Certification of food products is a response to increased demands for credible product information. Today, certification is f.eg. used to signal that a product is produced according to particular hygiene standards. The report analyzes if and how voluntary certification of food products affects competition and international trade. A general description of the different types of certification that exist is also provided.
The conclusion is that voluntary certification has both positive and negative competition effects. Which effects that dominate depends on the design of the certification standard, the market’s initial competition situation and how well information about the certification is transferred to buyers. If the positive effects shall dominate then 1) all producers must have the same certification possibilities, 2) all levels of the supply chain must operate in well-functioning competition, and 3) buyers must know about and understand the meaning of the certification.
Empiric studies indicate that these three conditions are not always met, which means that voluntary certification may have negative effects on competition. Voluntary certification also tends to disadvantage the market’s weaker actors, the small producers, since they have to bear relatively higher certification costs than large producers.