THIS ARTICLE IS WRITTEN BY SHIVANGI MISHRA, PRASANNA PANDA LAW COLLEGE, JHARSUGUDA, ORISSA, DURING HER INTERNSHIP AT LEDROIT INDIA
INTRODUCTION:
Agriculture is the backbone of the economy of low-income countries. Around 60% of a country’s Gross Domestic Product (GDP) is covered by agriculture. It employs a large proportion of the labor force, from 40 to around 90 percent. It represents a major part of foreign exchange, supplies bulk food, and provides income to more than half the population. Agriculture contributes only 9 percent of GDP in middle-income countries and 1 percent to high-income countries. In low-income countries, agriculture is the main source of income which can be an engine of growth and a source for poverty reduction.
To increase the income of the rural population, the productivity and profitability of agriculture should be increased, which increases the demand for agricultural and industrial products. The agricultural food produced can be exported to increase foreign exchange which enables the importation of capital goods and technology as well as agricultural goods such as seeds, fertilizers, irrigation equipment, godowns, and food supplies.
GEOGRAPHICAL INDICATIONS:
Geographical Indications (GI) is a sign that is used on specific goods that have a specific geographical origin and possess qualities, reputation, or characteristics that are essentially attributable to that place of origin. This may be because of climatic factors, as well as human inputs.
The obligation of countries to protect geographical indications is contained in Article 22.2 of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). These provisions require WTO members to provide the legal means for interested parties to prevent:
- The use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in geographical area other than the true place of origin, which misleads the public as to the geographical origin of the good;
- Any type of use that constitutes an act of unfair competition.
The TRIPS Agreement does not prescribe how countries might legislate to prevent the misuse of GIs. Giovannucci et al. explains that 111 countries have enacted sui generis legislation to protect GIs as a distinct IP category while 56 countries rely on the protection of GIs through trademark laws. Sui generis protection is that specially enacted to deal with this particular category of Intellectual Property (‘IP’) right. It is originated in Europe to protect food stuffs, wines and spirits. For example, in relation to traditional rice varieties in Kerala, GIs have been obtained for ‘Navara’ rice by the Navara Rice Farmers Society, for ‘Pokkali’ rice by the Pokkali Land Development Society and Kerala Agricultural University (KAU), for ‘Wayanad Jeerakasala Rice’ by the Wayanad Zilla Nellulpadaka Karshaka Samithi (a farmers’ collective), for ‘Kaipad Rice’ by the Malabar Kaipad Farmers’ Society and for ‘Palakkadan Matta Rice’ by the Palakkad Matta Farmers Producer Company Ltd.
Regulation 2081/92, made for the protection of geographical protection, was considered by a WTO dispute panel to be in breach of the TRIPS Agreement because it discriminated against non-European GIs. This regulation was repealed and replaced by Council Regulation (EC) No 510/2006 of 20 March 2006. On 21 November 2012, the 2006 Regulation was replaced by Regulation (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs as part of a policy of prioritising innovation in agriculture (‘Quality Schemes Regulation’).
Several of this legislation’s objectives are equally relevant to developing countries and LDCs. Recital to the Quality Schemes Regulation observes that EU consumers ‘increasingly demand quality as well as traditional products’ and are also concerned with maintaining the diversity of agricultural production, which ‘generates a demand for agricultural products or foodstuffs with identifiable specific characteristics, in particular, those linked to their geographical origin’. Recital suggests that operating quality schemes for producers which reward them for their efforts to produce a diverse range of quality products can benefit the rural economy, particularly in less favored areas, in mountain areas and in the most remote regions, where the farming sector accounts for a significant part of the economy and production costs are high.
Alternative approaches to the protection of GIs involve the use of certification and collective trademarks. These marks can be used by producers who meet prescribed certification standards. The marks are registered by the certifying authorities, which are not involved in the production of the relevant origin product. Detailed below are some of the arguments that have been put forward to justify countries’ adopting GIs protection, which are relevant to the promotion of agricultural sustainability and economic development.
GEOGRAPHICAL INDICATIONS AND MARKET DIFFERENTIATION
Agricultural producers in developing countries and LDCs have the challenge of securing market access in the valuable markets of industrialised countries by differentiating their products from those of other agricultural producers. GIs provide a mechanism for the producers of agricultural products to allow them to differentiate their products from general commodity categories such as rice, coffee and tea, by establishing territorially differentiated niche markets. GIs disconnect origin products from commodity markets by capturing attributes of the locality such as environmental factors and local knowledge and it made the point that although origin-based marketing has a long history, its contemporary relevance is increasing, partly as a reaction to globalization as local producers need to be able to distinguish their product in the eyes of consumers from generic competition.
In the newly urbanising developing countries, consumers and people from a particular region or ethnic group look to the products from their places of origin as being reliable and known.Gradually, these local products begin to gain a commercial reputation among a wider group of traders and consumers. By way of example, origin products from developing countries and LDCs which have been differentiated from commodity products are: Indian Basmati rice and Darjeeling tea, Kintamani Bali coffee and Muntok White Pepper from Indonesia, Blue Mountain coffee from Jamaica, Rwandan coffee, Rooibos tea and Karoo lamb, from South Africa, Buon Ma Thuot coffee and Me’o Vac Mint Honey, from Vietnam, Man mountain rice from Côte d’Ivoire, Mamou pepper and Boké palm oil from Guinea, Oku white honey from Cameroon, Surin Hom Mali scented rice and Jasmine rice from Thailand.
GEOGRAPHICAL INDICATIONS AND PREMIUM PRICING
A number of researchers have identified the capacity of origin labelling to differentiate otherwise homogeneous commodities as the basis for charging premium prices. Reviron et al., refer to value addition from a mix of economic, cultural and social characteristics leading to the capturing of a premium price. Marette and Williams assert the higher value which consumers attach to products differentiated according to their origin.
Babcock reported that Bresse poultry in France receives quadruple the commodity price for poultry meat; Italian “Toscano” oil gains a 20% premium above commodity oil; and milk supplied to produce French Comte cheese sells for a 10% premium. The case study of Comte cheese in France by Gerz and Dupont indicated that French farmers receive an average of 14 more for milk destined for Comte and that dairy farms in the Comte area have become more profitable since 1990, and now are 32 per cent more profitable than similar farms outside the Comte area. The retail price of Comte has risen by 2.5 per cent, annually while the wholesale price has risen by 1.5 per cent a year. The French Ministry of Agriculture claims that part of this added value accrues to producers and other actors in the Comte supply chain, whereas retailers have appropriated all of the 0.5% rise in the retail price of Emmental. O’Connor and Company refer to the protection of ‘Lentilles vertes du Puy’, which is said to have increased the production of lentils from 13,600 quintals in 1990 to 34,000 quintals in 1996 and 49,776 quintals in 2002, the number of producers almost tripling from 395 in 1990, to 750 in 1996, and 1,079 in 2002. In a study of Hessian apple wine, Teuber indicated that the willingness of consumers to pay a premium price is because of their view of the positive impacts of GIs on the local economy.
Although studies have suggested that GI products can capture premium prices, a particular problem for developing countries and LDCs is how to distribute these benefits from marketers to upstream to producers. For example, the producers of Zanzibari cloves receive $5 per tonne, compared with the $40 received by the distributors of those cloves in the lucrative European market. Hughes reports a generally negative experience of producers in Africa where the advantages premium prices from GIs tend to remain with centralised marketing authorities. Similar observations have been made by Gopalakrishnan et al., in relation to Indian traders who have tended to securing the largest share of GI premiums, compared with producers.
CERTIFICATION OF PRODUCT QUALITY
GIs can play an important role in signaling the quality of goods to consumers. Among the attributes of a product that are signaled by GIs is ‘credence’ or the integrity of product origin and sustainable production methods. This is particularly the case where the GI is underpinned by a registration and certification system enabling producers to signal quality and an associated reputation that has been developed over time. Claim that producers are incentivized by an origin indication to maintain product quality. The reputation signaled by the origin indication attaches to all stakeholders in the supply chain.
As consumers have become increasingly concerned with the quality, safety, and production features of food, the demand for food products with credence attributes (e.g., origin, organic, locally grown, environment-friendly) has been steadily growing.
Aggregation of market power
Gordon et al., explain that to escape the commodity trap where each producer of a particular product is a direct competitor with every other producer, farmers need to band together both to differentiate their products and to aggregate their market power. This is particularly the case for agricultural producers in developing countries and LDCs, who are generally dwarfed by the industrialised country acquirers of their products. Yeung and Kerr suggest that GIs are a useful modality for the aggregation of the market power of small producers. By creating grounds for competitive advantage based on territorial specificities and reducing competition with non-differentiated products, GIs potentially assist producers in appropriating a larger income from the production of origin-based goods. Bramley and Biénabe Point out that a niche marketing strategy entails an increase in production and marketing costs, particularly promotional costs to secure consumer recognition, but Barjolle and Sylvander suggest that those promotional costs can be recouped through increased sales volumes and through premium product pricing. Belleti et al., explain the international success of Tuscan firms producing: Olio Toscano PGI, Olio Chianti Classico PDO, Pecorino Toscano PDO and Prosciutto Toscano PDO to the aggregation of the market power of a number of small enterprises.
It should be noted however, that GI collectives in the EU in general have a long history of existence and have been created through local industry initiatives, which contrasts with. developing countries and LDCs where initiatives to establish GIs are driven by state instrumentalities, NGOs or agricultural universities, rather than by producer collectives. This lack of a tradition of collective action is seen to be a significant hurdle faced by developing country and LDCs in building a GI strategy.
Sustainable use of natural resources and biodiversity conservation
While environmental sustainability was not the primary aim of GIs protection, the fact that GIs are inextricably linked with local, natural resources means that the environmental benefits of origin products are increasingly seen as an important externality. Responsible environment stewardship has also been mentioned by policymakers as a justification for GI protection.
The codes of practices that are collectively adopted in relation to GI labeling often incorporate biodiversity objectives. Refer to the Rooibos industry in South Africa as an example of an industry that has explicitly considered biodiversity concerns in designing its product specification to take account of the environmental sensitivity of its place of production.
In relation to sustainability objectives, it is also important to point out that the success of an origin product may lead to an increase in demand and therefore to increased pressure on local resources. Sustainable production guidelines need to be agreed upon by means of a participatory process in order to prevent pressure from being placed on fragile environments and to ensure in particular that the GI does not lead to “genetic erosion”.
RURAL DEVELOPMENT
One of the justifications advanced for the establishment of the French GIs system for the protection of wines in the 19th Century was the role that it played in preserving agriculture and rural employment in areas which were unsuitable for cereals and other crops. The maintenance and promotion of rural development has been repeatedly advanced as a justification for GIs. As Pacciani et al., and O’Connor and Company point out the protection of GIs accords with the EU policy on rural development.
An increase in employment has for example been observed for the French Comte cheese industry. Kop et al. estimated that the production of Comte cheese generates five times more jobs in processing, maturing, marketing, packing, etc. than its generic equivalents and that migration away from the countryside in the Comte area is only half that of equivalent cheese-producing regions. Similar results have been identified for origin-protected cheeses supporting the milk supply from cattle in Northern Italy and the sheep of Southern Italy. Barjolle identifies 21 European GIs where the maintenance of rural development is in the product specification. GIs also have a wider territorial impact that extends beyond the direct GI stakeholders. GIs can lead to employment creation and agro-tourism within the region. GIs are also likely to stimulate investment and the price of land within the borders of the GI region. Giovannucci et al. Also, point to the potential “complementary effect” a GI may have on other products in the area.
CONCLUSION:
Considerable work has been done by the EU in identifying suitable GI candidates in the developing countries and LDCs of Africa, the Caribbean and the Pacific. To some extent, this has reflected a European campaign to recruit supporters for its system of sui generis protection. Although, as we have seen above, there is substantial literature on the potential benefits of GIs for developing countries and LDCs there is however, a paucity of empirical data on the positive impacts of GIs even in the EU.
The obligation imposed by the TRIPS Agreement for countries to implement GIs protection has resulted in considerable legislative activism around the world, but the top-down imposition of GIs laws has tended to run in advance of producer enthusiasm. For example, in India, although the Geographical Indications of Goods (Registration and Protection) Act was enacted in 1999 a study of Indian rice farmers in 2020 revealed a general ignorance of the difference between GIs and plant varieties.
Other costs that have to be carried include the expense of monitoring a GI and enforcing it against unauthorized third parties. In the early life of a GI, the expense of enforcement overseas can be carried by the national authorities. Thus, concerning the misuse of the Indian GI ‘Basmati’ by a US corporation, proceedings were brought to the USA by CSIR, the national Indian scientific research authority. Even in domestic litigation, the Tea Board of India has sued to defend the ‘Darjeeling’ GI.
As well as the financial burden, the implementation of GIs protection also imposes significant administrative burdens. Point out that the capacity of GIs to ensure rural development benefits is dependent upon the creation of institutions that govern the use of the GI, as well as preventing misappropriation in domestic and international markets.
