| dc.description.abstract | In order to be prepared for expanding trade of processed organic food led by changes in domestic and overseas conditions, a major interest of concerned policy makers and environment-friendly farming unions and agencies the is pre-analysis of the impact of introducing an equivalence system. This study was carried out to present systematic solutions based on the analysis of specific impacts on the organic farming and organic food market in Korea, in promoting equivalence with the organic food certification system.
This report consists of eight chapters. Chapter 1 describes the background and purpose of this study, a review of prior studies, and the method and scope of this study. Chapter 2 describes the current situation of organic agricultural food. Chapter 3 describes the current organic food certification system and presents the equivalence system. Chapter 4 describes the concept and background of introducing equivalence of organic food, international standards including WTO/TBT, CODEX, etc., and key issues related to introducing equivalence. Chapter 5 describes cases of equivalence agreement for organic products, the organic product certification system and cases of approving equivalence in major countries. Chapter 6 describes the result of analysis on the impact resulting from promoting equivalence, using theoretical models and game trees, etc. Chapter 7 describes solutions for promoting equivalence. Lastly, Chapter 8 provides a summary and conclusion.
An equivalence system has been introduced as an alternative to the processed food labeling system based on the Food Hygiene Regulation. However, since the equivalence system is involved in agricultural products as well as processed food, issues related to equivalence of organic agricultural products have emerged. There are two opposing points of view on the development of the organic food industry, one of which is that the equivalence system is essential as an alternative to the labeling system and the other of which emphasizes the negative aspects of the equivalence system on the organic food industry in Korea.
In review of the international standards and regulations related to equivalence include those in the Agreement on Technical Barrier to Trade of WTO and CODEX, which is an international standard for organic products. Equivalence is specified in the certification system of the EU, the USA, Canada, Japan, Australia, New Zealand, etc. As of 2011, there are cases of the mutual equivalence agreements between the US and Canada, the US and Japan, and Canada and the EU.
For analyzing the impact of the introduced equivalence system on organic agricultural products and processed organic food, a Game Tree was used for showing the process of decision making for organic agricultural products and benefits for parties concerned were compared, and the cost of organic certification which accounted for a portion in the cost of import was calculated for the organic agricultural products. The feasibility for importing major organic agricultural products currently produced in Korea from other countries was also reviewed.
Since there is no significant difference between the labeling system currently employed and the equivalence system in terms of regulations for processed organic food, it was shown that there would not be significant change in the volume of import if the equivalence system was introduced. In the comparison of the certification system with the equivalence system it was determined that the effect by the fixed expenses added by the certification system on the increased volume of import was not great in terms of economic action for maximized profits.
The result of analyzing predicted response of importers who import processed organic food and government’s optimum selection showed that the best solution for the importers is to get organic certification to import processed organic food. It was shown that some of the people who produce processed organic food in Korea approved and some did not approve of equivalence. As a result, it is predicted that the introduction of the equivalence system by the government is inevitable, considering other social costs (profits), e.g., trade pressure.
Unless the equivalence system is introduced, a high degree of import costs would be needed by means of the certification system for processed organic food produced with various raw materials, so that it is highly likely that importers may give up importing to Korea. In that case, the government will have to compare the benefits of producers who produce processed organic food in Korea with the social costs due to no introduction of equivalence to make an optimum selection.
In terms of economic actions for maximized profits, the fixed cost added by the certification system will not have an impact on the volume of import for the organic agricultural products. Analysis of the case of having imported organic grapes from America showed that the cost for certification accounted for a very small portion in the entire import cost. That is, assuming that the total imported products were 100 tons, the cost for certification in the average import cost per kg accounted for 1%, implying a tiny proportion. Therefore, comparison of the certification system with the equivalence system showed an insignificant impact on the volume of import.
Inspection of the market condition of importing organic agricultural products showed that, since the current import volume meets the demand for the grains, e.g., barley, beans, corn, etc., it is considered that changes in the import volume resulting from introducing the equivalence system would be negligible. Fruits, e.g., grapes, mandarins and persimmons, are likely to be imported from New Zealand. Importing vegetables is prohibited from most countries, pursuant to the Plant Protection Act. It is also difficult to import vegetables, e.g., chillies, garlic, onions, etc., because of high customs fees. It is possible to import fresh vegetables, e.g., Chinese cabbages, white radishes, carrots, lettuces, etc., from China, but consumers do not prefer those imported from China. It thus seems that changes in the import volume for the fresh vegetables would be negligible.
No fresh organic agricultural products are currently imported from America, pursuant to the certification system. Therefore, as an alternative, products imported unilaterally by Japan and Taiwan, which are geographically close to Korea, were reviewed. Exemplary fresh organic agricultural products that can be exported to Korea were comprised of the five products of grapes, cherries, strawberries, blueberries, and apples. However, it was shown that importable products were only grapes and blueberries as a result of quarantine inspection.
The current base of the organic agro-food industry in Korea is not strong, and processed organic food highly depends on imported raw materials to produce organic agricultural products. Significantly negative impacts are thus predicted if the raw materials are not smoothly imported for any reason. Therefore, it is necessary to systematically support the organic agro-food industry, to integrate the dualized certification system into one system, and to enact applicable provisions to minimize the loss of any parties concerned.
Thorough preparation is required before making the equivalence agreement with counterpart countries. In particular, it is necessary to secure more manpower in charge in the responsible divisions in the Ministry of Food, Agriculture, Forestry and Fisheries, to install the Organic Food Equivalence Deliberation Commission (provisional) organized by the government, producer groups, research institutions, consumer groups, etc., and to establish strategies for minimizing risk-bearing resulting from introduction of the equivalence system through appropriate role sharing among related subjects, and for maximizing the policy effect.
Researchers: Chang-Gil Kim, Hak-Kyun Jeong, Tae-Hoon Kim, Dong-Hyun Moon and Byeong-Il Ahn
Research period: 2011. 8. ~ 2011. 10.
E-mail address: changgil@krei.re.kr | - |
