We expect that it is necessary to have a certificate for organic products. Yes, it is correct but why is that? Buyers often pay an additional premium for organic status. So buyers want to know that really what she/he pays buy the money’s worth. Nobody really can guarantee that 100% but it is a way to meet consumer desire to know the truth about the commodity that she/he would be buying.
Any product needs some form of standards that assures that consumer safety and information needs. Here organic products must also have a certificate to confirm that the producer/packer/seller follows agricultural and industrial practices that are consistent with the organic standards. So, certification is a way to satisfy consumers’ desire to know details about the product that s/he would be buying.
Generally certification is done by an independent accrediting agency on producers’ behalf but for consumers. So, accrediting agency needs consumers’ trust. Generally statutory bodies like departments of agriculture set up guidelines and standards in consultation with environmental authorities. Accrediting agencies follow those standards and examine, investigate and audit producers/packers production/packing systems/standards and issue certificates on behalf of such authorities. There are many such accrediting agencies in the world and they issue certificates and consumers trust them and buy the products. If any consumer finds the stated standards have not met in her/his bought commodity then the consumer can return the product.
Certification, root of origin and adherence to organic cultural practices are hence a key to test the genuineness of the organic status of a product. Often accrediting agencies ask the producers to follow stricter standards than a statutory body has stipulated in their standards. This might be done in a good faith to assure or uphold consumers’ preference. Seemingly this might be an innocent effort to help the consumer asking stricter conditions. However, this might remove some of the products coming into the market and hence consumer might be paying a higher price for the products that are in the market. This might even further reduce the competitiveness in the organic market.
A million dollar (or a billion dollar) question is when can we expect perfectly competitive markets for organic products? Forget about perfectly competitive market. What about reasonably competitive markets? Could we have any hope?
Presented by, Prof. P. Abeygunawardena