In a very competitive environment, where pricing for agricultural products has been in a downward trend, producers of agri-food and agricultural products are looking how to add value thus escaping the “commodity curse”. Products with a strong traditional origin or traditional appeal have offered producers to move into a more lucrative market. This is especially true for emerging markets, like for example Indonesia. Traditionally strong in spices and food products, the country’s richness is a good source for this value adding approach that producers looking for. As an example, nutmeg, a spice that sells for around 18,000 tons worldwide, originates from Indonesia (Kalimantan or the island of Siau in the north of Indonesia), which produces roughly 12,000 tons.
Geographical indications are a means for differentiation, leading the way, if marketed well, to differentiate these agri products and spices into more lucrative markets and pricing. However, the success of such a marketing strategy depends largely on whether there are measures in place that ensure localization of production. As a result, international rules for the regulation of origin-labeled products have become increasingly important in recent years.
Hence the growing interest of Indonesia, and Europe for that matter, in geographical indications (GIs). Institutionalizing the relationship between the product and the region and/or tradition through the use of legal instruments that prevent the misappropriation of benefits. Efforts are under way, stimulated by a EU-Indonesia support program, called TCF (Trade Cooperation Facility) to increase the number of GIs in Indonesia. This can only lead to economic benefit and the differentiation for agrifood products if the grant of GIs is accompanied by economic activities that strengthen the potential of GIs to improve rural livelihoods based on local resources, like quality initiatives and strong marketing of the specific product features of that local food, spice or product.
TCF – as well as another EU funded program in Indonesia, called Trade Support Programme (TSP) II – are currently aimed at stimulating Indonesia to improve not only the number of GIs but also to provide constant quality of the products covered by GI protection.
Much research remains to be done on the underlying economic impact of geographical indications, especially in a developing country context. See for such research, a WIPO 2009 publication, “The Economics of Intellectual Property”, pages 109-141 (with an interesting analysis of the geographical indication “Rooibos” (tea).
See also a TCF presentation on Geographical Indications by Severin de Wit for Bappenas, Indonesia’s State Ministry of National Development Planning.