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Opportunities for the smallholder sandalwood industry in ... - ACIAR

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markets <strong>in</strong>clude grow<strong>in</strong>g consumer preference <strong>for</strong><br />

natural <strong>in</strong>gredients; manufacturer preference <strong>for</strong><br />

susta<strong>in</strong>able, ethically produced <strong>in</strong>gredients; and a<br />

grow<strong>in</strong>g global beauty <strong><strong>in</strong>dustry</strong> (Adviser Edge 2008).<br />

Certification schemes and<br />

quality standards<br />

Certification schemes<br />

Certification schemes are <strong>for</strong>mal, auditable management<br />

systems, commonly used <strong>for</strong> a myriad key<br />

operational purposes, such as susta<strong>in</strong>able production<br />

practices, quality assurance, environmental management,<br />

organics, and workplace health and safety.<br />

Private or public sector organisations that advertise <strong>the</strong>ir<br />

compliance with a particular certification scheme will<br />

normally have been audited by a qualified <strong>in</strong>dependent<br />

party as act<strong>in</strong>g <strong>in</strong> accordance with <strong>the</strong> stated program.<br />

These schemes are becom<strong>in</strong>g <strong>in</strong>creas<strong>in</strong>gly important<br />

with<strong>in</strong> <strong>the</strong> <strong>for</strong>estry and essential oil <strong>in</strong>dustries<br />

and impact on both small-scale and large corporate<br />

bus<strong>in</strong>esses. Implement<strong>in</strong>g certification schemes<br />

can ‘prove’ that a bus<strong>in</strong>ess complies with def<strong>in</strong>ed<br />

management systems—<strong>for</strong> example, susta<strong>in</strong>able production<br />

and harvest<strong>in</strong>g practices—or illustrate equitable<br />

arrangements with Indigenous communities.<br />

Certification schemes will often provide transparency<br />

and allow traceability of product throughout <strong>the</strong> supply<br />

cha<strong>in</strong>, and hence enhance buyer confidence <strong>in</strong> a<br />

supplier’s capability.<br />

Although used primarily <strong>for</strong> compliance purposes,<br />

certification schemes can be used commercially as<br />

market<strong>in</strong>g tools to illustrate a company’s or supply<br />

cha<strong>in</strong>’s ‘positive po<strong>in</strong>ts of difference’ relative to <strong>the</strong><br />

competition. Certification schemes can also be used<br />

to promote companies as ethical, environmentally<br />

responsible and ‘good corporate citizens’, and hence<br />

attract consumer and <strong>in</strong>vestor support.<br />

Certification schemes can be developed at <strong>the</strong><br />

national or community level. AusAID reports that<br />

non-government organisations and o<strong>the</strong>r agencies are<br />

currently <strong>in</strong>itiat<strong>in</strong>g programs at <strong>the</strong> community level <strong>in</strong><br />

a number of Pacific countries. Group certification can<br />

be used to certify a number of small enterprises that<br />

<strong>in</strong>dependently would not have <strong>the</strong> expertise or f<strong>in</strong>ance<br />

to meet <strong>the</strong> costs of certification (AusAID 2006).<br />

Certification schemes, particularly perta<strong>in</strong><strong>in</strong>g<br />

to susta<strong>in</strong>able production, environmental management<br />

and ethical bus<strong>in</strong>ess practices, are particularly<br />

valued <strong>in</strong> <strong>the</strong> European Union and have become a<br />

key element of supplier–buyer relationships among<br />

lead<strong>in</strong>g European perfume manufacturers.<br />

This trend is of particular relevance to <strong>the</strong> future<br />

development of <strong>the</strong> Vanuatu <strong>sandalwood</strong> <strong><strong>in</strong>dustry</strong>. An<br />

<strong>in</strong>terest<strong>in</strong>g case study <strong>in</strong> <strong>the</strong> <strong>sandalwood</strong> <strong><strong>in</strong>dustry</strong> is<br />

<strong>the</strong> Songman Circle of Wisdom Certification Protocol.<br />

This case study can provide a lead to <strong>the</strong> Vanuatu<br />

<strong>sandalwood</strong> <strong><strong>in</strong>dustry</strong> <strong>in</strong> its strategic and export market<br />

plann<strong>in</strong>g <strong>for</strong> a number of reasons:<br />

• It is an <strong>in</strong>ternational, ‘whole of supply cha<strong>in</strong>’<br />

bus<strong>in</strong>ess arrangement <strong>in</strong>volv<strong>in</strong>g Indigenous producers,<br />

processors, exporters and lead<strong>in</strong>g global<br />

perfumeries.<br />

• In essence, a premium is be<strong>in</strong>g paid <strong>for</strong> product<br />

sourced from an Indigenous community over and<br />

above <strong>the</strong> standard commodity price.<br />

• The focus of <strong>the</strong> scheme is on susta<strong>in</strong>able production,<br />

quality <strong>in</strong>tegrity, traceability from harvest<br />

to f<strong>in</strong>al po<strong>in</strong>t of sale, and production of natural,<br />

unique end products.<br />

• Involvement <strong>in</strong> <strong>the</strong> program is heavily and<br />

proudly promoted by <strong>the</strong> Australian processor,<br />

Mt Romance, and most importantly by Aveda and<br />

Givaudan. All of <strong>the</strong>se companies see this protocol<br />

as a key element of <strong>the</strong>ir bus<strong>in</strong>ess model and<br />

preferred sourc<strong>in</strong>g policy.<br />

• There is due recognition of <strong>the</strong> key role of <strong>the</strong><br />

Government of Western Australia <strong>in</strong> provid<strong>in</strong>g an<br />

appropriate regulatory framework to protect <strong>the</strong><br />

resource.<br />

• In <strong>the</strong> absence of available statistics, <strong>the</strong> volumes<br />

of product be<strong>in</strong>g marketed via this protocol are<br />

likely to be relatively small <strong>in</strong> global terms given<br />

<strong>the</strong> size of <strong>the</strong> available resource. Despite this,<br />

<strong>the</strong> program is effectively resourced and heavily<br />

promoted <strong>in</strong> <strong>the</strong> <strong>in</strong>ternational marketplace, at little<br />

or no cost to <strong>the</strong> producers <strong>in</strong>volved.<br />

Product standards<br />

Product standards are used to ‘grade’ and accurately<br />

describe a product, and are becom<strong>in</strong>g <strong>in</strong>creas<strong>in</strong>gly<br />

important with<strong>in</strong> <strong>the</strong> commercial <strong>for</strong>estry and<br />

essential oil <strong>in</strong>dustries. If a product has complied<br />

with a specified standard, it is deemed to meet<br />

specified m<strong>in</strong>imum quality criteria. This can greatly<br />

enhance buyer confidence and facilitate export trade.<br />

To be valued and effective, product standards must<br />

be measurable, achievable and verifiable. In <strong>the</strong> case<br />

of essential oils, such as <strong>sandalwood</strong>, verification is<br />

often carried out by accredited laboratories to enhance<br />

<strong>the</strong> <strong>in</strong>dependence and technical credibility of <strong>the</strong><br />

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