Potential Target Groups
• Organic markets: farmers, small-scale food producers and manufacturers, and collectors of non-timber forest products,
• Organic markets: farmers, small-scale food producers and manufacturers, and collectors of non-timber forest products,
• Fair-trade markets: craft producers, farmers, small-scale food producers, and manufacturers.
Purpose and Rationale of Service
• Export-oriented SEs: organic and fair-trade specialty markets offer advantages over commercial markets;
• New enterprises: specialty markets provide opportunities for higher margins and lower volumes; and
• All SEs: alternative markets allow them to grow slowly and enable production capacity to keep pace with market demand.
Note: Fair-trade certification is in its formative stages in the U.S. and, unlike the organic market, remains accessible without certification. It is likely that formal certification will become necessary, as well as valuable, as fair-trade labeling groups gain recognition. Certification will also allow specialty markets to mentor enterprises seeking to enter the commercial sector.
When is This Activity Appropriate?
Primarily when the market sought is in the U.S. or Europe. However, fair-trade and organic certifications are becoming widely recognized in Canada and Japan, which is opening them, as well.
Methodology
Organics:
• Help SE contact an appropriate certification agency;
• Assist with documentation, inspections, and fee negotiations;
• Ensure the agency’s certification is valid for the market sought; or
• Secure a market link prior to certification, as some importers pay for it when an organic product is in demand.
Fair-trade:
• Analyze markets carefully and negotiate with wholesalers / retailers to ensure long-term sales and strong market partners;
• Assess demand for organic and fair-trade products;
• Identify organic and/or fair-trade markets; and
• Introduce SEs to appropriate companies, trade-shows, trade associations, and fair-trade wholesalers / retailers.
Finance and Cost-Recovery Mechanisms
• A percentage of the sale price may be negotiated;
• A flat fee for certification may be charged with payment deferred for up to one year to enable the SE to cover the high cost
of certification;
• Buyers may be charged royalty fees for use of established logo; or
• A percentage of future revenue may be charged to cover up-front investment. It can be eliminated once costs are covered.
How Should the Program be Evaluated?
• Number of sustainable links between producers and buyers;
• Increased sales for the SE;
• Increased value of the premium; and
• Level of cost recovery.
Potential Impact
• Increased sales and revenues for SEs;
• Increased number of sustainable market links;
• Development of improved organizational systems due to certification requirements such as a constitution or election of
officers; and
• Better preservation of biodiversity as a result of farming techniques that discourage clear cutting.
Length of Intervention
• Organic certification—assistance in finding the appropriate certifier and completing documentation takes 6-8 months
depending on harvest cycle, current on-farm practices, and organization of the SE;
• Linking to specialty markets—developing effective market links can take anywhere from a month to a year or more
depending on product competitiveness and an SE’s information system and management capacity.
Illustrative Programs, Sectors and Regions
Conservation International (CI) programs help suppliers in agroforestry (coffee and cocoa), non-timber forest products (essential oils), decorative products (potpourri) and crafts (candles, natural rubber crafts and nut-based jewelry) in Latin America (Mexico, Guatemala, Peru, Bolivia, and Ecuador), and West Africa (Ghana and Ivory Coast.) CI links community enterprises with players in the organic sector and with fair trade partners, specifically:
• Organic markets: coffee cooperatives in Chiapas, Mexico increased sales by 1,790% in three years and organic premiums
provided 680 farmers an average of $0.28 per pound over local prices.
• Fair-trade markets: provided the only viable market opportunities for craft suppliers in Guatemala, Peru, Guyana, and
Ecuador. Their sales increased by over 200%.
• The Conservation Coffee program in Mexico and Colombia works with farmer cooperatives in support of the development
and commercialization of shade-grown, organic coffee in areas near national parks and reserves.
• The Conservation Cocoa program follows a similar approach but works with cocoa farmers in Ghana and Brazil.
Where to get more information
Organics:
US:
Europe:
Fair-Trade:
• European markets and fair-trade history and definitions: International Federation for Alternative Trade (IFAT) www.ifat.org
• Fair-trade labeling organizations: Fair Trade Labeling Organizations International (FLO) www.fairtrade.net/
• Social Responsibility in the Global Market; Fair Trade of Cultural Products, by Mary Ann Littrell and Marsha Ann Dickson,
Sage Publications: www.sagepub.com
Additional Resources:
Daniele Giovannucci, editor. The Guide to Developing Agricultural Markets & Agro-Enterprises wbln0018.worldbank.org/essd/essd.nsf/Agroenterprise/
Mick Blowfield. Fundamentals of Ethical Trading/Sourcing in poorer countries, Natural Resources Institute (NRI) wbln0018.worldbank.org/essd/essd.nsf/Agroenterprise/ethical_trading
Blowfield, M.E., Malins, A., Nelson, V., Maynard, Gallat, S. (1999), Ethical Trade and Sustainable Rural Livelihoods, Chatham, Natural Resources Institute
Blowfield, M.E. (1999), Coherence and Divergence: the advantages and disadvantages of separating social and environmental issues in developing standards and codes of practice for agriculture. Paper presented to the Values Network, London, January 1999 and printed in Natural Resources and Ethical Trade Working Paper no. 5. Chatham, Natural Resources Institute, Carney, D. ed. (1998)
Blowfield, M.E. (1999), Ethical Trade: a review of developments and issues. Third World Quarterly, 20:4. Chichester, Wiley
Cavanagh, J. (1997) Rethinking Corporate Accountability. In: Griesgraber, J.M., Gunter, B.G. World Trade: toward fair and free trade in the twenty-first century; London, Pluto
Courville, S. (1999) Preliminary Report on Joint Inspection of Coffee in Mexico Bringing Certification Agencies together at the Inspection level. Unpublished report for the Institute for Agriculture and Trade policy, USA.
Crucefix, D. (1998) Organic Agriculture and Sustainable Rural Livelihoods in Developing Countries; Chatham, Natural Resources Institute
EFTA (1998) Studies about Fair Trade; Maastricht, European Fair Trade Association
Elkington, J. (1997) Cannibals with Forks: the triple bottom line of 21st century business; Oxford, Capstone
Lake, R. (1998) Fair Trade and Ethical Trade: distinct but complementary. Paper for the Ethical Trading Initiative Communications Task Group; London, Traidcraft
Carney, D. ed (1998) Sustainable Rural Livelihoods: what contribution can we make? Ethical Trade and Sustainable Rural Livelihoods. NRET London, Routledge Raghavan, C. (1997)
Griesgraber, J.M., Gunter, B.G. A New Trade Order in a World of Disorder. World Trade: toward fair and free trade in the twenty-first century; London, Pluto
Lessons Learned
Organic Certification:
• Can be expensive and should be pursued only if realistic market opportunities exist;
• Products not regulated by international prices (as coffee and cocoa are) may face price competition without certification;
• Unless there is a strong demand for a certified product, a post-certification price increase may further hamper sales; and
• Due to the high cost of sending foreign certifiers to local sites annually, work with local certifiers who have been accredited
by US / European certifiers to ensure the validity of organic labeling in those markets.
Fair-Trade Certification:
• More common in Europe than in the US;
• Less expensive because wholesaler / retailer pays costs;
• In US, there is only one licensed fair-trade certifier (Transfair) and it is focused only on coffee;
• Due to the lack of certification for products not on the current list—coffee, tea, cocoa, honey, sugar, orange juice and
bananas—there is greater fair-trade market access without certification than in the organic industry; and
• The lack of standardized certification and consistent monitoring of sites means less oversight and more opportunity for non-
compliance.
Market Access:
• Assisting enterprises to effectively link with specialty markets can be a long process that results in minimal cost-recovery
for several years; and
• Royalty arrangements succeed in some industries, but for low-margin products, the price increase on the end product can
decrease product competitiveness.