Do Eco-Labeled Products Actually Benefit the
Environment and/or the Local Communities?
A closer look at the debate in the context of cacao production in Belize
Lauren Berlamino
FOR595: World Forestry
Dr. Erin Sills
April 29, 2010
Consumers in today’s economy are becoming more aware of eco-labeled products; for this reason, eco-labeling is a widely discussed and disputed topic. A debate exists of whether or not eco-labeled or eco-certified products actually benefit the causes identified on their labels. In order to address this debate, this research paper look to address the question, do eco-labeled products actually benefit the environment and/or the local communities? Most research that is done on the debate of eco-labeling looks at coffee production while this research paper will look specifically at cacao production. The findings of this research may even lead to further analysis of cacao eco-labeling versus coffee eco-labeling. This research is important because significant differences in eco-labeling of the two may be found and this would add to the debate. In this paper, I argue that at least in the case study of organic, fair-trade cacao production in Belize, eco-labeling provides a positive impact on the environment and on the local communities, despite the fact that there are some drawbacks to organic production. There are arguments against eco-labeling that are outlined in this paper that challenge this view.
For the purpose of this paper, it is important to define some of the terms used. The first of these terms is eco-labeling. According to the International Organization for Standardization (ISO) eco-labeling is a voluntary, environmental performance label that is awarded by a third party that looks to stimulate the potential for market-driven continuous environmental improvement (Global Ecolabeling Network 2008). The two eco-labels specifically examined in this paper are the fair-trade and organic labels. Fair trade is defined as, “a trading partnership, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers -- especially in the South” (Moore 2004). The definition of organic labeling comes from the Organic Trade Association. Their definition is,
“organic production is based on a system of farming that maintains and replenishes soil fertility without the use of toxic and persistent pesticides and fertilizers…must be produced without the use of antibiotics, synthetic hormones, genetic engineering and other excluded practices, sewage sludge, or irradiation…Organic foods are minimally processed without artificial ingredients, preservatives, or irradiation to maintain the integrity of the food” (Organic Trade Association 2008). These definitions are vital to understanding the arguments of the debate as outlined in this paper.
The first section of this paper will go over some of the basic principles of fair trade and organic certification. Next, the debate over whether or not fair trade and organic certification are actually beneficial on the environment and communities involved with certification will be discussed. The third section of this paper will look at what impact eco-certification has had on the cacao industry in the Toledo District of Belize. Finally, the paper concludes with a wrapping up of major findings and implications for policy makers in the future.
The Debate: Pros and Cons of Certification
Fair-trade pros and cons tend to focus on the benefits of the farmers, while organic certification tends to focus on the impacts on the environment. Fair-trade certification ensures that farmers in developing countries are paid fair prices for their products. This is accomplished through the buyer and seller, and therefore eliminates the middleman (Loueriro et al. 2005). In other words, fair prices mean a greater opportunity for social justice and conducts trade in such a way that no one is harmed by inequalities in initial positions (Maseland et al. 2005). A quote from the Fair Trade Foundation sums up this advantage nicely when the Foundation states, “by requiring companies to pay above market prices, fair trade addresses the injustices of
conventional trade, which traditionally discriminates against the poorest, weakest producers” (in Maseland et al. 2005).
Fair-trade labels also signify that the product purchased supports caring for the environment through sustainable practices (Loueriro et al. 2005). Additionally, most fair trade certified coffee, tea, and cacao are also certified organic, shade grown (Loueriro et al. 2005), which promotes a healthier environment. Shade grown labeling also promotes the preservation of biodiversity, as shade grown labels promote environmentally sound practices that are harvest the crops in such a way that conserves the natural habitats of birds and mammals (Loueriro et al. 2005). Organic (coffee) is grown without pesticides, herbicides, or chemical fertilizers and therefore have less of an environmental impact on the ecosystem (Loueriro et al. 2005).
Organic certification also has some advantages. Peter Melchett (2009), a policy director of the Soil Association, argues that the absence of pesticides and fewer additives add greater health benefits to the consumer. These practices are also better for the environment because there is less pollution of the soil (Bretman et al. 2006). Another argument for organic production is that it is more energy efficient because fertilizers are made with non-renewable resources and restricting use of fertilizers in organic production limits production and demand for fertilizers (Bretman et al. 2006). The main arguments of organic certification tend to focus on the health benefits to the consumer and the ecosystem.
There are also some drawbacks of certification. Different organizations have their own particular understanding of what fair trade entails (Maseland et al. 2005). The market share of certified products is less than 1% (De Pelsmacker et al. 2005). This is due to the fact that price, quality, convenience, and brand familiarity are the most important factors for consumers when making a purchase (De Pelsmacker et al. 2005) and thus consumers are reluctant to purchases
these products. This view also argues that market share is so small that it really is not having a large effect on the entire process. Additionally, the argument here is that fair-trade and organic farmers could make more in a free market because they can sell to a larger audience.
Regarding organic certification, there are potential downsides, as addressed by Rob Johnston, an environmental expert. Johnston (2008) argues that organic farming is not better for the environment, nor is organic farming a sustainable practice. Central to his argument is that organic farming produces lower yields and is therefore not very energy efficient, nor sustainable. Another point that Johnston highlights is that organics require more land for cultivation in order to produce the same amount of food as non-organic products and that they world cannot be fed with organics because of the lower yields. Johnston (2008) is also not convinced that organic foods are healthier and that they contain more nutrients. Finally, another negative to organic products is that they cost the consumer more money (Soil Association and Sustain 2001) and may also be another contributing factor as to why the market share is so small.
How Fair is Fair Trade?
A study conducted by Maseland et al. (2005) compared fair trade with the alternative, free trade. Maseland et al. found that given income distribution in a poor region, fair trade is superior to free trade.The study also found that fair trade is fair when it comes to the advantage of the least well off in society. Fair trade also pays a higher, decent price for certain commodities from lesser developed countries (Maseland et al. 2005). Maseland et al. conclude that free trade and protectionism are less optimal cases than fair trade.An article from 2006 in The Economist
notes that economists often times believe that fair-trade is not actually fair. The reason for this is that, “paying a guaranteed fair-trade premium—in effect, a subsidy—both prevents this signal [of fair trade products] from getting through and, by raising the average price paid for coffee,
encourages more producers to enter the market. This then drives down the price on non-fair-trade coffee event further, making non-fair-trade farmers poorer” (Bretman et al. 2006). One final conclusion that Maseland et al. found was that the effects of fair trade are dependent on type of sector and for this reason; fair trade should study the characteristics of markets they consider to enter. Based on these conclusions, it is important to look at the cacao sector and the direct effects eco-labeling has on the cacao industry.
Case Study of Cacao Production in Belize
Belize is located in Central America on the Caribbean Sea and borders Mexico and Guatemala. The ancient Mayans roamed the land before the arrival of Europeans in the 1500s. This case study looks at cacao production in Southern Belize, in the Toledo District. Mayan Indians have been growing cacao in southern Belize since their ancestors first discovered the benefits of cacao. The Toledo Cacao Growers Association (TCGA) was established in 1983 by a group of farmers in the district in an effort to establish bargaining power, lower costs of transportation, better prices of the crop, and a more convenient and secure method of payment for farmers growing cacao (Edeco 2008). In 2008, 875 farmers were registered with the TCGA as certified organic farmers, including 35 women (Edesco 2008).
The Toledo District of Belize has been involved with a USAID project in the 1980s, in which the large corporation, Hershey's, was set to be the original buyer of cacao produced in the area. At this point in time, estimated prices of cacao were $1.75 per pound (Crucefix 1998). However, when the trees were ready for production, the actual price of cacao had dropped to $0.55 cents per pound. Many Maya cacao farmers abandoned their plots due to the falling price of cacao because it was no longer economically logical to maintain the cacao farms. The luck of the Toledo District changed when in 1993, a company based in the United Kingdom, Green and
Black’s Organic Chocolate, was in need of a new organic, cacao supplier because their supplier in Togo ran into political trouble (Crucefix 1998). Craig Sams, the owner of Green and Black’s, visited Belize and entered into a contract with the pre-existing TCGA for organic cacao. In 1994, the fair trade and organic certifications were awarded to the TCGA (Crucefix 1998). Green and Black’s provided the TCGA and the farmers a guaranteed market at a fair trade mandated price set for the world market in Switzerland (Crucefix 1998).
Agricultural Impact
When the USAID program began in the late 1980’s, hybrid varieties, chemicals, and fertilizers were used on the cacao trees (Crucefix 1998). However, when the prices fell and the trees were just starting to bear crop, most of the plots were abandoned. Since 1991, no chemicals have been applied to the area (Crucefix 1998). The trees were many left for kinkajous and squirrels to snack on, as well as children looking to sneak a tasty snack. Woodpeckers also have learned to utilize the cacao. Woodpeckers poke holes in the pods and return to find insects for food that are attracted to the cacao, which causes damage to the crop (Crucefix 1998) but it would be difficult to find a farm that is completely overrun with woodpeckers to have a serious negative effect on the yield.
It is difficult to determine however what the effects of switching from fertilizers and chemicals to organic has had on the environment and yield there because this went unmonitored for so many years. In the absence of certification, these cacao farms might still be abandoned and thus undisturbed. This may create greater biodiversity than shade grown cacao, because the land would be virtually untouched. However, when you consider that there are no chemicals used in organic production and no chemicals have been applied since 1991, the certification may have little impact on the integrity of the soil.
Environmental Impact
In Belize, the impact of organic cacao farming has proved beneficial. The cacao is not planted as a plantation, but rather, grown in shade tree conditions without the use of fertilizers and pesticides. It is widely acknowledged that cacao grown in shade tree farms harbors higher biodiversity than other tropical crops (Haynes et al. 2009). The trees provide homes for domestic and migratory species of birds and act as a habitat for a variety of animals (Crucefix 1998). The ground remains undisturbed because there is no clearing for planting, and thus, there is minimal soil erosion and trees remain intact. A more concrete example of the environmental impact in Belize has to deal with a stipulation in the contract signed by Green and Black’s and the TCGA. Within the contract states a clause in which any farmer, who plants a mahogany, cedar, mamey fruit, or cohune nut tree as part of the shade system on each acre of land, is given a guaranteed payment of a 5 cent per pound premium (Crucefix 1998). This allows for economic production alone with watershed protection and the preservation of habitat.
Would the environmental impact be different if there were no certification? The land on these farms does not necessarily belong to the farmers, most of it is owned by the government. Most farmers have no title or ownership of the land that they harvest from and therefore if a company comes in and wants to clear the land for a plantation, they could purchase the land from the government to do so. It is possible to consider that because farmers are utilizing the land for cacao cultivation that is backed by a well-respected organization in Belize and a contract with Green and Black’s, this would not occur. Therefore it is possible to assume that organic certification is keeping the land from being used for other uses that may not be as beneficial as organic farming. Biodiversity would also be impacted if the land were used for other uses. The only land use that would possibly be more beneficial than organic farming would be the
establishment of a nature preserve or a state park. However, then considerations of ecotourism would have to be considered.
Economic Impact
The economic impact within the Toledo district has been tremendous. It is often difficult to find employment in the Toledo District, and many Maya in the area rely on subsistence farming to provide for their families. Green and Black’s was paying the TCGA $.078 cents per pound (1998 estimate) for dried and fermented cacao; this price was significantly more than the average world market price for cacao at the time (Crucefix 1998). Green and Black’s also pays for the organic certification for the TCGA annually and the Fair-trade Foundation also pays for the fair-trade certification (Crucefix 1998). Most of the TCGA member farmers are full time subsistence farmers and grow other agricultural produce for small scale sale and personal consumption. If there were no contract with Green and Black’s that guarantees a market and fixed prices, the farmers would not invest in planting more cacao and expanding their farms (Crucefix 1998). One alternative that farmers would have instead of certification would be to enter the free market and hope for the best. Given the fact that farmer’s abandoned these fields when prices dipped really low in the late 1980s, this would likely not be an option. In all likelihood, farmers would be subsistence farming for an income or working in citrus farms to the north and may not make as much money which would impact them socially as well.
Social Impact
The people living within the Toledo District have had in the past less access to education and health services in the past. With the contract between the TCGA and Green and Black’s, farmers have been able to raise money to afford to send their children to school (Crucefix 1998). The money earned from cacao production has also led to another benefit. Many farmers no
longer make the commute to citrus fields up north to earn more income because they are making enough through cacao farming; thus allowing children in the family the opportunity to attend school because they are not maintaining the farm at home while the older men are off in the citrus fields (Crucefix 1998).
Women have also seen a change with the involvement of organic, fair-trade cacao. In 1996, women joined the managing council of the TCGA (Crucefix 1998). Also, as previously stated, women are also becoming land owners and registering with the TCGA for organic certification. This has led to greater equality of women in the area and given women more power. Women have the opportunity to generate income for their own and provide for their families which allows them to make sound decisions (Edesco 2008). The TCGA has recognized that women are becoming an integral part of the process, from working in the cacao plant nurseries, to grafting, and managing fields alongside men, to harvesting cacao, to taking care of the fermenting and drying processes. For this reason, the TCGA is increasing resources for women (Edesco 2008). These new social advantages would have never been possible without the organic contract with Green and Black’s.
One could argue that without certification, farmers would find other ways to make money and have incomes. However, these farmers would likely not be making as much as they do through eco-labeling and because of this they could have difficulty sending their children to school. This would also impact the children of the farmers, because they would likely be helping out at home instead of in the classroom. Another negative effect to not having certification would be that women would probably not making the strides they are today with eco-labeling. Additionally, since the farmers are generating more income with certification, the government
has been developing more schools and hospitals in rural Mayan villages. Without these incomes, these communities might still be struggling to gain better access to health care and education.
Current Concern
There is a threat of Moniliasis, caused by the fungus Moniliophtora rorei, on the organic cacao crop. This disease is often referred to by the Maya farmers as “monilia.” The fungus can easily be managed with pesticides; however, the use of such chemicals would result in de-certification of organic cacao. Therefore, strict regimes of pruning and shade management are necessary in order to maintain the organic integrity. The alternative to managing the disease organically would be to obviously use pesticides and herbicides to control the spread of the disease. If this were to occur, certification would be lost, and so would the contract with Green and Black’s and so would the guaranteed market and pricing. Since the farmers already know what their alternative is, and they continue to manage the disease by pruning, it is evident that to the farmer, the security of the contract with Green and Black’s outweighs the alternative, even if the organic certification takes more time to manage.
What the Future Holds
In conclusion, arguments on both sides of the certification debate are valid. For this reason, it is hard to ignore the positives and negatives of certification. When looking at cacao production in Belize as an example, certification maintains many agricultural, environmental, economic, and social benefits that outweigh the alternatives to certification. These benefits are the main goals of certification, which proves that certification does work. However, I must recognize that it is hard to deny that this case might be a very special one. It is probably very rare that many companies like Green and Black’s exists in this world. Green and Black’s entered in a long contract with this community, pays a premium for their cacao crop, pays for their
certification, and guarantees a market. One would like to assume that this is something that occurs across the board for companies producing organic goods; however, this is probably not as common as it should be.
The implication of this research for policymakers is simple. While the debate over certification is relevant, industries need to be examined on a case by case basis. This paper has shown that organic, fair-trade cacao grown in the Toledo District of Belize has been beneficial for the local communities and the environment. However, this may not be the case in another country that grows cacao, or even in a different sector, like coffee. One size does not fit all, and certification will not fit all situations and sectors either. As this study has shown, in Belize, in the case study of organic, fair-trade cacao production, eco-labeling provides a positive, level of prosperity on the environment and on the local communities, despite the fact that there are some drawbacks to organic production.
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