The ‘Global Policy Toolkit on Public Support to Organic Agriculture’, provides a comprehensive overview of how policies can support the growth of organic agriculture along with tips and tools for advocates and policy-makers. One of the many policies looked at is how government support for organic certification can help level the playing field for organic farmers, who often incur costs conventional farmers are not faced with.
Certification as a Public Good
The role of certification is to provide a guarantee in the marketplace, enabling consumers to identify which producers conform to certain standards. In this sense, certification corrects one of the imperfections of the market, namely the asymmetry of information available to each side in a transaction (the seller and the buyer).
Therefore, in a free market economy, certification acts as a public good to help optimize the functioning of the market. As organic certification is voluntary, the cost is mostly incurred by organic producers, while conventional producers have no such cost.
Governments can correct this imbalance and help promote a well-functioning market by supporting organic certification, taking on some of the costs that otherwise fall on organic farmers. Apart from the cost of certification services, there are considerable costs involved in the set-up of the certification institutions, training inspectors/auditors, cost for accreditation etc. Again, costs and time that the conventional farming sector doesn’t have to invest.
Another reason for the government to cover certification costs, in part or full, is to help ensure equal access of all operators to the service, across the territory and across all farming systems. Most often, private certification bodies charge operators for travel costs to their location, as well as time spent on their audit, etc. This can result in unequal access to certification. For example, operators based in remote areas of a country and those with diversified production systems may have to pay more for certification, which can be considered unfair competition and detrimental to rural development objectives.
Certification support can be given at various levels, ranging from local to national government levels. The options include:
- Subsidies to operators for private organic certification.
- The inclusion of organic certification in a wider subsidy policy for certification, or food quality schemes in general.
- A national certification program that provides free certification to all organic operators nationally in lieu of private certification.
- A national certification program that offers reduced cost certification as an option for operators.
- Ad hoc measures such as funding the certification of groups of producers within a time-limited government-funded project, or projects supporting the establishment of Internal Control Systems for group certification.
Putting Policy into Practice
The government reimburses 100% of organic certification costs for up to three annual certification cycles, with payments directed to operators through the certification bodies.
The government covers 70% of the cost of certification and inspection for both individual and group organic producers converting to organic, for a period of 5 to 7 years.
Various schemes at the federal or state level, subsidize farmer groups to meet certification costs and manage Internal Control Systems.
Some 80 local governments provide certification subsidies to organic farming enterprises.
The federal government has a number of subsidy schemes to support organic certification, covering 50% of the capacity building costs related to obtaining organic certification, 50 – 75 % of the costs of technical assistance for operators to produce their Organic System Plan, and 50 – 75 % of the total cost of certification. It also supports organic certification bodies directly by covering 50% of their accreditation costs.
The US Department of Agriculture provides reimbursements of up to 75% of annual certification costs to an annual maximum payment of USD 750 per certification scope e.g. crops, livestock. Subsidies are administered through local USDA Farm Service offices. Several state and county governments in the US offer low-cost organic certification to farmers.
Most member states cover part or all of the farmers’ certification and inspection cost for 4 quality schemes (including organic). In Denmark, a government-run certification system provides certification to all organic operators in lieu of private certification.
A certification body established by the Ministry of Agriculture in 2009 provides low-cost certification to small farmers, as well as assistance in setting up Internal Control Systems for group certification.
Bali kicked-started local organic certification by covering the costs of the certification of 22 farmer groups in the period 2009-2012.