Participatory Guarantee Systems

by Tim Marshall

Organic certification has now been in existence in Australia for more than thirty years, and during that time it has changed in character, complexity and cost. These changes are necessary to facilitate the current level of trade, especially international trade, in organic produce, and the level of guarantee that consumers now require.

Many organic growers and consumers regret some of these changes, believing that, in fact, organic growing systems should be ‘the norm’, and chemical users should be the ones who require strict monitoring. Unfortunately, that is not the way of the world.

Some background on certification systems

Government support for organic trade now requires that certification is compliant with International Standard Organisation (ISO) norms. ISO requirements also benefit consumers because they are designed to eliminate (or at least minimize) conflict of interest and ensure that standards and certification systems across the world meet minimum standards and have a level of equivalency. The issue is not ‘the operating standard’ itself (i.e. the written rules which in effect establish the definition of organic), which is separately regulated by governments and the United Nations, but the application of the certification system. These rules govern things such as separating inspection and decision-making functions, frequency of re-inspection, appropriate methods of appeal when growers think they have been unfairly treated and so on.

So, increasing levels of trade drive increased complexity in the system and that necessarily increases cost. Despite this undeniable increase in bureaucratic paperwork and cost, we should note that organic certification remains one of the cheapest forms of certification available, and that there is quite a lot of myth and misunderstanding about certification cost. Increasingly all farmers must pay for certification of one sort or another to market their produce. It is very difficult to offload significant crops of wine grapes, for instance, without some form of certification provided to the winery concerning production methods, chemical use and hygiene. It is almost impossible to sell to the major supermarkets without Freshcare certification or an equivalent system.

Organic certification is complex because it is not simply the ‘product certification’ that applies to physical objects, where a quality controller at the end of a production line can easily measure that a nut and a bolt are compatible. Organic requires ‘process certification’ that looks at many facets such as cleanliness of the land, suitability of inputs, ‘chain of custody’ and so on, to ensure that the pumpkin leaving the organic field is the same pumpkin buyers find on the shelf, or what we call ‘paddock to plate’ checking.
In certification parlance, we are looking for ‘verification’ at every major stage of production and each time the product changes hands.

Special arrangements for small growers

The operating standard should be identical, and the certification system should be substantially the same, regardless of the size of the farm. Consumers will quickly loose confidence in organic claims if we start varying the standard for different growers. There are small variations in organic standards across the world to account for different climatic regimes and cultural variation. For example, dairy cattle in northern Europe must be housed inside over the winter for their wellbeing, but we do not allow confinement of organic animals in Australia.

However very small growers clearly have a reduced capacity to pay for certification. In fact, while small growers have always tended to complain about the cost of certification, their fees have never really covered the full cost of delivering certification, which has always been subsidized by larger and more profitable growers.

To assist small growers, the major Australian certification providers (certification bodies or CBs) did, for many years, offer a ‘small growers scheme’. These schemes have varied somewhat between CBs, and across time. Early small grower’s schemes required that growers were located together and ran their own ‘internal control system’ (ICS are described below). Later schemes reduced the inspection interval (every two years rather than every year) to lower the cost, but in doing so they did not meet the ISO norms and therefore could not be part of international trade (they could be sold only within Australia).

More recently some of the CBs have ceased to offer a small grower scheme. The small grower arrangements were not profitable, and they required extra surveillance of the marketplace to ensure that their produce did not make its way into ISO-controlled export supply chains. NASAA still offers a small grower option, limited to production not exceeding $40,000 per year. Other certification bodies may offer ‘domestic only’ certificates, with reduced inspection frequency or other conditions. 

In recent years, because of cost of certification or unavailability of small grower’s schemes, many small growers have dropped their certification. Sometimes this did not matter, because small growers frequently only sold their produce by various forms of ‘direct marketing’ such as via farm stalls, farmers markets and to-your-door box delivery. These growers relied upon establishing a relationship of trust with their customers and operated without certification.

While some small growers still find what we call ‘relationship marketing’ adequate, others want to do the right thing and submit to some form of verification. Also, as farmers markets grow in number and size, the market management needs to offer its own form of guarantee to market shoppers.

Unfortunately, the demise of small grower schemes did permit the rise of some attempts to offer a ‘lesser’ and cheaper form of certification, and these have usually fallen well short of consumer (and consumer law) expectations. They may have tried to redefine organic, but that always resulted in misuse of the organic claim. They may have tried to define some form of ‘chemical free’ claim but failed to understand the complexity involved in making such a claim (a genuine chemical free claim is so difficult to define and guarantee that it would inevitably be more expensive and difficult than organic certification). These schemes fell so far short of ISO norms that they raised many issues of reliability and conflict of interest. In the worst cases, they were clearly fraudulent.

An alternative form of organic verification

The gaps described above have inspired a quest for a reliable alternative form of organic verification.

A special case of small growers is the many very small growers in the developing world, who could not afford western style certification. During the 1990’s, the concept of Grower Group certification developed to allow hundreds of thousands of small landowners to supply small quantities of coffee, tea, spices and tropical fruit to the wealthy organic consumers in the west. Grower group certification applied the concept of the internal control system (ICS). The grower group would organize its own inspection, at the affordable local rate in the developing world. The western inspector would then conduct a compliance audit of the grower group ICS. They would interrogate the ICS recording system to ensure it was thorough and up to date and select some operators (usually between 5 and 10 percent) for farm visits.

This author (Tim Marshall) conducted more than three thousand grower group inspections in Asia and The Pacific between about 1995 and 2003, including visiting more than 800 unique farms in Indonesia, 250 in Sri Lanka and 150 in Samoa (and multiple repeat visits to some of them).

The acceptance of grower group produce into the international supply chain required a high level of compliance at the ICS audit. If there were any failures at all, I would require an extra ten farm visits for each non-compliance (which meant more time in the field and greater expense). If there were multiple failures, the entire grower group could be rejected. To ensure that this was achieved, grower groups maintained a high level of ‘social policing’. That is, the growers would watch each other. One non-conforming grower could threaten the whole group, so they ensured that any wild card growers were removed from the group. In some cases, such as in Aceh, social policing could be reinforced by the village chief and/or the Imam. 

In the early 2000’s I began to work for IFOAM, the international peak body for the organic movement, in a role that was designed to encourage uptake of organic growing and certification in the developing world. At that time there was a significant debate starting up, that suggested, “Grower group certification is all very well for benefiting wealthy organic consumers in the west, and helps some individual small farmers in poor countries, but it does little to encourage development of an organic marketplace within those countries”. How could the organic movement sponsor demand for a genuine organic food supply in the developing world, for the benefit of growers and consumers?

The answer was participatory guarantee systems or PGS.

In the PGS, growers grouped together to guarantee each other. They could take on the role of inspector, in rotation, or in some cases employ a suitably qualified inspector, whose inspection reports were assessed by the group. In such a system, there was either no cost, or minimal cost (if a local inspector was employed).

Finally, we had arrived at a system that could supply a local organic market at minimal expense.

PGS actively promoted social policing (everyone keeps an eye on each other), and participation in all aspects of organisation, inspection, decision making and marketing of the PGS scheme. Some PGS are comprised entirely of producers, but others include consumers, environmental groups and government agencies.

It was always the intention that PGS would eventually develop to the extent that PGS produce could, perhaps through a re-certification system or additional verification, find it way into the international trade, but this could not happen until PGS had proven itself. This final goal would eventually establish a meaningful level of self-reliance in poor countries and reduce the local cost of supplying organic reduce to the west which could be significant, especially if they required separate certifications for European, American, Japanese and Australian markets (more recently China, Korea and other countries have introduced their own certification, adding further cost and complexity for exporters). Finally, some models are arising, especially in South America, that may be reliable enough to see some PGS produce moving into international organic supply chains.

IFOAM now estimates that there are at least 240 PGS initiatives in 66 countries, including 115 under development and 127 fully operational (in 43 countries), with more than 300,000 farmer members.

Applying PGS in Australia

Demise of the small grower schemes has provided an opportunity for application of PGS in the developed world, and several are under development, but few are fully operational.

The phenomenal growth of farmers markets across Australia provides an obvious focus for PGS, because they are local, and provide good basis for community building, and may include growers, consumers, local governments and social or environmental interest groups.

At this stage we have only one long-term functioning example of an Australian PGS, operated by the South East Coast Producers Association (SCPA, see http://www.scpa.org.au), based around the Bega Valley and including producers from Braidwood, Batemans Bay and Eden. It supplies markets as far away as Canberra. There are several more Organic PGS that have formed in the last few years, in NSW and Queensland, and some farmers markets are establishing PGS for the purpose of guaranteeing that produce sold is genuinely produced by the seller (these may include non-organic members).

Despite the small number of examples of PGS in western countries, we do know that they will have the following characteristics:

• If they make an organic claim it will be based on an existing standard (such as the AS6000 or the National Standard for Organic and Biodynamic Products). They should not attempt to redefine or vary the generally accepted rules for organic production.
• They will encourage participation and be non-hierarchical, and they will not be privately owned or ‘for profit’.
• They will almost certainly be organized around a specific region or locality and often focused on local supply. They may be specifically focused around a market place such as a farmer’s market and local organic shops, at least initially. Some PGS may be organized around a specific commodity.
• They will be very cheap or without cost. Like any community organisation or activity they may, if they are large enough, pay for services of a coordinator or inspector, but to the greatest extent possible they will use voluntary labour.
• It is probable that the first few working PGS will be focused on small growers, and initially it is unlikely that they will try to market through ‘third parties’ such as major wholesalers and supermarkets, although this may be possible in time, when PGS have become well established.

Steps are underway to form a national PGS Council to assist with the development of PGS and to regulate use of the term, and to ensure that the first few operating PGS are successful exemplars for others to emulate.

As an example of how the price of certification can be reduced in PGS while retaining reliability and local acceptance, the SCPA PGS costs $165 per annum including membership of SCPA and certification fees. In this case members inspect each other (first time inspectors are accompanied by a more experienced member).

Does PGS detract from third party certification?

PGS may supplement third-party organic certification, and if correctly management, can offer significant benefits, including the following:

• PGS may be suitable for some small growers who are not profitable as clients of third-party certifiers (their certification costs are subsidized by larger clients).
• If the PGS uses a genuine organic standard (and they must if they are to be recognised by other PGS and the PGS Council), then the integrity of organic claims is well served and consumers are protected.
• Small growers become familiar with the operation of certification and are therefore prepared for joining a third-party certification scheme as their business grows and they need to sell into larger, remote, and export markets.
• Unlike third-party certification bodies, PGS may offer advice to members, so conversion to organic can grow quicker.
• Importantly, more land is converted to genuine organic management and more safe organic food is available to the community.

How should genuine PGS be established?

The best guidance for PGS is to apply the following guidelines:

• Use an acknowledged and accredited organic standard. SCPA uses the IFOAM Standard, but I believe that the National Standard or the AS6000 are more appropriate.
• Establish a non-hierarchical, not-for-profit organisation, and ensure that some form of member protection or insurance is available. Becoming a ‘project’ of an NRM or Landcare group may be an option (SCPA is an association incorporated in NSW).
• Require major roles including inspector and reviewer roles to be rotated between members. If the inspector role is contracted to a trained auditor, the task of reviewing inspection reports and approving certification should remain with members.
• Provide training to members as necessary, including training in organic production methods and certification procedures.
• Include non-producers in the group, to avoid a perception of ‘you give me one I will give you one’. This may include members of other local groups such as Landcare, NRM, the Slow Food Movement, or other civil society organisations, and well known chefs, foodies and other community leaders.