Certification

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Certification Labeling Considerations for
Agricultural Producers
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Where is Agriculture Growing Today?

• Large-scale commercial commodity focused
  producers
• Consolidation / economies of size
• Low-cost production strategy
• Niche or differentiated product agriculture
• Often small-scale / customer intimacy strategy
• High-end service and quality attributes
• Recreation or education connection to product
• Activities that add value beyond the farm-gate
• Credence attributes

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Credence Attributes

• Credence attributes are defined as
  extra-sensory product characteristics.
• can NOT be discerned by consumer inspection
• production/processing techniques chemicals,
  animal welfare, fair wages, origin of food,
  traceability, etc.
• Food products have traditionally been
  differentiated through
• appearance attributes (sight, touch, smell,
  etc.)
• experience attributes (taste, sweetness,
  flavor, etc.)
• seek quality assurances from a third-party.

4
Third-Party Certification

• A tool allowing producers to enter a recognized
  market using an established umbrella program or
  label
• Certified products provide consumer assurance
  that products meet certain extra-sensory or
  production/process attributes
• Third-party certification implies that the
  certifying party does not directly benefit from
  sale of the good (e.g., USDA Organic, Fair Trade,
  Certified Angus Beef, Oregon Grown, etc.)

5
Branding vs. Certification
Branding A name, term, design, symbol, or any
other feature that identifies one sellers good
or service as distinct from those of other
sellers.
Certification To confirm formally as true,
accurate, or genuine. To guarantee as meeting a
standard.
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Trends Fueling Certification

• Growing household incomes
• Increasing food safety concerns
• Growing separation between agricultural producers
  and consumers
• Concerns about status/causes of food consumed

• Hierarchy of Consumers Food Preferences

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Five Consumer Questions/Issues

1. Does the food product affect the health of my
   family?
2. Does the production of the food product treat
   animals in a humane way?
3. Are the production processes environmentally safe
   or friendly?
4. Are other people affected by the production and
   processing techniques?
5. Does product conform to my religious beliefs?

8
Branding

• Generally privately owned managed
• Focus on product attributes that are desired by a
  companys target markets
• Successful at local or regional level if
  consumers associate brand/label with desirable
  quality attributes (e.g., Kleenex, Coke, etc.)

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Recognition of Certified Labels
Kona Coffee
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Functions of Third-Party Certification

• Standard Setting
• Specific quality levels, well-defined criteria
  and terminology
• Testing/Inspection
• Objective verification of production practices,
  record-keeping requirements, quality standards,
  etc.
• Provide Labels to Certified Producers
• Enforcement
• Continued testing inspection
• Fines/penalties for fraud

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Types of Certifying Agencies

• Government Agencies
• FDA, USDA FSIS, NRCS, AMS, etc.
• Majority of US consumers trust govt. certifiers
  (85)
• Govt. accredits private and non-govt.
  organizations
• Non-Government Organizations (NGOs)
• World Wildlife Fund, The Food Alliance,
  Greenpeace, Organic Consumers Assoc.,
  Certification Monitoring Network, Oregon Tilth
• Private Companies
• Quality Assurance International, Scientific
  Certification Systems (Nutriclean)

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First-Party/Self Certification

• Direct claims made by a firm about its product
• e.g., Healthy, Homegrown, Natures Best,
  grass-fed, pasture-raised, exempt organic
  producers (lt5,000 in organic sales)
• Requires no generally accepted standards
• Firms are still held to truth-in-labeling laws
• Consumers may prefer first-party claims as
  personal relationships and trust develop over time

13
Label Claims

• No current regulations on grass-fed or pasture
  raised
• Greener Pastures promote product as going beyond
  recognized labels like organic.

14
Producer Payoff from Certification

• Immediate recognition by high-income consumers
  for niche attributes
• Studies show consumers willing to pay premiums
  for label identified characteristics
• Food safety
• Specific nations/areas of origin
• Natural/organic/reduced chemical inputs
• Humane animal treatment
• Nutritional related factors (e.g. high
  antioxidant, low fat)
• Social responsibility

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Cost-Benefit Analysis

• Benefits
• Higher prices for goods?
• Increased market access?
• Improved price stabilization?
• Costs
• Price of attaining certification?
• Production process changes?
• Record keeping costs?
• Brand design marketing?
• Comparison must be done for a reasonable
  multi-year time horizon

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Which Direction to Pursue?

• Proliferation of certification strategies
  available
• Own brand still an option
• How does one decide what strategy to pursue, if
  any?

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Third-Party Certification Issues

• Guidelines on third-party certification
• Experiences of several enterprises
• Food industry trends
• Numerous labels available

cals.arizona.edu/arec/ wemc/wemc.html
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page 48
Consumer Questions/Issues
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Flowchart Guide (pp. 44-47)
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Selected Web Resources

• Food Safety Inspection Services
• www.fsis.usda.gov
• The American Heart Association
• www.americanheart.org
• List of accredited organic certifiers by state
• www.ams.usda.gov/nop/ -- certifying agents
• Certified Humane Raised Handled
• www.certifiedhumane.com
• Rainforest Alliance
• www.rainforest-alliance.org
• Western Extension Marketing Committee
• ag.arizona.edu/arec/wemc/

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Helpful Certification Resource
1-800-346-9140 1-800-411-3222 (en
Español) www.attra.ncat.org
ATTRA is a project of
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Organic / Specialty Markets
Economic Research Service www.ers.usda.gov