the daily business operations of millions of commodity producers, processors, traders and consumers. Consumers often prefer to rely on certified products because of health and quality concerns. More recently the growing consumer interest in ‘fair’ and ‘green’ products generated an increase in the market share of the Fairtrade and Organic certified products. All these certification schemes have introduced a new set of both opportunities and challenges for the farmers. As markets for ‘fair’ and ‘green’ certified produce grow, being able to cope with certification and certification costs becomes a real issue for producers. The success of a certification scheme will be determined by whether it is profitable for producers and whether a gap- a ‘non-tariff barrier’- is created between those who can afford to pay the certification costs and those who can’t. Quite often for the smallholder commodity producers, the certification costs are too large for their pockets.

The International CFC Workshop on the Opportunities and Challenges of Certification for Commodities Harvested/extracted by the Rural Poor was convened in April 2009 by the Common Fund for Commodities and associated stakeholders at the premises of the International Network for Bamboo and Rattan (INBAR) in Beijing, China. The report of this one day workshop can be downloaded from this link: Workshop on the Opportunities and Challenges of Certification for Commodities. The objective of the workshop was to discuss the experiences that major commodity stakeholders have had with certification, and the potential role of the CFC in shaping commodity certification in the future. The event provided important insights into the effect of certification felt across a wide range of commodities such as tropical timber, jute, lead, coffee, olives, bamboo and cotton. In addition presentations were made various certification schemes including Fairtrade, IFOAM (organic) and sustainability certification. FAO made a presentation on the advantages and disadvantages of voluntary certification for small, poor producers.

The main recommendations from the workshop can be summarized as follows:

  1. There is a need for standard alignment to the standards by the producers: It is recognised that adherence to standards offers many environmental, health and social benefits to smallholders. Before smallholders will be able to comply with standards there is a clear need to further harmonize and align standards. The proliferation of standards with their specific compliance rules makes adherence to standards complicated for smallholders. Commodity organisations should work towards providing enabling environments and streamlining the information flow on standards for smallholders. There is also a need to provide financial and technical capacity to smallholders so that they are better informed about standards, and can comply with the criteria and demands at minimal cost. Although smallholder producers face serious challenges with the market mechanism, in many cases significant benefits can ensue from alignment with and harmonization of standards.
  2. Build financial capacity and develop solutions: Financial capacity to adhere to certification was highlighted as the greatest challenge facing smallholders, who often cannot benefit from economies of scale even under structured group schemes. At the international and national level, the authorities and the private sector should work towards developing more equitable grounds for certification for smallholder producers and recognise that without economic incentives, the market mechanism cannot function. Countries could be requested to set up a fund to provide finance to make certification for smallholders possible.
  3. Investigate roundtable options: Roundtables, with the participation of producers, consumers, exporters, industry, trade unions and Governments can be useful for solving problems in the commodity sector and promoting sustainability guidelines, with or without voluntary commitments.for all stakeholders. The rountable mechanism is currently used to discuss issues in the soya, cacao, coffee, cotton and other supply chains. The roundtable mechanism can prove relevant for the harmonisation of standards. Adequate cost benefit analysis should be conducted before any roundtable is developed.

Commodity certification is a very important topic for commodity development. Coffee certification merits special attention. In September 2012, the International Coffee Organization (ICO) organized a seminar on coffee certification which was held in London. The theme of the seminar was the economic, social and environmental impact of certification on the coffee supply chain from the farm to the cup of coffee. Several presentations were delivered by the producers organisations, private sector, research institutions and standard setting organisations, in particular those involved with sustainability certification. The summary report and copies of the various presentations can be accessed on the following link http://www.ico.org/seminar-certification.asp.

One of the presenters in London was Mr Filtone C. Sandando of the African Fine Coffees Association (AFCA) a coffee producer organization with a membership ranging from several African private sector affiliates and Government Coffee Boards. CFC finances a certification training project under AFCA coordination. Mr. Sandando reported on the progress of the activities of this CFC/ICO/EU project and lessons learned about certification and verification in Africa. The overall objective of the project is to increase the quality and quantity of certified / verified coffee produced and processed within the East African region in order to have viable access to premium markets upstream. This project made significant progress towards implementation of project activities which motivate farmers, particularly specialty coffee farmers, to produce the quantity and quality of certified coffees resulting in greater market access and better prices as well as an overall sustainability of production practices. The specific needs of coffee farmers in each country was clearly identified so that the training process was tailored accordingly. Training manuals were developed and this culminated in the training of master trainers and on-going trainer-of-trainers training. One key output was the development of the Generic Training Manual which is being used to guide the training process for the project.

The 6030 farmers trained in the project have their coffee certified with respect to the various certification schemes being applied in the project countries. To this end, a multiple certification approach was applied to provide the beneficiary farmers with access to market options and better terms of trade. Multiple certification capabilities provide farmers with leverage to switch market options for better terms of trade. The multiple certification capabilities promoted by the project do not only lead to better prices but also to more diversified market options. In addition existing new and emerging coffee sustainability initiatives resulted in an improved market efficiency, an increased value addition in terms of production and processing and a better coordination between coffee producers and the international coffee market. The other training activities involved nine National Coffee Institutions (NCIs) more in particular professional certifiers and verifiers. Under the project 86 coffee certification professionals were trained, including 39 master trainers, 18 auditors/certifiers and 30 trainer-of-trainers. Each NCI in turn initiated appropriate farmer training programmes.

The output from the seminar discussions was that sustainability of the coffee value chain was important for both producers (supply chain) and consumers (demand side) and that certification should be viewed as an integral part of the sustainability of the coffee value chain. However, it was noted that there were significant challenges that required to be addressed on certification for it to be sustainable.