Inter-American Development Bank
facebook
twitter
youtube
linkedin
instagram
Abierto al públicoBeyond BordersCaribbean Development TrendsCiudades SosteniblesEnergía para el FuturoEnfoque EducaciónFactor TrabajoGente SaludableGestión fiscalGobernarteIdeas MatterIdeas que CuentanIdeaçãoImpactoIndustrias CreativasLa Maleta AbiertaMoviliblogMás Allá de las FronterasNegocios SosteniblesPrimeros PasosPuntos sobre la iSeguridad CiudadanaSostenibilidadVolvamos a la fuente¿Y si hablamos de igualdad?Home
Citizen Security and Justice Creative Industries Development Effectiveness Early Childhood Development Education Energy Envirnment. Climate Change and Safeguards Fiscal policy and management Gender and Diversity Health Labor and pensions Open Knowledge Public management Science, Technology and Innovation  Trade and Regional Integration Urban Development and Housing Water and Sanitation
  • Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Skip to footer

Beyond Borders

  • HOME
  • CATEGORIES
    • Asia – LAC
    • Innovation and Technology
    • Investment Attraction
    • Public-Private Alliances
    • Regional Cooperation
    • Regional Integration
    • Trade & Investment Agreements
    • Trade Facilitation
    • Trade Promotion
  • Authors
  • Spanish
organic-certifications

Why Agricultural Exporters Should Consider Organic Certifications

March 21, 2022 by Tomás Lisazo - Ignacio Marra de Artiñano - Gabriel Scattolo - Christian Volpe Martincus - Lucas Zavala Leave a Comment


Organic agriculture is a rapidly expanding market that can provide countries in Latin America and the Caribbean (LAC) with opportunities to differentiate their products and diversify their foreign sales away from commodities.

To understand this potential, we examine the effects of organic certification on firms’ foreign sales. In so doing, we focus on two Latin American exporting countries: Argentina, the country with the largest area of agricultural farmland in the region; and Peru, the country with the most organic producers in the region. On the importing side, we concentrate on the United States, which accounted for approximately 42% of worldwide retail sales of organic foods and drinks – by far the largest organic market in the world in 2019 (FiBL-IFOAM, 2021). We explore how USDA organic certification affects overall firms’ exports and their different components, especially export prices (unit values). The evidence suggests that USDA organic certification is associated with a 20% increase in sales to the United States. This increase can be traced back to larger volumes, more frequent shipments and, importantly, higher unit values.

Organic Agriculture and Certification

Demand for organic products has expanded at an accelerated pace over the last two decades. Worldwide organic food and drink retail sales grew seven times since 2000 to reach almost US$ 120 billion in 2019. The number of organic producers and area of organic farmland have evolved accordingly and topped 3 million and 72 million hectares (HA), up from 200,000 and 11 million HA 20 years ago, respectively. LAC countries are key players in this growth, hosting 7% of organic producers and 11.5% of organic agricultural land in 2019 (FiBL-IFOAM, 2021).

Firms must be certified to label and sell their products as organic. This requires undergoing a formal process through which an official certification body verifies that the firm complies with regulations in the country in question (e.g., US Department of Agriculture –USDA- in the United States).[1] Consistent with demand expansion, the number of certified firms has increased substantially in recent years. For instance, the total number of establishments certified as organic by the USDA exceeded 44,500 in 2019 after growing approximately 65% since 2013. LAC firms accounted for 21% of this total (Figure 1).

Organic-Certified Firms Are Increasingly Important Actors in Agricultural Exports

Firms certified as organic by the USDA accounted for roughly 40% of Argentina’s and Peru’s total exports of agricultural products in 2018, almost doubling since 2013 (Figure 2, left panel). USDA-certified firms were concentrated in a handful of agricultural product categories and the largest of these categories were fruits, coffee/tea, and flours (Figure 2, right panel).

Organic certified firms were responsible for a disproportionate share of countries’ total exports of specific product groups. For instance, USDA-certified firms accounted for just 30% of the total number of cocoa exporters but approximately three-fourths of total exports of cocoa products from Argentina and Peru. Similarly, USDA-certified firms represented 30% of exporters selling flours and coffee/tea yet generated more than 50% of the respective total export values. This suggests a relatively high concentration of exports in certified firms in these sectors. In contrast, only 35% of the fruit exports were associated with the roughly 25% certified firms, thus indicating a more even distribution of these sales (Figure 3, right panel).

Organic-Certified Firms Sell More and at Higher Prices

Organic-certified firms registered higher foreign sales, even after controlling for differences across firms and their products over time (e.g., changes in firms’ productivity in producing specific goods) and across destination countries and sectors over time (e.g., changes in countries’ demand for goods in given sectors). In particular, exports to the United States were 20.3% larger for firms with USDA organic certification. The increase in export value arises from the growth in export volumes, primarily because of more frequent shipments and a rise in unit values (Figure 4, left panel). Furthermore, we find that producers selling goods for less than their peers seem to gain the most from certification (Figure 4, right panel).[2]

Countries Need More Data and Analysis to Design Organic Agriculture Policies

The expansion of organic agriculture can provide opportunities for developing countries to diversify their exports. This can benefit smaller producers, thereby reducing poverty in rural areas and helping the environment through the adoption of more sustainable practices.

For these benefits to materialize, countries should implement policies that address the possible market failures that can prevent producers from getting certified. This could include reducing information barriers that firms typically face when looking for business opportunities abroad and assessing the costs and conditions to obtain organic certifications and the advantages thereof. The same applies to the coordination problems that may arise in the provision of the necessary training to address these barriers and help firms upgrade to meet relevant organic requirements.

Trade promotion agencies can play an important role in this regard. For instance, in 2018, Costa Rica’s PROCOMER launched a “Green Growth Program” to assist firms in improving their sustainability practices and outcomes through adequate changes in their production processes. This program is now supported by the Inter-American Development Bank through the Integration and Trade Sector and includes organic products as one of the priority criteria for eligibility, thus connecting sustainability and organic agriculture.

Facilitation of organic trade through international agreements (e.g., Mutual Recognition Agreements -MRAs- between countries) is another important area in which countries should keep working. For example, Chile has already signed and implemented these types of agreements with several partners.

To properly design these policies and ensure their effectiveness, countries need to systematically collect firm- and transaction-level data on agriculture, including on primary producers, their suppliers, customers, and intermediaries. They should use these data to perform periodic research and impact evaluation of the relevant programs; and conduct regular benchmarking to identify best international practices.

The IDB is supporting LAC countries in implementing this agenda. An important initiative in this regard is LAC Flavors, an annual food and beverage business forum that the Integration and Trade Sector has held 12 times throughout the region since 2009. During these forums, buyers from as far as Dubai closed deals with suppliers from LAC. This was, for instance, the case with Organic Rainforest, a Peruvian producer and exporter of organic cacao, which has been able to open new markets and differentiate its products by getting organic, kosher, and fair-trade certifications.


[1] There is an increasing number of mutual recognition agreements (MRAs) between countries (e.g., between the United States and the European Union).

[2] In other words, unit values below the median drove the impact of organic certifications on unit values. This is consistent with available empirical evidence, according to which initially lower quality farmers tend to benefit more from certification than their higher-quality counterparts who can already obtain good prices.

[3] The dependent variables are (the natural logarithms of) those that appear in the y-axis, and the main explanatory variable is a binary indicator that takes the value of one for the United States if the firm is certified as organic by the USDA in the year in question and zero otherwise along with firm-product-destination, firm-product-year and destination country-product-year fixed effects. Estimated effects that are not significantly different from zero at the 10% level are reported as zero. The figure on the right presents quantile fixed effect estimates for the (natural logarithm of the) unit values. In the figure on the left, estimated percentage effects are shown, i.e., [exp(estimated coefficient on USDA organic certification)-1]x100, whereas in the figure on the right direct estimates are presented.


Filed Under: Trade Promotion

Tomás Lisazo

Tomás Lisazo obtained his Bachelor in Economics at Universidad de Buenos Aires (UBA - Argentina) and he is a MA in Economics candidate at Universidad de San Andrés (UdeSA - Argentina). He is currently a Consultant at the Integration and Trade Sector of the Inter-American Development Bank (BID-INT) and he is also a Research Assistant at the Economic Simulation Models Sector of the Interdisciplinary Institute of Political Economy of Buenos Aires (MESi - IIEP). Tomás is an Assistant Professor in International Trade at Universidad de Buenos Aires. His main fields of interest are international trade, development, climate change economics and health economics.

Ignacio Marra de Artiñano

Ignacio Marra de Artiñano is a PhD candidate at the Université Libre de Bruxelles and the European Center for Advanced Research in Economics and Statistics (ECARES). He also works at the Investment Climate Unit of the World Bank. Before starting his PhD, Ignacio worked at the Trade and Integration Sector of the IDB and he completed an MPhil in Economics at the University of Oxford and a Bachelor of Economics at the Universidad Carlos III de Madrid. His research aims to answer policy-relevant questions in the intersection of trade, investment and development.

Gabriel Scattolo

Gabriel Scattolo is a consultant at the Integration and Trade Sector of the Inter-American Development Bank. Gabriel has research experience on international trade and productive development. He is a researcher at the Interdisciplinary Institute of Political Economy of Buenos Aires (IIEP), Faculty of Economic Sciences, University of Buenos Aires (UBA). He has previously been a researcher at the Monitoring and Evaluation Unit of CIECTI (MINCyT) and consultant in international organizations such as the IADB and the World Bank. In the public sphere he has served as an advisor at the National Foreign Trade Commission (2017-2018) and at the Undersecretariat of International Insertion (2019) in Argentina.

Christian Volpe Martincus

Christian Volpe Martincus is Principal Economist at the Integration and Trade Sector of the Inter-American Development Bank (IDB). Christian has expertise in international trade, foreign direct investment, regional integration, and economic geography, and has advised several governments in both Latin America and the Caribbean and OECD countries on these matters. He previously worked for the Ministry of the Economy of the Province of Buenos Aires and was advisor at the MERCOSUR Commission of the National Representatives Chamber in Argentina. In addition, he was researcher at the Center for European Integration Studies in Bonn, Germany. At the IDB Christian has been working on the impacts of trade and investment facilitation and promotion policies, the effects of trade and multinational production on sustainability, the implications of digital technologies for trade and investment, the role of integration in shaping trade flows and specialization patterns, and the interplay between innovation and exports (https://www.christianvolpe.com/). His research has been published in various professional journals such as the Review of Economics and Statistics, the Journal of International Economics, and the Journal of Development Economics, among others. Christian has a PhD in Economics from the University of Bonn, and is CESifo Research Fellow, Associate Editor of the Review of International Economics, and member of the Editorial Board of the World Trade Review.

Lucas Zavala

Lucas Zavala's work focuses on barriers to trade and competition in emerging economies (lzavala.com). He is currently a Postdoctoral Fellow in the International Economics Section at Princeton University and will join the World Bank's Development Impact Evaluation group as an Economist in 2022. He also serves as a director of the Graduate Applications International Network (GAIN), a mentoring program for prospective PhD students from low-income countries (gain-network.net). Lucas received his PhD from Yale University.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Follow Us

Subscribe

Search

Productivity and Trade

This space explores how trade, investment and sustainable development in strategic sectors can boost productivity and strengthen more dynamic, inclusive and resilient economies in Latin America and the Caribbean. From trade facilitation and export and investment promotion to entrepreneurship, the development of public-private synergies, agri-food systems and tourism, we address challenges and opportunities for growth in the region.

Related posts

  • The Impact of Voluntary Sustainability Standards on Agricultural Exports: Friends or Foes?
  • Selling to supermarkets and international distributors
  • What Happened to Cross-Border E-Commerce Under the Pandemic?
  • From the Andes to the World: How a Peruvian Company Conquered Global Value Chains
  • Toward greater regulatory cooperation for trade 

Categories

Footer

Banco Interamericano de Desarrollo
facebook
twitter
youtube
youtube
youtube

    Blog posts written by Bank employees:

    Copyright © Inter-American Development Bank ("IDB"). This work is licensed under a Creative Commons IGO 3.0 Attribution-NonCommercial-NoDerivatives. (CC-IGO 3.0 BY-NC-ND) license and may be reproduced with attribution to the IDB and for any non-commercial purpose. No derivative work is allowed. Any dispute related to the use of the works of the IDB that cannot be settled amicably shall be submitted to arbitration pursuant to the UNCITRAL rules. The use of the IDB's name for any purpose other than for attribution, and the use of IDB's logo shall be subject to a separate written license agreement between the IDB and the user and is not authorized as part of this CC- IGO license. Note that link provided above includes additional terms and conditions of the license.


    For blogs written by external parties:

    For questions concerning copyright for authors that are not IADB employees please complete the contact form for this blog.

    The opinions expressed in this blog are those of the authors and do not necessarily reflect the views of the IDB, its Board of Directors, or the countries they represent.

    Attribution: in addition to giving attribution to the respective author and copyright owner, as appropriate, we would appreciate if you could include a link that remits back the IDB Blogs website.



    Privacy Policy

    Copyright © 2025 · Magazine Pro on Genesis Framework · WordPress · Log in

    Banco Interamericano de Desarrollo

    Aviso Legal

    Las opiniones expresadas en estos blogs son las de los autores y no necesariamente reflejan las opiniones del Banco Interamericano de Desarrollo, sus directivas, la Asamblea de Gobernadores o sus países miembros.

    facebook
    twitter
    youtube
    This site uses cookies to optimize functionality and give you the best possible experience. If you continue to navigate this website beyond this page, cookies will be placed on your browser.
    To learn more about cookies, click here
    X
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Non-necessary
    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
    SAVE & ACCEPT