Report Feasibility study organic bitter tea Cao Bang - Helvetas

Report Feasibility study organic bitter tea Cao Bang - Helvetas Report Feasibility study organic bitter tea Cao Bang - Helvetas

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Feasibility Study Organic Bitter Tea in Cao Bang: 2007 For a processed product, the determination as to whether the product meets the Korean standards may be based on a certificate issued by an organization, which satisfies the qualifications to be a certifying entity under the relevant regulations of: a) the exporting country, or b) a reliable organization certified by a recognized international body, such as IFOAM. In the case of Vietnam, the second option would be the only one applicable. 5.2.4. Group Certification Organic certification norms and regulations, e.g. the EU regulation, requires an annual inspection visit of every producer. However, for most smallholders in developing countries, it is impossible to pay for annual inspection visits by a foreign certification body (IFOAM, 2004). To cope with this situation, smallholders in developing countries in co-operation with certification bodies have been developing systems to assure compliance to organic standards for producers as a group. Different forms of quality assurance systems of smallholder groups have developed over time with respect to the nature of the operation and size, ranging from tens to thousands of individual producers. The systems have in common the following aspects (IFOAM, 2004): A central body responsible for marketing and the group's compliance to applicable standards: (This body can be the buyer, processor, or self organized cooperative/association.) One single certification for all individual production as well as processing and handling activities registered within the group. Individual operators within the group may not use the certification independently. Group members operate under contractual or binding membership requirements specifying the commitment to comply with applicable organic standards and permit inspection, etc. Presence of an internal control system (ICS), operated by the responsible central body or an external body contracted by the central body. The ICS normally maintains files on all members of the group and inspect each member's operation at least once a year. A list of all individual member producers is available. The ICS has two important components: Training the producers and anyone else who is responsible for processing or handling the organic product in their responsibilities for maintaining the organic integrity of the crop, and Setting in place the systems for measuring and inspecting the farmers, processors and handlers compliance to the organic standards. With an ICS in place, the external inspection process is then focused on evaluating the operation of the ICS and the inspection of a sample of farms not each individual farm (generally only 10% of the farmers in the group is inspected) as well as processing facilities. Coupled with an annual inspection of the operation cum evaluation of the ICS, group certification thus offers two tiers of control as opposed to just an external annual inspection - 19 -

Feasibility Study Organic Bitter Tea in Cao Bang: 2007 visit. Furthermore, the flow of produce from individual producers is under greater control with centralised marketing as a group (IFOAM, 2004). Several ICS have been set up in Vietnam already, for example by the tea company Ecolink. This ICS includes over 200 farmers as well as a processing unit and several warehouses for tea storage. One staff of Ecolink is assigned to manage the ICS, while the ICS inspectors are government staff (from PPSD or extension service) that do the ICS inspections on a part-time basis. However, Ecolink is responsible for arranging training for these ICS inspectors. Some NGOs in Vietnam, such as ADDA, can provide training and assistance in setting up an ICS. 6. COST BENEFIT ANALYSIS 6.1. Costs of external certification The cost of certification generally consist of two parts, the first is the certification fee (based on the kind of certificate needed) and the second the actual cost for the inspection. If several certificates are required (for example, both EU and JAS) it is most economic to select one certification body that can issue both certificates through one inspection visit. Recently, a regional CB (ACT Thailand) set up collaboration with a well-established European CB (ICEA Italy), which offers a very interesting menu of certification options to operators in South East Asia, i.e. IFOAM Accredited and BioSuisse certification through ACT as well as EU, NOP and JAS certification through ICEA. The cost for certification though this arrangement ranges between 350 and 450 Euro, depending on the certificate required. The two partners also give a discount if more than one certificate is requested. Based on the certificate needed there could be some additional costs, for example for samples to be analysed for chemicals (300 Euro per sample). Total cost for three certificates: EU (direct) 400 Euro, JAS 440 Euro, Korea (through ACT private standards) 350 Euro. Total: 1190 Euro - 20% = 950 Euro, plus 300 Euro for the sample. Total costs 1250 Euro. Inspection fees are 150 Euro per day per inspector, plus all local and international travel and food and lodging. With 100 producers there are 10 producers to be inspected plus the processing unit (3 days), plus 1 day for ICS check. Adding 2 days for travelling to Cao Bang makes a total of 6 days or 900 Euro (6 x 150 Euro). Finally, we need to add the travel from Bangkok (300 USD) as well as food and lodging for 6 days (240 USD, 6 days @ 40 USD/day). Adding the costs for certification (1250 Euro or 1750 USD) and the inspection (900 Euro or 1260 USD) and the travel, food and lodging (540 USD) gives a total of 3,550 USD. (Please note that the current exchange rate of Euro to US dollar is quite unfavourable.) 6.2. Costs of operating the ICS There are initial funds required for setting up the ICS and training producers, ICS personnel and inspectors. However, since most of the costs, including for trainers, are local, total funding needs are not high. An estimated initial expenditure of 500 - 1000 US dollar may be needed, which could maybe be requested from Helvetas or provincial funding. - 20 -

<strong>Feasibility</strong> Study Organic Bitter Tea in <strong>Cao</strong> <strong>Bang</strong>: 2007<br />

For a processed product, the determination as to whether the product meets the Korean<br />

standards may be based on a certificate issued by an organization, which satisfies the<br />

qualifications to be a certifying entity under the relevant regulations of:<br />

a) the exporting country, or<br />

b) a reliable organization certified by a recognized international body, such as IFOAM.<br />

In the case of Vietnam, the second option would be the only one applicable.<br />

5.2.4. Group Certification<br />

Organic certification norms and regulations, e.g. the EU regulation, requires an annual<br />

inspection visit of every producer. However, for most smallholders in developing countries,<br />

it is impossible to pay for annual inspection visits by a foreign certification body (IFOAM,<br />

2004).<br />

To cope with this situation, smallholders in developing countries in co-operation with<br />

certification bodies have been developing systems to assure compliance to <strong>organic</strong><br />

standards for producers as a group. Different forms of quality assurance systems of smallholder<br />

groups have developed over time with respect to the nature of the operation and<br />

size, ranging from tens to thousands of individual producers. The systems have in common<br />

the following aspects (IFOAM, 2004):<br />

A central body responsible for marketing and the group's compliance to<br />

applicable standards: (This body can be the buyer, processor, or self organized<br />

cooperative/association.)<br />

One single certification for all individual production as well as processing and<br />

handling activities registered within the group. Individual operators within the<br />

group may not use the certification independently.<br />

Group members operate under contractual or binding membership requirements<br />

specifying the commitment to comply with applicable <strong>organic</strong> standards and<br />

permit inspection, etc.<br />

Presence of an internal control system (ICS), operated by the responsible<br />

central body or an external body contracted by the central body. The ICS<br />

normally maintains files on all members of the group and inspect each<br />

member's operation at least once a year. A list of all individual member<br />

producers is available.<br />

The ICS has two important components:<br />

Training the producers and anyone else who is responsible for processing or<br />

handling the <strong>organic</strong> product in their responsibilities for maintaining the<br />

<strong>organic</strong> integrity of the crop, and<br />

Setting in place the systems for measuring and inspecting the farmers,<br />

processors and handlers compliance to the <strong>organic</strong> standards.<br />

With an ICS in place, the external inspection process is then focused on evaluating the<br />

operation of the ICS and the inspection of a sample of farms not each individual farm<br />

(generally only 10% of the farmers in the group is inspected) as well as processing<br />

facilities.<br />

Coupled with an annual inspection of the operation cum evaluation of the ICS, group<br />

certification thus offers two tiers of control as opposed to just an external annual inspection<br />

- 19 -

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