1. Trade in Organic Farming
Sanjay Kumar
4th January 2006

2. Organic Farm Production in India
Total area under certification : 2.5 million Ha
Quantity Exported : 6792 MT
Export Value : Rs.841million
Percentage of Exports : 3%
Wild herb area (MP, Uttaranchal): 2.4 million Ha
Certified Organic Farms : 1426

3. Global Organic Market Largely dominated by US, Japan, and Europe
Organic Market : £ 17.5 billion
Organic Food Sales : 1-3%
Total area : 17 million Ha
30% of the area in Americas, mostly Latin America
US (food and non-food) - $ 10.8 billion (20%)
EU – € 11 billion (5%)

4. Products of Interest Basmati rice Tea Spices
Definition - “long grain - slender aromatic rice” grown and produced in a particular geographical region of the Indian subcontinent.
Production                 : 1,183 MT
Export Quantity         : MT
Export Value                 : Rs 25 Million
Tea
Production                 : 33,140 MT
Export Quantity         : 2,060 MT
Export Value                 : Rs 516 Million
Spices
Production                 : 4850 MT
Export Quantity         : MT
Export Value                 : Rs 39.2 Million
Other important commodities of export interest to India:
Honey
Coffee
Cashew.

5. Problems of Market Access
Import discrimination
Multiple certification
Multiple accreditation
Few Equivalency Agreements
Limitations of Equivalency Agreements

6. Plethora of Standards Hundreds of Private standard setting bodies
56 Government Regulations
2 International Standards
IFOAM - Basic Standards
Codex Guidelines
Chaotic, unstable foundation for international trade
Lack of focus on local situation of organic agriculture and markets.

7. Guiding Principle Striking a balance for welfare maximization
Benefits – higher price realization
Costs -
Standards involve costs, so loss to economy.
Minimum standard has stronger effects on market outcomes.
Welfare maximizing instrument – that equalizes the marginal cost of introducing the standard (including the negative trade effects) to its marginal benefits (in terms of risk reduction).

8. Harmonization Agreement to use one common (existing or new) standard
WTO Rules – international standards does not constitute trade barriers.
TBT Agreement – Article 2.2 and 2.4 – technical regulation not based on international regulation to be judged
Trade effects – whether more trade restrictive than necessary
Effectiveness – to achieve the objective.

9. Mutual Recognition To overcome the problem of asymmetric information
Guiding principle – Are the objectives of the regulation being met?
Compliance can be ensured – Are the regulations met?
What is happening?
Bilateral Equivalence – mechanism exists – NONE!!
Multilateral Equivalence – no mechanism exists.

10. What is the perspective?
Organic agriculture is no longer “alternative agriculture” – now called “sector”.
Market forces legitimize the organic sector.
Equivalence should facilitate mutual acceptance.
Models for equivalence to be identified.
Distinct role of the Government
Shortage of input
Need for tasting laboratories.
Central certifying agencies.
Monitoring the compliance.
Extension progarmmes.

11. Thanks.