COAG/99/9 Rev.1





COMMITTEE ON AGRICULTURE

Fifteenth Session

Rome, 25-29 January 1999, Red Room

ORGANIC AGRICULTURE

Item 8 of the Provisional Agenda

Table of Contents

I. INTRODUCTION

1. Although as yet only a small industry, organic agriculture is becoming of growing importance in the agriculture sector of a number of countries, irrespective of their stage of development. For example, in several developed countries organic agriculture has come to represent a significant portion of the food system (10 percent in Austria, 7.8 percent in Switzerland)1 and many others are experiencing growth rates that exceed 20 percent annually (e.g. USA, France, Japan, Singapore)2. Some of the developing countries have small domestic organic markets (e.g. Egypt) and a few have begun to seize the lucrative export opportunities presented by organic agriculture (e.g. exports of Mexican coffee, Ugandan cotton).

2. Though only a small percentage of farmers are expected to become organic producers, consumer demand for organically produced food and fibre products provides new market opportunities for farmers and businesses around the world. It also presents new challenges for FAO. For many years, and with great success, the private sector alone has developed the concepts and markets for organic products. However, the surge in consumer interest has created new interest from the public sector, and developing countries are particularly in need of good information. Member countries are requesting FAO assistance as they seek to determine the potential of such markets in specific areas. Governments need to know the potential of organic agriculture to contribute to sustainability in order to direct research and extension efforts. Countries also seek FAO's assistance in deciphering the multitude of rules various traders expect to be followed; increasing international trade in organic products has placed FAO in the forefront of efforts to achieve greater harmony in organic standards.

3. The World Food Summit Plan of Action recognized the importance of "appropriate input technologies, farming techniques and other sustainable methods, such as organic farming, to assist farming operations to be profitable, with the goal of reducing environmental degradation, while creating financial resources within the farming operation." This paper discusses the opportunities and constraints of organic agriculture and the public policies influencing the adoption of organic agricultural practices. The paper proposes a coherent and cross-sectoral FAO programme in organic agriculture with four distinct functions, all aimed at enabling member countries to make informed choices about organic management. COAG is asked to endorse FAO's intention to develop such a coherent programme.

II. DEFINITION OF ORGANIC AGRICULTURE

4. An organic label indicates to the consumer that a product was produced using certain production methods. In other words, organic is a process claim rather than a product claim. An apple produced by practices approved for organic production may very well be identical to an apple produced under other agricultural management regimes.

5. Several countries and a multitude of private certification organizations have defined organic agriculture. In the past, differences in these definitions were significant but the demand for consistency by multinational traders, has led to great uniformity. The International Federation of Organic Agriculture Movements (IFOAM), a non-governmental organization internationally networking and promoting organic agriculture, has established guidelines that have been widely adopted for organic production and processing.

6. Most recently, the Codex Committee on Food Labelling has debated "Draft Guidelines for the Production, Processing, Labelling and Marketing of Organically Produced Foods"; adoption of a single definition for organic agriculture by the Codex Alimentarius Commission is expected at its next meeting in June, 1999. According to the proposed Codex definition, "organic agriculture is a holistic production management system which promotes and enhances agro-ecosystem health, including biodiversity, biological cycles, and soil biological activity. It emphasises the use of management practices in preference to the use of off-farm inputs, taking into account that regional conditions require locally adapted systems. This is accomplished by using, where possible, agronomic, biological, and mechanical methods, as opposed to using synthetic materials, to fulfil any specific function within the system."

7. Organic agriculture is one of several approaches to sustainable agriculture and many of the techniques used (e.g. inter-cropping, rotation of crops, double-digging, mulching, integration of crops and livestock) are practised under various agricultural systems. What makes organic agriculture unique, as regulated under various laws and certification programmes, is that: (1) almost all synthetic inputs are prohibited,3 and (2) `soil building' crop rotations are mandated.4

The basic rules of organic production are that natural inputs5 are approved and synthetic inputs are prohibited. But there are exceptions in both cases. Certain natural inputs determined by the various certification programmes to be harmful to human health or the environment are prohibited (e.g. arsenic). As well, certain synthetic inputs determined to be essential and consistent with organic farming philosophy, are allowed (e.g. insect pheromones). Lists of specific approved synthetic inputs and prohibited natural inputs are maintained by all certification programmes and such a list is under negotiation in Codex. Many certification programmes require additional environmental protection measures in addition to these two requirements. While many farmers in the developing world do not use synthetic inputs, this alone is not sufficient to classify their operations as organic.

III. OPPORTUNITIES AND CONSTRAINTS

8. The demand for organic products has created new export opportunities for the developing world. While some consumers express a preference for locally-grown organic foods, the demand for a variety of foods year-round makes it impossible for any country to source organic food entirely within its own borders. As a result, many developing countries have begun to export organic products successfully (e.g. tropical fruit to the European baby food industry, Zimbabwean herbs to South Africa, six African nations export cotton to the European Community). Typically, organic exports are sold at impressive premiums, often at prices 20 percent higher than identical products produced on non-organic farms. The ultimate profitability of organic farm varies, however, and few studies have assessed the long-term potential for such market premiums. Nevertheless, under the right circumstances the market returns from organic agriculture can potentially contribute to local food security by increasing family incomes.

9. Entering this lucrative market is not easy, however. Farmers are denied access to developed country organic markets for two to three years after beginning organic management since such countries will not certify land and livestock as organic before that time, arguing that it is necessary for the purging of chemical residues. Under the Draft Codex guidelines, however, products produced on land under organic management for at least one year but less than the two-three year standard can be sold as "transitional organic", although few markets have yet developed for such products.

10. In most cases farmers and post-harvest businesses seeking to sell their products in developed countries must hire an organic certification organization to annually inspect and confirm that these farms and businesses adhere to the organic standards established by various trading partners. The cost for this service can be expensive, although it varies in relation to farm size, volume of production, and the efficiency of the certification organization (e.g. IFOAM recommends that certification costs a maximum of 5 percent of sales value, but where local certification organizations exist it is estimated that costs can be reduced to 2 percent of sales value). Few developing countries have certification organizations within their borders, and even when sufficient resources are available to pay for certification farmers often lack the information to find credible inspectors.

11. While most developing country traders have focused on export markets in the developed world, domestic market opportunities for organic food or eco-food may also be exploited. In China, for example, there is a growing market for "green food" which, according to government grading standards, is produced without certain pesticides and fertilizers and with biological methods. Chinese farmers also produce organic food for export (e.g. tea to the Netherlands, soybeans to Japan).

12. Whether the intent is to sell organic products domestically or abroad, reliable market information is difficult to obtain. There is virtually no systematic production or market survey data being collected with which to assess the rate and pattern of organic market growth. In particular, no projections for the market in the developing world have been made, nor have markets systematically been identified for developing country exports. Estimates of the public's willingness to pay premiums, the impact of regional attitudes and tastes, and the incidence of market fraud have not been undertaken.

13. Farmers will probably experience some loss in yields when converting their operations to organic production. There is a period of time between the discarding of synthetic inputs and sufficient biological activity being restored to the land (e.g. growth in beneficial insect populations, nitrogen fixation from legumes) during which pest suppression and fertility problems are typical. The degree of yield loss varies, however, and depends on factors such as the inherent biological attributes of the farm, farmer expertise, and the extent to which synthetic inputs were used under the previous management system. Where soil fertility is low and biological processes have been seriously disrupted, it may take years to restore the ecosystem to the point where organic production is possible. In such cases other sustainable approaches, which allow judicious use of synthetic chemicals, may be more suitable start-up solutions. One strategy to survive the difficult transition period involves converting farms to organic production in partial instalments so that the entire operation is not at risk.

14. Most studies find that organic agriculture requires significantly greater labour input than conventional farms. This is especially true in areas of low ecological potential. However, when labour is not a constraint organic agriculture can benefit underemployed labour in rural communities. Furthermore, the diversification of crops typically found on organic farms, with their various planting and harvesting schedules, may distribute labour demand more evenly which could help stabilize employment. Land tenure is also critical to the adoption of organic agriculture. It is highly unlikely that tenant farmers would invest the necessary labour and sustain the difficult conversion period without some guarantee of access to the land in later years when the benefits of organic production are attainable.

15. Soil-building rotations need to be designed both from the economic and the technical points of view - uses must be identified for all the crop and livestock products produced. As in all agricultural systems, diversity in production increases income-generating opportunities and can, as in the case of fruits, supply essential health protecting minerals and vitamins to the family diet. It also spreads the risks of failure over a wide range of crops. It is possible that, even on those farms where organic crop yields are lower than those produced under systems which use high levels of inputs, the overall economic yields of the farm will be competitive since organic systems benefit from market premiums and sometimes lowered input costs.

16. The insights generated by organic farmers in their search for site-specific production strategies can be of great benefit to non-organic farmers interested in expanding their management options. However, organic farmers still face huge uncertainties. A lack of information is an obstacle to organic conversion (e.g. surveys find that 63 percent of sub-Saharan African farmers and 73 percent of North American (US and Canada) organic farmers cite a lack of knowledge as the greatest barrier to adoption). Extension personnel rarely receive adequate training in organic methods and studies have shown that they sometimes discourage farmers from converting. Furthermore, institutional support in developing countries is scarce. Professional institutions with a capacity to assist farmers throughout the production, post-production and marketing processes are non-existent in many developing countries. While there are helpful research results that immediately could be extended to farmers, much more are needed. In 1990, FAO sponsored a conference at which organic research needs were identified (e.g. economics of stockless farms, animal husbandry, nitrogen cycling); however these challenges have largely gone unmet.

17. The explicit goal of organic agriculture is to contribute to the enhancement of sustainability. Nevertheless, negative impacts may occur and organic agriculture is not an exclusive method for sustainable farming. The soil and water protection and conservation techniques of sustainable agriculture used to combat erosion, compaction, salinization and other forms of degradation are evident in organic farming. The use of crop rotations, organic manure and mulches improves soil structure and encourages the development of a vigorous population of soil micro-organisms. Mixed and relay cropping provide a more continuous soil cover and thus a shorter period when the soil is fully exposed to the erosive power of the rain, wind and sun. Terracing to conserve moisture, and soil are used in appropriate situations and particular attention is paid in irrigated areas to on-farm water management. Properly managed organic farming reduces or eliminates water pollution and helps conserve water and soil on the farm (although improper use of manure can seriously pollute water). A few developed countries compel or subsidise farmers to use organic techniques as a solution to water pollution problems (e.g. Germany, France).

18. Organic farmers rely on natural pest controls (e.g. biological control, plants with pest control properties) rather than synthetic pesticides which, when misused, are known to kill beneficial organisms (e.g. natural parasites of pests, bees, earthworms), cause pest resistance, and often pollute water and land. Reduction in the use of toxic synthetic pesticides, which the World Health Organization (WHO) estimates to poison three million people each year, should lead to improved health of farm families.

19. Organic farmers aim to make the maximum use of the recyclable fertility in on-farm crop residues (straws, stovers and other non-edible parts) either directly as compost and mulch or through livestock as farmyard manure. Eliminating the use of synthetic nitrogenous fertilizer greatly lowers the risks of nitrogen contamination of water. Crop rotation is a widely used method of fertility maintenance and pest and disease control, which is used in large- and small-scale farming in both developed and developing countries, especially under intensification. Fodder legumes are well-known fertility-building crops and are grown on vast areas in sub-tropical Asia and in semi-arid regions for the dual purpose of feeding livestock and adding nitrogen to the farm fertility cycle. Grain legumes may also produce a reasonable crop without nitrogenous fertilizer. Leguminous crops in rotations add various amounts of nitrogen to the overall farm system through biological fixation; other nitrogen-fixing plants such as Azolla may also be used.

20. Biological nitrogen fixation is a powerful technique but it often requires some addition of minerals to the soil, especially phosphorus. Most certification programmes restrict the use of mineral fertilizers which may be necessary to supplement the organic manure produced on the farm. Natural and organic fertilizers from outside the farm are used (e.g. rock phosphate, potash, guano, seaweed, slaughterhouse by-products, ground limestone, seaweed, wood-ash). While most certification programmes prohibit the use of sewage sludge and night-soil they are still used in some places. However, sludge may contain many contaminants including heavy metals which can have a deleterious and cumulative effect on the soil, while night-soil contains human pathogens and must be carefully composted before use.

21. Crop rotations encourage a diversity of food crops, fodder and under-utilized plants; this, in addition to improving overall farm production and fertility may assist the on-farm conservation of plant genetic resources. Integrating livestock into the system adds income through organic meat, eggs and dairy products, as well as draught animal power. Tree crops and on-farm forestry integrated into the system provide shade and windbreaks while providing food, income, fuel and wood. Integrated agri-aquaculture may also be found within diverse organic agricultural systems. Economic objectives are not the only motivation of organic farmers; their intent is often to optimize land, animal, and plant interactions, preserve natural nutrient and energy flows, and enhance biodiversity, all of which contribute to the overall objective of sustainable agriculture to preserve natural resources and ecosystems for future generations.

IV. POLICY CONSIDERATIONS

22. The environmental and economic benefits of organic agriculture have captured the attention of several countries; however, only a small number have enacted policies to assist the organic sector. Most assistance has developed in the private sector, especially by NGOs. This private sector infrastructure is not only recognized by countries, but also encouraged.

23. Farmers and consumers in almost all countries rely on a system of private self-organized producer organizations and independent certifiers which have, over the years, provided an economically-efficient mechanism of certification. The degree to which private organizations are significant is indicated by the fact that IFOAM has some 650 individual and institutional members in over 100 countries, 75 percent of which are in developing countries. However, the network of private certifiers needs to expand; as mentioned earlier, many developing countries still lack certification organizations.

24. Organic programmes, as well as the Draft Codex guidelines, maintain evolving "input lists" of acceptable inputs for organic production, processing aids, and ingredients. Countries, in consultation with civil society organizations, can propose their own input lists to Codex and negotiations will probably take place over what ultimately is acceptable in the international marketplace. Many developing countries have not drawn up material lists and generally lack the resources and training to effectively participate in international standard-setting processes.

25. Engaging in international trade requires quantities of goods well beyond the production capacity of individual small organic farmers. NGOs have supported farmers in their efforts to establish appropriate organizations for collecting, processing and marketing organic products. Countries could support NGOs in building organizations which play a key role in disseminating best practices and ensuring that farmers use adequate production and post-production techniques.

26. Northern developed countries have invested by far the most in organic agriculture research but even so, the contribution is minimal compared to overall research agriculture (e.g. less than 0.01 percent of the US Department of Agriculture research budget is directed to organic agriculture). The lack of extensive formal organic research combined with the highly site-specific nature of organic agriculture, suggests that it would be most advantageous for farmers themselves to participate in locally-based, applied field research. Experience with FAO-initiated Integrated Pest Management (IPM) Farmer Field Schools and community forestry projects has shown that farmers, whether owners or tenants, large or small, can practice good scientific methods if they are given orientation and technical support. Countries could also undertake market research. The USA, for example, analysed the market for organic goods in more than 20 countries, with a focus on opportunities for US exports.

27. Draft Codex guidelines, as well as most national and private organic standards, disallow genetically engineered organisms (GEOs), including transgenic crops, in organic production. By providing consumers with a non-GEO produced alternative organic agriculture has secured an important market, at the same time relieving much of the pressure to impose out-right bans on GEO-produced food. While current biotechnology applications have been rejected for organic production, it is possible that future scientific developments and further discussions may produce technologies acceptable to consumers (e.g. the value of tissue culture in producing disease-free planting materials).

28. Interest in environmental protection and the preservation of small family farms has led developed European countries to subsidize organic production to varying degrees. The subsidies can provide significant encouragement (e.g. UK provides up to £450 per ha during the conversion period for designated land areas; European Community subsidies have helped 15 percent of Irish organic farmers develop dairy operations). Interested communities would have to be advised about organizational aspects and on procuring and commercializing the necessary inputs as well as on marketing any surplus produce (e.g. seed and planting material of adapted varieties, suitable livestock genitors).

29. Consumer confidence in the integrity of organic claims is essential if goods are to be sold at a premium. Because organic products cannot be distinguished from conventional products, consumers depend entirely on certifiers to truthfully distinguish organic from non-organic goods. Countries could better enforce organic standards by punishing those who engage in fraudulent activities as well as undertaking systematic tracking and measuring of fraud and its impact on the market.

V. ONGOING FAO ACTIVITIES

30. FAO has undertaken several activities specific to organic agriculture, most of which are in the early stages of development. An FAO Library bibliographic search identified 49 FAO reports on organic agriculture. The FAO Regional Office for Europe has been supporting meetings of researchers working on organic agriculture, sponsored a conference in 1990 on Biological Farming in Europe, and, most recently, an expert Round Table in 1997 which established a working group on Research Methodologies in Organic Farming under the European System of Co-operative Research Networks in Agriculture (ESCORNA). The Regional Office for Asia and the Pacific has co-ordinated an Asian Bio and Organic Fertilizer Network that for more than a decade has issued annual bulletins on organic recycling in the region. Software has been developed by FAO's Land and Water Development Division to facilitate collecting data on the use of organic nutrients. The Codex Committee on Food Labelling is currently considering Draft Guidelines for the Production, Processing, Marketing and Labelling of Organically Produced Foods. Perspectives and guidelines for post-harvest handling of organic fruits, vegetables, aromatics, and spices in developing countries are under development by the Agroindustries and Post Harvest Management Service.

31. In 1997 an internal E-mail network on organic agriculture was established to facilitate the exchange and evaluation of information and develop common understandings among FAO staff. A focal point on organic agriculture was nominated within the Environment and Natural Resources Service. After obtaining formal liaison status within FAO in 1997, IFOAM met with FAO experts from all technical departments in March, 1998 to identify areas of potential collaboration.

VI. FUTURE FAO FUNCTIONS IN ORGANIC AGRICULTURE

32. Additional FAO efforts will be necessary to respond to the frequent requests from member countries for organic agriculture information and assistance. FAO could effectively collaborate, and build partnerships with existing institutions (e.g. national organic programmes/associations, IFOAM and other NGOs, and national and international agricultural research centres) in several areas, presuming that adequate resources are secured. Proposed major functions include:

33. As part of its Regular Programme, FAO could provide a forum for member countries to agree on standards for organic production, labelling, and other market related concerns. Some of this would continue to take place within the Codex Committee on Food Labelling but FAO could, in addition, convene expert groups to respond to emerging issues such as soil building crop rotations, pathogen problems associated with manure use, and the development of post-harvest handling codes. The recommendations of these expert groups could be provided to the Codex Committee on Food Labelling or any Codex-like mechanism that provides a forum for international debate. FAO Codex Regional Committees could further consider regionally-based organic standards and input lists that take into account local production needs as well as international market demands.

34. Basic intelligence is needed to fully understand the magnitude and potential of the organic sector. FAO could request organic production and trade data from countries through its regular annual questionnaire. FAO could also develop appropriate standards and classification for data collection efforts by countries and private organizations. FAO could also serve as a clearinghouse for market research by gathering and reporting on information generated by various entities. A roster of resource centres and experts involved in research and marketing could be maintained and networking in developing countries could be promoted. Data collection, although part of FAO's Regular Programme functions, would require dedicated funding. For well-defined, in-country studies, an appropriate mix of regular and extra budgetary funds must be secured. For example, Technical Cooperative Programme resources could be used. Once data has been collected and analyzed, FAO could provide advise on how to develop local production priorities in accordance with organic market demands.

35. Organic farming tends to reveal interesting research questions having implications for enhancement of sustainable production systems for and beyond Organic Agriculture. FAO could facilitate communication of these questions to researchers so that they may be considered in international research centres, such as the Consultative Groups for International Agricultural Research (CGIAR) and the National Agriculture Research Systems (NARS). Research collaboration could be increased through networks and regular research fora that respond to the cross-sectoral and multi-disciplinary expertise needs of organic agriculture. FAO could also help develop relevant curricula for higher education and appropriate extension and communication programmes. While some of these network opportunities touch upon FAO's Regular Programme functions including the CGIAR TAC Secretariat and NARS Secretariat, others will require extra-budgetary resources.

36. Working with national programmes in pilot activities, FAO could assist in better integrating organic, IPNS, and IPM information to ensure that all such techniques are available to farmers. Among the greatest opportunities for effective FAO involvement is the application of the "Farmer Field School" model in places where market opportunities suggest that organic agriculture would be profitable. FAO-sponsored Farmer Field Schools in organic agriculture could evaluate, on a local basis, the contributions of organic production to food security through adaptive field trials. The highly local nature of organic production means that community-based expertise and organizational capacity is needed. FAO could also promote the development of locally-based certification organizations in developing countries, which could eliminate the costly practice of hiring outside experts to certify organic operations. All of these pilot activities would require the identification and mobilisation of extra-budgetary resources, and could be strengthened by collaboration with member countries' research, development, and extension institutions.

VII. CONCLUSION

37. FAO has the responsibility to give organic agriculture a legitimate place within sustainable agriculture programmes and assist member countries in their efforts to respond to farmer and consumer demand in this sector. Organic agriculture may contribute to the overall goals of sustainability. First, organic farmers and processors, in their attempts to adhere to rigorous certification standards, may discover new and innovative production technologies that apply to other agricultural systems as well. Second, organic agriculture may provide market opportunities for farmers and processors who choose to alter their practices to meet certain consumer demands. Finally, organic agriculture promotes the national and international public debate on sustainability by creating awareness of environmental and social concerns that merit attention.

38. In light of the above, an Organization-wide, cross-sectoral programme in organic agriculture is needed. Such a programme would focus on: provision of information and cost-effective discussion fora on organic production and trade; institutional support and policy advice to members; facilitation of research, extension and networking; technical assistance for developing skills, organic standards and certification capacities; and pilot projects that explore and promote feasible organic agricultural techniques.

39. The programme would have an institutional core where some activities would be anchored within the Regular Programme and, where possible, strengthened with extra-budgetary resources. FAO, in partnership with public and private institutions, should undertake related programme activities. The Sustainable Development Department, through the Environment and Natural Resources Service of the Research, Extension and Training Division would continue providing co-ordination by promoting and catalysing technical divisions' work on organic agriculture. The Committee on Agriculture may wish to endorse this proposal and to provide guidance on how FAO might best shape a coherent programme on organic agriculture reflecting the needs and opportunities of member countries.

1 Data sources: Austria: Market Brief, prepared by the U.S. Department of Agriculture, Foreign Agriculture Service, November 1996; Switzerland: USDA Outlook Conference Proceedings, February 23, 1998.

2Data sources: USA: Federal Register, Vol. 62, No. 241, December 16, 1997; France: USDA/FAS Market Brief, December 1997; Japan: USDA/FAS Market Brief, September 1994; Singapore: USDA/FAS Market Brief, August, 1997.

3No single definition of "synthetic" exists, although the various material lists of allowed and prohibited inputs for organic production, developed in different countries and by different certification programmes, are fairly consistent, reflecting an implicit agreement on a definition. The few legal definitions of synthetic reflect the common understanding of the term in organic trade. For example, British Columbia, Canada defines "synthetically compounded" as "a process which chemically changes a material extracted from naturally occurring plant, animal or mineral sources, excepting microbiological, mechanical and heat processes." The USA defines synthetic as "a substance that is formulated or manufactured by a chemical process or by a process that chemically changes a substance extracted from naturally occurring plant, animal, or mineral sources, except that such term shall not apply to substances created by naturally occurring biological processes."

4 Crop rotation is the practice of alternating crops grown on a specific field in a planned pattern or sequence in successive crop years. Organic certification programmes require `soil building' crop rotations, meaning that they must be specifically designed to steadily improve soil tilth and fertility while reducing nitrate leaching, weed, pest and disease problems. IFOAM, for example, recommends specific rotations that include legumes and requires the rotation of non-perennial crops "in a manner that minimises pressure from insects, weeds, diseases and other pests, while maintaining or increasing soil, organic matter, fertility, microbial activity and general soil health." Under limited cropping conditions (e.g., mushrooms, perennials) crop rotations may not be applicable; in such cases other methods that contribute to soil fertility may be required by certification programmes.

5 Natural is commonly understood as anything that is non-synthetic.