13.04.2019

FAO: Geographical indications (GIs) is one of the ways to enhance the provision of public goods – such as food heritage, landscapes, traditional knowledge and the rural economy at large.

While not limited to agriculture, GIs play a crucial role in the agricultural sector. By way of example, in the European Union (EU), where farmers can continue to compete on international markets only relying on quality rather than price, the worldwide sale value of the GIs is estimated at € 54.3 billion (OriGIn, 2018)

The study by FAO-ERBD "Strengthening sustainable food systems through geographical indications. An analysis of economic impacts" finds the positive impact of the GIs on economic resilience, as well as territorial and rural development. 

The main objective of this study is to provide additional evidence regarding the economic impacts of GIs on value chains and producers.
Although the positive impacts of the most famous GIs – such as Champagne or Parmigiano reggiano – have been well demonstrated, there has been relatively little research conducted on the economic sustainability of GIs in general, - says the Report.

It takes nine cases from worldwide for the analysis of the economic and sustainability impacts of GIs: Colombian coffee, Darjeeling tea (India), Futog cabbage (Serbia), Kona coffee (United States), Manchego cheese (Spain), Penja pepper (Cameroon), Taliouine saffron (Morocco), Tête de Moine cheese (Switzerland) and Vale dos Vinhedos wine (Brazil).

The study reaffirms that the GIs make strong business and sustainability cases and finds the following evidence of the positive economic impacts on economic sustainability: (i) positive impact on the price of final products; (ii) better distribution to primary producers; (iii) positive impact on production, especially in the long term; (iii) enhanced market access; (iv) positive effects on economic resilience of the value chains, achieved especially by boosting the diversification of markets or through “de-commoditization”, allowing products to avoid the effects of price volatility on commodity markets; (v) positive impact of the well-organized collective action in the GI processes increases the bargaining power of a group of actors.

  

The interest in the origin-linked quality driven by consumers provides strong evidence of the positive economic impacts of GIs on price, quality, production volumes and market access to more remunerative markets. The study finds the positive considerable effects of GIs on the price that hold regardless of the type of product under consideration (coffee, tea, wine, etc.), the region of origin (Europe, Africa, America) and whether the GI has been established for a long time or is recently registered. The Report shows that there are various mechanisms to positively affect price: (i) by providing information about the link to origin, and consequently to increase consumers’ willingness to pay higher prices; (ii) by modifying the organization of the market through the collective organization of the producers and intervening on the determination of price, either by controlling supply (creating a higher demand and increased price) or through an agreement among the value chain stakeholders to pay a minimum price to producers.

Geographical indications (GIs) represent "virtuous circle of origin-linked quality" and refer to products with specific or distinctive characteristics linked to natural and human factors, such as soil, climate, local know-how, and traditions. If established well, with consolidated enforcement mechanisms, labels on geographic origins can ensure quality for consumers, additional visibility and higher income for farmers, and contribution to rural development.

 

As for social and environmental sustainability, the study finds, that the demand for "origin-linked quality" enhances sustainable value chains and territorial development, food systems and healthy diets, however, the positive impact of GIs on environmental sustainability and  social welfare is not straight forward and depends on two important factors: (i) sustainable use and reproduction of local resources; (ii) the increasing social demand for sustainability by consumers and its importance for market access.

It is worth to admit, that the relationship between socio-environmental sustainability and GIs is an interesting and open academic and policy question. As Organization for International Geographical Indication Network (OriGIn) admits: "While the concept of sustainability presents many links with the notion of Geographical Indications (GIs), the sector has not yet agreed on sustainability priorities." Ensuring sustainability is not just a “moral” obligation (OriGIn, 2018), it has proven to create strong economic impacts through a persistent change in consumer's behavior and the value system underlying it. 

There is a need to revisit GIs strategies in terms of growing sustainability concerns. Given these premises, oriGIn and the Food and Agriculture Organisation of the United Nations (FAO) have developed a “GIs & sustainability strategy” to encourage GI associations worldwide to look at their potential in this field and engage with local stakeholders to give full visibility and/or improve their sustainability performance.

Please, follow the course by Prof. Zappalaglio and be welcomed to develop a further discussion on the topic of Sustainability and GIs in his class or in your thesis.

By Katsiaryna Serada

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