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18 Feb, 2012

UNCTAD Conf Gives Boost to Global Trade in Organic Products

UNCTAD Media Brief

Nuremberg, 17 February 2012 – The European Union (EU) and the United States signed a landmark “organic-equivalency” agreement here following a conference on opening markets to organic products. And an Asian group of government officials and representatives of organic farmers and marketers adopted an Asian Regional Organic Standard that should greatly expand trade in such food in that part of the world. These steps, accomplished just before and after the tenth anniversary meeting on Global Organic Market Access (GOMA), should help farmers in poor countries participate more fully in the organic food sector, which rings up worldwide sales of $60 billion annually.

The GOMA partnership – originally called the International Task Force on Harmonization and Equivalence in Organic Agriculture (ITF) – was established at a February 2002 conference of UNCTAD, the Food and Agriculture Organization of the United Nations and the International Federation of Organic Agriculture Movements, the international umbrella organization for the organic sector. The collaborative effort has resulted in support for a number of steps towards easing the flow of organic produce across borders, including systems for ensuring that varying rules for what qualifies as “organic” can be accepted as equivalent for purposes of trade and export; and the establishment of regional organic standards such as that just adopted for Asia.

EU–United States organic equivalency agreement

The EU–United States agreement, signed 15 February, covers only products exported from and certified in the United States or EU – for example, organic noodle soup exported from Thailand and accepted in the EU does not automatically qualify for direct export  from Thailand and sale as organic in the United States.

Yet the pact still should help developing-country organic farmers, since much of their produce sent to the EU or United States is in the form of ingredients or bulk organic goods. Once packaged or processed either in the European Union or the United States, such goods do qualify for automatic acceptance in the partner market. Under this arrangement, for example, coffee from Ethiopia certified as organic under EU regulations could be sent to a trade partner in Europe and packaged for sale in both markets.

It will take some time for organic traders to adjust their supply lines to the new framework. While an equivalency agreement providing direct market access to both the United States and the EU without the need for intermediaries would be preferable for developing countries, it seems clear that this agreement will already serve to boost developing-country organic sales. In addition, the EU and United States are enormous markets. They now account for some 92 per cent of the value of worldwide certified organic sales.

Asian Regional Organic Standard

The Asian Regional Organic Standard (AROS) was approved on 12 February by GOMA’s Asia Working Group, which consists of government officials and farmers and other representatives of the region’s private sector in organic agriculture. The standard, developed over two years, covers organic crop production, processing and labeling. AROS is equivalent to the Common Objectives and Requirements for Organic Standards, an international tool established through GOMA to ease organic trade. The working group consists of public and/or private-sector representatives from Bhutan, the Lao People’s Democratic Republic, Thailand, Viet Nam, Malaysia, India, Indonesia, China, the Republic of Korea, Japan, Hong Kong (China), the Philippines, Cambodia, Nepal and Sri Lanka.

The next step is for the Asian Regional Organic Standard to be recognized formally by governments in the region.  The working group issued a declaration on 12 February calling for such recognition and recommending that AROS be adopted as the common standard for the region.  It also called for the Association of Southeast Asian Nations (ASEAN) and the South Asian Association for Regional Cooperation to accept AROS as a regionally harmonized organic standard.

Working group members have already initiated the ASEAN adoption process. AROS is on the agenda of the next Task Force on ASEAN Standards on Horticulture Produce meeting, set for 24–26 April in Hanoi. From there, it will go to the ASEAN Working Group on Crops and then to the ASEAN Senior Officers Meeting later this year.

The role of organic agriculture in developing countries

Of an estimated 2 million certified organic farmers worldwide, some 80 per cent are in developing countries: 34 per cent in Africa, 29 per cent in Asia, and 17 per cent in Latin America. In addition, developing countries account for 73 per cent of land certified for organic wild collection and beekeeping. Countless other developing country farmers practice organic agriculture without being formally certified.

Organic agriculture relies on healthy soils and active agro-ecological management rather than on the use of inputs with adverse effects such as artificial pesticides and fertilizers. It combines tradition, innovation and science. Among the benefits are higher incomes, more stable and nutritious diets, higher soil fertility, reduced soil erosion, better resilience to climate extremes such as drought and heavy rainfall, greater resource efficiency, lower carbon footprints, less dependence on purchased external inputs and reduced rural-urban migration.

Organic production that is certified assures buyers that the product has been produced in accordance with organic standards. Certified organic products can fetch higher prices for farmers in developing countries – typically they earn from 15 to 150 per cent more than conventional products. Increasingly, they can be traded internationally in robust markets. Minor differences in organic standards and certification requirements can hinder this trade. Harmonization and equivalence – that is, mutual recognition of different standards and conformity assessment systems – are a means of overcoming these differences so that markets for organic products continue to grow.