COMMENTARY: New ruling may spark organic coffee crisis

Posted: 15 June 2007

Author: Eric Holt-Giménez, Ian Bailey and Devon Sampson

A move by the US to change the organic certification process is likely to make it more expensive and difficult for small-scale organic coffee growers in the developing countries, who produce the bulk of organic coffee in the world, to continue to survive.

"The Coffee Crisis" used to refer to the disastrous plunge in world coffee prices in the 1980s and 1990s that bankrupted hundreds of thousands of smallholders around the world. The US Department of Agriculture's (USDA) National Organic Program (NOP) is now poised to bring us the 'Organic Coffee Crisis.' With a breathtaking disregard for transparency, consultation and public debate, the NOP is moving to make it prohibitively expensive and logistically impossible for small-scale organic coffee growers.

Ar present, when combined with Fairtrade coffee, certified organic coffee can fetch up to $1.51/lb. Though even this price may not completely cover many farmers' production costs, the Fairtrade-Organic combination has saved many smallholders from total financial ruin.And until now, official certifiers inspected smallholder 'community grower groups' (usually a cooperative), to ensure compliance with organic standards. Inspectors typically tested 20 per cent of the group's farms to validate farmers' compliance. This allowed some 300 grower groups in the Global South to obtain organic certification for over 100,000 farmers. This system is very similar to USDA organic food processing audits.

Last year, the USDA National Organic Program decertified a coffee co-operative in Mexico after an inspector discovered that the co-operative's internal control system had failed to detect that one farmer had used pesticides and stored his coffee in used fertilizer bags.

After an unsuccessful appeal filed by the Mexican cooperative, on October 27, 2006, not only did the USDA decertify that co-operative -based on a legal reading by USDA administrative law judges - USDA decided to abandon the grower group certification process altogether by unilaterally declaring that, "The use of an internal inspection system as a proxy for mandatory on-site inspections of each production unit by the certifying agent is not permitted." (NOP Appeal Summaries, 10/2005-3/2007).

Yearly inspections

Now every farmer, no matter how small, must submit to yearly, on-site inspections. Certification inspection visits, often to remote coffee farms, can take three to five days at a cost of $150-$270 a day. There is little likelihood that individual smallholders - who produce the bulk of the world's organic coffee - can pay this price, or that certifiers can reach all of them.

Organic certification already comes at a high cost for smallholders. Not only do farmers have to invest more labour in weeding, pruning, and organic fertilisation, they must first sacrifice three years of farming organically without certification (or the premium) before qualifying. They must also organise in co-operatives under one management and marketing system and maintain a strict, documented, internal control system to make sure all members in the grower group are complying with organic standards and production practices. It is hard to imagine who benefits from this new USDA decision, aside from large-scale organic coffee farmers who can afford yearly inspections. It certainly doesn't benefit organic smallholders, who produce the bulk of organic coffee in the world, or consumers, who will see the price of organic coffee go through the roof.

It doesn't benefit Fairtrade roaster-distributors who depend on the organic price to shore up the Fairtrade premium paid to many organic farmers. It doesn't even benefit the large retailers that carry organic coffee. How will Wal-Mart and Nestlé maintain their 'halo' of fairness and greenness if the organic and Fairtrade coffee that the chains sell is replaced by high-priced coffee sold by a handful of big growers?

Sacrificial lambs

While this move could favour large coffee growers, it does not appear that they were behind this development. Likewise. though the Mexican co-operative's violation may have triggered the USDA's reaction, it is unlikely that this was their main motive. Rather, it may be that the USDA, burned by large-scale organic imports from China that were not organic, decided to tighten certification procedures.

So, hard-strapped smallholder coffee co-ops that have spent nearly two decades trying to make the organic certification system work, are now the sacrificial lambs for the industrial organic industry. By sabotaging smallholder certification, the USDA risks destroying both the Organic and Fairtrade coffee markets in the US. This USDA ruling comes at a time when large processors, retailers, and large-scale industrial farms are making inroads into the organic market that, according to the Organic Trade Association, is growing at 20 per cent a year. The market for organic reflects the industrial restructuring of organic production itself; a restructuring that favours large retailers, large processors, and large industrial farms.

For smallholders this is like inviting a bull into a china shop. Not only are they at a price disadvantage, they lack power in negotiating a fair price and in setting rules. The USDA typically loosens standards for agribusiness, but tightens them for smallholders, all in the 'consumer interest.' As the looming Organic Coffee Crisis suggests, once the agri-foods industry takes over, there is no guarantee that smallholders who survive will reap the so-called benefits of mainstreaming.

This article is extracted from the US-based Food First publication 'Backgrounder', Vol. 13, No. 1.It was distributed by Third World Network Features.