Rural development effects

Geographical indications are generally applied to traditional products, produced by rural, marginal or indigenous communities over generations, that have gained a reputation on the local, national or international markets due to their specific unique qualities.

Producers can add value to their products through Geographical Indications by:

• communicating to consumers the product's characteristics, which derive from the climate, soil and other natural conditions in its particular geographical area;
• promoting the conservation of local traditional production processes; and
• protecting and adding value to the cultural identity of local communities.

The recognition and protection on the markets of the names of these products allows the community of producers to invest in maintaining the specific qualities of the product on which the reputation is built. Most importantly, as the reputation spreads beyond borders and demand grows, investment may be directed to the sustainablity of the environment where these products originate and are produced. In the International Trade Centre's "Guide to Geographical Indications: Linking Products and their Origins", authors Daniele Giovannucci, Professor Tim Josling, William Kerr, Bernard O'Connor and May T. Yeung clearly assert that geographical indications are by no means a panacea for the difficulties of rural development. They can however offer a comprehensive framework for rural development, since they can positively encompass issues of economic competitiveness, stakeholder equity, environmental stewardship, and socio-cultural value. The application of circular economy will ensure socio-economic returns in the long-run to avoid growth at an environmental cost. This approach for GI development may also allow for investment together with promoting the reputation of the product along the lines of sustainability when and where possible.

Rural development impacts from geographical indications, referring to environmental protection, economic development and social well-being, can be:

• the strengthening of sustainable local food production and supply (except for non-agricultural GIs such as handicrafts);
• a structuring of the supply chain around a common product reputation linked to origin;
• greater bargaining power to raw material producers for better distribution so as for them to receive a higher retail price benefit percentage;
• capacity of producers to invest economic gains into higher quality to access niche markets, improving circular economy means throughout the value chain, protection against infringements such as free-riding from illegitimate producers, etc.;
• economic resilience in terms of increased and stabilised prices for the GI product to avoid the commodity trap through de-commodisation, or to prevent/minimise external shocks affecting the premium price percentage gains (usually varying from 20-25%);
• added value throughout the supply chain;
• spill-over effects such as new business and even other GI registrations;
• preservation of the natural resources on which the product is based and therefore protect the environment;
• preservation of traditions and traditional knowledge;
• identity based prestige;
• linkages to tourism.

None of these impacts are guaranteed and they depend on numerous factors, including the process of developing the geographical indications, the type and effects of the association of stakeholders, the rules for using the GI (or Code of Practice), the inclusiveness and quality of the collective dimension decision making of the GI producers association and quality of the marketing efforts undertaken.citation needed