Fair Trade producers in Mexico depend heavily on organic certification to reap price premiums for both labels, and will be hurt on more than one front by the recently released USDA rule requiring them to change certification practices, researchers say. In a recent article in Salon, later followed by a post on Gristmill, Samuel Fromartz detailed the consequences of a USDA ruling that would force a radical change in the way grower groups in the global South certify their products. The USDA ruling, Fromartz writes:

[T]ightens organic certification requirements to such a degree that it could sharply curtail the ability of small grower co-ops to produce organic coffee — not to mention organic bananas, cocoa, sugar and even spices.

In his blog on the subject, Fromartz says he only hit the tip of the iceberg. So I hunted around a bit, seeking to find out more about how the ruling would impact producers in developing nations. I contacted Aimee Shreck and Christy Getz, two researchers who have published on organic and Fair Trade in developing nations. And notably, I got in touch with Tad Mutersbaugh, a professor of geography at the University of Kansas. Mutersbaugh’s research focuses on international certification standards, and he’s worked with organic and Fair Trade certified grower groups in Oaxaca, Mexico. He was familiar with the recent USDA ruling, and expressed his concern about the implications the ruling would have for small farmers in organic and Fair Trade grower groups.

In the email exchange we had, Mutersbaugh made a distinction that I had not yet heard. It is written in the USDA ruling, and refers to grower groups’ use of “internal inspectors” versus “external inspectors.”

Internal inspectors generally come from the region they certify, but are specially educated by the larger grower organization in how to certify farms. They are usually true believers in the organic project, says Mutersbaugh, and work for low wages in order to get the job done, charging as little as $1 per inspection. In contrast, external inspectors cost $150 per day, and are also much slower.

“I once attended an external inspection where we managed to do four fields in a day (at $150/day rate) because the inspector simply could not take all of the walking,” Mutersbaugh wrote in an email message. “I then went on an internal inspection where we literally ran down through a canyon and up a mountain, performing 10 inspections in a day at the cost of just $1 per inspection!”

But the USDA ruling prohibits use of internal inspectors, a move that, according to Mutersbaugh, will have dire consequences for small-scale producers. “The only way to do inspections is by using ‘internal inspectors’,” he said. “If external inspectors are used, the cost will be absolutely prohibitive.”

Costs are a big deal to small growers involved in these cooperative groups. Mutersbaugh notes that the $15 organic premium per 100 pound sack can significantly help these farmers, who often earn less than $1,000 a year. He also notes that many of these farmers are indigenous women whose husbands have migrated in search of work. And, Mutersbaugh says, because only a percentage of Fair Trade coffee is actually sold as Fair Trade, since the supply of Fair Trade exceeds the demand, the organic certification is that much more important for these growers.

Organic certification, Mutersbaugh writes, “is … the key for farmers who want to get Fair Trade market access. If they produce coffee that is ‘double certified’ as Fair Trade and organic, and their coffee is gourmet quality, they will gain market access. This is why farmers spend so much — and it really is costly — to gain access to Fair Trade Certified/organic markets.”

In response to worries about organic standards being broken, Mutersbaugh admits this is a “concern” not held only by the USDA — Mexican grower groups worry about it as well. But external certification has its own problems. Mutersbaugh cites an example where a village had been offered certification by an external inspector, but without actual inspections. “Basically,” Mutersbaugh said, “the external inspector would simply invent the paperwork! These [organizations] have come to be called ‘chafa’ (as in wheat chaff) certifiers, but they pose a real challenge.”

Mutersbaugh hammered home two points related to corruption and certification:

  1. “Internal inspectors do not, in my experience, certify their own villages: They certify other villages outside of their regional organizations.”
  2. “Internal inspectors are accredited. They must receive training and pass examinations approved by the national level certifier.”

Mutersbaugh also tied the USDA ruling into the bigger picture of international conservation, development, and the global economy. He wondered why it took ten years for the organic price premium to increase by five cents a pound. (In June of 2007, the price for a 100-pound sack of organic coffee will jump from $15 to $20.) The cost for certification over this 10-year time period has “skyrocketed,” he said, but “this price is simply not reflective of … the cost to certify.”

In addition to this, he added, certified-organic producer families are often key partners in crafting conservation infrastructure. These farmers not only produce coffee, but also habitat. Their fields and conserved lands offer water filtration services, and their conservation support preserves biodiversity and endangered species. Grassroots environmentalists in Mexico often work with networks of certified organic growers to preserve prime conservation land. “What of the songbirds protected, butterflies?” he asked.

Mutersbaugh offered a two-part compromise as a way to alleviate some of the USDA’s concerns and strengthen certification processes:

  1. There should be a “thoroughgoing accreditation process” for internal inspectors, he said. This would allow internal inspectors to be accredited by external bodies, therefore making the system more credible, but still affordable.
  2. The organic premium should be increased to $30 a sack (30 cents a pound) “so that internal inspectors can afford to be inspectors rather than migrants to the U.S” Many good inspectors, he said, leave the business because it is such a low-paying and thankless job. A premium increase to 40 dollars a sack would be a “better bet,” he adds, but he doesn’t think that’s realistic.

But as Mutersbaugh and the other researchers I contacted noted, barriers to entry in organic production are high, and U.S. consumers need to be willing to compensate grower groups in order to help them develop the infrastructure needed to support organic. If it takes 40 dollars a sack — well, for U.S. consumers, that’s just 25 cents more per pound than we’re paying now. “Imagine,” Mutersbaugh says, “getting a raise only once a decade!”