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The role of private standards in sustainable development

03 September 2012

According to Hans-Peter Egler, head of trade promotion at the Swiss Government Secretariat for Economic Affairs, private voluntary standards (PVS) which define and certify criteria applied to production processes and production methods can make a significant contribution to sustainable production. Mr Egler summarises the conclusions of two studies, one under the Committee on Sustainable Assessment’s (COSA) pilot project in the Tanzanian coffee sector, and the other in the Burkina Faso cotton sector.

The article reports that the analysis of the coffee sector in Tanzania found PVS helped to:

  • build social capital by raising the school attendance rate and educational level of children;
  • promote biodiversity and preserve resources (including soil and water);
  • substantially increase net disposable income, as a ‘direct result of better prices through a mark-up for organic and fair-trade produce’ and indirectly through efficiency gains linked to better know-how.

It also reports that the study of the cotton sector in Burkina Faso found that organic farming helped ‘reduce expenses by up to 90%’ and lowered the ‘financial dependency linked to the purchase of fertiliser’. It further found that producers invested in diversification, to become ‘less dependent on a single crop’. Farmers were furthermore reported to be healthier and soil fertility improved. The analysis concluded that ‘the net income of producers of organic cotton is generally 30% higher.’

On the basis of these studies Mr Egler argues that PVS are seen as delivering three main benefits:

  • securing better access to markets;
  • improved competitiveness;
  • increased awareness of appropriate farming options.

A particular focus of the analyses on which the article is based was on the role of fair-trade certification, since the contractual arrangements helped to improve farmers’ incomes. Organic certification was also a main focus of the analysis. Particular importance was attached to the development of farmers’ management skills, which allowed farmers ‘to develop their production, processing and marketing methods, and therefore take ownership of their future’.

The article argues that ‘trying to harmonise standards is crucial to strengthening the impact of these initiatives.’ It calls for more analysis of ‘which labels have the best impact on producers, bearing in mind the local conditions’.

The article argues that to prevent ‘sustainability criteria from becoming new technical barriers to trade… standards must be adapted to producers’ needs’. In addition, ‘additional measures such as the transfer of knowledge or financial support to cover the costs of implementing these standards are needed’. This, it was maintained, ‘would allow small producers with lower income to take part in private standards and sustainable value-added chains’.

In terms of government policy in developing countries, the article highlights the findings of a World Bank study showing that ‘governments of producing countries that were actively involved in developing and implementing standards, and which invested in frameworks to ensure they were respected, were very successful.’

Overall the article concluded that while some see PVS as a market barrier, ‘the cost of implementing these standards should not be seen as an expense but as an investment in modern, competitive farming’, since it serves to improve the commercialisation of agricultural activities.

Editorial comment

The studies cited in the report are in an under-researched area that is both controversial and of considerable importance for the development of ACP agriculture. The summary makes interesting and encouraging reading. It concludes that PVS can play an important role in increasing both producer margins and the sustainability of production.

It will be important, however, to evaluate the full reports when they are published, since any such study faces certain methodological problems. These tend to make it hard to formulate firm conclusions, since it is often difficult to disentangle the effect of the practices being studied from other market developments (i.e. difficult to establish a ‘counterfactual’ scenario).

One important point emerging from the article is that there is a need for more analysis of ‘which labels have the best impact on producers, bearing in mind the local conditions’. This is essential, because standards, which become the industry-wide norm, can impose costs on ACP producers without any corresponding price benefits, as more suppliers emerge and competition intensifies. Even in the area of fair trade, an expansion in the number of fair-trade certified suppliers can see a narrowing of the gap between fair-trade and conventional banana suppliers.

In this context there may well be a need for some mechanisms to assist ACP exporters to find their way around the many private standards that exist, so as to be able to identify those which yield the greatest net financial benefits to ACP producers.


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