Organic agriculture in Costa Rica: The case of cacao and banana production in Talamanca

Octavio Damiani

Draft report prepared for the Office of Evaluation and Studies of the International Fund for Agricultural Development Rome, October 2001

I. II.

III.

IV.

V.

Introduction The importance of organic production in Costa Rica and the case of the Talamanca Small Farmers Association A. Organic agricultural production in Costa Rica B. The organic production of cacao and banana in Talamanca Effects of the organic model of production on small farmers and the environment in Talamanca A. Effects on farmers income and quality of life B. Effects on the natural environment The factors explaining the success of cacao and banana producers A. The influence of economic and agricultural policies B. The role of policies towards organic agriculture C. The incorporation of organic agriculture in university and training Programs D. The views and policies of agricultural research, extension, and credit agencies E. The role of Non-Governmental Organizations F. The role of APPTA Conclusions and potential lessons A. Conclusions B. Potential lessons

I.

Introduction

1. This report focuses on the recent growth of organic agricultural production in Costa Rica, one of the countries that has advanced most in Latin America in developing institutions to deal with organic agriculture. An Organic Agriculture National Program within the Ministry of Agriculture was established in 1994, an Organic Agriculture Law was passed by the Congress in 1996, and several other laws have been approved since the mid-1990s. In addition, Costa Rica has also been successful in implementing policies to preserve its diverse ecosystems, and it has been making efforts to promote environmentally-friendly economic activities among small farmers, such as ecotourism and organic agriculture. These measures have contributed to create a good international image of the country that was favorable for the access of Costa Rican organic products to foreign markets. 2. The study provides an overview of the development of organic agriculture in Costa Rica and analyzes in detail the case of the Talamanca Small Farmers Association (APPTA), a well-known success story in Costa Rica for becoming the largest association of organic small producers in the country and one of the largest ones in Central America. APPTA includes 1,500 small farmers, most of them Bribri and Cabcar indigenous people who live and produce in an indigenous reservation in the Talamanca county (Province of Limn) in the southeast of the country (see map 1). These farmers had grown cacao since the 1940s, when a disease (Moniliasis) caused by Moniliophtora roreri sp. decimated the crops in the late 1970s, leaving farmers without their only source of cash income. As a result, farmers abandoned their cacao plantations and many slashed and burned the areas with cacao to grow subsistence crops (corn, beans, and rice) or guinea. By the early 1990s, they lived basically from subsistence crops and poultry, selling a very low proportion of their production in the market. 3. APPTA was successful in promoting a revival of the cacao production. With the help of ANAI, a Non-Governmental Organization of US origin, APPTA established contacts with buyers of organic cacao in the United States, and in the early 1990s was able to certify a significant area of cacao and to start exporting to the US. After this initial success, APPTA carried out efforts to sell other products (especially banana) that were grown by its members under the rainforest and often mixed with cacao, but which were used for the consumption of the family. As a result of these efforts, APPTA obtained the organic certification for its members production of banana, and it started selling it to foreign firms based in Costa Rica that used banana to produce baby food (organic puree of banana) and export it Europe and the United States. By 2000, more than 1,000 members of APPTA had obtained the certification of organic producers in more than 2,000 hectares of cacao and banana. APPTA was exporting directly cacao to the United States and Europe, and was selling organic banana for the production of baby food. In addition, it had negotiated with a supermarket chain in the Costa Rican capital city (San Jos) to sell organic fruits and vegetables and had started a program to promote them which was incorporating an increasing number of its members. Finally, APPTA had initiated efforts with government agencies to produce organic banana to be sold fresh in the international market. 4. Organic production in Talamanca had significant positive effects on farmers incomes and quality of life. This is important because Talamanca has been one of the poorest regions in Costa Rica, showing the highest illiteracy rates and lowest incomes in the country. Farmers had lost access even to the limited domestic market of cacao because middlemen had stopped purchasing cacao from most communities in Talamanca due to their low production levels. As a result of the emergence and growth of organic production, farmers were able to start selling cacao again, and they obtained prices significantly higher than in the conventional market. In addition, while the

price that the banana processing industry paid to APPTAs producers for their organic product was low compared to the international market price of the fresh organic banana, farmers were able to obtain a constant source of income by selling every two or three weeks all-year-round.

Map 1. Talamanca county in Costa Rica

5. In addition, the organic models of production had positive effects on the environment. This is important because Talamanca is one of the ecologically richest and most diverse regions in Costa Rica. Organic cacao and banana were environmentally-friendly because they were not grown as a monoculture, but under the shade of rainforest trees and combined with other products like fruits and tubers, in an improved form of the traditional systems of production. According to several

studies carried out by specialists, these organic systems of production characteristic of Talamanca were also associated with the conservation of wildlife. 6. The paper discusses the factors that led to the success of organic production in Talamanca, analyzing the role of laws, regulations, and agencies dealing with organic agriculture, the main problems that small producers faced when growing organic crops, the way in which they solved them, and the role of government institutions, private agencies, APPTA, and NGOs. The main questions addressed in the paper are the following: a) What were the positive and negative effects of organic production on small farmers production and incomes? b) What were the main constraints that small farmers faced when they started to grow and sell the organic crops? c) What were the main interventions that government agencies and NGOs implemented to help small farmers successfully cultivate organic crops? 7. The findings presented here are based on field work which I carried out in Costa Rica between August 14 and 28, 2001. During that time, I carried out interviews in San Jos, Alajuela, and Cartago with government officials, researchers and professors at the University of Costa Rica, and professionals at international, government agencies, and NGOs. In addition, I visited producers of organic crops in the counties of Talamanca, which concentrates the production of organic banana and cacao, and Alajuela, where most of the fresh organic vegetables are produced. I was joined in my visit to the Talamanca region by Michelle Deugd of the Free University of Amsterdams Center of Rural Development Studies located in San Jos, who focused on microeconomic analysis of organic production and elaborated a paper that provided valuable information for this study. 8. The report is organized as follows. After this introduction, the second section describes organic agricultural production in Costa Rica and the case of the Talamanca Small Farmers Association; the third section analyzes the forces that led to the emergence of organic products in Costa Rica and the influence of different factors, including macroeconomic and agricultural policies, the role of government and private institutions involved in agricultural research, extension, and training, and the influence of NGOs. The fourth section analyzes the key interventions that led to the successful production of organic banana and cacao in Talamanca, and the last section offers conclusions and some preliminary lessons for project design. II. A. The importance of organic production in Costa Rica and the case of the Talamanca Small Farmers Association Organic agricultural production in Costa Rica

9. The cultivation of organic crops in Costa Rica started in the mid-1980s. Interestingly, it originated not as a result of a specific program or project of government agencies or NGOs, but as a result of the initiative of farmer associations and individual farmers in different crops and regions in of the country in response to critical situations that they faced related with the attack of pests and diseases or with the excessive use of pesticides. These initiatives included small cacao producers in the Atlantic Region (Talamanca, Province of Limn) whose crops had been decimated by a diease, small coffee producers in the central and northern regions (Provinces of Alajuela and Guanacaste) who were experiencing financial problems due to the high costs of the intensive use of pesticides, and vegetable producers in the central region (Province of Alajuela) who were facing high costs and health problems caused by chemical inputs. While these experiences were unrelated

with each other, they had in common the experimentation of farmers with organic fertilizers and pesticides, and in some cropsnotably in cacao and coffeethe use of natural forests in combination with some of the crops. 10. Simultaneously, a dynamic and diverse organic movement emerged in the late 1980s. These movement included NGOs and individuals who were mostly urban professionals who worked at universities and NGOs and were concerned with the negative impacts on the natural environment of conventional agriculture and with the possible negative effects of chemical residues on the health of consumers. Although this organic movement did not influence the emergence of organic agriculture in Costa Rica, it played a key role in the development of an institutional and legal framework for organic agriculture since the mid-1990s, their members carried out useful studies on the situation of organic agriculture in Costa Rica, and their work contributed to the further adoption of organic agriculture by other producers. 11. Finally, a research project funded by the Japanese International Cooperation Agency (JICA) in the late 1980s and implemented with the University of Costa Rica and the National Training Institute (Instituto Nacional de Aprendizaje, INA) also played a very important role in the emergence of organic agriculture. The University of Costa Rica had a research station (the Fabio Baudrit Experimental Station) located in Alajuela, which carried out research on vegetable production technologies, and some researchers were interested in developing organic inputs as an alternative to chemical ones. The INA, a government agency created in 1960 to provide training to small farmers and workers in all economic activities, was also interested in incorporating new topics to its agricultural training programs. The project sponsored by JICA included Japanese researchers and volunteer professionals, and it analyzed and eventually promoted the use of organic fertilizers (bocashi) in substitution of chemical fertilizers among vegetable producers in the central region. Its had relevant results, leading to an increasing interest among university researchers and NGOs, and encouraging other vegetable producers (both small farmers and firms) to shift to organic production. 12. By early 2001, the estimated total area with organic crops in Costa Rica was about 7,000 hectares, about 1.6% of the countrys cultivated area (449,000 hectares) (see table 1). About half of this area had obtained the formal organic certification, while the rest was under transition and might obtainat least part of itits formal certification in the next one to three years. Banana and cacao were the most important certified crops, with close to 2,300 hectares (64% of the certified organic areas). Other important certified crops were coffee (860 hectares), blackberries (730 hectares), and vegetables (43 hectares).1 Organic vegetables and crops that had not yet been certified (basic grains, roots, and spices) were sold mainly for the domestic market, while the certified crops were produced for export.
Table 1. Estimated areas of organic crops in Costa Rica

Crops Banana 1/ Cacao 1/ Banana Coffee Orange Blackberry Vegetables

1

Organic areas (Ha) 2,265 679 860 550 730 43

Total area (Ha) 50,000 2,200 49,394 106,000 25,200 N/A 26,650

The areas of organic crops have been estimated by IICA (2001)

Beans 1,398 35,550 Cashew 182 N/A Sugarcane 128 46,000 Pineapple 33 9,900 Spices 2/ 30 N/A Mango 7 9,270 Other crops 3/ 197 53,809 TOTAL 7,102 448,973 Fuente: IICA (2001) and Agricultural Sector Planning Executive Secretariat 1/ It includes the total certified areas of APPTA in Talamanca, which comprise several production systems in which cacao and banana are grown under the rainforest and combined with other species. The main production systems are cacao + forest, banana + forest, and cacao + banana + forest, and cacao + banana + fruits + forest 2/ It includes vanila, cinnamon, cardamom, ginger, curcuma, peppermint lemon grass, and wild marjoram 3/ It includes mainly palm, guinea, cassava, and corn. In the total area column, it also includes cashew, blackberries, and spices Table 2. Costa Rican exports of organic products (in tons per year)
Crops Coffee 1/ Banana Blackberries Orange Spices Sugarcane Cacao Pineapple Medicinal plants Volume 11,020 20,400 964 6,136 1.4 630 300 264 N/A Market USA UE USA UE USA UE USA, UE USA USA, UE

1/ In quintals (one quintal = one hundred pounds) Source: Based on information from IICA (2001)

13. Organic banana and cacao were produced in the Talamanca county (Province of Limn), while organic vegetables concentrated in the Province of Alajuela and organic coffee was grown mainly in the Provinces of Alajuela and Guanacaste. All of the production of organic cacao and blackberries and most of the coffee were exported to Europe and the United States. Most of the banana production was sold processed as baby food to the US and Europe, while a small fraction was sold fresh in a supermarket chain in the capital city (San Jos). B. The organic production of cacao and banana in Talamanca

14. As it was mentioned above, producers of organic cacao and banana are located in the Talamanca county that is part of the Province of Limn in the southeastern part of Costa Rica. Talamanca is characterized by a tropical rainy climate (in average 4,000 mm of rainfall and a temperature of 25.6 degrees Celsius), and it includes lands between 40 and 1,500 meters over sea level in two main well-defined areas: the highlands and the valley. The highlands account for about 82% of the total area and 20% of the population, while the valley account for 18% of the area and 80% of the population. The highlands are characterized by higher rains (up to 6,400 mm) and slopes of between 13% and 60%, with one third of the area having slopes of over 57% and more than half with slopes over 29%. This area has substantial constraints for agriculture, with low fertility and high risk of erosion. In contrast, the valley has lower rains, slopes of less than 13%, and moderately fertile soils, though soils are usually characterized by the high risk of flood. This

area has been more intensively used for agriculture, with basic grains, cacao, guinea, and fruits being the most important crops. 15. Most of the producers of organic cacao and banana live in an indigenous reservation created in 1977 by the Indigenous Law No. 6162. At that time, the reservation had a total area of 66,419 hectares (664.2 km2) and a population of 6,500 inhabitants, which resulted in a population density of 10 persons per km2. In 1982, the government divided the area into two different reservations, the Indigenous Reservation of Talamanca Bribri and the Indigenous Reservation of Talamanca Cabcar, with areas of 43,690 hectares and 22,729 hectares respectively. 2 Both reservations altogether account for 23% of the area and 45% of the population of the Talamanca county. They are both part of La Amistad National Park and of the Talamanca-Caribe Biological Corridor, which also include the Gandoca Manzanillo Wildlife Refugee, the Cahuita National Park, and the Hitoy Cerere Biological Reservation. 16. Most of the organic producers are smallholder farmers who usually grow a mix of crops cultivated under the rainforest. Cacao used to be their most important cash crop between the 1940s and the late 1970s. In contrast to farmers in other regions, who grew cacao as a specialized crop, most farmers in Talamanca grew it as a part of a production system that included shade trees and rainforest. In the late 1970s, the attack of Moniliophtora roreri sp and low world market prices led farmers to abandon their crops. While many turned to slash and burn agriculture, others maintained the cacao plantations, usually combined with trees like avocado (Persea sp), citrus (Citrus sp), cedar (Cedrela odorata), and laurel (Cordia alliodora). This production system was important because it required relatively little work, its cost was low, and farmers still harvested and sold some cacao at the end of each year (between October and December). 17. Nowadays, the production system has numerous variations, including perennial crops like cacao and banana, fruits, and tubers, mixed with shade trees and rainforest. When banana is grown, the system includes an old and tall (about 7 meters) variety (Grand Michelle), which is cultivated under shade rainforest trees but in a somewhat purer form (i.e., less mixed with other crops) than cacao. Most farmers have about 1 hectare with cacao as a main crop, mixed with fruits, timber trees, and banana, and about 1 hectare with more or less pure banana. In addition, they usually cultivate an area of basic grains (rice, corn, and beans) in a slash and burn system. Some of themespecially in the lowlandsalso cultivate guinea as a single crop. 3 18. The cultivation of banana is based on manual activities, such as weeding, clearing the soil around the plant, and removing old leaves. In most cases, farmers remove numerous slips or shoots around the plant, selecting and leaving two strong and well distributed ones for the next cycle. Most farmers put tapes around the stems in order to keep track of the maturation process, and they place sticks under the stems to prevent the plant from collapsing. Some farmers apply a bacterial composition called EM, which is intended to general resistance of the plants. Few farmers place plastic bags around the bunches to protect the fruit. No other organic inputs are normally used, and most of the production tasks are done with family labour. 19. As it will be explained in more detail in section IV.F., APPTA was created in 1987 with the assistance of ANAI, a NGO of US origin that had been working since the mid-1980s with indigenous communities, promoting reforestation and the introduction of new species of trees in harmony with the preexisting forests. ANAI encouraged the creation of APPTA with the idea of

2 3

Borge and Castillo (1997) See Deugd (2001)

promoting the collective marketing of products and of attracting international donors that supported indigenous communities in developing countries. 20. After an initial emphasis in working on projects funded by foreign donors that involved the conservation of rainforests, APPTA made contacts through ANAI with US buyers of organic cacao. These contacts led to the certification of cacao by a US certification agency (OCIA) and made possible to export cacao to the US. Later on, APPTA negotiated successfully with firms in Costa Rica to sell organic banana. By 2000, APPTA was exporting annually 210 tons of organic cacao, out of which 160 tons (76%) were sent to the US and 50 tons (24%) to Europe, and it was selling 1,300 tons of organic banana to Gerber, which the firm used to make puree of banana that was then exported to the US and Europe. III. A. Effects of the organic model of production on small farmers and the environment in Talamanca Effects on farmers income and quality of life

21. Organic production had substantial positive effects on farmers incomes and quality of life. As it was mentioned earlier, small farmers in Talamanca had lost their only source of cash income in the late 1970s, when their cacao plantations were decimated by a disease that made them abandon the crop. Thus, most of these farmers in the late 1980s obtained their income from subsistence crops (rice, corn, and beans), timber from the rainforest, and fishing and hunting. The sales of organic cacao and banana allowed farmers to have a new and substantial source of cash income. In the last harvest (obtained in late 2000), APPTA had paid an average of close to USD 1 per kilogram of organic cacao to its members, while the price paid for the conventional cacao by middlemen in the region was in average USD 0.40 per kilogram. This high price difference was representative of what happened since APPTA started exporting organic cacao. Meanwhile, organic banana was being paid at USD 0.081 per kilogram, for an average production of 12 tons per farmer.4 Because cacao is harvested in two seasonal peaks, and banana is harvested every two or three weeks all year round, both crops have also contributed greatly to generating a more stable income throughout the year. 22. According to a study carried out by APPTA, the revenues from organic cacao and banana represented 31.7% of the total farmers income, with an additional 37.2% coming from products from the forests that are part of the organic cacao and banana production systems. If only cash incomes were considered, organic cacao and banana represented 61.8% of the income (see table 3).
Table 3. Sources of family income among APPTA producers from the community of Katsi, Talamanca Products Organic cacao Organic banana Forest products Guinea Corn Beans Rice Poultry TOTAL Source: APPTA
4

Cash income (in %) 36.5 25.3 0.0 36.0 0.0 0.0 0.0 2.2 100.0

Total income (in %) 11.3 20.4 37.2 15.4 2.3 1.3 4.8 7.2 100.0

The average used here corresponds to the data obtained from the sample of APPTA members used by Deugd (2001)

23. A study by Deugd (2001) evaluated the microeconomic performance of the production systems predominant among members of APPTA, finding that organic cacao and banana had made a significant contribution to their incomes. The production system that included cacao, banana, fruits, and trees generated a family income 60% higher than what the family members would have obtained for similar work in the area (USD 11.6/day compared to USD 7.27/day). The results were satisfactory even if the family labour costs, which were not paid, were incorporated into the costs. A separate evaluation of a production system that included banana mixed with other fruits and trees showed an even better performance, with an income for family labor of USD 14.9/day. The production system that included cacao as a main crop, mixed with rainforest and fruits generated USD 5.50/day. Although the economic performance of this last system was slightly negative if family labour costs were taken into account, it is important to consider that small farmers themselves often do not consider family labour as a cost. The net income without considering family labour costs was USD 264 per hectare per year, an important supplement to the family income, especially for households whose members do not have access to other job opportunities. 24. Finally, while there is no specific information on the effects of organic agriculture on health, the organic production systems that farmers applied in Talamanca prevented the expansion of crops which might have used chemical inputs very intensively. The use of chemical inputs is high not only in Talamanca, but in Costa Rica as a whole. Recent studies have shown that Costa Rica has one of the highest levels of pesticide consumption in the world (about 4 kg per person annually).5 More than 1,400 cases of intoxication caused by pesticides were reported in 1998, one third of them affecting minors. Several cases of cancer whose origin is usually related to the use of synthetic pesticides are also high among the Costa Rican population. 6 In the case of Talamanca, the lowlands are occupied by important areas of banana grown by transnational corporations, which use a technological package characterized by the intensive use of pesticides, fungicides, and fertilizers. In addition, there has been a significant increase in the area with guinea grown as single crop with conventional technologies. B. Effects on the natural environment

25. The effects of the production systems associated to organic production in Talamanca are very important becauseas it was mentioned earlierthe region has one of the richest biodiversities in Costa Rica and largest areas of forests in Central America. Several authors have estimated that Talamanca has more than 10,000 species of superior plants, which represent more than 90% of Costa Rican assets, more than 4,000 species of inferior plants, and close to 1,000 ferns of the 1,300 existing in Costa Rica.7 26. At the same time that the government has established reservations and protected areas, Talamanca has been substantially transformed by the expansion of agriculture. Guinea and cacao have been traditionally the main cash crops. After cacao was affected by Moniliasis, many farmersespecially in the lowlandsslashed down the cacao crops and started to grow guinea instead. Meanwhile, most farmers in the highlands abandoned the crop and turned into subsistence crops. By 1992, the forest occupied 33% of the land, guinea 18%, cacao 12%, basic grains 7%, banana 5%, and sugarcane 1%.8 The pressures for further expansion of areas under agriculture have been significant because of the high population density that characterizes Talamanca. A high
5 6

See PNAO (1999), pg. 9 See PNAO (1999), pg. 9 7 Tsochok et al (1992), cited by Borge and Castillo (1997) 8 Proyecto de Ecologa Cult ural de Talamanca (1994)

proportion of the popula tion is indigenous and shows some of the highest levels of poverty in the Costa Rica. In addition, Talamanca has concentrated an important proportion of the banana plantations grown in Costa Rica by transnational corporations. These banana crops are monoculture systems characterized by a very high use of pesticides and other chemical inputs, and they have represented one of the most important dangers to the conservation of the ecological diversity in Talamanca. Finally, government agenciesthe National Production Council (CNP) and the Ministry of Agricultures extension serviceshave recently been providing technical assistance and subsidies to investments in the cultivation of guinea in Talamanca, as a part of a government program to promote non-traditional crops. Guinea has usually been cultivated as a single crop in areas previously occupied by rainforest and involves a substantial use of chemical inputs. 27. Several authors who have studied the production systems dominant among APPTAs farmers have found that they had positive effects on the natural environment compared with other production systems. Due to the thick ground cover that characterizes the organic production systemswhich combine cacao and banana with fruits and tubers under the rainforestthe degree of erosion and leaching are considered minimal compared to the monoculture production systems. In addition, all product residues are used for home consumption and the residues of the cacao are reintegrated into the system (Deugd, 2001). 28. Some studies found that although the agro-forestry systems characteristics of farmers in Talamanca were not as ecologically diverse as the natural forests, they were much more diverse than fields with single crops. Guiracocha (2000) found that while the natural forests in Talamanca had 85 species of trees and palms, the shaded cacao fields had about 35 species, while the shaded banana fields had 14 species and the single banana or guinea had none. The number of animal species in the natural forests was 51, while it was 25 in shaded cacao and 9 in shaded banana. No substantial differences were found in the number of mammals in the three systems. Reistma et al (1999) also found no significant differences between the number of species of birds in the shaded cacao fields of Talamanca (131 species) and in the natural forest (130 species). A large number of these species (44 in the natural forest and 34 in shaded cacao) were protected under the CITES treaty for the trade of endangered species, or were endangered according to classifications of the World Conservation Union (IUCN).9 Analyzing the production systems of APPTAs farmers in Talamanca, Parrish et al (1999) concluded that the management of shaded cacao led to a lower incidence of pests and diseases and a higher natural reproduction as a direct result of the higher ecological diversity. 29. While most authors have found positive effects on the natural environment, it has also been argued that the crops that are sold in the marketespecially bananamay involve a net loss of nutrients when the high loss of biomass is not compensated by the incorporation of nutrients. Comparing nutrient output through crop harvest and nutrient input through material pruned from trees, Deugd (2001) concluded that the extraction of n itrogen, phosphorus and magnesium was more or less compensated. However, the potassium balance was negative, with a loss of about 47 kg per year. According to soil data from the research area (Umaa, 2001), the average level of potassium was considered just within the normal range, so the annual potassium losses may have a negative effect on the sustainability of the organic banana system in the long run. This would require the incorporation of some organic fertilizers to the management practices.

See Parish et al (1999), pp. 24-25

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IV. A.

The factors explaining the success of cacao and banana producers The influence of economic and agricultural policies

30. The government implemented economic and agricultural policies that even though were not targeted to organic production, they had some positive effects on it. These policies included structural reforms, especially in the areas of the financial sector and international and domestic trade policies. Financial sector reform implied the reduction of subsidies to credit, the liberalization of interest rates, and the authorization to intermediary financial institutions to set up passive and active interest rates. In 1995, a Law for the Modernization of Financial Institutions was approved, reducing the role of the Central Bank. The main impacts of these reforms in the agricultural sector were the contraction of the formal financial sector and credit to the agricultural sector, the sharp increase in interest rates, and the more difficult access to credit by small farmers. At the same time, a substantial number of new non-governmental financial institutions emerged. Reforms in trade policies included the incorporation of Costa Rica to the World Trade Organization, the approval of a Free Trade Agreement with Mexico, the liberalization of imports of machinery, equipment, and vehicles, and the implementation of fiscal incentives to exports. 31. These policies partly explain a favorable evolution of the Costa Rican economy during the 1990s. The average annual growth rate of the GDP reached 5.8% between 1991 and 1999, while the growth of the Agricultural Gross Product reached 4.1% annually in the same period. Total exports grew almost five times between 1991 and 1999 (from USD 1.36 billion to USD 6.58 billion), while agricultural exports almost d oubled (from USD 0.98 billion to USD 1.88 billion) in the same period. Non-traditional agricultural exports increased from 23.5% of the agricultural exports in 1991 to 39.8% in 1999. 32. The government also implemented trade and agricultural policy reforms during the 1990s that reduced dramatically the support to traditional crops (mainly corn and beans) and promoted their substitution for non-traditional crops. Until the late 1980s, the government intervened actively in the market of basic grains, as a part of a food policy that aimed at ensuring the domestic supply at reasonable prices. The National Production Council (Consejo Nacional de Produccin, CNP) purchased farmers basic grains, stored them in its own storage facilities, and imported them in case that the domestic production did not satisfy the domestic demand. In addition, the government used to set up high tariffs for imported grains, while setting prices to consumers and producers. 33. As a part of the trade reform policies, the government reduced dramatically its role in the domestic marketing of basic grains, lifting price controls and transferring storage facilities to farmer associations. Tariffs for basic grains were reduced and other trade barriers were lifted. In addition, it implemented programs to promote the adoption of non-traditional crops, providing subsidies to investments of farmer associations and to credit for farmers establishment of new plantations. The CNP changed its mission towards the promotion of non-traditional crops and agro-processing and became in charge of the administration of government subsidies to projects involving nontraditional crops. As a result of these policies, the area with basic grains fell substantially, and at the same time many small farmer assocaitions all over Costa Rica initiated a wide variety of nontraditional activities, including the cultivation of fruits and vegetables, organic crops, and agrotourism.

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B.

The role of policies towards organic agriculture

34. Costa Rica is one of the Latin American countries that has advanced most in developing institutions to deal with organic agriculture. The main policy instruments were created in the mid1990s, including a set of laws and a National Organic Agriculture Program. B.1. Laws and regulations

35. The main laws dealing with organic agriculture in Costa Rica are the Organic Environment Law No. 7554 approved in November 1995 and the Organic Agriculture Decree approved by the Ministry of Agriculture in 1997. In addition, several other la ws were approved to regulate various issues related to organic agriculture, such as the registration of producers of organic inputs, soil conservation, and the use of poultry manure.10 36. a) The Organic Environment Law. This umbrella law was important in terms of making definitions on some relevant issues: (i) It provided a definition of organic agriculture; (ii) It designated the Ministry of Agriculture and Livestock as the government agency in charge of designing and implementing policies concerning organic agriculture, setting up norms and procedures, controlling certification firms, and promoting research and dissemination of organic technologies.11 (iii) It established the obligation of organic products to be certified by a national or international certification firm registered before the Costa Rican State, and it made definitions on the minimum time-period (three years) of the transition from conventional to organic agriculture.12 (iv) It created the National Ecological Agriculture Commission (NEAC) as an organization assisting the Ministry of Agriculture and Livestock in matters related to organic agriculture. The NEAC comprises one representative of the Ministry of Agriculture and Livestock, one representative of the state universities with experience in the dissemination of organic technologies, three representatives of organizations of organic products, one representative of the firm organizations implementing programs or projects to promote organic agriculture, and one representative of the registered organic certification firms 13 . 37. b) Organic Agriculture Decree No. 25834. The Organic Agriculture Decree, approved in February 1997, created a detailed regulatory framework for the production, processing, and marketing of organic products. The most important measures, which were expanded in more detail in 2000though not changed in substancewere the following: (i) Detailed definitions on the nature of organic agricultural products, including among other the prohibition of using terms that could lead to consumers misunderstanding.
10

Decree No. 25538, approved in October 1996, regulates the use of poultry manure. Law No. 7779 of Soil Use, Management, and Conservation, approved in May 1998, contains provisions on the use a nd conservation of soils. 11 Law No. 7554, article 73 12 Law No. 7554, articles 74 and 75 13 Law No. 7554, article 76

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(ii) Designation of the Ministry of Agriculture, through the National Organic Agriculture Program, as the government organization in charge of supervising the application of regulations and of promoting organic agriculture. In addition, it was established that the Ministry of Agriculture would be responsible for establishing norms for the production, processing, packing, conservation, certification, inspection, and marketing of organic products.14 (iii) Creation of detailed norms for the production, processing, marketing, labeling, packing, and control of organic products, including among others the use of organicallygrown seeds, the application of a farm management plan to provide adequate protection to the crops, the implementation of a plan for water conservation in the case of irrigated crops, the application of soil conservation measures, and the definition of a minimum of a threeyear period of applying the norms of organic production in order for a product to be defined as organic. (iv) Obligation of registering before the Ministry of Agriculture and Livestock all the products named as organic products. The MAG would determine if the products meet the quality and technical specifications established in the la ws and regulations and would provide an organic stamp from the MAG. 15 (v) A list of authorized inputs, including fertilizers and products for the control of pests and diseases and for food processing. 38. c) Phytosanitary Protection Law No. 7664. This law, which was approved in May 1997, established a complete set of general regulations about phytosanitary controls, and included some specific provisions related to organic agriculture. It established that the Phytosanitary State Service of the Ministry of Agriculture would handle the registration of producers and processors of organic vegetables and inputs, supervising the compliance with the established procedures and issuing the certificates of organic production, or authorizing specialized certification persons or firms.16 In addition, it established that the government would promote organic agriculture by covering the costs of certification for up to two years to small farmers who demonstrate not having the capacity to pay for it. 39. d) Decree No. 26921. This decree was approved by the Ministry of Agriculture and Livestock in May 1998 as a regulation of the Phytosanitary Protection Law No. 7664 of one year earlier. It established that the Phytosanitary Services would supervise and control the compliance with norms and procedures of organic certification, register certification firms, inspectors, farms, and industries producing organic inputs. In addition, it provided detailed definitions on the requisites and procedures for obtaining the organic certification and the registration and operation of certification firms and inspectors. Among other provisions, it created an Organic Certification Committee with functions equivalent to those of a certification firm. B.2. The National Organic Agriculture Program

40. The National Organic Agriculture Program (NOAP) was initiated in 1994 within the Ministry of Agriculture and Livestock with the objective of supporting and promoting the development of organic agriculture in Costa Rica. The main instruments that the NOAP has used in doing its work
14 15

Decree No. 25834, articles 5 and 7 Article 37 16 Article 11

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have been the following: a) Promotion of organic agriculture among producers and consumers; b) Dissemination of information; c) Training; d) Formulation of studies and plans; e) Support to research activities; f) Promotion of incentives, credit, and other support policies; and g) Coordination with different public and private agencies.17 41. After a slow start, the NOAP has become more active since the late 1990s, coordinating various activities with government and private organizations, mainly the MAG, the CNP, the Ministry of Health, the Ministry of the Economy, Industry, and Energy, universities, producer associations, NGOs, and international organizations. The program made a diagnosis of the situation of organic agriculture in Costa Rica in 1999, and prepared the next year an Action Plan with the participation of representatives from government agencies, NGOs, and producer associations. The Action Plan proposed alliances between government and private agencies to generats information, carry out training, research, and extension, improve laws, regulations, and institutions dealing with organic agriculture, and promote the production, transformation, and marketing of organic products.18 B.3. The effects of the new laws and government organizations on organic agriculture

42. While Costa Rica has made significant progress in developing institutions dealing with organic agriculture, their effects in the development of organic crops have not been significant yet. As it was explained earlier, the very emergence of organic agriculture took place in the late 1980s in the absence of these institutions, which were created starting in the mid-1990s. 43. This fact does not mean that these new institutions are not necessary. Just the opposite, these institutions have become essential for gaining access to export markets because of new demands from importing countries that were absent in the past. In fact, the European Union recently established that countries exporting organic products to EU members will have to satisfy minimum standards in terms of having national laws and institutions that ensure that their national production and certification of organic products meet the EU standards. Therefore, the development of these institutions s i necessary to sell in export markets, in the same way that countries now need to develop institutions to ensure that standards on animal and plant health are met. Once a country meets these requirements, it obtains what is called third-country status, and is able to export organic products certified with its own certification firms. In addition, the presence of laws and institutions implies that exporters of organic products have a national framework that supports them in case of any problem in the foreign markets. Until mid-2001, only six countries had obtained the third-country status, being Argentina the only in Latin America. Costa Rica had completed its application and was hopeful to obtain the third-country status soon. 44. An additional alleged positive effect of developing national institutions is the decrease in the costs of certification faced by farmers. In fact, the new laws and regulations required that all certification firms registered and had offices in Costa Rica. Until the 1990s, similarly to other Latin American countries (with the only exception of Argentina), the certification firms working in Costa Rica were from European countries or the US. Thus, a farmer or group of farmers had to pay high costs because inspectors traveled from foreign countries, so they had to pay for expensive air tickets and for professional fees similar to the ones that these inspectors charged to their home producers. In contrast, nationally-based certification firms faced significantly lower travel expenses and could pay lower fees to inspectors based in Costa Rica. While in some countries (e.g. Guatemala)

17 18

See PNAO (1999) See PNAO (2000)

14

national certification firms started operations, they still had to make partnerships with European or US certification firms in order to be respected in the importing countries. 45. Unfortunately, the costs of certification in Costa Rica seemed not to have fallen, according to most of the producers and producer associations interviewed. The reasons may are likely to be the following: a) Buyers from importing countries still show their preferences for certifying the products that they purchase with certification firms from their own countries, with which they have worked in the past and they trusted. For this reason, the national certification firms in Costa Rica similarly to other countrieshad to make partnerships with foreign certification firms in order to satisfy the buyers of Costa Rican products. In this partnerships, the national certification firm usually carries out most of the work involved in the certification process, but two certifications are givenone from each of the two firms. This partnership has a cost for the national firm, which is totally transferred to the producer. b) There has been only one national certification firm (Eco-Logica) registered until early 2001, when an one (Aimcopop) registered and started operating. In addition, two other foreign certification firms registered and opened offices in San Jos, including OCIA (US), BCS Oko garantie (Germany), Ecocert (France-Germany), and Skal. Thus, there seems not to be enough competition yet in the market of certification firms. 46. In any case, it is important that the organic production of cacao and banana in Talamanca, as well as other crops that started to be grown since the late 1990s, emerged as a result of producers initiatives, without any public policy specifically targeted to support organic agriculture, and without specific institutions. Some organizationsmainly NGOs and universitieslater started to support organic farmers in production and marketing. C. The incorporation of organic agriculture in the programs of universities and training institutions

47. Universities and training institutions in Costa Rica have been increasingly incorporating organic agriculture in their programs since the early 1990s. Although there are a few programs focused specifically in sustainable agriculture, agricultural specialists in Costa Ricaespecially the younger ones who studied in the 1990susually have a concern and general knowledge about sustainable agriculture and technologies of organic production. 48. The most important institutions doing university and professional training in organic agriculture are EARTH, the University of Costa Rica, and the National Training Institute ( Instituto Nacional de Aprendizaje, INA). EARTH is a private international university that established its campus in the province of Limn in 1990. It carries out education and research in agricultural sciences, and it has a bachelors program in Agricultural Sciences and Natural Resources attended by Costa Rican and international students. The whole program has an approach to agriculture based on long-term sustainability, and organic agriculture is viewed in the context of sustainable models of agricultural production. 49. The University of Costa Rica created an Organic Agriculture Program in 1995, as a coordination and exchange entity for all the teaching and research initiatives at the university on organic agriculture. As a part of the program, a one-semester course on Organic Agriculture started to be provided as a part of the academic program for the Bachelors degree in Agricultural Sciences.

15

However, the academic program has not changed substantially, focusing on the conventional agriculture, and the course on Organic Agriculture is optional, so a relatively small (but growing) number of students has been taking it. 50. The National Learning Institute (INA) has also been implementing training activities on organic agriculture. INA is a government agency created in 1960 that provides training to workers in all economic sectors, and which is well-known in Costa Rica for having done an effective job. It is quite well funded, receiving the revenues obtained from a tax paid by firms with more than ten permanent workers and calculated as a 1.5% of the wages. INA organizes its activities in seven regional offices and twelve Technology Centers, which focus on different sectors and activities, such as agriculture, food processing, metal-mechanic, services and tourism. One of these technology centers (the Agriculture Technology Center) covers areas like soils and water, agricultural machinery, rural management, animal production, vegetable production, and organic agriculture. 51. INA started to provide training to small farmers in organic agriculture in 1994, and created in 1997 a Specialized Center in Organic Agriculture, as a part of its Agricultural Technology Center, to provide training and carry out research in organic agriculture. The Specialized Center in Organic Agriculture is located in Cartago and has an annual budget of 45 million colones (USD 135,861), including eight professionals that carry out both training and research activities. Training courses provided by the INA are usually short-term, having benefited around 1,200 small farmers between 1998 and 2000. D. D.1. The views and policies of agricultural research, extension, and credit agencies Agricultural research

52. Research on organic agriculture in Costa Rica started in the late 1980s with a project funded by the Japanese International Cooperation Agency (JICA) that was implemented jointly by the University of Costa Rica and the INA. This project studied the use of organic fertilizers (bocashi) as an input in the production of organic vegetables in Costa Rican Central region. The project included the participation of Japanese researchers and volunteer professionals, and it was based on the Fabio Baudrit Experimental Station located in Alajuela. As a result of the project activities, several farmers, firms, and researchers at the University of Costa Rica became interested in organic methods of production, and INA started to incorporate organic agriculture in its training courses. In addition, the project was instrumental in promoting the adoption of organic fertilizers by many farmers and firms producing vegetables in the Central region. 53. By the mid-1990s, several institutions had started research projects on subjects related to organic agriculture. Costa Rica has a largely fragmented agricultural research system, which comprises a large number of organizations, including the following: a) producer associations in several crops like coffee, sugar, and banana, such as the National Coffee Association (Asociacin Nacional del Caf , ANACAFE), which have created research institutes to support the improvement of the respective crops; b) several universities, such as the University of Costa Rica and the University of Heredia, which carry out research in their agricultural or technology faculties; and c) government organizations, such as the Ministry of Agriculture and the Ministry of Science and Technology. Universities have been the ones that have most advanced in organic research, with substantially less presence of organic research in producer associations and government institutions.

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54. Like in professional training, the most active university institutions have been EARTH and the University of Costa Rica. EARTH has been carrying out research in its own campus, mostly on organic pesticides and fertilizers. By 2001, the University of Costa Rica had about 20 researchers involved in research and educational activities in organic agriculture and who were part of its Organic Agriculture Program. There were fifteen research projects, most of them in the development of new pesticides and fertilizers, which are carried out at the campus in San Jos and at the Fabio Baudrit Research Station. One of the projects focused on the banana organic production systems in Talamanca, and it was being implemented in collaboration with APPTA. Its objective was to analyze alternative management practices in the organic production of banana to be sold fresh. The project had determined that the production systems that characterize the organic production of banana among members of APPTA in Talamanca may extract more nutrients than what it was incorporated to the soil, so they may not be sustainable in the long term. Thus, it was attempting to identify materials and practices to incorporate inputs to the soil, especially potassium. 55. Finally, the INA has also been implementing research activities on organic agriculture. Research concentrated on determining dosage of organic fertilizers, the development of new methods of processing plants for medical use, and the development of organic pesticides. 56. In spite of this progress, research in organic agriculture has related much more to the initiative of individual researchers than to more or less structured research programs that might have resulted from the definition of organic agriculture as a priority by the different institutions. There is still a great knowledge vacuum in several areas, including among others the definition of the best dosage for the various organic inputs in different soil and climate conditions of the country, the development of technologies to control several pests and diseases, the development of post-harvest technologies, and the incorporation of microeconomic analysis to the organic research. 57. In addition, there has been little coordination and exchange of information among the different institutions and professionals involved in research on organic technologies. This relates partly to the characteristics of the agricultural research system in Costa Rica, which have frequently worked with little coordination, often duplicating efforts and competing for resources. In the late 1980s, the government started to make efforts to create a coordination body, which eventually led to the creation of a National Commission of Agricultural Research and Technology Transfer (CONITTA) in 1989. 58. CONITTA initially included fifteen research organizationslater incorporating several othersand established mechanisms of coordination and collaboration. The commission was given a fourfold mandate: a) to advise government ministers on matters of agricultural research and technology transfer policy; b) to establish national programs in accordance with government policy; c) to manage, monitor, and evaluate the national programs; and d) to establish a national system of agricultural information. As one of its first tasks, CONITTA organized national commodity and production-factor programs (National Programs of Agricultural Research and Technology Transfer, PITTAs), which would plan and coordinate activities of all the organizations working on a specific commodity or production factor (e.g. corn and water). Each PITTA had a technical committee comprised by all the organizations interested in a specific commodity and key researchers in the field. 19 59. Each national program elected its own coordinator. CONITTA then requested each to prepare a diagnostic study, based on an analysis of the strengths, weaknesses, opportunities, and threats (the so-called SWOT analysis) of the new PITTA and its target commodity or production factor. The
19

See Hobbs et al (1998)

17

SWOT analysis included an evaluation of the resources available for research on that commodity in each of the different organizations involved, as well as production and market opportunities. In addition, a Foundation for the Promotion of Agricultural Research and Technology Transfer (FITTACORI) was established in 1996 with a mandate to promote, support, and finance projects related to research, training, and diffusion of agricultural technology in the country. It started with a seed capital of about USD 100,000, and could plan, discuss, and promote donor projects. Eighteen programs were initially established in products like avocado, banana, beans, beef cattle, citric fruits, corn, milk, potatoes, tomatoes, irrigation, and others. One of the programs focused on organic farming. 60. After a slow start, the PITTA on organic farming began making progress under the influence of the National Organic Agriculture Program (NOAP). The NOAP identified that a research program on organic agriculture needed to be formulated with all the institutions involved in agricultural research, and it made some definitions about the approach that research activities should have, including the need for being systemic, practical, and open to dimensions other than production, such as the markets of organic products, economic studies, and processing of organic products. In addition, it argued that farmers should be incorporated into the research in organic agriculture, and that research should take into account technologies already developed by farmers. D.2. Agricultural extension

61. Differently than other Central American countries, which have completely suspended the provision of public extension services to farmers, Costa Ricas Ministry of Agriculture (MAG) has been providing extension services through its regional and local offices located throughout the country. However, the extension services have suffered substantial budget cuts that reduced the number of extensionists and the availability of vehicles and equipment. 62. The MAG has worked more closely since the second half of the 1990s with the National Production Council (Consejo Nacional de Produccin, CNP). The CNP had been created in the 1960s as an organization in charge of the implementation of a food s ecurity policy based on ensuring the supply of basic grains to the countrys population at low prices. The agency intervened actively in the market of basic grains, buying crops from farmers, setting prices to producers and consumers, managing storage facilities, and importing grains in case that domestic production did not cover the demand of the population. In the early 1990s, the government implemented important policy reforms, which included among others the liberalization of the market of basic grains. As a result, the CNP went through a great reform in its mission. It stopped buying farmers crops and setting up price controls, and it transferred its storage facilities to farmer associations. In addition, it reformulated its mission towards promoting the diversification of agriculture, especially among small farmers, through the introduction of new crops, mainly for export. 63. In carrying out its new mission, the CNP worked jointly with the MAGs extension services. The CNP had funds available to support producers in farmer associations that were willing to adopt new crops. These funds made possible for the CNP to provide subsidized credit to small farmers to establish perennial crops, or to give grants to their associations to cover part of the costs of storage facilities, trucks, or other collective investments. The process involved an application by a farmer association and the formulation of a project jointly by the CNPs Project Formulation Unit and the MAGs Sectoral Projects Unit. Once the project was evaluated and approved, the CNP would work jointly with the MAGs extension services in providing technical assistance to its implementation.

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64. In the case of Talamanca, the CNP and the MAGs extension services have concentrated their efforts on promoting the diversification of agriculture through the cultivation of guinea for export. The CNP promoted the creation of the Guinea National Councilan organization representing the interests of guinea producers before the public and private sectorin Talamanca, as this county accounts for close to 80% of the national production of guinea. In addition, it formulated and implemented jointly with the MAGs extension services two projects supporting small farmer associations. One of them involved ASOPARAISO, an association of small farmers located in the lowlands, and the other one the Guinea National Council. The project with ASOPARAISO started in 1997 and aimed at promoting the introduction of 1,000 hectares of guinea for export. It included the construction of processing facilities, the purchase of a truck for the transportation of the product, and construction of the associations building for ASOPARAISO. The project total cost was 23 million of colones (USD 69,440), 40% of which was given as a grant and 60% as a 5-year loan with a grace period of one year and 19% of real interest rate. As a result, ASOPARAISO has been able to sign contracts with Dole and Del Monte, which in turn exported the guinea to Europe and the US. The project with the Guinea National Council, which started its implementation in 2001, consisted of long-term credit for farmers to introduce guinea, under the condition that they signed contracts with the transnational banana corporations. The objective was to increase the areas with guinea in 2,000 hectares. 65. The CNP has only recently started to pay some attention to organic production. In fact, it has formulated a project jointly with the MAG to support farmer associations (APPTA, UCANEHU, ACAPRO, and ABACO) in producing and marketing organic banana to be sold fresh in foreign markets. In addition, it approved the implementation of a feasibility study for a processing plant for the same farmer organizations which would produce puree of banana for export. These initiatives do not involve any substantial change in CNPs policies, or any support specifically directed to organic agriculture. The agency has just view organic crops in Talamanca as one more alternative of diversification with market opportunities. As put by one of CNPs technicians in the Bribri offices, CNP does not have any preference for organic or conventional agriculture. It supports any production alternative that involves the diversification of production among small farmers, has good market perspectives, and shows that is feasible at project appraisal. 66. With respect to the MAGs extension services, the offices in Talamanca, which are part of the Huetar Atlantic Region and are located in Cahuita, Margarita, and Sixaola, worked together with the CNP, concentrating all their human and material resources in those offices on the provision of extension services to farmers growing guinea. Although organic crops in Talamanca have become relevant since the early 1990s, the MAGs extension services never attended any farmer involved in organic production. In addition, the agencys extensionists did not have any training in organic agriculture, so they were not prepared to assist organic farmers with a service of acceptable quality. D.3. Agricultural credit

67. The introduction of new crops and technologies by small farmers frequently requires credit to pay for investments or for increased costs of inputs, so it was important to find out if the organic crops in Talamanca demanded credit, and in case that they did, how farmers obtained it. 68. Like in many other countries, Costa Rica created banks (the National Bank of Costa Rica) to provided long-term and short-term agricultural credit to farmers. Credit lines often had convinient conditions because they responded to larger goals of development policies. Financial reform in the 1990s liberalized interest rates and led to a sharp decrease in the availability of credit for small farmers from the formal banking system. At the same time, a great number of new financia l

19

institutions, including among others savings and credit cooperatives, foundations, and community banks, emerged to attend the rural population, frequently with the support from NGOs. These financial institutions became very important sources of credit f or small farmers and they have managed important portfolios of rural credit. As a result, the access to credit has not been such an important problem to small farmers in Costa Rica as compared to other Central American countries.20 These institutions were even more flexible than banks in the conditions of credit, including interest rates, collateral, and others. 69. Most organic producers in Talamanca did not have any access to credit, neither from formal banking institutions nor from other institutions. However, this did not represent a problem in general to the organic production of cacao and banana because it did not require any significant investment. As it was explained earlier, the organic production systems in Talamanca involved the just the certification of the production systems that were traditional in the region, which consisted in the abandoned cacao crops in combination with the rainforest, with some improvements in their management. Although the introduction of banana required some expenditures in purchasing plantines, these were so low that often could be covered with the farmers own savings. 70. While most production activities are done with family labor, some of the new activities such as cleaning fields and maintaining the cacao plants free of parts attacked by Moniliasis, were demanding in labor. Thus, farmers needed to have available some non-family labor. This problem affected especially women, who were sometimes alone and did not have resources available to hire wage labor. A traditional system used by indigenous farmers was the chichera, a system that consisted of paying for work with food and chicha, a traditional alcoholic beverage obtained by the fermentation of corn. However, the chichera system was still expensive because of the cost of food and chicha. Thus, short-term credit for small farmers, and especially for women, to pay for wage labor would be the most important needs of credit in the organic crops characteristic of Talamanca. 71. More important, the presence of credit was key for APPTA, so that the organization could purchase the production of its members. In fact, APPTA was making a big effort in organizing the production of organic crops and establishing a system to monitor that all its members complied with the organic technologies. If APPTA did not have available funds to pay farmers for their cacao and banana at the same time or a very short time after they send it to the association, other buyers with funds available could start buying and leave the association without any product. In order to avoid this problem, the US buyers of cacao provided APPTA with seed capital in order for the association to create a fund that has been used to pay farmers inmediately after they send their product, instead of waiting until the association receives its payments after exporting. The existence of these funds was key for APPTA maintaing their position in the market of cacao and banana. E. The role of Non-Governmental Organizations

72. Some NGOs played a very important role in the development of organic agriculture. The most important were the following: a) ANAI, a NGO of US origin that started working in Talamanca in the mid-1980s, promoting reinforestation activities among indigenous communities. ANAI was key in the creation of APPTA, encouraging farmers to create it in order to have an organization that could serve collective interests and attract foreign donors interested in the implementation of projects that involved the preservation of the rich environment of Talamanca. L ater on, it helped to the strengthening of
20

See Barrantes et al (1997)

20

APPTA in the first stages of the organization, and it was key in the establishment of contacts between APPTA and foreign buyers of organic cacao. b) Fundacin Gilomb, a NGO that similarly to ANAI has supported indigenous communities in Talamanca since the mid-1980s. Its emphasis has been on promoting organic agriculture, especially the cultivation of organic banana and sugarcane by small farmer organizations. Fundacin Guilomb has provided these farmer associations with training and technical assitance in negotiating contracts with buyers of organic products. c) CEDECO, which was created in 1984 and has worked on organic agriculture among small farmers. CEDECO provides training to small farmers and it has promoted the domestic marketing of organic products, having organized fairs since 1999 in San Jos, where small farmers sell their organic vegetables every one or two weeks. In addition, it has carried out useful studies about the situation and problems of organic agriculture in Costa Rica, it organized workshops to promote discussions with other institutions about the challenges faced by organic agriculture, and participated in discussions towards the development of a legal framework for organic agriculture. d) National Association of Organic Agriculture (Asociacin Nacional de Agricultura Orgnica, ANAO) is an association comprising more than 160 organic producers of all sizes. It was created in 1992 to promote organic agriculture, mainly through training and the promotion of certification as an instrument to gain access to markets. ANAO participated actively in the creation of the first Costa Rican organic certification firm, and it has been providing training in the certification process to professionals who wish to work as inspectors. In addition, it also participated actively in the development of the Costa Rican legislation on organic agriculture. F. The role of the Talamanca Small Farmers Association

73. APPTA played a key role in the growth of organic agriculture in Talamanca and in the access of small farmers to the organic markets. As it was mentioned earlier, APPTA was created in 1987 as a result of the support from ANAI, a NGO of US origin. ANAI had been working since the mid1980s with indigenous communities in Talamanca, promoting reforestation and the introduction of new species of trees in harmony with the preexisting forests. ANAI encouraged the creation of APPTA with the idea of attracting international donors that supported indigenous communities in developing countries and of promoting the collective marketing of products. The first collective tasks that APPTA undertook consisted of building and opening an input supply store, which is still operating nowadays. In addition, APPTA worked with environmental organizations and NGOs to promote rainforest conservation. Soon afterwards, it received support from the Inter-American Foundation (a US foundation that received funds from the US Congress to implement poverty alleviation projects in Latin America) to strengthen the association, including the construction of buildings and purchase of equipment. 74. APPTA is not the only farmer association producing organic crops in Talamanca, but it is the most important one in terms of number of farmers and volumes sold. Other associations include the Borden Association of Conservationist and Organic Agriculture ( Asociacin Borden de Agricultura Conservacionista y Orgnica, ABACO), the Association of Organic Peasant Producers ( Asociacin de Campesinos Productores Orgnicos, ACAPRO), and the UCANEHU Association. These associations include a lower number of farmers and only produce organic banana. 75. While APPTA was quite successful in attracting international funds for the conservation of the rainforest in a region with indigenous communities, several members argued by the late 1980s that

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it needed to change its focus towards more sustainable activities. These discussions marked the start of a more active role of the organization in searching for possible markets for their products, which eventually led to contacts with buyers of organic products. APPTA played a key role in the access to organic markets in three ways: 76. a) Identifying the possibility of certifying as organic the production systems dominant among small farmers in Talamanca. In fact, organic production in Talamanca did not involve a substantial change in production, in contrast to producers of other regions, such as fresh vegetable production and coffee plantations in the Central Region, where farmers shifted to organic production from previous conventional technologies. While these cases frequently involved a costly transition, in which yields fell significantly, cacao and banana were certified without substantial changes in the technologies of production. This was possible because when looking for market opportunities, APPTA made contact with the help of ANAI with buyers of cacao in the United States. These buyers were looking for regions in developing countries where cacao plantations had been abandoned for several years due to pests and diseases, and were promoting the idea of obtaining the organic certification of these plantations. Thus, APPTA was able to find a market for crops that had been abandoned and which were producing at such low yields that they were not even being harvested. 77. After its success in selling organic cacao, APPTA started to negotiate with firms in Costa Rica to sell organic banana. Many of APPTAs farmers had banana in addition to cacao. Most of them used the Gros Michell variety that had been used in commercial plantations grown by transnational corporations in Talamanca in the 1950s, and which had been abandoned because of the attack and susceptibility to the Panama disease caused by Fusarium cubensis. After several years of negotiations, APPTA was able to start selling organic banana to Trobanex and Gerber, industries of German origin with facilities in San Jos which used the product as a raw material for producing organic baby food (puree of banana) that they exported to the US and Europe. 78. b) Organizing the marketing of organic cacao and banana. Buyers from foreign countries often do not want to face the costs of dealing with a large number of individual farmers. Thus, they prefer to negotiate with firms or farmer associations that can deliver the required amounts of product at specific times of the year. Thus, the presence of APPTA was instrumental for the organic cacao buyers, as it was able to organize an efficient marketing system, purchasing the product from farmers and delivering to them in a timely manner. 79. c) Setting up and managing a monitoring system to ensure that all farmers use organic technologies, preventing that individual farmers use forbidden inputs and punishing those who do not comply. This has been the most important task carried out by APPTA. The international norms that regulate the certification of products from groups of small farmers establish the obligation that the group organizes what is called an internal control system. This is a key part of the certification, in addition to the annual inspection and other possible surprise inspections that are carried out by the certification firm. While these inspections are more like pictures describing the situation at a particular time, the monitoring system makes sure that things work well permanently. APPTA was able to organize an efficient system that is decentralized and based on members participation. In fact, instead of organizing a central team of technicians who p ermanently visit farmersas it is done in many farmer associations elsewhereAPPTA created local committees in the different villages. These local committees had been created in the mid-1980s to carry out reforestation activities with the support from foreign donors. When APPTA negotiated the first contract to sell organic cacao, the organization committed to organize a monitoring system as a part of the obligations in the certification processwhat is usually called by certification firms as internal control system. APPTA decided to use these committees as a basis for the new

22

monitoring system. Each of the 25 committees that have been created has a board, a President, and a Treasurer elected by the organic farmers who are members of APPTA in each village. The local committees receive complaints from any member about non-complying farmers and decide on the penalties to be imposed to them. The interviews that I carried out with members of APPTA in different communities showed that the local committees have worked very well because their roles are well-known by other members of the communities and their decisions are fully respected, even when they are tough. In addition, the system worked well because APPTA gave intensive training to the communities about the relevance of complying, and the danger for everybody losing the market if someone did not comply. V. A. Conclusions and preliminary lessons Conclusions

80. Organic production of cacao and banana had great positive impacts on the incomes and quality of life of small farmers in Talamanca. These producers had lost their main source of cash income in the late 1970s due to the attack of Moniliophtora roreri sp to their cacao plantations. As a result, by the early 1990s they were living on subsistence productsmainly corn, beans, rice, and poultry. Organic cacao and banana became important sources of cash income, and because banana was harvested about every two weeks all-year round and cacao twice a year, they generated a more uniform source of income throughout the year. 81. The organic production systems also had positive effects on the environment of Talamanca one of the most diverse ecosystems in Costa Rica and at the same time one of the most affected by the expansion of commercial agriculture on rainforest areas. Organic cacao and banana were produced in a production system that was friendly with the rainforest. They were not grown as single crops, but under the rainforest and in conjunction with other fruits and tubers. Thus, they contributed to the conservation of the rainforest and of wildlife. 82. The Talamanca Small Farmers Association (APPTA) played a key role in the development of organic production because of the following reasons: (i) It had the technical capacity to search for new opportunities for its members. APPTA was able to certify as organic the production systems that its members were already using, just selling as organic the products that were already produced, without any significant change in technology. After its initial success with organic cacao, APPTA was able to negotiate contracts for certifying and selling organic banana, and it negotiated a contract with a supermarket chain in San Jos to sell organic fruits, vegetables and tubers. In addition, it was making a feasibility study to produce organic banana to be sold fresh in the international market. (ii) As a farmer association that sold the members products collectively, APPTA obtained economies of scale in marketing, managing volumes that lowered transactions costs of negotiating and implementing contracts with foreign buyers of cacao, as well as with foreign firms located in Costa Rica that purchased banana for producing organic baby foods. (iii) It organized a monitoring system that effectively controlled that all members complied with the organic methods of productionone of the key requirements of the organic certification process to small farmer associations. APPTA provided intensive training to its members that was instrumental in convincing them that it was essential to comply with the organic technologies, or else everybody would suffer from negative effects and even loss of the market. The monitoring

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system was effective and inexpensive because it was based on local committees at the community level that controlled compliance, without the participation of external agents or professionals. 83. The organic production of cacao and banana in Talamanca did not require any significant onfarm investment, as they implied the improvement of the production systems predominant among small farmers. However, the requirements of labor were significant and often required contracting wage labor. This became a contraint for the incorporation of women to organic agricultureeven though the proportion of women at APPTA was significantly high. Women often faced more difficulties to access cash to pay for wage labor. The most important investments that organic farmers had to make were off-farm, and they included collective investments in packing and storage. 84. Government p olicies and institutions were in general supportive of organic agriculture, though they did not play a significant role in the emergence of organic cacao and banana in Talamanca and in the success of APPTA. Economic policies led to a favorable economic environment, characterized by high rates of growth and exports. Trade policies reduced dramatically the intervention of the state in the marketing of basic grains, and in addition to programs that promoted the cultivation of non-traditional crops, they encouraged small farmers to shift to these crops among them the organic ones. In addition, key government organizations working with the agricultural sectorthe CNP and the MAGs extension servicesshifted from its previous emphasis on basic grains to non-traditional crops, though they focused mainly on those grown with conventional technologies of production and paid little attention to organic crops. 85. In addition, Costa Rica made great progress during the 1990s in developing institutions to deal specifically with organic agriculture. A National Organic Agriculture Program was created in 1994, and specific laws and regulations concerning various aspects of organic agriculture were approved in the second half of the 1990s. These actions were very important in creating a good international image of Costa Rica and for meeting new requirements imposed by the EU to exporters of organic products. These requirements included the creation of appropriate laws and institutions to deal with organic agriculture that ensured that organic products were analyzed and certified according to EU standards. Such a move may make possible for Costa Rica to be accepted as a having thirdcountry statusa status only held by Argentina in the Latin American region and which will become essential for maintaining the access to European markets. 86. The development of laws and institutions did not influence the production of organic cacao and banana in Talamanca, which emerged several years earlier. However, they are important because they provide a support system for any exporter in case of any problem in the foreign markets. In addition, because the new norms require the presence of nationally-based certification agencies, certification costs are likely to fall in the futuresomething that has not happened yet mainly due to the small number of certification firms in the market. Also, the NOAP have become important in coordinating the actions of the various institutions involved in some way with organic agriculture. 87. Universities and training institutions for agricultural specialists have been incorporating organic agriculture in their programs since the mid-1990s, though there is still a great space for further progress. EARTH has a Bachelors program in Agricultural Sciences that is totally oriented to sustainable agriculture and considers explicitly the methods of organic agriculture. Meanwhile, the University of Costa Rica created an Organic Agriculture Program that includes all the research and teaching activities and faculty. It also established a one-semester course on Organic Agriculture as a part of the Bachelors program in Agricultural Sciences, though it is not compulsory. In addition, INA recently created a teaching and research station in Cartago to work exclusively with organic agriculture. As a result of all these efforts, most professionals in agriculture have a general idea of

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organic agriculture and knowledge about some technologies, though they usually need additional training when they have to work in projects that focus on organic agriculture and require some more sophisticated knowledge. 88. Several institutions have been carrying out research on organic agriculture since the early 1990s. The most important ones have been EARTH, the University of Costa Rica, and INA, which have all focused on the evaluation and development of organic inputs. The other numerous organizations that comprise the fragmented agricultural research system in Costa Rica have focused on conventional technologies, not carrying out any significant work. In any case, these research activities have not generated a significant pool of organic technologies, so farmers experimentation has been the most important source of new technologies. The National Program of Organic Agriculture has been making efforts to coordinate the research activities of different agencies through the PITTA on organic agriculturea body that includes the various actors involved and defines policies. B. Potential lessons

89. The case of organic production in Talamanca shows some potential lessons for IFAD with respect of how to support the adoption of organic crops in small farmers. The following are the most important lessons: 90. a) The products from some traditional production systems applied by small farmersfor example the production of some crops under the rainforest, preserving it and the wildlife that they containmay be certified as organic with little changes or no change at all in the production practices. These production systems are frequently seen in a negative way for the low productivity of the crops if compared with the single crop production system. However, they have great positive effects on the conservation of the environment, and the organic certification of the products obtained may help turning them into viable economic alternatives. The organic certification of the products should be complemented with further efforts to obtain for the small farmers involved the deserved payments for the environmental services involved in these production systems. 91. b) The organic production that involved an improved traditional production system have the advantage of not requiring significant on-farm investments. However, some form of credit should be available for contracting laborthe most important factor o f production that farmers need to purchase. This credit should be available especially for women, who are most exposed to face difficulties in carrying out the labor-intensive tasks usually involved in the organic production. 92. c) Programs and projects that promote the adoption of organic crops among small farmers should strongly support farmers organization, strengthening associations like APPTA. These organizations could be organized in terms of a set of tasks that are essential for the success of the initiative: (i) The collective marketing of production. Collective action plays a key role in obtaining economies of scale in marketing, making possible to obtain better prices, and reducing the transaction costs that buyers face when negotiating contracts. (ii) The organization of a monitoring system that is able to control effectively that all farmers members comply with the organic methods of production.

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(iii) While a monitoring system could involve a specialized technical department within the farmer associationas it is done by many farmer associations elsewherethe experience of APPTA shows that a better alternative is to put together a system based on the organization at the local level that can be effective and substantially cheaper. Organizing such a system requires a heavy training at early stages in order for members of the association to understand the basis of organic agriculture and the reasons why it is necessary to comply with the organic technologies. 93. d) An institutional framework that strongly supports the development of organic agriculture may not be essential to its emergence and development. However, it is important to support the development of these institutions when they are not present for many reasons: (i) Some new requirements from importing countries (mainly the EU) in terms of developing laws and institutions dealing with organic agriculture have emerged in recent years. These laws and institutions are intended to ensure the importing countries that organic products are produced and certified according to the EU standards. (ii) Appropriate laws and institutions dealing with organic agriculture provide protection to exporters of organic products in case that they encounter any problem in foreign markets. In addition, they are essential in international negotiations involving other governments that may be crucial to open the access to foreign markets. (iii) National laws and regulations may make possible to decrease the certification costs faced by farmers, as they lead to the establishment of nationally-based certification firms. This requires additional efforts to promote competition in the supply of certification services. (iv) The experience of Costa Rica shows that a government program dealing with organic agriculture may be inexpensive and effective at the same time. Such a program does not need a significant budget and numerous staff in order to work well. It requires clear ideas and great coordination with other government agencies and actors o f the private sector, so that they can coordinate efforts and avoid unnecessary duplication. 94. e) The incorporation of issues related to organic production by research and education programs of universities and training institutions is key in order to have a supply of professionals who have the adequate training and to generate a pool of technologies that solve the main problems faced by farmers. Thus, it is esential to support these research and training programs in case that they have not been developed yet, as the insufficient supply of professionals may become a great constraint in projects supporting organic agriculture. Improvements in research require institutions to coordinate efforts to move quickly in certain areas, including mainly the determination of dosage levels of various organic inputs in different regions within countries, the analysis of potential negative effects on health of some organic inputs (especially pesticides), economic analysis of organic technologies and production systems. 95. f) The needs of on-farm credit may not be significant in some organic production systems of the characteristics of Talamanca, which only required some management improvements to traditional production systems. However, the increased demand for labor whic h could not be covered by the family labor available may benefit greatly by the presence of short-term credit. This type of credit will be especially necessary for female producers, who are frequently alone and have less resources of their own to pay for wage labor. In addition, associations must secure access to funds to purchase the production from their members.

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96. g) Finally, the costs of certification are an important part of the costs of organic production, and they could be subsidized in the first few years of the adoption of the organic model of production.

References Barrantes, Franklin, Harry Clemens, Ricardo Quers y Martn Ugalde (1997). Estudios de la Oferta y la Demanda de Crdito Rural en Costa Rica: Estudios de Casos en Tres Regiones. Centro de Estudios para el Desarrollo Rural, Universidad Libre de Amsterdam. San Jos, Costa Rica. Borge, Carlos and Castillo, Roberto (1997). Cultura y Conservacin en la Talamanca Indgena. San Jos, Costa Rica: EUNED. Deugd, Michelle (2001). Feasibility of Production Systems in Talamanca, Costa Rica. Centro de Estudios para el Desarrollo Rural, Universidad Libre de Amsterdam. San Jos, Costa Rica. Giracocha, Ginina (2000). Conservacin de la Biodiversidad en los Sistemas Agroforestales Cacaoteros y Bananeros de Talamanca, Costa Rica. Tesis de Maestra, CATIE, Turrialba, Costa Rica. Hobbs, Hantington, Fernando Mojica Bentancour, Oscar Bonilla Bolaos, and Emilia Sols Quirs (1998). The Creation of a Coordinated National Agricultural Research System: The Case of Costa Rica. Benchmark study, briefing paper No. 37. ISNAR. Holdridge, LR., L. Poveda, and Q. Jimnez (1997). rboles de Costa Rica. Centro Cientfico Tropical. San Jos, Costa Rica. Vol. 1, 2a edicin.

IICA (2001). Aproximaci n a la Oferta de Productos Orgnicos en Centroamrica y desarrollo de sus Mercados. Caso de Costa Rica. San Jos, Costa Rica. Proyecto de Ecologa Cultural de Talamanca (1994). Encuesta Socioeconmica del Territorio Indgena de Talamanca. Departamento de Geografa de la Universidad de Costa Rica, Comisin para la Defensa de los Derechos Indgenas de Talamanca y Embajada Real de Dinamarca. San Jos, Costa Rica. PNAO (1999). Taller La Produccin Orgnica en Costa Rica. Lineamientos para una Estrategia Concertada. Memoria. San Jos, Costa Rica: Editorial del Norte. PNAO (2000). Plan de Accin 2000. San Jos, Costa Rica. Parrish, Jeffrey, Robert Reitsma, Russel Greenberg, Kevin Skerl, William McLarney, Robert Mack, and James Lynch (1999). El cacao como cultivo y herramienta de conservacin en Amrica Latina: Frente a las necesidades del agricultor y de la biodiversidad forestal. Documento de trabajo Amrica Verde No. 3b. The Natural Conservancy. Arlington, VA. Tsochok, Iriria; Asociacin CODEBRIWAK, Servicio de Parques Nacionales y Asociaciones de Desarrollo Indgenas de Talamanca (1992). Proyecto para el Desarrollo en la Reserva

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Indgena de Talamanca y la Conservacin de los Parques Nacionales Talamanca (Parque Atlntico) y Cahuitabb. San Jos, Costa Rica. Umaa G. (2001) Prcticas agrcolas en campo y despus de la cosecha y uso de extractos naturales para el mejoramiento de la calidad y disminucin del desarrollo de pudriciones poscosecha de banano orgnico. Universidad de Costa Rica. Centro de Investigaciones Agronmicas. Convenio Bilateral para el Desarrollo Sostenible Costa Rica- Holanda.

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List of persons interviewed a) Professionals and officials at government agencies, NGOs, and farmer associations

Ing. Giselle Alvarado Retana, Directora del Programa de Agricultura Orgnica, Universidad de Costa Rica Ing. Agr. Manuel Amador, Director Ejecutivo, Corporacin Educativa para el Desarrollo Costarricense (CEDECO) Dr. Helga Blanco, Investigadora Estacin Experimental Agrcola Fabio Bandrit, Universidad de Costa Rica Dr. Jorge Briceo, Programa de Agricultura Orgnica, Universidad de Costa Rica Mario Castejn, Especialista FAO-RUTA Pedro Cussianovich, Representante, Agencia de Cooperacin Tcnica en Costa Rica, IICA Geovanny Delgado Hidalgo, Director Ejecutivo, Eco-Lgica Ing. Melvin Daz, Consejo Nacional de Produccin, Oficina en Bribri Ing. Carmen Durn, Encargada de la Unidad Tecnolgica de Agricultura Orgnica, Instituto Nacional de Aprendizaje (INA) Felicia Echeverra, Gerente del Programa Nacional de Agricultura Orgnica Patricia Fernndez, UPANACIONAL Jorge Hernndez, Director Ejecutivo AUPA y Coordinador de Capacitacin, UPANACIONAL Ing. Claudio Gamboa Hernndez, Director, Estacin Experimental Agrcola Fabio Baudrit, Universidad de Costa Rica Ing. Esau Miranda, Seccin Agrcola, Productos Gerber de Centroamrica S.A. Carmen Eugenia Morales, Consultora RUTA Jorge Len, Especialista en Desarrollo Rural, FIDA-RUTA Maureen Lizandro, Directora Programa de Agricultura Orgnica, UPA Nacional Encarnacin Pereira, Encargado de compras y acopio de cacao, APPTA Dr. Carlos Pomareda, Presidente Ejecutivo, Servicios Internacionales para el Desarrollo Empresarial (SIDE) Walter Rodrguez, Gerente, Jugar del Valle S.A. Walter Rodrguez, Gerente, Asociacin de Pequeos Productores de Talamanca (APPTA) Ing. Augusto Rojas, Coordinador del Programa de Agricultura Orgnica, Universidad de Costa Rica Guillermo Saborio Ocampo, Director de Certificacin, Eco-Lgica Gabriela Soto, Presidente, Asociacin Nacional de Agricultura Orgnica (ANAO) e Investigadora en Produccin Orgnica, Proyecto Agroforestal CATIE/GTZ Ing. Agr. Dany Umaa, Encargado Desarrollo de la Produccin de Fruta Fresca, APPTA b) Farmers

Juanita Baltodano, Presidente Asociacin de Pequeos Productores de Talamanca (APPTA) Henry Gerrero, productor, Asociacin de Productores de Alfaro Ruiz Juan Jos Paniagua, productor, Asociacin de Productores de Alfaro Ruiz Otilia Aguirre Lpez, productora APPTA Anastasia Hernndez Hernndez, productora APPTA Eufemia Hernndez Hernndez, productora APPTA Darvian Pez, productor APPTA Ricardo Ros, productor APPTA Elas Snchez Snchez, productor APPTA

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