The Politics of Food Labeling and Certification - The Oxford Topic of Food, Politics, and Society - page 631

farmers on new techniques, and offer small loans for new farm equipment. Moreover,
once a cooperative is established, farmers may more easily overcome collective action
problems and more successfully improve production or market access. In these cases of
bundled treatments, it is difficult to disentangle the effect of the certification from the
effects of being organized into a cooperative or receiving capacity-building training.13
The best way around these issues is experimental research. Experimental studies of
the effects of certification schemes on producers are on the horizon and offer the great-
est potential for conclusive evidence on whether certification schemes actually help
farmers.14
The Watchdog
The spread of third-party certification standards is unfolding alongside a parallel
development: the spread of Corporate Social Responsibility (CSR) initiatives on the
part of companies. Corporate Social Responsibility schemes often make claims simi-
lar to those of certification and labeling initiatives, from promoting safe and healthy
working conditions to ensuring environmentally sustainable sourcing practices. They
key difference is that CSR claims are made by the company selling the product, not by
outside parties.15
There is a clear incentive for firms to make rosy claims about their sourcing practices
without actually incurring the expenses of ameliorating hazardous working conditions,
low wages, child labor, the use of toxic chemicals, high emissions, and poor treatment of
animals in their production processes. Milton Friedman wrote in 1970, “I share Adam
Smith's skepticism about the benefits that can be expected from 'those who affected to
trade for the public good,' ” (Friedman 1970) and the dangers of “greenwashing” and
“fairwashing” are not lost on today's ethical consumers.
The advantage articulated by third-party certifiers is that, unlike companies with
CSR initiatives, they are not motivated by profit and are in the position to act as watch-
dogs, providing accountability by certifying and monitoring production facilities
and food supply chains from which they do not draw a profit. In other words, in the
principal-agent problem that necessarily arises between a consumer and a standards
provider—characterized as it is by an asymmetry of information—third-party certi-
fiers are less susceptible than corporate standards providers to moral hazard (Deaton
et al. 2010). Freeman argues that “some external labeling organization, private ( vide
Consumer Reports) or public, would be needed to assure the accuracy of labour con-
ditions labels” (Freeman 1994, p. 83). Certification systems typically involve both a
standard-setting body and certification agents. Standard-setting bodies are frequently
nonprofit organizations, though this role is also sometimes played by the government.
Fair Trade standards are set by nonprofit organizations, whereas Organic standards
are set by the USDA. These standard-setting bodies then accredit and authorize certi-
fication agents. Certification agents are nonprofits, private companies, or government