|Sustainability claims by design are private standards. They are designed and implemented by organizations outside the public sector and promoted for use by producers and retailers as a service. All sustainability claims emanate from consumer concerns about an environmental aspect, and this is often preceded by campaigns by environmental activists on a particular issue. |
These concerns are then followed by a process of drafting documents which define activities to be allowed or prohibited in order to achieve environmental sustainability. In the case of agriculture, this document, referred to as a standard, will define which pest products are allowed or prohibited, soil preparation mechanisms that are allowed, and handling practices of all farm inputs.
The Sustainability Claims organization (usually a board of producers, retailers and consumers) thereafter often circulate the standard developed for comments from a network of stakeholders or the general public for comments. After incorporation of the comments, the standard developed defines the conditions under which the commodity in question is traded.
Finally, a mechanism of attesting compliance to the standard is developed by the organization owning the standard, which results in certification of compliant producers and other actors in the value chain. The process of certification is often expensive, and is expected to be paid by the person (usually farmer and/or processing company) seeking certification.
This is arguably a scientific and consultative process, which should result in a representative sustainability claim. The concerns on the process however are mainly on how representative the views of the experts are, the extend of the stakeholder consultation, and fairness of the attestation mechanism. The panel of experts who draft the thresholds to be applied in the standards usually are professional persons who participate in their individual capacity, and not representing institutions as is the case in public standards drafting process. As such, there is always the fear that a personal opinion of a scientist, not fully agreed as a universal principle, is drafted into a private standard and becomes basis for trade. This risk is supposed to be addressed by the next step, which involves collecting views from stakeholders, often producers and consumers.
Considering the limited capacity of collecting a wide range of views that any private organization would have (when compared to government institutions), some aspects from the experts may not receive sufficient scrutiny given the limited array of stakeholders consulted.
The most serious criticism of private standards is on the method of attestation of compliance. This process is not only expensive, but it is considered impossible to certify all producers, especially the millions of small scale producers in ACP countries.
It is widely considered that private standards thrive in international trade today because of the slow response by governments to consumer concerns, and the lack of a harmonized system of public standards between countries.
This is underpinned by the fact that on aspects where government regulatory mechanism is strict and effective (such as food safety standards in fisheries, control of quarantine pests in fresh produce, and control of mad cow disease in livestock), there is virtually no private standards, because the public regulatory mechanism is sufficient. Environmental, social and ethical aspects of international trade still do not have harmonized thresholds for compliance, and are hence open to different interpretations by various pressure groups whose views often get translated into private standards.
Public standards manly use a systems approach, whereby the controls are targeted at regulating processes rather than end product. Examinations of final products for certification are therefore used as a confirmatory step of the efficacy of the regulatory mechanism. From a cost distribution point, this is a more equitable form of control. The main problem however is when governments lack sufficient capacity to assure compliance to international standards, either through lack of sufficient qualified personnel, or accredited labs, as is the case in most developing countries.
Since international trade is ultimately between private sectors of countries (governments don’t trade, but facilitate trade), exporters and importers have devised a system of private standards to ensure that their products are environmentally sustainable, in additional to being safe and produced in a socially sustainable way.
Private standards can and do play a positive role in international trade. They often are the only basis for international trade in certain products from developing countries which lack an effective standards infrastructure. It is socially unfair to block poor farmers of products such as green beans, or avocadoes from participating in global value chains on account of lack of public sector standards system, which may take years to establish, and hence deny them the lucrative export prices that do hasten poverty alleviation measures in their communities. In several of these countries, private standards have been critical in creating a culture of compliance with international best practices, even when their public sector systems are not as developed.
|There are serious concerns on sustainability claims that if unchecked act as effective non tariff barriers to trade. A further complication is that since these are private measures, and not state measures, they technically fall outside the regulatory mechanism of the WTO which exists to ensure fair play in international trade. The WTO has therefore not yet found a mechanism of disciplining them.|
There have been efforts to refer to private standards as voluntary standards, because they are not legally required either at exporting or importing destinations, but ACP countries counter this argument by stating that since the buyers demand them as a precondition to purchase, they are indeed mandatory. For as long as a measures affect market access (is not restricted to consumer choice level), they have the potential of distorting international trade, and the WTO should develop sufficient disciplines on it.
|One of the concerns on sustainability claims is that several of the parameters that sustainability claims seek to regulate are actually regulated, to the same extend, by public sector. Exporters in developing countries therefore feel that this amounts to double checks, one at the port of entry by government officials, and another at the doorstep of a supermarket buyer. Nobody likes to be double checked, and what’s worse, it costs money to check, a bill which is passed on to the exporter in developing countries.|
There is even a concern at developing countries level that some importing countries abscond their regulatory role o some aspects to private standards, since they have the option of been more strict without exposing themselves to international legal requirements as governments would suffer.
This double-check situation is one that developing countries can do without. There is need to ensure that where public sector standards exist and their enforcement is sufficient, private standards are excluded from exerting a double check.
|Currently, there are numerous private standards that seek to control exactly the same parameters and often do not have a mutual recognition of each other, and a farmer exporting to destinations where these standards are active would have to certify to all of them. Each standard has a different set of checklist and paperwork, and this would translate to a lot of time wastage on the part of the farmer, whose main task is to farm. |
If one considers that there are similar numbers of standards on social, ethical and food safety issues, the number of standards that a farmer would have to comply with is staggering, often in excess of 30!.
Just like official control systems which have proven elusive to harmonize, private standards are businesses in themselves, and therefore to many, a merger of similar standards amounts to loss of business and brand recognition.
There is encouraging news that several major private standards are in the process of benchmarking to each other (meaning you don’t need one if you have got the other), such as the GFSI and GlobalGAP, and GlobalGAP and SQF1000 standards. It is considered that like all other businesses, many of the current private standards will either die off or merge with others, and that there will be a time when any of the 3 main categories will have less than 5 major standards.
|Private standards are a business, and producers in developing countries pay for them through cost of certification. Many of these sustainability claims are entirely paid for by producers, with retailers not being charged directly. On average, many of these certifications cost in excess of 1,000 US$ per farm, a figure way above what is affordable by small scale growers who form the basis of producers in ACP countries. This cost excludes the huge cost of creating compliance environment, which entails construction of structures, laboratory tests, and hiring of skilled workforce to handle standards paperwork. This inherently raises the cost of doing business and excludes this category of producers from global value chains. |
As an example , there are 150,000 fresh produce farmers in Kenya (actual figures). If they were to certify to just one of the 10 main private standards, the total cost to the sector would be 1.5 billion US$ per annum. Considering that the total export revenue of fresh produce from Kenya is 1 billion US$, certifying all the growers in Kenya would be a more profitable business than farming. Unless the cost of certification is urgently addressed, farmers in developing countries, especially small scale ones, will be rendered non competitive by certification schemes.
List of environmental certification schemes