1. Organic Accreditation and Certification in Canada By Simon Weseen University of Saskatchewan

2. Presentation Outline Definitions Accreditation, certification, our National Standard, and the notion of regulating Canada’s organic industry Potential models for regulation of Canada’s Organic Industry Criteria for an effective accreditation system Ability of each model to meet criteria Conclusions Recent Developments

3. Definitions Transaction Costs – costs associated with activities carried out in preparation for, and after, an exchange –In the context of the organic industry transaction costs are primarily associated with verifying organic authenticity –Buyers want to ensure that organic products are truly organic

4. Definitions cont’d Certification – the process by which certification bodies (CB’s) provide assurance that organic products are produced and handled according to clearly defined organic standards –Easily allows buyers to verify that products are organic –Therefore reduces TC’s

5. Definitions cont’d Accreditation – allows buyers to verify that standards employed by certifiers are at a minimum acceptable level (Lohr). –Accreditation means that an agency is declaring that a CB is using acceptable standards –Provides access to markets over which agency has jurisdiction (e.g. NOP – US market) –Also lowers transaction costs

6. Definitions cont’d Equivalency Agreement – an agreement under which two nations agree that their standards are acceptable to each other for the purpose of trade –Provides free access to each other’s market –Involves comparison of standards in detail

7. Canada’s Certification/Accreditation System Over 40 certification bodies (CB’s) CB’s seek accreditation with agencies, thus providing clients with market access - National Organic Program (NOP) - European Union - International Federation of Organic Agriculture Movements (IFOAM) - Japan Agriculture Standards (JAS) - Standards Council of Canada (SCC)

8. Canada’s National Organic Standard Voluntary national standards administered by the Standards Council of Canada (SCC) The standard is currently undergoing revisions so that it is more compatible with those of our trading partners Once the standard is approved by the Standards Committee and the SCC, equivalency will be sought Only 2 CB’s are accredited to Canada’s national standard

9. Suggested Problems with our Certification/Accreditation System Accreditation is too costly National Standard doesn’t provide market access (i.e. no equivalency yet) High transportation and handling costs Is not Regulated (i.e mandatory) –Could hinder equivalency negotiations –Uncertified products can be sold as organic in Canada

10. Regulating Canada’s Organic Industry Problems described above have prompted discussion about having a regulated organic industry. Regulation would likely mean –One common standard to which all CB’s must be accredited –Only products certified by an agency accredited to our national standard could be sold as organic

11. Benefits of a Regulated Organic Industry Equivalency with countries that favour a regulated system of accreditation –2005 deadline in Europe A clear, common definition of “organic” for domestic and foreign consumers –Easier to verify standards Decreased handling costs associated with segregation (derived from having a common standard) Protection of quality in domestic markets –Minimum acceptable standards

12. Options for Regulation Assuming that regulation provides net benefits, the next question is: Who should regulate the industry? Two Models for Industry Regulation 1) Industry Regulation (self-regulation) 2) Government Regulation Which one will be more effective?

13. Industry vs. Government Regulation One method of determining which is better –List criteria for an effective accreditation system –Evaluate the potential for each model to meet the criteria

14. Criteria for an Effective Accreditation System It must facilitate equivalency –Trading partners must recognize and approve our system –Equivalency must benefit trading partners It must seek to minimize handling and transportation costs It must clearly define and protect the word “organic” in domestic markets

15. Criteria cont’d Development requires industry input It must allow for trade dispute settlement Industry autonomy must be maintained It must incorporate functioning components of the current system (e.g CBs) Overall, system must have lower transaction costs –Will occur if equivalency is obtained –Will be aided by having a common standard

16. Discussion of Options Both government and industry regulation have the ability to satisfy some of the criteria for an affective accreditation/ certification system –clear definition of “organic” –industry input – incorporate CB’s –minimize handling and transportation costs

17. Discussion cont’d Government regulation would facilitate –Equivalency agreements (Credibility brought by having gov’t involvement) –Trade dispute settlement –Affordable accreditation? –Protection of “organic” label Industry regulation would facilitate –industry autonomy

18. Conclusions An effective regulated national standard is crucial for –reducing transaction costs and providing market access (equivalency) –for the protection of domestic organic markets –reducing handling costs –consumer perception

19. Conclusions cont’d The industry must work together to decide whether criteria for an effective system are best achieved through industry or government regulation and work towards a common goal.

20. Recent Developments Industry stakeholders endorsed the notion of regulation - Guelph Ad hoc committee will bridge the gap between industry and government Committee wants to hear from all interested stakeholders Process will take at least 2 years Industry in Saskatchewan must collaborate to ensure that our needs are met