Agriculture Reference
In-Depth Information
which was the main aim. The issue of regional standard appropriateness is not controversial.
The problem is, however, to find efficient ways to facilitate international trade in the presence of
regional standards and certification procedures.
The issue of acceptable differences in standards is also an area that needs more attention, as
many standards are not based on scientific considerations. One example is the conversion
period, which determines the time farmers have to wait before they are eligible to be called
organic. This provides easier access to premium prices. At the international level, the conver-
sion period is set in different ways. For example, IFOAM has a conversion period of 12 months
for plant production, while the EU and the Codex Alimentarius Commission (part of the FAO
and World Health Organization's food and veterinary standards activities) require a minimum
of between two and three years, although the conversion period can be reduced to one year if
certain requirements are met (Schmid 2003). Importing countries that set the conversion
period at a certain level do not take into account the possibly legitimate claim by some export-
ers that a decrease in conversion for their local circumstances may be appropriate. For example,
if the conversion period is meant to provide time for the breaking down of substances that
have no place in organic agriculture or for positive agents to build up, this process will be
inf luenced by local conditions, such as climate. Variable conversion periods in countries with
different climates would be appropriate.
Consumer prices
Apart from the importance of consumer confidence in the product, which is encouraged
through a trustworthy and known certification scheme, a stable supply (e.g. through the
involvement of supermarkets) and relatively low prices are important for organic agriculture
to expand (Michelsen
et al.
1999).
In general, produce sold as organic commands higher prices than conventionally grown
produce of equal quality. Many surveys have shown that consumers are willing to pay more for
these products, though the demand is highly price sensitive (see Weir
et al
. 2003, and refer-
ences therein). Demand rapidly shifts towards conventional products with increasing prices
for organic products.
Though output premiums for farmers are often blamed for high consumer prices, for many
products the farm price is only a small part of the final consumer price. Other components
such as transport, wastage, processing, handling and sales also inf luence the retail price. One
would expect that for many products with low sales volumes, costs would be relatively high per
unit; however, the lack of institutional facilities for organic products is also likely to affect
costs. This has been recognised by for example the Dutch and Danish governments who devote
a relatively large part of their organic agriculture support in encouraging and promoting the
increased efficiency of the supply chain for organic products.
Governmental regulations
Differences in government support between countries can lead to an unfair advantage for pro-
ducers in countries with regulation compared with those where no regulations exist. For
example, subsidies for organic farming in one country, be it in the form of direct payments for
farmers, research subsidies, or the development of a national certification scheme, can affect
the price and the quantity of production in that country. This means that producers in other
countries will need to produce more efficiently in order to be able to export to those countries.
In other words, an advantage for farmers in some countries means a disadvantage for some
farmers in other countries. Some governments, especially those of EU countries, support
organic agriculture (see EUROPA 2005 for the European Action Plan).
Subsidies have an additional benefit to increasing farmers' income - farmers are able to sell
their produce more cheaply, thereby reducing consumer prices and therefore demand. However,
