Each year, the revenue for organic certified exporting companies increases. It seems almost that New Zealand is built for organic production – the methodologies tie in well with New Zealand’s clean green farming image and can offer a point of difference for exports. For those reasons, an understanding of organic certification is probably quite critical to contemporary primary producers (small just as much as large).
Having said that, very few New Zealanders tend to buy organic, or understand the supposed benefits of organic production. This is partly because of no specific regulation exists that enforces the definition of the term (apart from the Fair Trading Act).
This week we take a look at the logistics of organic certification in New Zealand. We talk to Jared White, Senior Auditor at BioGro.
BALANCE TRANSFERS: Tell me a bit about BioGro. In your own words what does BioGro do?
JARED: We certify producers that want to be able to market their product as organic. We also form a bridge between producers and consumers, so that we are providing a guarantee to the consumer that the products meet their expectations, and we are helping producers understand the expectations of the consumers.
BALANCE TRANSFERS: Many of our readers are not farmers – they range from environmentalists to entrepreneurs – so for the benefit of those blog readers who may not know, what is organic certification and what does it mean for a small producer to become organic certified?
JARED: Organic certification is a guarantee that the producer is meeting well defined standards and regulations depending on the market. The main purpose of being organic certified is to be able to market their product as organic which gives them the ability to charge a higher value for their product which is reflective of the cost of production.
BALANCE TRANSFERS: Can you walk me through some of the steps to become organic certified?
JARED: The producer would in the first instance contact a certifier. Sometimes we’ll get people doing initial contact meetings so that we’ll go out and spend half an hour to an hour, sometimes two even, and talk them through the process. Others just apply directly to us so we will send them out some paper work to complete and they will need to describe their operation and complete a management plan and once that is being received by our office an auditor will be sent out to their operation. We usually spend half a day with them going through their practices. We’ll make recommendations, or identify issues they have to address, and once that’s all dealt with and closed, then we’ll recommend a date for registration. From registration to organic certification it takes 36 months, and that is consistent around the world. After twelve months in New Zealand a producer can make claims of conversion organic.
BALANCE TRANSFERS: That’s regardless of whether it is a new farm or existing farm?
JARED: It always takes 36 months but there are situations where people believe they’ve been growing organically already, they can get credit for their past management, up to a maximum of two years.
BALANCE TRANSFERS: I’m talking from the perspective of a small organic grower. Is it worth becoming organic certified? What are some of the benefits of attaining organic certification?
JARED: It depends why the grower is becoming certified. There are some who becoming organic production is the best way for them. They already grow organically and they want something to demonstrate that. Then there are others who think that people will be paying a higher price for their product. Those are probably the two main reasons.
We have quite a number of growers (not just in market gardens or orchards), who grow organically because they believe that is the right way to grow and that’s what they prefer. They then have a third party who can verify that they are growing using accepted standards of organic production. That means it is not just their word when they are selling to their customers.
BALANCE TRANSFERS: So it sounds like to some people its important from the perspective of, it’s already something they are doing and something that they are interested in doing, it’s just a reflection or outside verification of that process? But for other people it’s about managing the price point, is it?
JARED: Yes, that’s right. Some people see a market opportunity, so if they felt that there was a gap in the market as a small grower, and they didn’t feel they could compete with the large scale production model, they may see that there is a market that they can satisfy. It means less competition for them.
That’s certainly the case in wine, because it’s a unique sector for us in that there isn’t a clear and direct premium that consumers will pay for organic wine, but we still have a large number of producers that are certified, and one of the reasons is, it provides them a market opportunity that they wouldn’t otherwise have. So they are competing with a lot of other labels in the market – if they are organic, it gives them something distinct.
BALANCE TRANSFERS: So it gives them a point of difference, particularly in the wine market where there are a lot of competitng labels and it’s almost a commodity.
JARED: That’s right.
BALANCE TRANSFERS: So can organic certified produce fetch a higher price point in market?
JARED: Almost always.
BALANCE TRANSFERS: So what opportunities does this create for a small grower’s business model?
JARED: In the first instance they have to identify the market. Once they’re satisfied that there’s a market that they can sell into, then if they satisfy the desires of their market they can get a good premium or achieve a really good price for their product.
BALANCE TRANSFERS: So you’ve already answered how long the process takes to become organic certified, but how rigorous is the process?
JARED: We look at every aspect of their production from their crop yield to every input that they use on their property. We look at other aspects of the environmental management, like their water use. We look at neighbouring production to see what the risks are. We look at all the aspects of their management practice on their property. So it’s pretty rigorous, it’s quite a thorough assessment. But I think people also find the process quite valuable. It’s quite a useful process for growers to go through.
BALANCE TRANSFERS: In what way is it useful?
JARED: Well it can be good having outside eyes looking at what you do. There might be times when you might learn things about your production process that you haven’t really considered or that you are taking for granted. Outside eyes might help you question why you are doing something a certain way.
BALANCE TRANSFERS: So it could help your production efficiency, potentially?
JARED: Yeah, it could do.
BALANCE TRANSFERS: Are there any common pitfalls that small producers ought to avoid that may affect their ability to become organic certified?
JARED: Yes. The main one is rushing in without doing research properly. It is really worthwhile talking to other producers if possible and seeing what other producers do in that space. Another fairly common pit fall is people believing that they are already managing organically and seeking credit for that and asking for backdated registration, but finding that some of their practices that they have currently don’t meet the standards and so they are not able to gain backdated registration. So it takes a little bit longer to get to full organic status.
BALANCE TRANSFERS: So it sounds like there is a lack of awareness about what the standards actually are?
JARED: That’s right. Standards are sometimes not a black and white thing. Not every single thing can be listed in the standards. Once the grower is certified, for example, they get a login to our website and they get to register all of the products that they want to use on their property. So they get approval for that beforehand. But not all of those products are listed in the standard. They are available free online on the BioGro website for growers to search for, but if a grower’s not aware of that then they don’t do that for due diligence, and they may be using a product that they think is fine. But they find out that they can’t.
It happens fairly frequently that advisors or salespeople will tell people ‘yes this product is organic’, but it’s not necessarily allowed under organic standards or certifications. So what BioGro does is certify not only to the BioGro standards, but we certify to many international regulations. And New Zealand is a little bit unique in the Western world – New Zealand and Australia both – in that we don’t have regulations which define organic production.
BALANCE TRANSFERS: Why is it, do you think, that New Zealand doesn’t have these standards, when other countries do?
JARED: I’m not sure why. I think until recently it hasn’t really come to the attention of government as being a problem. I think other places have passed regulations because it prevents people from capitalising on the premiums paid for organic products without actually being certified, and in some cases without even following accepted organic rules.
If you sell something as organic in USA, Europe, Canada or Japan, for example, you must be certified by an independent third party to those countries’ regulations, whereas in New Zealand the only regulations we have to prevent someone selling as ‘organic’ if they’re not certified, (is) the Fair Trading Act.
There have been a few prosecutions in New Zealand for companies (falsely) claiming organic status for their products.
BALANCE TRANSFERS: So there’s less legislation in New Zealand to enforce organic standards.
JARED: There’s no legislation defining ‘organic’. There’s only the Fair Trading Act.
BALANCE TRANSFERS: So I was just asking about people who struggle or who fail to meet the organic certification standards. Can you think of any specific examples where small producers have failed (without naming names)? What lost them the opportunity to become organic certified?
JARED: The main one is people using a product mistakenly. That is the most common cause of a loss of certification.
BALANCE TRANSFERS: Is it always easy to detect whether someone has in the past used, say, fertiliser that isn’t organic certified?
JARED: I wouldn’t say ‘it’s always easy to detect’. When growers first register we get the soil tested for agrichemical residues. But certification does involve an element of trust in the producer. We are pretty good at finding out what people are using on their properties.
BALANCE TRANSFERS: So overall what percentage (as a rough idea) of applicants pass and what percentage fail when it comes to organic certification?
JARED: It’s not quite as black and white as failing or not. There might be one or two people that lose certification for some reason per year. Sometimes it’s just not (a suitable) certification for a part of their crop, or a part of their property. Contractors might do something that affects the status of the property for example. If someone applies to us for certification and there’s a few things they need to change before registration, they just need to change these things and they can be registered. Partially it’s information transfer between the certifier and the grower. If I’m doing my job properly, they should be very clear about what the expectations are and the standards are that they need to meet. If they do something that doesn’t meet those standards and they weren’t aware, then I feel that I haven’t done my job properly.
BALANCE TRANSFERS: So it’s partly your job to shepherd people applying for organic certification through to a successful application?
JARED: Yes, I would say that’s true. We can’t offer consultancy in our role as the auditing body, but we can assist growers to understand what the requirements are.
BALANCE TRANSFERS: And just to get a sense of proportion you mentioned that one person might lose the certification a year… is that one out of how many people?
JARED: I think we are between six and seven hundred clients.
BALANCE TRANSFERS: Is it easier to become organic certified if you’re a new farm, as opposed to say an existing established one?
JARED: There’s not many new farms. I wouldn’t say it’s any easier.
BALANCE TRANSFERS: What’s the benefit of organic certification for exporters?
JARED: It provides them a market opportunity that they would not otherwise have. There’s good premiums in apple production, kiwifruit and dairy farming, as well as blueberries. In the major sectors there are some pretty good premiums to be made in international markets.
BALANCE TRANSFERS: Do local consumers in New Zealand recognise the benefit of buying organic certified New Zealand produce? Or is a carrot still a carrot to them, regardless of organic certification?
JARED: There’s an increasing awareness. The big organic distributors in New Zealand are increasing retail year on year. Ceres, Chantal and Fresh Direct are the big ones.
BALANCE TRANSFERS: What about for smaller organic producers? Do you think they are doing as well as the bigger guys?
JARED: If you’re talking people who are fulfilling their local market? I think that’s a really good model. It’s something that hasn’t been explored as much in New Zealand as it could have been. I think there’s definitely an opportunity there if you look at the way that farmers’ markets have exploded across America. In New Zealand there are some good farmers’ markets and small farmers can make a good income growing specifically for their local market.
BALANCE TRANSFERS: Does any part of the BioGro certification look at things like carbon emissions? Or is that something that’s not really relevant to organic certification?
JARED: We don’t calculate carbon emissions, but we do look at environmental management. So (we look at things like) efficiencies of machinery use. But calculating carbon emissions is quite a complicated business.
BALANCE TRANSFERS: I was going to ask a few questions around domestic versus inputs versus international, but I think you’ve answered those really well. So I’m pretty confident we have everything we need, I really appreciate your time.
JARED: Domestic versus international can be quite interesting because that is something that can be surprising to growers.
BALANCE TRANSFERS: Tell me about that? I’m very interested in it.
JARED: Most of our clients are certified to a range of different regulations, and there’s a reasonably high level of consistency between the regulations, but there are differences. The differences are mainly in the products that are able to be used for the ingredients in fertilisers and pesticides.
In the domestic market, BioGro makes those decisions and doesn’t need to be concerned about whether Japan accepts that method of extraction of seaweed, for example. So those sort of things can get quite technical, and sometimes regulations that we apply for international markets can be fairly specific to that market.
There are situations for example that might make sense in another market, but not so much here. Growers quite frequently complain about the treated timber rule, for example. In New Zealand and in Europe, treated timber is allowed to be used for fence posts and structures, but in North America it’s not. So we have to understand and apply and be able to explain the differences in the regulations if a grower wants to become certified. We have to know where they want to send their product if they want to export. We have to know to say, if you want to sell into the USA, you can’t use treated timber as a replacement for any structure.
So that’s the difference between export markets and New Zealand. If they just wanted to sell into New Zealand (and only New Zealand) we could say, well yes, you can use treated timber for your fence posts.
BALANCE TRANSFERS: So using something like treated timber could easily throw up additional logistical complexities if they are exporting overseas to the USA, and I imagine that could have a significant impact on their cost of actual production?
JARED: In some cases it can. I’ll give you an example of the treated timber one – this is just one example, there are other examples between regulations. Vineyards use a lot of treated posts in the crop structure. Most of the vineyards in New Zealand are certified to all international regulations as well as our domestic standard. When the treated timber rules came in in North America it did put the costs up for growers needing to replace treated posts. They don’t need to replace all of their structure, but any time a post is broken and they need to put a new one in, they can’t replace it with another treated post. So that did put the costs up.
What happened then was – that became a market opportunity for another company to produce posts that met the regulations. So now I would say, 10 years on, there are good options for posts made of non-treated timber, and that has filtered through to the non-organic sector as well. They are becoming quite a popular choice for all vineyards, not just organic vineyards.
BALANCE TRANSFERS: So what’s so evil about timber when it’s treated that makes it so unacceptable to the US market?
JARED: It’s the chemicals used in the treatment which have traditionally included copper, chrome and arsenic. That has been questioned in Marlborough in particular, because there’s so many treated posts used there. You can debate the question back and forth whether it’s more sustainable to produce steel posts, with the energy that involves, or whether treated pine is a better alternative. There are people who argue both ways. But the USA does not allow treated timber, full stop. We can debate the merits of that decision, but in the end we have to apply that rule.
