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NatureInterface > No.02 > P108-111 [Japanese]

A Message from The Foundation for Earth Environment -- Hiroko Aoyama

Agricultural Products That We Can Trust.

The organic agriculture certification system is enforced.

Last year in June, the certification system of organic agricultural products was enacted by the Japan Agricultural Standards Association (JAS) law revision. After this, displaying "organic" has become impossible without obtaining the certification. The reason why the system was built is to eliminate fake organic products from stores. It is good news for the producers who have so far worked on organic agriculture earnestly. Full-scale enforcement started this April. Some producers have already begun to take certification and a few products with JAS marks attached appear in the stores.

The reaction to the certification system is, however, not all favorable. Supermarkets and wholesalers are reluctant to deal with those products. Even the farmers who work on organic farming say, "We cannot think that is a good system."

What is the Certification System?

This is the first time that the display of organic products is institutionalized completely. There has been a "guideline", but it has been only an indicator and hasn't had binding force. From now on, only on the products which fulfill the organic cultivation standard, "JAS mark" seals can be stuck. If not certified, displaying "organic" leads to a penalty of less than 1 million yen.

The standard for organic products determined this time is; "products that were produced in the fields where cultivation without agrichemicals or chemical fertilizers is kept for more than three years for fruit trees, and two years for vegetables and rice." Processed products and import agricultural products are also set as the object of display.

In fact, this institutionalization was to follow the international trends around the organic certification. The CODEX Alimentarius Commission, which defines the international standard for foods, determined the organic international standard in 1999, and the Ministry of Agriculture, Forestry, and Fishery started to work on the enactment of the organic certification system. This cultivation standard refers to the European and American standard. Although this standard is not so hard to reach in those countries where the climate is dry, it is rather difficult in Japan where humidity is high. Producers said before legislation, "It is completely the external pressure. Japan is not suited for it," "Imported agricultural products will dominate the market."

The System Requires Time and Money

The producers who want the labeling of "organic" have to undergo inspection of a private certification body authorized by the Ministry of Agriculture, Forestry, and Fishery. This inspection requires considerable time and effort.

First, a producer has to present various documents to a certification body including the record about cultivation such as the source of seeds or agricultural materials, or of the method of prevention of harmful insects or pathogens, as well as the documents proving neither agricultural chemicals nor chemical fertilizers were used in the past. When the document inspection is passed, an inspector visits the farm to examine the field. After passing this examination, the producer is finally allowed to have the "organic" mark.

This requires not only time but also cost. About 30 certification organizations in Japan are authorized by the Ministry of Agriculture, Forestry, and Fishery as of March 2001. The certification cost varies among organizations, ranging from 25,000 ~ 200,000 yen (ca. 200 - 1700 U.S. dollars) per farm. Besides, actual expenses such as transportation are added to this.

That's not all. The fields of organic farming must install a buffer zone or wind protection to prevent agricultural chemicals from flowing in from the fields of habitual cultivation. Also for rice, measures not to mix the water of the paddy field of habitual cultivation must be taken, and the cost is not cheap.

By the way, not only the producers but also the distribution dealers of the organic farm products have to obtain the certification. Well, how are the reactions to the certification system among producers and distributors of organic products? Some producers are willing to obtain the certification while distributors are reluctant, which brings the cost share heavily to the producer.

Retailers Put More Emphasis on "Special Cultivation" Than "Organically Cultivation"

"We plan to deal with the certified organic farming products, but the quantity would be less than 1% of the whole vegetables and fruits," says Mr. Kazuhisa Toi, senior merchandiser of vegetables-and-fruits division of Ito-Yokado.

This company sells organically grown and special cultivation vegetables since 1996 under the brand names "Organic Vegetables" and "Healthy Vegetables" to correspond to the consumers' health orientation. The customers of the organic products are those who have particular interests in organic foods, because their family members suffer from atopic dermatitis, for example. Since they are a very limited part of the whole customers, only selected stores in the metropolitan area deal with the organic vegetables. After the enforcement of the certification system, Ito-Yokado simply changes organic products to certified ones.

Mr. Toi, who knows the details of the situation of the production areas says, "It is clear that this certification system is not suited to the climate of Japan. Also the cost is a burden for farmhouses." Furthermore, the turnover and profit ratios of organic products are not so high, he says, it is difficult for retailers to bear certification cost.

This company puts more effort on "Healthy Vegetables" rather than "Organic Vegetables." Also as for the price, while "Organic Vegetables" cost 30 ~ 50 % higher than other vegetables, the price of "Healthy Vegetables" is kept less than 20% raise even at the highest.

For major supermarkets, selling organic products is only for increasing the range of selection for consumers. Even if the certification system guarantees the real organic products in the market, no supermarket is observed which try to deal with organic products more actively. Jusco, one of the biggest supermarket chains in Japan who had treated with organic vegetables before the certification system started, shows their intention to hold the status quo saying, "We only change organic vegetables to the certified ones." Daiei, another big supermarket chain in Japan, goes further saying clearly; "We have not dealt with organic products until now, and we are not planning to do so either."

*Special cultivation vegetables: The agricultural crops grown with decreased amount of agrichemicals or chemical fertilizers

Cold Responses from the Market

Just like the retail stores' reaction, wholesalers are generally cold toward the certification system. The Tokyo Vegetables and Fruits, the biggest wholesale company who had a top handling quantity in Ota market in Tokyo established in 1991 the "Individualized Horticulture Agricultural Products Corner" which treats organic, special cultivation vegetables and special domestic products. The establishment of the certification system didn't trigger the expansion of the amount of organic products that this company would deal with.

"The number of organic products are decreasing from the counters of department stores and supermarkets. They talk about health and safety, but for consumers the price is the priority. Organic products are not bought so much as it is said." say the inside sources. It is hard to think that they will be willing to deal with the certified products.

As recession continues, consumers try not to use much money. Only few people would say, "I want safe products, however high the price would be."

However, among those market dealers, some wholesalers who trade with food service companies have obtained the organic certification as distribution companies. "I think the JAS mark is appreciated. But if the price becomes higher, only few people would buy it. The problem is whether the price can be held low to compete with habitual products," says a wholesale dealer. Organic products require much time for cultivation itself beside certification costs. It is largely due to this cost problem that distribution companies are hesitant towards certified products.

Food Services Established Their Own Standard

On the other hand, in order to meet the consumer needs for "safety" and "low price," food service industry worked out on original standard system differs from certification. An organization of food service, the Japan Food Service Association (JF Association) established an independent enterprise of vegetables and rice in 1998. This is called the "JF standard", and its principle is not "organic", but "special cultivation vegetables" (cultivation using 50% of the amount of agricultural chemicals, and chemical fertilizers of habitual cultivation.)

In the spring last year, JF Association started the certification system for the agricultural products which passed "JF standard." The vegetables with JF certification are already used in Jonathan, one of the largest family restaurant chain in Japan, Watami, a Japanese big tavern chain, etc.

The food service industry had started using organic products before supermarkets did. But why did they establish an original "special cultivation vegetable" certification? Mr. Kunio Chiba, chief of public relations office of JF Association explains; "Organic is the best, but the quantity of production is limited. For food service, keeping the quantity of materials is important to provide what customers want from the menu. Although JF standard is an original standard, a third organization certifies the products so that trust of the consumers can be obtained." They plan to keep the cost of certification to 0.5% of the total sum of production cost. This cost would be paid by the three parties concerned, food services, wholesalers and producers, and they try not to reflect the certification cost on the menu price.

On the other hand, some food service companies deal positively with the vegetables which received JAS certificate. One example is Heisei Foods Service, which operates tavern chains "Hokkaido" and "Hamamachi" in the metropolitan area of Tokyo. This company exchanges annual contracts with organic farms of various places, and 80% of the vegetables used at the restaurants are organic.

Mr. Takeuchi, Vice President of Heisei Foods Service, encourages the contract farms to obtain the certification, saying, "Certification is required in order to tell consumers about what a real organic product is." But he does not think about increasing the prices of the menu like other companies, and say "Although certification cost would become a burden for the producers, the increase of the cost should be avoided by cutting down other costs such as distribution expenses." This company probably aims at stimulating the consumers' demand for organic products by providing safety-guaranteed vegetables with conventional prices, especially because the food service industry suffer from a long-term depression.

Certification Acquisition as a Prior Investment

As of March 1, 2001, there are 352 farms that obtained the certification of JAS. The majority of these farms is domestic producers (225 cases,) and the second-largest majority is manufactures of processed goods (71 cases.) "More producers than we presumed have applied for the certification," says an inspector who has engaged in certificate business from the time before the certification system was enforced

When we think about distribution industry companies that are reluctant to apply the certification system or the food service industry that made its original standard, there might be no merit for the producers to take the certification. Producers cope with this trend in different ways: some producers dare to receive certification, and others do not depend on certification but on their mutual trust with their customers.

The organic product committee of JA (Japan Agriculture Association) Sambugun-shi, Mutsuoka branch at Chiba Prefecture has worked on organic agriculture from early on. Last autumn, about 50 members of the committee underwent certification inspection. The organic product committee has broad markets, such as co-op's, food services, and delivery industries. Certification was determined not by the request from customers but by the meeting of the organic product committee. And that cost is paid by the budget of the organic product committee.

Mr. Hisanobu Shimoyama, Director of JA Sambugun-shi, Mutsuoka branch says, "There are many problems in the certification system, but ignoring the problems is not the best way to solve the problems. I think that the certification itself is not important, but information disclosure will be needed from now. I want to make an attitude to respond immediately to customers' requirements for information disclosure."

In order to receive the certification, various documents about the cultivation method or fields are needed. Thorough the preparation for obtaining the certification, information is accumulated and if this information is disclosed to the public when needed, mutual trust with customers will also increase.

Farming districts is increasing where farmers try to cultivate products according to their original standards and to cope with information disclosure, even if they don't obtain the certification as JA Sambugun-shi, Mutsuoka branch does.

Certification is Unnecessary If There is Mutual Trust.

On the other hand, there are some farmers who had obtained the certification before the system was enforced, but stopped receiving the certificate after the certification system started. Seichakai, a green tea production group in Fujieda City, Shizuoka Prefecture, had the inspection of a certificate body in the U.S. and received the organic certification three years ago. That was a voluntarily decision before the certification system started. But Mr. Tadaaki Tsukamoto, the ambassador of Seichakai, stopped updating the certification because "the merit of having the certification was too little compared to the high cost."

Seichakai consists of six members, and they sell the half of the tea they produced directly to consumers, and the rest to the wholesale stores or co-op's. They obtained the certification to respond to the request from their wholesalers. The wholesalers probably assumed that the certified goods before the JAS low revision would appeal to retail stores.

They decided to obtain the certification, and each field and tea processing space of six members went though the inspection. The cost exceeded \600,000 (5,000 U.S. dollars), even excluding the expenses such as transportation. The wholesale stores had also paid a part of the cost.

But the certification cost could not have been included into the product price, and the customers who had bought the tea directly from Seichakai farmers said, "The certification is not necessary. We order your product because of its high quality." Mr.Tsukamoto said, "I realised that the certification was meaningless, since we are connected to the customers by mutual trust. Besides, we had to spare the time for the fields to make documents." In this way, Seichakai did not take updating procedure of the certification for the following year.

By the way, there is an episode after this. The wholesaler who had required Seichakai to get the certification came to see Mr. Tsukamoto, and said, "We'll be in trouble if you don't update the certification. We'll pay the cost, so please update it." Seichakai thus updated the certification. But Seichakai thinks "Certification is not necessary for producers. If required, the distribution side should pay the expenses." Seichakai continues to keep this attitude.

Possible Attack from Foreign Countries

Producers react to the certification system in different ways. One thing certain is that they cannot utterly disregard this system, because organic products might be imported from foreign countries.

In fact, samples of foreign organic products have been sent to the Ota market in Tokyo. Owing to the recent progress in preservation technologies, many fresh vegetables without fumigation process come to Japan. It is said that a certain trading company contracts with a Chinese company, and is planning to sell organic vegetables produced in China. Moreover, in South Korea, in order to compete against WTO, organic farming is promoted nationwide, and products are planned to be exported to Japan, where prices are higher than those in Korea.

So far we have rarely seen imported organic products with JAS marks. However, if the number of imported agricultural products increases at the market rather than that of domestic ones, it is clear that the Japanese agriculture would face a hard situation. Imported products are cheap even if they are organically grown. The price of domestic agricultural products may become lower because of cheap imported products. Producers might be angry saying, "The establishment of this certification system just helps foreign organic products to be imported to Japan."

Surviving by Direct Delivery from the Farm without Depending on the Certification System

For environmental conservation or for health of producers and consumers, it would be desirable if agricultural methods with less damage on the environment spread. However, enforcement of this certification system is merely for regulating misbranding, not for developing organic farming.

The Ministry of Agriculture, Forestry, and Fishery, which enacted the system, said before enforcement: if the certification is obtained, additional value would increase and the products would become more expensive. But after the certification system was enforced, only some distribution companies benefit from selling such certified products with high prices, while producers have to pay the cost by themselves alone.

" Don't be manipulated by the system " is the general view of the producer side towards the certification.

The organic certification system has been operated by private sector organizations in the U.S. for 30 years. While certified organic products are sold in the market, there are many organic products which are sold at farmers' markets. The latter is mainly agricultural products grown by small-scale farms. It is also said that there are many direct deliveries from local producers to consumers who have deep understanding toward organic farming. Probably this suggests that direct selling of products, where farmers sell products to consumers directly under mutual trust between farmers and consumers, may survive the competition for selling organic products even after the certification system is enforced in Japan.

After April 2001 when the certification system is enforced, we will see organic products with JAS marks in stores. On the other hand, even they cannot display "organic," the products by the farmers who tries to cherish the taste or quality of products or the relationship with consumers would appear in the market. The time will come when consumers should decide which products they would choose.

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