CORE Metadata, citation and similar papers at core.ac.uk Provided by Research Papers in Economics CAPSA Working Paper No. 104 Adding Value to Fresh and Processed Produce through Product Certification Togar Alam Napitupulu Ronnie S. Natawidjaja Josefina M. Lantican ESCAP is the regional development arm of the United Nations and serves as the main economic and social development centre for the United Nations in Asia and the Pacific. Its mandate is to faster co-operation between its 53 members and nine associate members. ESCAP provides the strategic link between global and country-level programmes and issues. It supports Governments of the region in consolidating regional positions and advocates regional approaches to meeting the region’s unique socio-economic challenges in a globalizing world. The ESCAP office is located in Bangkok, Thailand. Please visit our website at <www.unescap.org> for further information. The shaded areas of the map indicate ESCAP members and associate members. CAPSA-ESCAP The Centre for Alleviation of Poverty through Secondary Crops’ Development in Asia and the Pacific (CAPSA) is a subsidiary body of UNESCAP. It was established as the Regional Co-ordination Centre for Research and Development of Coarse Grains, Pulses, Roots and Tuber Crops in the Humid Tropics of Asia and the Pacific (CGPRT Centre) in 1981 and was renamed CAPSA in 2004. Objectives CAPSA promotes a more supportive policy environment in member countries to enhance the living conditions of rural poor populations in disadvantaged areas, particularly those who rely on secondary crop agriculture for their livelihood, and to promote research and development related to agriculture to alleviate poverty in the Asian and Pacific region. CAPSA Working Paper No. 104 Adding Value to Fresh and Processed Produce through Product Certification Togar Alam Napitupulu Ronnie S. Natawidjaja Josefina M. Lantican CAPSA-ESCAP Jalan Merdeka 145, Bogor 16111 Indonesia © 2009 by the UNESCAP-CAPSA All rights reserved. Published 2009. Printed in Indonesia National Library: Cataloguing in Publication Adding Value to Fresh and Processed Produce through Product Certification / by Togar Alam Napitupulu, Ronnie S. Natawidjaja and Josefina M. Lantican -- Bogor: CAPSA-ESCAP, 2009. xiii, 87 pp.; 23.8 cm. -- (Working paper series; No. 104) ISBN 978-979-9317-73-5 1. Standardization 2. Agriculture – Product. I. Title. II. Natawidjaja, Ronnie S. III. Lantican, Josefina M. IV. Series. 389.63 The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area of its authorities, or concerning the delimitation of its frontiers or boundaries. The opinions expressed in signed articles are those of the authors and do not necessarily represent the opinion of the United Nations. Table of Contents Page List of Tables .............................................................................................................. vii List of Figures ............................................................................................................ ix Foreword ..................................................................................................................... xi Acknowledgements ....................................................................................................... xiii 1. Introduction 1.1 Background ............................................................................................... 1 1.2 Objectives and framework of the study ..................................................... 2 1.3 Structure of the working paper .................................................................. 2 2. Product Certification: Creating Added Value for the Rural Poor 2.1 Introduction ............................................................................................... 5 2.2 Evolution in marketing and logistics .......................................................... 6 2.3 Product certification as enabler ................................................................. 7 2.4 How the rural poor can benefit .................................................................. 9 2.5 Concluding remarks .................................................................................. 10 3. Study on Adding Value to Fresh and Processed Produce through Product Certification: The Indonesia Case 3.1 Research background ............................................................................... 13 3.2 Food market restructuring in Indonesia ..................................................... 14 3.3 Government certification for product standard .......................................... 20 3.4 Private standard of modern retailers ......................................................... 21 3.5 The role of specialized supermarket wholesaler on product quality .......... 24 3.6 Value chain analysis: value added through certification ............................ 27 3.6.1 Value chain of traditional market channel ................................. 27 3.6.2 Value chain of modern market channel without certification ...... 28 3.6.3 Value chain of modern channel with certification ...................... 29 3.7 Conclusion ................................................................................................ 29 4. Adding Value to Fresh and Processed Produce through Product Certification: iii The Philippines Case 4.1 Introduction ............................................................................................... 31 4.2 Background ............................................................................................... 32 4.3 Review of literature ................................................................................... 35 4.3.1 Guidelines on standards and certification of agricultural exports 36 4.3.2 Good agricultural practices ....................................................... 37 4.3.3 Organic agriculture .................................................................... 39 4.3.4 Incentives/disincentives in the adoption of product certification 40 4.4 The highland vegetable industry in the Philippines ................................... 42 4.4.1 Area planted .............................................................................. 44 4.4.2 Average production ................................................................... 44 4.4.3 Consumption ............................................................................. 46 4.5 Marketing of highland vegetables ............................................................. 46 4.5.1 The Cordillera Administrative Region ........................................ 46 4.5.2 Northern Mindanao ................................................................... 61 4.6 Pricing scheme ......................................................................................... 67 4.7 Instability of vegetable prices .................................................................... 69 4.8 Product Certification in the Philippines ...................................................... 70 4.9 Conclusion and recommendations ............................................................ 75 5. Concluding Remarks ............................................................................................. 79 5.1 Indonesia .................................................................................................. 79 5.1.1 General conclusions .................................................................. 79 5.1.2 Specific conclusions .................................................................. 79 5.2 The Philippines ......................................................................................... 81 5.2.1 Tedious and expensive product/process certification ................ 81 5.2.2 Lack of information campaign on Good Agricultural Practices (GAP) and Organic Agriculture (OA) ......................................... 81 5.2.3 Inadequate incentive package on the part of the government to support DA’s (Department of Agriculture) programs on GAP and OA ............................................................................. 82 5.2.4 Certification is a demand driven issue. Scale is important with average of less than one hectare .............................................. 82 5.2.5 Low participation in the certification program of the government 82 5.2.6 Private monopoly of a certifying agency for organic agriculture.. 82 iv 6. References ......................................................................................................... 83 Appendix .................................................................................................................. 87 v vi List of Tables Page Chapter 4 Table 4.1 Average area planted to major highland vegetables in the Philippines, 2003-2007 ............................................................................................... 44 Table 4.2 Average production of major highland vegetables in the Philippines, 2003, 2007 .............................................................................................. 45 Table 4.3 Farm price differences between clean and unclean vegetables at La Trinidad trading post, July 2008 .............................................................. 47 Table 4.4 Farm gate, wholesale and retail prices of vegetables in the Cordillera Administrative Region, 2007 (PhP per kilogram) ....................................