Geographical indications (GIs) are a type of intellectual property right associated with place-based names. GIs are used to identify products that come from certain regions and have particular characteristics that indicate the product’s quality or reputation (e.g. “Champagne,” “Roquefort”). While GIs are protected by various legal principles and statutes—including sui generis GI laws, trademarks, certification marks, and collective marks—all GIs function to certify that a product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation due to its geographical origin. While the oldest and most developed systems of GI protection are found in Europe, other developing countries have recently begun implementing GI legislation domestically and seeking protection in international trade agreements, with the goals of promoting rural development and protecting local heritage and the natural environment.
Geographic indications, when managed to support the interests of local farmers, can bring sustainable economic development to developing countries. However, benefits to farmers are eroded when the focus shifts from regional uniqueness to corporate profits. Photo credit to krembo1.
As technological advances in communication and transportation continue to foster international economic transactions, the global distribution of agricultural products has increased competition among developing countries. In our globalized world of industrial agriculture, where large-scale producers from developed countries often benefit from government subsidies, agricultural producers in emerging economies are forced to achieve greater product differentiation to stand out from competitors and position themselves on more profitable market segments. As part of a comprehensive strategy to increase product differentiation and charge higher prices in the international market, GIs offer a promising avenue for enhancing the value of local products. Indeed, GI products tend to have a reputation for higher quality and therefore command a higher price than similar products that lack unique place-based characteristics.
However, maintaining the uniqueness of GI products often requires preserving both the traditional knowledge and technical practices of a region as well as its terroir, or physical and climatic conditions. Much of the developing world continues to rely on subsistence agriculture and traditional methods of crop cultivation and harvesting, which do not involve heavy chemical inputs or modern industrial agricultural techniques. Around the world, generations of people have developed local knowledge around specific modes of production within specific landscapes. As researchers for the UN Food and Agriculture Organization note, “[t]oday, this link among a product, a place and the inhabitants not only represents a heritage to be preserved, but also has a market value in its own right, as consumers become increasingly interested in quality linked to geographical origin, traditions and typicity.”
While no direct link between GI protection and rural development has been confirmed, many researchers suggest that properly managed GIs, where traditional sustainable agricultural practices are valued, can be used to promote biodiversity preservation and improve the welfare of rural producers in emerging countries. This Article compares the management of two of the most well known GIs from non-European countries—tequila from Mexico and coffee from Colombia—and examines how the existence of GIs has affected the sustainability of local economies and environments.
I. Mexican Tequila
Tequila has a rich history in Mexico and is often considered Mexico’s national drink. The liquor is made by fermenting and distilling the roasted heart of the agave tequilana (blue agave plant). The Mexican government established the GI for tequila in 1974, making it the oldest legally-recognized GI outside of Europe.
Agave is grown in heterogeneous regions in Mexico, with little focus on terroir. Photo credit to amantedar.
The Mexican government owns all Mexican GIs, including the GI for tequila. The Tequila Regulatory Council (CRT, its Spanish acronym) is the certification authority for tequila, and it manages the agave-tequila supply chain. A private, non-profit organization, the CRT is tasked with protecting the GI for tequila in Mexico and internationally, as well as verifying and certifying compliance with the norm for tequila production. While the CRT is comprised of representatives from all parts of the tequila supply chain—including agave producers, tequila distilleries, and bottlers and distributors—the tequila companies retain a monopoly over decision making. Agave producers, on the other hand, are disempowered because they lack representatives on the CRT Board of Directors as well as on the other management committees, which are staffed exclusively by tequila distillers and bottlers/distributors.
Over time, CRT management decisions have eroded the importance of the specific terroir of the agave-producing region, which has subsequently devalued the role of agave producers and traditional agricultural practices. For example, the CRT enlarged the size of the GI region to incorporate regions without a tradition of agave cultivation, and it authorized tequila bottlers to source their tequila from anywhere across the heterogeneous region. Furthermore, the norms governing the Tequila GI do not dictate appropriate agricultural practices, incorporate traditional knowledge, or include measures designed to protect the local environment.
Similarly, the GI covers tequila that is not made purely from blue agave. The GI protects two different types of tequila: “100 percent agave,” which is made from the blue agave plant alone, and tequila mixto, which is made from fifty-one percent blue agave alcohol and forty-nine percent alcohol from other sugars (generally sugar cane). The higher-quality, more expensive “100 percent agave” is required by law to be bottled within the GI region—an acknowledgement of the importance of the link to terroir. However, that the GI also protects tequila mixto illustrates the decreasing importance of the link between the product and the place that characterizes the Mexican Tequila GI. Tequila mixto, which comprises the majority of tequila exports, is often sold in bulk and bottled outside of Mexico by transnational liquor companies. Consumers of tequila mixto cannot appreciate the unique qualities of the agave plant grown in the GI region.
The demands of producing for an international market have also contributed to the erosion of the terroir link. As aforementioned, tequila companies today tend to source their agave from across an expansive and biologically heterogeneous GI region. Compared to other GIs around the world, the GI region authorized to produce tequila is unusually large—more than eleven million hectares. The GI region includes areas that have not historically produced agave, and that are not particularly well suited for cultivating agave due to their soil and climatic conditions. This includes the region of Tamaulipas (where agave cultivation did not begin until the 1960s), which was likely added in part to increase the size of the overall GI region and keep pace with international demand for tequila.
In addition, many tequila companies have consolidated in the face of international supply and demand challenges, further diminishing the role of local producers. Because blue agave takes six to ten years to mature after being planted, agave cultivation is typically characterized by “boom and bust” cycles. This long maturation cycle has historically complicated supply and demand patterns, and has resulted in a volatile tequila market. To ensure stability of agave supply after a massive shortage in 2000, much has been done to consolidate agave production into the hands of the four largest tequila companies. These multinational tequila companies have expanded their control within the supply chain by creating their own plantations and growing their own agave, making it more difficult for small, independent agave farmers to sell their agave to distillers.
At the same time, bottlers and distributors have gained more power within the supply chain. For example, policies now allow for the value-adding process to take place at the bottling and distribution level rather than at the production level. And when international liquor companies “brand” tequila, they emphasize bottlers’ names, as opposed to the region where the tequila was produced.
From a sustainability perspective, the dominant role of the tequila companies along with the weakening value of place-based production is problematic. Because of the eroding connection between tequila and the particular climate and production processes of agave-producing regions, tequila is following the modern trend of commercial agriculture, which decreases the likelihood that the GI can be used to promote sustainable farming practices that preserve the environment.
In particular, as control over agave production has shifted from the agave farmers to tequila companies, traditional agave cultivation techniques have been replaced by greater mechanization and chemically intensive production systems. The trend within the tequila industry is to value the advice of trained technical engineers, who recommend the use of chemical herbicides and pesticides over the expertise of experienced but uneducated agave farmers. Traditional methods of intercropping agave with corn or beans have essentially disappeared because large tequila companies prohibit intercropping under contract. The practice of leaving land fallow for several years between cultivation cycles, which used to be common practice, has been replaced by planting crops every season to maximize immediate production. These short fallow periods between cycles negatively affect soil fertility, ultimately requiring more chemical inputs and harming both the environment as well as the productivity of the land.
Moreover, due to the concentration of power in transnational tequila companies, independent agave farmers essentially have two options for selling their agave: establish advance purchase contracts with the distilleries or use an intermediary to sell their agave to the distilleries. While advance purchase contracts guarantee the agave farmer that his crop will be purchased in full, these contracts with distilleries come with strings attached. Specifically, farmers are obliged to produce the agave according to the tequila companies’ specifications—typically with heavy use of chemical pesticides fertilizers and without the traditional practices of intercropping or leaving land fallow to improve soil fertility. Agave farmers who do not establish advance purchase contracts are left on their own to cultivate agave, and they are often forced to sell their agave through intermediaries, known as “coyotes,” who buy agave at very low prices and then resell it to tequila companies. Neither of these processes values the traditional knowledge and artisanal cultivation practices of the agave farmers.
Finally, traditional agave producers have largely been excluded from the rapid growth and success of the tequila industry. According to a recent study, agave producer incomes vary widely, fluctuating with the boom and bust cycles. For farmers without advance purchase contracts, it is difficult to plan or assure a stable income. Even for farmers with advance purchase contracts, because there is no guaranteed minimum price (only the guarantee to buy what is produced) farmers cannot be assured of a stable income because they cannot predict what the price of agave will be six to ten years after it is planted. While there have been some efforts by agave farmers to organize and collectively demand higher prices for their produce, the large, diverse nature of the GI region and the superior bargaining position of the major international liquor companies has limited such efforts.
In conclusion, the Tequila GI has not been successful in promoting rural economic development or in maintaining sustainable agriculture practices due to the consolidation of power amongst a handful of international liquor companies. These bottlers and distributors do not value traditional agricultural practices that emphasize specific links to terroir. Rather, they prefer chemical-intensive industrial agriculture that can be associated with their “brand,” as opposed to a particular region of origin. Despite the growth of the tequila industry, the management of the GI has not allowed for socioeconomic benefits to trickle down to the local agave producers. On the contrary, sustainable agricultural practices that were once commonplace among agave producers are continually eroded as the large tequila companies have gained increasing control of the tequila supply chain.
II. Café de Colombia
Colombia is the world’s third largest exporter of coffee, producing approximately twelve percent of the world market share. The Café de Colombia GI was established in 2005 as part of a strategy to promote Colombian coffee abroad. It certifies that the coffee is grown in a limited production area of Colombia, from Arabica beans, at an altitude of 400 to 2500 meters above sea level. Out of the more than seven million hectares of Colombia’s coffee production areas, only 869,000 hectares are included in the GI area. This GI area is limited to the districts of the Central Coffee Belt that have traditionally produced the highest quality coffee beans.
The Federation of Coffee Growers benefits local cafeteros in Colombia. Photo credit to Arne Bevaart.
The Café de Colombia GI is owned and managed by the Federation of Coffee Growers (FNC, the Spanish acronym), a non-profit, non-political cooperative that has taken the lead in branding Colombian coffee on the international stage. The FNC was founded in 1927 by a group of Colombian coffee growers (cafeteros), and today it is owned and managed entirely by cafeteros. Currently representing more than 563,000 cafetero families, the FNC is one of the largest collectives of coffee growers in the world.
According to the FNC, GIs are an important instrument for promoting product differentiation, as they protect against unfair competition to Colombian coffee growers and marketers and provide a legally binding guarantee of origin for consumers. It is difficult, however, to measure the success of the Café de Colombia GI in promoting sustainability directly, since many of the FNC programs pre-dated the GI. Nevertheless, it is evident that the FNC has managed the Café de Colombia GI in a manner that increases consumer awareness of Colombian coffee abroad and enables the GI product to command a higher price based on its reputation for quality.
The FNC has established the National Coffee Fund, whereby each coffee producer contributes from two to six cents per pound of coffee exported, which is to fund a variety of initiatives that promote producer wellbeing. One of the most important functions of the National Coffee Fund has been to deliver farmers a price guarantee for purchase of their beans. For instance, the FNC guarantees cafeteros that they will buy the coffee that the farmers produce even when the global market price is down. In those cases, the FNC stores the surplus coffee in the warehouses of its quality control arm, Almacafé, until coffee prices rise again. This system provides a buffer against the volatility of the world coffee market and ensures cafeteros a return on their production. While farmers are not required to sell their coffee to the FNC—and often choose not to when world coffee prices exceed the minimum FNC offering price—the creation of a price floor ensures protection for coffee farmers when world coffee prices fall.
Because of the strength of the FNC and its ability to represent virtually all of the coffee growers in the GI region, higher prices for Colombian coffee on the world market lead to greater incomes for coffee producers. While producer incomes fluctuate with the market, the strength of the FNC in representing the interests of coffee growers nationally and internationally has given producers a valuable role in the coffee supply chain.
In addition, the FNC has used the National Coffee Fund to improve the lives of rural coffee farmers by investing in infrastructure, health, and education in rural coffee growing regions. The FNC has established more than 6000 schools, 180 hospitals, and 200 health clinics in coffee growing areas, and has improved the availability of clean drinking water, utilities, and basic sanitation. The FNC has also established sixty-eight “connectivity centers:” facilities that provide Internet access to rural producers and educate them in the use of information and communication technologies.
The FNC has also developed a number of programs to promote environmental sustainability in cafetero communities. Through the FNC’s Biodiversity and Coffee Growing project, in collaboration with the World Bank and the Global Environmental Fund, more than 27,000 hectares of coffee have been certified as sustainable and environmentally friendly, more than 450 hectares have been reserved as biodiversity conservation corridors, and 11,500 cafeteros have been trained in sustainability practices. A similar collaboration between FNC and the United Nations Development Program has certified another 10,000 hectares as biodiversity-friendly and provided training to more than 5000 producers in certification and verification processes, as well as biodiversity conservation and environmental services. These projects also aim to increase grower incomes by compensating cafeteros for environmental services and for the sale of certified products. Other projects have supported forest conservation, water conservation, soil erosion prevention through methods like cross-sloping, and climate change mitigation and adaptation measures, including research on climate-change-resistant crops.
In conclusion, the work of the FNC, including its promotion of the Café de Colombia GI, has fostered rural economic development and sustainable agriculture practices. Even though FNC funding and support—as opposed to GI creation—is responsible for many of the environmental and economic benefits in coffee growing regions, the FNC serves as an organizational model of GI management, given its ability to empower local producers and enable environmental and cultural preservation. The FNC has promoted these objectives with GIs, adding value to exports by demanding a strong link to terroir and recognizing the importance of traditional knowledge of the cafeteros.
III. Comparing GI Management Strategies: Tequila vs. Café de Colombia
While both tequila and Colombian coffee have been successful on the international market, Columbian coffee production has resulted in far greater economic and social benefits to rural producers. This Article suggests that these differences are attributable to GI management and marketing.
In the first place, the size of a GI region appears to have an indirect effect on local cultivation techniques. In the case of tequila, the Mexican government has expanded the size of the GI region to include areas without a tradition of agave cultivation. Enlarging the GI zone in this manner devalues traditional methods and practices of agave farmers, since farmers in these expanded areas do not possess this traditional knowledge, nor do they have the reputation for quality that was earned by traditional the agave producers. Furthermore, this expansion of the GI area undermines the importance of terroir, since the expanded production zone has a different climate, one that is not optimal for agave production. When the specific link to terroir is undervalued, the need to protect and maintain the agave growing region itself is perceived as less important. As the case of the Tequila GI demonstrates, underappreciation for the unique characteristics of the soil can result in a lack of protection for sustainable traditional practices, thereby giving way to industrial agricultural practices that favor increased mechanization and heavy chemical inputs.
The Café de Colombia GI has been more successful in benefiting local farmers than the Mexican Tequila GI. Photo credit to Neil Palmer (CIAT International Center for Tropical Agriculture).
Conversely, the Café de Colombia GI has limited the size of the coffee GI region to the product’s highest quality agricultural zones, thereby recognizing the value of traditional farmer knowledge and the significance of terroir. Indeed, the Tequila GI region is more than 11 million hectares, whereas the Café de Colombia GI is only 800,000 hectares. While limiting the GI zone excludes farmers outside of the region from the potential economic benefits of GIs, over-expanding the GI zone could lead to devaluation of the traditional cultivation techniques and the land itself, as has happened in the tequila case.
In addition, the specifics of GI management play a major role in determining sustainability outcomes of local GI regions. The Tequila GI has been managed in a way that devalues traditional and sustainable agave production techniques. While agave producers are represented by the CRT, they do not hold decision-making power, and are thus excluded from the management of the Tequila GI. On the other hand, the Café de Colombia GI, which is owned and managed by the coffee growers themselves, has been able to solidify the origin-quality link for their product. These coffee growers are more closely tied to the GI regions and therefore understand the importance of terroir and of environmentally sustainable practices.
Different GI policies have also affected quality controls on GI products. For example, certified Café de Colombia requires that 100 percent of the coffee beans come from the coffee producing GI region, whereas only fifty-one percent of tequila mixto agave is required to come from the GI region. These overly lax regulations for blue agave liquor undermine the role of the agave producer in supply chain management decisions since blue agave becomes part of a generic product, as opposed to a unique origin-based good.
A comparison between these two case studies suggests that the goals of rural economic development and sustainable agriculture are best accomplished when the GI is managed by local producers. These producers make management decisions in ways that value the links between terroir, environmental conservation, and traditional farmer knowledge, because they understand that their livelihood depends on maintaining the unique characteristics of their product which position it in more profitable market segments. While the tequila industry has been immensely successful at expanding into markets abroad, it is the multinational bottlers and distributors who have reaped the profits, not the local agave producers. This suggests that it is the collective nature of the FNC, with its core mission of improving the wellbeing of rural cafeteros, which makes the GI Café de Colombia a model for sustainability.
Contrasting the Tequila GI and the Café de Colombia GI provides a useful lesson for producer communities that seek to use GIs to promote sustainable economic development and environmental protection. Keeping the GI region small and limiting it to areas with a history of production and a reputation for quality encourages respect for the place-based uniqueness and the value of terroir. Similarly, by limiting the size of the GI region, the GI can be used to emphasize quality over quantity and focus on developing norms and standards that promote sustainable production. This Article therefore suggests that producer-managed GIs can be a successful tool to promote rural economic development and environmental sustainability.
* J.D. Candidate 2014, University of California, Berkeley, School of Law.
 Place-based names are protected under different names and systems in different countries. For purposes of this article, the term “geographical indication” (GI) is used generally to encompass the type of protection that would be consistent with the WTO TRIPS definition: “Geographical indications are...indications which identify a good as originating in the territory of a [certain country], or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin.” TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights, art. 22, Apr. 15, 1994, 33 I.L.M. 81 (1994) .
 A brief survey of recent international news suggests that GIs are continuing to be explored as a tool for economic development. See, e.g., GI Act Will Be Passed in JS Within Earliest Possible Time, The Financial Express, (Mar. 22, 2012)(discussing the new GI Act that Bangladesh is considering); Guimaras Mangos Exports Get Boost, Manila Bulletin, (Mar. 4, 2012)(discussing GI protection in the Philippines).
 See Monique Ngo Bagal and & Massimo Vittori, Organization for an International Geographical Indications Network (oriGIn), Practical Manual on Geographical Indications for ACP Countries 11 (2011) .
 See Ulrike Grote, Environmental Labeling, Protected Geographical Indications and the Interests of Developing Countries, 10 Estey Centre J. Int’l L. Trade Pol’y 94, 96 (2009).
 Emilie Vandecandelaere, et. al., UN Food and Agricultural Organization, Linking People, Places and Products: A guide for promoting quality linked to geographical origin and sustainable geographical indications xix. (2009) .
 See Laurence Bérard & Philippe Marchenay, Local products and geographical indications: taking account of local knowledge and biodiversity, 187 Int’l Soc. Sci. J. 109, 109 (2006).
 Vandecanelaere, et al., supra note 6, at xi.
 See Dwijen Rangnekar, The Socio-Economics of Geographical Indications: A Review of Empirical Evidence from Europe (UN Conference on Trade and Dev. – Int’l Centre for Trade and Sustainable Dev. ed., 2004) .
 Sarah Bowen & Ana Valenzuela Zapata, Geographical indications, terroir, and socioeconomic and ecological sustainability: The case of tequila, 25 J. Rural Stud. 108, 110 (2009).
 Id. Tequila has been registered internationally, as an appellation of origin, under the Lisbon Agreement since 1978. See Esperanza Rodríguez Cisneros, The Protection of Geographical Indications in Mexico, Symposium on the International Protection of Geographical Indication, The World Intellectual Property Organization (WIPO) (2001).
 Bowen & Zapata, supra note 10, at 110–111.
 Bowen & Zapata, supra note 10, at 110.
 See Sarah Bowen, Embedding Local Places in Global Spaces: Geographical Indications as a Territorial Development Strategy, 75 Rural Soc. 209, 225. (2010).
 Bowen & Zapata, supra note 10, at 110.
 Id. at 118.
 As displayed in Figure 1, “[t]he vast majority of the GI region is contiguous to the historic center of tequila production, the Amatitán-Tequila Valley. However, the region also includes several municipalities in the state of Tamaulipas, located on the east coast of Mexico. When the GI for tequila was originally established in December 1974, it did not include the state of Tamaulipas; however, plantations of agave were established in Tamaulipas in the late 1960s, and in 1977, the GI was modified to include several municipalities in Tamaulipas. It is widely agreed that the decision to include Tamaulipas was largely political.” Bowen & Zapata, supra note 10, at 228.
 Bowen & Zapata, supra note 10, at 110.
 Id. at 111, 112.
 Id. at 111.
 See id. at 112.
 See Bowen, supra note 15, at 224.
 Bowen & Zapata, supra note 21, at 118.
 Id. at 115.
 See id. at 115.
 Id. at 114.
 See id.
 See id.
 See id. at 225.
 See Nadja El Benni & Sophie Reviron, Swiss National Centre for Competence in Research, Geographical Indications: Review of Seven Case-Studies World Wide (NCCR Trade Working Paper No. 2009/15, 2009).
 Id. at 28.
 Gabriel Silva, Colombian Coffee Growers Federation, Geographical Indications: The Case of Colombian Coffee (2008).
 Lennart Schüβler, Protecting ‘Single-Origin Coffee’ within the Global Coffee Market: The Role of Geographical Indications and Trademarks, 10 Estey Centre J. Int’l L. Trade Pol’y 149, 170 (2009).
 El Benni & Reviron, supra note 38, at 34.
 Id. at 48.
 El Benni & Reviron, supra note 38, at 37.
 El Benni & Reviron, supra note 38, at 37.
 Sustainability that Matters: 1927–2010, supra note 49, at 123.
 Id. at 123–134.
 See discussion supra Part I.
 See id.
 See discussion supra Part II.
Copyright 2012 Jennifer Barnette. All rights reserved.
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