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4.2.1 Concept

Organic production, also referred to under the name of organic farming and organic agriculture, is a widely respected process in agricultural production that aims to improve soil fertility, nutrient cycling, and food security, and reduce the use of veterinary medicines. A central element of organic production is the efficient use of on-farm and local resources like farmyard manure, indirect crop protection and local seed (Vogl, Kilcher & Schmidt, 2005). Organic production intends to overcome the negative environmental impacts such as global warming, reduction in biodiversity, soil degradation and ground water pollution caused by agrochemical-based agriculture (Halberg, Alrøe, Knudsen & Kristensen, 2006). Especially in developing countries, organic production not only contributes to improving the environment but also aims at strengthening socio-economic development.

Organic production is embedded in local cultures, including their knowledge, ethical values and beliefs (Yussefi & Willer 2003). According to Benzing (2001) traditional agriculture provides useful models of sustainable agriculture and its achievements, especially in Australia, India, Central and South America, have served as foundations to develop modern organic production. For instance, the traditional agriculture of Central and South America has been central in the development of the concept of agro-ecology (Altieri, 1999; Altieri & Nicholls, 2000). Peru being one of the world’s five centres where agriculture has originated, traditional agriculture presents particular features such as the vertical control of ‘ecological floors’ (one of the ways Andean societies organize the supply of goods, including food, because of the steepness of the Andes), diversification of crops and indigenous farming technologies (Altieri, 1995; Espinoza, 1987; Murra, 1975; Rostworowski, 1999). Furthermore, organic production in Latin America, particularly in Peru, not only encompasses traditional farming practices but also a dynamic movement of farmers and organizations (Altieri & Nicholls, 2000; Wezel, Bellon, Dore´, Francis, Vallod & David, 2009). These particularities show that organic agriculture has local and regional distinctiveness, although it is a global phenomenon (Holt & Reed, 2006; Kristiansen, Taji & Reganold, 2006).

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4.2.2 Developments and trends

After the 1960s the organic production movement underwent significant change. The appearance of Rachel Carson’s ‘Silent Spring’ in 1972, the Club of Rome’s ‘Limits to Growth’ in 1972 and Schumacher’s ‘Small is Beautiful’ in 1974 marked a turning point. One of the results was that the organic and environmental movements came together. A major landmark was the formation of the International Federation of Organic Agriculture Movements (IFOAM) in 1972 (Kristiansen, Taji & Reganold, 2006). During the last 25 years, organic agriculture expanded from a movement with political, philosophical and religious motivations to a movement with economic motivations. This is shown in the responses against the introduction to Genetic Modified (GM) crops at country level because such technologies are seen by organic agriculture embracers as a threat for traditional agriculture and crops (Altieri & Nicholls, 2000; Halberg et al., 2006; Kristiansen, Taji, & Reganold, 2006). These characteristics provide sociological and political relevance to organic production (Holt & Reed, 2006).

In the last two decades organic production has achieved formal political and legislative recognition at national and international level. Together with governments and other stakeholders, the organic production sector has developed standards and legislation on organic farming, which include rules for processing, trading, monitoring, and certifying agricultural produce. Examples of such standards are the European Council Regulation on Organic Farming No. 20292/91, the IFOAM Basic Standards, and the US Organic Food Production Act.

Organic production is currently distributed in about 100 countries and the area is increasing. When it comes to certified organic land Australia, Argentina and Italia are located at first place. The regions with largest areas of organically managed agricultural land are Oceania (12.1 million hectares), Europe (8.2 million hectares) and Latin America (8.1 million hectares) (Willer & Kilcher, 2010). About one-third of the world’s organically managed agricultural land (12 million hectares) is located in developing countries. Most of this land is localized in Latin America. In developing countries organically managed agricultural land is owned mostly by small scale organic producers. According to Willer and Kilcher (2010), the countries with the highest number of organic producers are India (340,000 producers), Uganda (180,000) and Mexico (130,000).

Organic production and consumption has increased over the last decade. Although many organic products are consumed locally, global trade of organic products, especially between North and South, is a growing reality (Halberg et al., 2006; Vogl, Kilcher & Schmidt, 2005). In the 1980s organic production experienced explosive growth. In the major markets for organic produce – North America, western Europe and Japan – organic produce began to appear in supermarkets in the early 1980s (Holt & Reed, 2006). In the late 1990s organic production strongly became more rationalized and market-driven. In the 1990s, and into the new millennium demand and production continued to grow exponentially around the world, often at 20-30% per year. Most consumption takes place in western countries. The global organic market involves about US$ 23 billon annually (Holt & Reed, 2006). Europe and North America represent the major markets for certified organic products, accounting for roughly 97% of global revenues (Kristiansen, Taji & Reganold, 2006). Products traded are coffee, tea, cocoa, spices, cane sugar, tropical fruits, and beverages, as well as seasonal fresh produce (Halberg et al., 2006). However, the average organic production per country is less than 6% of the total agricultural production, so compared with the

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conventional production the share of organic production is modest (Holt & Reed, 2006). Another development of the two decades has been the resurrection of the farmers’ market where producers sell goods directly to consumers (Kristiansen, Taji & Reganold, 2006).

Global markets impact organic production by pushing farming to rationalization. Rationalization, in this context, refers to specialization and enlargement of farms, increasing capital intensification and marketing, and a strong orientation on export. These developments represent threats and opportunities for organic production. In most national organic sectors across the planet, agribusiness has now moved into production of large scale. This has created barriers for small-scale producers to access global markets (Holt & Reed, 2006). International trade of organic production is mostly controlled by medium and large enterprises, not by small scale enterprises (Halberg et al., 2006). Nonetheless, expanding markets go together with broader recognition of organic farming principles and may provide new options for organic producers. However, there is a need to develop policies for organic production that take into account local food security, environmental impacts, and socio-economic impacts. Locally traded organic production provides social and economic value such as social cohesion and expanding employment in rural areas (Halberg et al., 2006). In sum: organic production has gained a place in global markets, but it is still marginal and has low power against conventional agribusiness trade, and social and environmental challenges of organic production remain (Kristiansen, Taji & Reganold, 2006).

In recent years, international cooperation agencies and international NGOs supporting SMEs have adopted and promoted new approaches to rural development, which also affect organic production. NGOs are shifting from charity to partnering, from projects to programmes, and from service delivery to advocacy. For instance, in a study about the roles of NGOs in Peru and Bolivia, Bebbington, Rojas and Hinojosa (2002) conclude that local NGOs are not succeeding in poverty reduction and rural development, and suggest that international cooperation should shift to a more market-based approach.

4.2.3 Agents

Producer associations, NGOs, companies and national governments perform roles promoting organic production and trade at the international and national level (Bridge, O’Neill & Martin, 2009). The key global agent is the International Federation of Organic Agriculture Movements (IFOAM). IFOAM is the worldwide umbrella organization for the organic movement, uniting more than 750 member organizations in 116 countries, including small scale producer associations. IFOAM actively participates in international agricultural and environmental negotiations with the United Nations and multilateral institutions to further the interests of the organic agricultural movement worldwide (IFOAM website, 2011). Other agents are NGOs. Increasingly NGOs, particularly international NGOs, are taking an active part in promoting and supporting SME development in the organic sector. For instance, Dutch development aid organization CORDAID supports SME development by improving the enabling environment that conditions the development of sustainable agricultural value chains and the sustainability of well-organised agricultural chains, building on experiences of organic and fair trade chains (CORDAID website, 2011). Two other Dutch development aid NGOs, HIVOS and ICCO, help small scale producers in developing countries to access local and international markets with an organic and fair trade quality

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mark. They collaborate with larger companies and local NGOs to develop organic and fair trade certification and standards (HIVOS Annual Report, 2011; ICCO Annual Report, 2011). NGOs such as OXFAM America also work closer to grass root organizations and academia around the world to promote self-sufficiency and food sovereignty (Cohn, Cook, Fernández, Reider & Steward, 2006). Additionally, international cooperation agencies, including the Food and Agriculture Organization of the United Nations (FAO), the international fund for agriculture (IFAD), the Danish Research Center for Organic Farming (DARCOF), the Belgian Technical Cooperation (ADG), the Danish Agency for Development Assistance (DANIDA) and the Research Institute of Organic Agriculture (FiBL) are also active in promoting the globalization of organic production (Halberg et al., 2006). Also, national governments in western countries are promoting organic production. National governments in developing countries are increasingly showing interest in implementing regulations to support exporting certified organic production (Kristiansen, Taji & Reganold, 2006).

At the Latin American regional level, the main agents are the Latin American agroecological movement (MAELA) and the IFOAM Regional Group for Latin America and the Caribbean (GALCI). In Peru, key agents are the Ecological Agriculture Network of Peru (RAE Peru), Grupo Ecologica Peru and the National Ecological Producers Association (ANPE). Local agents will be described in more detail in Chapter 5.