Does SA need regional copyrights?

Dinga Fatman, researcher at Trade & Industrial Policy Strategies, warns that Geographic Indication is not a quick fix to your bottom line.

Geographic Indication (GI) protection opens up some lucrative opportunities for South Africa’s farmers. If, for example, SA’s beef biltong receives GI protection, cattle farmers in Australia would no longer be allowed to describe any ‘dried beef’ product as ‘biltong’. They would have to find an alternative name, remarket the product and familiarise consumers with the new brand. In this way, the income from the ‘improved’ market access generated by GI protection could lead to new employment opportunities and further rural development.

GI refers to a product from a specific province, town or country, and implies that the product has specific qualities such as shelf life, texture, flavour or nutritional properties related to its geographical origin. Producers of certified-GIs receive legal protection that prevents producers located outside the product’s region of origin from using the same name.

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The success of the Basmati rice brand highlights the potential of GI for economic development. Grown exclusively in certain provinces in India, this long-grained rice with a unique taste and aroma fetches a higher price in international markets than other varieties.And research shows this outweighs the lower yields and higher production costs of Basmati – and increases a farm’s income.

In the 1990s, the EU adopted the Protected Designation of Origin (PDO) regulation aimed at protecting certain food products and beverages historically produced in specific regions in the EU. This spurred interest in the rest of the world. By 2005, according to the Geographical Indications and International Trade database, 813 GIs had been identified across developed and developing countries.

The bulk of these – about 600 – were from the EU, though. South Africa doesn’t have a GI register, but the Trade Marks Act 194 of 1993 and the Liquor Products Act 60 of 1989 do make provision for protecting goods based on their geographical origin. For example, ‘wine of origin’, the internationally recognised system used by wine producers, is controlled and enforced by SA’s Wines and Spirits Board.

But is this enough? Does South Africa need a regulatory GI framework similar to that of the EU? The answer to this question will involve a cost-benefit analysis and consultations with stakeholders such as legal experts, economists and producers, to analyse the likely social welfare outcome. Because GI can be a double-edged sword, as seen in the case of Karoo lamb, which is now a certified trademark, producers not located in the region of origin of a GI-certified item can no longer brand their product in a particular way and will lose market share.

At the same time, GI is not necessarily a quick fix. Like other coffee-producing countries, Honduras has established a GI for Café de Marcala with the aim of gaining recognition in the main export markets. Prior to this, coffee from Marcala was used mainly for blends, resulting in low prices and a poor reputation, even though it’s of the same quality as coffee from neighbouring countries. But a study three years later found that the GI certification had had no significant effect on price, and noted that creating a reputation for special quality takes time and financial investment.

In Europe, the case of raw-milk French cheeses from particular areas is also instructive. These PDO cheeses serve a specific niche. They are protected due to their geographical origin and traditional production processes. Theoretically, then, consumer buying patterns should be less influenced by price changes in PDOs. But this isn’t the case – there’s no evidence that PDOs benefit from greater consumer loyalty.

There’s also the ‘free rider’ problem, whereby farmers in a region producing GI-protected goods get the price premium whether they meet the standards or not. And GIs could become generic over time. Parma ham, which is historically from Parma in Italy, has been produced in the US by Kraft Foods since 1945 and has become a generic name outside the EU.

But despite all this, with time, patience and good marketing, GIs can bring greater profits.

Contact Dinga Fatman on 078 135 3098 or email [email protected]

The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly.