Organic certification schemes: managerial skills and associated costs

Certification is critical in organic markets as it enables organic producers to access new export and domestic market opportunities and premium prices due to the fact that organic quality adds value to products. Whilst in developed countries, economic incentives and enabling policies and regulations have
promoted the establishment of organic standards and institutions, farmers in developing nations still face institutional and economic constraints to reach the stage of certified organic producers, making it particularly costly for smallholders to participate in the profitable organic market. Certification is therefore often seen as a barrier for small farmers' participation in export markets.

In this report, three certification schemes operating in developing and transition economies are
assessed:

• third party certification for individuals, a well-known and internationally recognised certification system
• third party certification, in which small-scale farmers may be certified in groups under an Internal Control System (ICS)
• the Participatory Guarantee System (PGS), which targets local or national markets and involves the participation of small farmers, small enterprises, traders and consumers in the certification process

The report provides a comparative analysis of the organisational structure and marketing strategies in the organic supply chain, gross margin analysis and the improved managerial skills required at the farm and supportive organisation levels in the three schemes. Case studies from Thailand, India, the Czech Republic, Hungary and Brazil engaged in organic rice and organic fruit and vegetable production are examined.

A number of actions are identified for government and other institutions that may enhance the competitiveness of the certified organic sector and the participation of farmers. These include:

• government should prioritise support for institutional development and the setting up of norms and standards at the national level in order to facilitate small-scale farmers inclusion  
• financing mechanisms should be established to support organic development projects at
  the initial phase
• market development should be supported
• cost-effective technologies should be investigated and disseminated among farmers to
  help them meet certification requirements
• assistance should be given to incorporate small-scale farmers in the organic supply chain
• training should be provided on management and market development along the organic
  food supply chain
  
  .