It said the way certification schemes for biofuels are structured, makes it difficult for smallholder producers and many developing countries to participate in export markets.
The report entitled: “Biofuels and the Sustainable Challenge,” was made available to the Ghana News Agency on Tuesday.
It noted that current certification schemes, which are voluntary and largely privately-operated, might exclude small-scale farmers because they are dominantly designed for large-scale agro-industry.
The report said many certification schemes are data- or information-intensive and require costs and capacities that are often out of reach for most smallholders.
“As structured, these schemes would tend to favour big players and provide incentives for scaling up production to absorb certification costs,” the report stated.
It said certification could however, have some positive impacts on business, including “improved efficiency within a supply chain, decreased risk, higher transparency and increased awareness about problems in the supply chain.”
The report said at the same time, however, the schemes, to the extent that they are established to control imports, could hinder trade and reduce market access – especially for developing countries with comparative advantages in business production. It said the industry was a real opportunity for development and for overcoming rural poverty and high unemployment.
“Many developing countries express concern that certification schemes can become indirect trade barriers when not managed properly,” the report said.
It noted that while it is easy for producers in industrialized countries to comply with the demand for education opportunities to be provided for employed farmers, it could be much more difficult for small-scale producers in developing countries.
It said similarly, big companies routinely keep financial records needed for audits while smallholders tend to keep information in their heads on data such as yields, fertilizers and other inputs needed for Greenhouse Gas Emissions estimations.
The FAO report said to increase certification uptake, governments and international organizations in consumer and producer countries should establish complementary mechanisms to create an enabling environment.
It said such mechanisms could include national legislation, public procurement policies, tax incentives and tax relief and start-up grants.
It said financial institutions also have an important role to play to support the schemes.
It said one way to reduce costs for smallholders is to promote local inspection bodies; these involve lower costs for the producers.
The report said there are positive, negative and mixed impacts of biofuel certification; environmental impacts for certification could bring positive benefits if they facilitate forest planning and inventory, silviculture, biodiversity protection, monitoring and compliance.
The report said economic impacts could also be positive if certification could generate price premiums for suppliers, ensure decent wages for workers and market access.
It said on the downside there are negative effects on smallholders who appear to be left out of the certification schemes.