Un congreso en Madrid

JOELLE KATTO-ANDRIGHETTO1

A growing number of organic producers are certified through Participatory Guarantee Sys- tems (PGS) across the world. PGS are locally focused quality assurance systems. They certify producers based on active participation of stakeholders and are built on a foundation of trust, social networks and knowledge exchange.

PGS are revisiting the way organic certification started 30 years ago. Through the important development and professionalization of the organic sector, accompanied by increased in- ternational trade, third party certification has become the norm in most developed organic markets. Nevertheless, PGS maintain their important role of serving organic producers and consumers eager to maintain local economies and direct, transparent relationships. Thanks to the efforts of networks such as the Latin American Agroecology Movement (MAELA) and IFOAM, the PGS concept has gained recognition in the past few years, and is now viewed by many as one of the most promising tools to develop local organic markets. IFOAM has described the PGS concept in a range of documents (see references).

Some of the organic producers involved in PGS may be included in overall national organic agriculture statistics presented in this book. This might be the case for example in the fol- lowing situations:

- If they are linked to, or recognized by, a national organic agriculture association which compiles national data on the organic sector, (e.g., in New Zealand).

- When some of the producers involved in PGS also have a separate third party certifica- tion and are therefore counted in the data reported by certification bodies, (e.g., in France, where 50 percent of the PGS-certified farmers have a double certification).

- When entire PGS groups are connected to the third party certification system by being audited and certified as a group, (which requires the PGS to manage an Internal Con- trol System). In this case, they would also be counted in the data provided by certifica- tion bodies. A few examples can be found in Latin America.

However, in several cases, organic producers certified through PGS are not yet included in the national organic agriculture statistics because they are not sufficiently recognized by other institutions and they might even be denied the right to call themselves “organic” ac- cording to the regulation in place.

IFOAM is the only organization compiling global data about PGS. IFOAM’s efforts to com- pile comprehensive data on PGS world-wide have started recently and are still under way; therefore, the data provided here is not exhaustive but can be considered a fair approxima- tion of the situation in 2009.

STANDARDS AND REGULATIONS:PGS From the data already collected by IFOAM, it appears that:

- More than 20 functional PGS initiatives exist, spread out over all five continents. Some of these initiatives are very local, (i.e., groups of a few dozen farmers, operating at the village or district level), while others have scaled-up into national PGS systems, involv- ing hundreds to thousands of farmers.

- While some PGS initiatives are nearly as old as organic agriculture, (e.g., Nature et Progrès, the French PGS founded in 1972, which was a co-founder of IFOAM), most current PGS initiatives are relatively recent (i.e., less than 10 years old). The rate of creation of PGS initiatives has been particularly high since 1998, with a major peek in 2005.

- It is estimated that around 10’000 small operators are involved in PGS world-wide. This includes mostly small farmers and a very small number of small processors.

- The leading countries with regards to PGS are located in the “global South”: the top two are in India, with more than 3’600 farmers involved, and Brazil, with approximately the same number.

- Among “developed countries”, the top two in number of farmers involved are the USA, with more than 800, and France with around 500.

- Latin America is the continent with the highest level of PGS awareness and recognition for PGS among governmental bodies, with several national organic laws recognizing PGS. The EU, the USA and Japan do not recognize PGS, hence it is forbidden for PGS- certified producers to sell their products as “organic” unless they obtain additional third party certification.

The complete PGS data set is available on the IFOAM Online Global PGS Database and regularly updated.

References

IFOAM Online Global PGS Database:

www.ifoam.org/about_ifoam/standards/pgs_projects/pgs_projects/index.php The Global PGS newsletter, Volume 1 Number 1, IFOAM October 2009.

“PGS Guidelines – How Participatory Guarantee Systems Can Develop and Function,” IFOAM, 2008. “Participatory Guarantee Systems – Case studies from Brazil, India, New Zealand, USA, France,” IFOAM, 2008.

STANDARDS AND REGULATIONS:ORGANIC AGRICULTURE AND CARBON MARKETS

Organic Agriculture and Carbon Markets

ALEXANDER KASTERINE1

Mitigation of climate change in agriculture

Science has delivered a grim message to the world. Cut greenhouse gas emissions by 90 percent in the next 40 years, or we risk facing ecological catastrophe.

Agriculture is responsible for 13 percent of total greenhouse gas emissions. This figure is substantially higher (around 30 to 40 percent) when land clearance for agriculture, agro- chemical usage, transport, and consumer energy usage is included.

A third of agriculture’s emissions come in the form of methane from ruminant meat pro- duction. Reducing this demand should be a priority. The largest potential for mitigation in agriculture, however, lies in changing cropping practices to increase the level of carbon stored in the soil. A large part of this potential for carbon “sequestration” lies in developing countries.

Key practices to increase the uptake of carbon include avoiding bare fallows, increasing the use of legumes, and the incorporation of compost - integral parts of organic agriculture (FAO 2008, ITC 2007, Soil Association 2009). Adopting these practices have co-benefits of improving yields (and thus incomes) over time and helping soils adapt to reduced water availability, increased temperatures, and more extreme weather events. Organic agriculture would at first glance appear well positioned to provide this carbon storage service. The devil however lies in the detail: markets barely exist to provide farmers with incentives to adopt climate friendly practices.

Markets for carbon storage from organic agriculture

There are three nascent or potential market mechanisms for organic to deliver carbon stor- age services. Table 15 presents the pros and cons of each form of carbon market for organic agriculture.

Voluntary carbon markets

Voluntary carbon markets have emerged to accommodate individuals and companies in the developed world who want to offset their emissions through financing mitigation projects in developing countries.

Pros: The market is relatively small (700 million US dollars in 2008), but growing fast. Unlike the mandatory market (e.g., the EU Emissions Trading Scheme), the voluntary mar- ket is open to applications for selling credits from land use projects, such as agroforestry and no-till agriculture. There is potential in the near future for inclusion for organic agricul- ture.

1 _{Dr. Alexander Kasterine, Senior Adviser (Trade, Climate Change and Environment), International Trade Centre}

(UNCTAD/WTO), Geneva, Switzerland

Responsibility for all errors, omissions, and opinions rests solely with the author. All findings, interpretations, and conclusions expressed in this paper are entirely those of the authors and do not necessarily represent the views of

STANDARDS AND REGULATIONS:ORGANIC AGRICULTURE AND CARBON MARKETS

Cons: The voluntary market periodically has a poor reputation due partly to the perceived lack of additionality and permanence of projects. Agriculture is still not accepted in the voluntary market with the exception of no-till agriculture in the Chicago Climate Exchange. The main prerequisite to having agriculture accepted by voluntary standards is to establish an inventory of carbon stocks in the soils and to monitor, report and verify (MRV) emis- sions reductions through sequestration. Once accepted, it is open to question as to whether current carbon values (around 10 US dollars per tonne CO₂) would be of interest to farm- ers. The transaction costs of preparing project proposals will still be relatively high for farm groups.

Outlook: The organic movement led by IFOAM has established a working group to draft a methodology for organic agriculture that carbon standards will accept, thus opening the door for carbon credits.

Agri-environmental schemes

Agri-environmental schemes pay farmers in developed countries for environmental services. To date, schemes cover changes in farming practices leading to reduced agrochemical usage, improved habitats, and better agricultural practice. There are only a few examples of pay- ments for carbon services. The EU does not pay farmers to store carbon in the soil. It is possible in the medium term that schemes will be extended to include practices that lead to greater soil carbon sequestration.

Pros: a government payment for carbon sequestration would not be very interesting finan- cially for organic farmers, (particularly after time spent on all the paperwork involved), but it would provide a valuable public relations boost for the organic sector.

Cons: As with voluntary markets, the main challenge relates to MRV. Administrators of schemes face high costs in mapping out the land, estimating carbon sequestration potential of different farm types, drawing up negotiating contracts, and finally implementing moni- toring schemes to ensure agreed upon environmental actions are taken by farmers. A sur- vey of 37 case studies of EU agri-environmental schemes revealed that administration costs as a proportion of total payments to landholders varied from 6 to 87 percent (Garnaut 2008). Public audit offices have shown interest in the past in what farmers decide to do after agri-environmental contracts end. There is nothing to stop a farmer from ploughing up his land and releasing the stored carbon. This would be an attractive option once com- modity prices are high enough.

Outlook: These payments are only a medium-term prospect and more likely to be seen at first in the U.S. than Europe. Regulators will need to be convinced that organic agriculture is effective in storing carbon in soils. Despite the favorable scientific evidence in this re- spect, the organic movement will be competing with other (potentially better financed) agricultural lobbies. It is very unlikely that developing countries could implement schemes widely and effectively, given weak institutions in regulation, contracting, and enforcement.

Product carbon footprint labels

Product carbon footprint labels have been introduced by many retailers in the EU, U.S. and Japan in the last two years. They are intended to respond to consumer concerns about climate change and help differentiate products as more “climate friendly.” The labels take two forms, either reporting a figure for how much CO₂ is embedded in a product (e.g., 100g

STANDARDS AND REGULATIONS:ORGANIC AGRICULTURE AND CARBON MARKETS CO₂) or making a claim about the product’s climate “performance” (e.g., “CO₂ approved” or “climate neutral”, see Bolwig 2009).

Several organic standard setters have also developed draft standards for climate “add-ons” for organic certification.

Pros: Labels that make claims about sustainability could favor organic products. For exam- ple, Hofer in Austria recently introduced a label that claimed that organic milk has 14.3 percent less emissions than the comparable conventional product.

Cons: Several carbon standards have been criticized for providing domestic products a com- petitive advantage over imported products. This is due to stipulations on either the mode of transport (e.g., no airfreight in the case of Bio Suisse and Coop), the length of journey from field to retailer, and season of import (e.g., draft KRAV climate standard, see Gibbon 2009). The French carbon standard will not include emissions from short journeys in France, thus giving a potential competitive advantage to French products. The UK Carbon Trust standard includes emissions from land use change (LUC) after 1990, for example in clearing trees and shrubs. The emissions from LUC are amongst the largest sources of emis- sions in the carbon footprint of crops produced in developing countries. It is therefore im- portant that calculations of these emissions are done correctly. This can be difficult in de- veloping countries where relevant data relating to the distribution of current and historical land uses are scarce or absent. There are also ethical issues that most developed countries do not need to include this source of emission as they cleared their forests decades or cen- turies ago (Brenton et al. 2010). At the very least, traders will face transaction costs in learning about life cycle analysis and providing information on supply chain carbon emis- sions. Evidence varies on the degree to which consumers will pay a premium for carbon labeled products and thus compensate these costs.

Outlook

The use of carbon labeling by retailers will grow considerably. This trend is driven partly by consumer frustration at the failure of governments at Copenhagen in December 2009 to reach a binding agreement to reduce greenhouse gas emissions. However, there is limited scope for organic to gain a competitive advantage as consumers mainly buy organic for personal health benefits not environmental reasons. Also it will be a costly exercise to es- tablish the environmental advantages of organic over conventional in all the different food lines.

Conclusion

Organic agriculture has long been recognized for delivering multiple environmental services for society in the form of habitats for flora and fauna, improved landscape and non- polluted water courses. Recently, scientists have shown that organic delivers effective car- bon sequestration services. Organic products, however, remain undersupplied, because neither consumers nor governments pay substantial sums (if at all) for these benefits. Key next steps to remedy this situation will be to build baselines and monitoring and verifica- tion frameworks ,so that the carbon markets will accept organic agriculture into their fold. Just as important is increasing levels government support for the organic sector, particu- larly funding for research and development. Carbon labelling schemes will be a “niche within a niche” for organics, affording a small advantage to organic products over some

STANDARDS AND REGULATIONS:ORGANIC AGRICULTURE AND CARBON MARKETS

products from agrochemical farming. However, they also pose the risk of being new non- tariff trade barriers for farmers in developing countries exporting to the EU, the U.S., and Japan.

Table 15: Pros and cons of each form of carbon market for organic agriculture

Market mechanism Pros Cons

Voluntary carbon markets

- Dynamic, growing market - Scope for standards to accept or- ganic agriculture in near future - Potential to merge organic certifica- tion with carbon to reduce costs

- No case to date of inclusion of organic - High cost to establish baseline, monitor and verify (MRV) emissions reduction Need to demonstrate “additionality” – (carbon storage would not have taken place without carbon payment) - Potential lack of permanence (farmers can revert to old practices)

- High carbon price needed to compensate transaction costs

Government agri- environmental schemes that include carbon sequestration

- Carbon payments justified as envi- ronmental public good

- PR boost for the organic sector

- Need for MRV – high cost for both regula- tors and farmers

- High carbon price needed to compensate transaction costs

- Potential for a lack of permanence and additionality

Retailer product carbon footprint labels

- Potential competitive advantage for organic over agro-chemical farming

- Transaction costs in measurement and reporting, therefore favors larger export- ers and farmers

- Potential measurement biases against imported products

- Airfreighted products likely to lose out – job losses for African farmers

References/Further reading

Bolwig, S. (2009). Review of Voluntary Standards and Schemes that Estimate and Label the GHG Emissions "Embedded" in Consumer Goods and Services, presented at the OECD Global Forum on Trade and Climate Change, Paris, 2009.

Brenton, P., Edwards-Jones, G., Jensen, M.F., Plassman, K., Norton, A., Attarzadeh, N. (2010). Carbon Footprints and Food Systems: Do Current Accounting Methodologies Disadvantage Developing Countries? World Bank Working Paper, Washington DC.

FAO (2008). Low Greenhouse Gas Agriculture : Mitigation and Adaptation Potential of Sustainable Farming Systems, FAO, FiBL, Rodale Institute, Food and Agriculture Organisation FAO, Rome.

Garnaut R. (2008). The Garnaut Climate Change Review: Final report. Canberra, Commonwealth of Australia. Gibbon, P. (2009). European Organic Standard Setting Organisations and Climate-Change Standards, presented at the

OECD Global Forum on Trade and Climate Change, Paris, 2009.

International Trade Centre (2007): Organic Farming and Climate Change, International Trade Centre, Geneva and FiBL, Frick.

Kasterine, A. and Vanzetti, D. (2010). The Effectiveness, Efficiency and Equity of Market-based Mechanisms to Reduce Greenhouse Gases in the Agri-Food Sector, In: Trade and Environment Review 2010, United Nations Con- ference on Trade and Development (UNCTAD), Geneva.

Organic Agriculture and