Certification & Labeling Consideration s for Agricultural Producers
Certification & Labeling
Considerations for Agricultural
Producers
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
Credence AttributesCredence 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.
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.)
Branding vs. Certification
Branding “A name, term, design, symbol, or any other feature that identifies one seller’s 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.”
Nutritious, Safe, AffordableLabel may display one or both of these items
Trends Fueling CertificationGrowing household
incomesIncreasing food
safety concernsGrowing separation
between agricultural producers and consumers
Concerns about “status/causes” of food consumed
Hierarchy of Consumers’ Food Preferences
Five Consumer Questions/Issues1. 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?
BrandingGenerally privately owned & managedFocus on product attributes that are
desired by a company’s target marketsSuccessful at local or regional level if
consumers associate brand/label with desirable quality attributes (e.g., Kleenex, Coke, etc.)
Recognition of Certified Labels
Kona Coffee™
Functions of Third-Party CertificationStandard Setting+ Specific quality levels, well-defined criteria and
terminologyTesting/Inspection+ Objective verification of production practices, record-
keeping requirements, quality standards, etc.Provide Labels to Certified ProducersEnforcement+ Continued testing & inspection+ Fines/penalties for fraud
Types of Certifying AgenciesGovernment 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)
First-Party/Self CertificationDirect claims made by a firm about its product+ e.g., “Healthy,” “Homegrown,” “Nature’s Best,”
“grass-fed,” “pasture-raised,” exempt organic producers (<$5,000 in organic sales)
Requires no generally accepted standardsFirms are still held to “truth-in-labeling laws”Consumers may prefer first-party claims as
personal relationships and trust develop over time
Label Claims
No current regulations on grass-fed or pasture raised
Greener Pastures: promote product as going beyond recognized labels like organic.
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
Cost-Benefit AnalysisBenefits+ 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
Which Direction to Pursue?
Proliferation of certification strategies available
Own brand still an option
How does one decide what strategy to pursue, if any?
Third-Party Certification IssuesGuidelines on third-
party certificationExperiences of
several enterprisesFood industry trendsNumerous labels
available
cals.arizona.edu/arec/ cals.arizona.edu/arec/ wemc/wemc.htmlwemc/wemc.html
Consumer Questions/Issuespage 48
Flowchart Guide (pp. 44-47)
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/
ATTRA is a project of:
1-800-346-9140 • 1-800-411-3222 (en Español)
www.attra.ncat.org
Helpful Certification Resource
Organic / Specialty MarketsEconomic Research Servicewww.ers.usda.gov