UNIT 1 DEVELOPMENT OF INTERNAL

CONTROL SYSTEM (ICS)

Structure
1.0 Objectives
1.1 Background
1.2 Concept of Group Certification
1.2.1 Constitution of Grower Group as per NPOP
1.2.2 Importance of Internal Quality System (IQS)
1.3 Internal Control System (ICS)
1 1 Definition and Concept
1.3.2 Basic Steps for Development of ICS
1.4 Implementation of ICS
1.4.1 Preparation of ICS Manual
1.4.2 Organization and Work Distribution among the ICS Personnel
1 1.4.3 Preparation of Internal Standard (IS)
1.4.4 Conflict of Interests
I
1.4.5 Scope of Certification and Trade
1.5 Procedures for Implementation of Internal Control System (ICS)

I 1.5.1
1.5.2
Registration of New Members
Provision of Documents to the Members of the Grower Group
I
I 1.5.3 Operating Document
1.5.4 Critical Control Points for Risk Assessment by the External Certification
Body
1.5.5 Internal Inspection
1.5.6 External inspection
1.5.7 Yield Estimates
1.5.8 Internal Approval
1.5.9 Non-compliance and Sanctions
1.5.10 Training of IQS/ICS Personnel and Farmers
1.5.11 Additional Procedures
1.6 Role of Service Provider in ICS
1.7 Let Us Sum Up
1.8 Key Words
1.9 Further References
1.10 Model Answers

1.0 OBJECTIVES
This Unit aims to familiarize you with Development of Internal Control System
(ICS). After studying this Unit, you will be in a position to learn:
the importance of ICS in Group Certification;
how to develop ICS among Grower Groups;
ICS implementation Procedure; and
ICS documents.
J>ocumentationand
Documentation control 1 BACKGROUND
In India, majority of the farmers have only small and medium sized land
holdings (1-2 hectares). Some of these farmers are located in remote areas,
making market access little difficult for their produces. Their meager finances
stand in the way of getting a certification for better prices in the market.
Group Certification will help them to overcome the economical difficulties
and ensure compliance to NPOP (National Programme for Organic Production)
standards.

1.2 CONCEPT OF GROUP CERTIFICATION

The criteria for certification have been laid down in Chapter 5 of NPOP. The
norms for certification of Grower Groups are as below:
The producers sh6uld be located in close geographical proximity to one
another.
The crops and farming practices of the groups should be uniform.
The group should be managed under one central administration.
Grower Groups must establish and implement their own Internal Control
System (ICS), supervision and production practices documentation.
A programme of knowledge transfer should be in place to ensure that all
members understand the applicable organic standards and how to apply
those to their specific operations.
Should have a centralized processing and marketing facilitylsystem.
The group will have an organizational set up and legal status, backed by
an organizational chart.

1.2.1 Constitution of Grower Group as per NPOP

The advantage of organizing into Grower Groups can be availed by producer
groups, farmers' cooperatives, contract production members and small scale
processing units. According to the NPOP guideline (Section 5), farmers with
land holding of four hectares and above can be eligible to be treated as a
Group, but will have to be inspected annually by the Inspection and Certification
Agency. The total area of such farms should be less than 50% of the total area
of the group. Processors and exporters can also be a part of the same group
but they have to be inspected annually by the Inspection and Certification
Agency.

The ICS implementation responsibilities are delegated to the individual

members/committees in the group. They will be carrying out specific activities.

1.2.2 Importance of.Internal Quality System (IQS)

The success of Grower Group Certification depends on proper quality
management known as Internal Quality System (IQS) by the group. IQS plays
an important role for participating farmers who are better organized and engaged
in a learning process that contributes to better farm planning.
The Internal Quality System (IQS) comprises of the following: Development of Internal
Control System (ICS)
Implementation of the Internal Control System (TCS).
Preparation of internal ICS Manual
Internal Standards
Risk Assessment

The external inspection and certification body conducts the annual inspection
of the individual groupiunit.

Check Your Progress Exercise 1

Note :a) Space is given below for the answer.
b) Compare your answer with that given at the end of the Unit.
1) What is Group Certification? What is its advantage?

2. What are the elements of Grower Group? How grower group is

constituted?

1.3 INTERNAL CONTROL SYSTEM (ICS)

1.3.1 Definition and Concept
The NPOP defines ICS as:

"a documented quality assurance system that allows the external certification
body to delegate the inspection of individual group members to a body
identified from within the operators of the group".
Documentation and This means that in practice a Growers Group basically controls all farmers for
Documentation Control
compliance with organic production rules according to defined procedures. In
such cases, the organic certification body only needs to inspect whether the
Internal Control System (ICS) is working well and efficiently. They make
random inspection of farmers in the group, by checking ICS documentation
system to evaluate effective implementation of ICS.

As ICS sets procedures of internal inspection, it helps grower groups to reduce

the cost of certification.

1.3.2 Basic Steps for Development of ICS

Preparation of ICS manual in local language.
Identification of farm to form a group.
Identify qualified personnel and train them in organic production and
ICS development with help of ICS manual.
 Development of Internal
1.4 IMPLEMENTATION OF ICS Control System (ICS)

1.4.1 Preparation of ICS Manual

The groups have to maintain an internal ICS manual to get certified. The ICS
will be the basis of certification. It is to be written in simple language (local)
so that all persons of the group could understand and effectively implement
it. The ICS manual is required to be updated regularly. The external certification
body checks whether the ICS manual meets all relevant criteria.
The ICS manual is made available to:
General management of the ICS.
Members of Organic Approved Committees of the ICS.
Internal Inspectors and field support staff.
Copies of the complete document are kept at the village project centres
for access by interested farmers.

Content of the Manual

The ICS Manual shall reflect current requirements of the certification standards.
Its contents are:
- An overview of the organic project site with mention of farming system
and agricultural practices of participating farmers, details from harvest to
sale, structure/activities etc.
- Risk assessment and measures to be taken to minimize risk.
- lnternal Organic Standards based on the National Standards.
- Farm control and approval procedure indicating registration of farmers,
internal inspections, yield estimate, internal approval procedure, non-
compliances and sanctions, formats etc.
- ICS Personnel and their specific job description, conflict of interest.
- Training of ICS personnel/farmers.
- Procedures of buying, handling, processing and export.
- External Inspection and Certification.

1.4.2 Organization and Work Distribution Among ICS

Personnel I

An organizational chart of the Growers' Group is to be prepared. This chart

should provide an overview of ICS personnel and their positions and
responsibilities. The Grower Group should specify the following ICS Personnel
for representation in the organization chart as:

i) Internal Quality System (IQS) Manager

ii) Internal Inspectors
iii) Approval Committee
Documentation and iv) Field officers/ extension Personnel
Documentation Control
v) Purchase Managers
vi) Warehouse Manager
vii) Processing Managers

Organizational Chart and Responsibilities in an ICS

I position 1~ a m e 1 Responsibility I
Internal Quality Name To supervise whole ICS.
System (IQS) To organize internal inspection.
Manager To conclude between field staff, approval
staff and external inspection agency.
To approve or sanction farmers.
To ensure that all standard requirements
are fully implemented by the group.
Internal Inspectors (11) Name 1 To perform internal inspection. (Inspectors
Name 2, shall be qualified and well versed with the
Name 3 standards to perform).
Approval Manager/ Name or To take approval decision (The AM/
Committee (AM) Name I, Committee shall be well versed with
Name 2, organic procedure of IQS, internal
Name 31 standard and NPOP standard).
Committee
Field Officers(F0) Name l(Area To register and contact producer.
of work) To maintain maps and records for the
Name 2(Area producers.
of work) To inform producer about organization
standard.
To train producer in production.
Purchase Officer (PO) Name To ensure correct purchase of produce from
farmers. (The PO shall be well versed with
ICS).
Warehouse Manager Name To handle the produce (to be well versed
(W) with ICS).
Processing Manager Name To ensure that only organic products are
(PM) brought as organic.
To ensure that processing follows the
standards.
1.4.3 Preparation of Internal Standard (IS)
The internal organic standards is the reference standards for the ICS. It is
prepared by the IQS Manager in adherence to the NPOP. It should take into
account specifics like the local situation of the organic produce and its strength.
The Internal Standards (IS) is required to be prepared in local language. The
IS would contain:
Definition of production units.
How to deal with part conversion.
Conversion period.
 Farm production,norms for the entire production unit (e.g. seeds, nutrient Development of Internal
Control System (ICS)
management, pest management, soil management, approved units,
prevention of drifts, livestock husbandry management).
Harvest and post-harvest procedure.
The requirements of the IS must be communicated to all farmers and if the
farmers are illiterate, the IS may contain illustration in the text for better
understanding to the farm.

1.4.4 Conflict of Interest

The conflict of interest is very sensitive issue in the Internal Control System.
It is the situation where an individual's capacity for objectivity is put to test
by financial or personal interests. Such interests would jeopardise fair and
impartial inspection.

Therefore, prevention of conflicts of interest is a very important aspect for

ensuring that internal inspections are done in a neutral, objective way. If an
inspector would inspect hisher own close friend's or family member's, farm,
helshe might not really be able to investigate the situation critically and report
all critical aspects. Hence, it is the thumb rule that the internal inspector
should keep away from inspecting such farms.

Therefore, all possible conflicts should be declared in a written statement 'by

all the members. In such cases, the IQS shall ensure that alternative solutions
are found. Many ICS OperatorsManagers solve this problem by exchanging
field officers between different regions for doing the internal inspection.

1.4.5 Scope of Certification and Trade

The certification shall be granted to the group with reference to the
regulationslstandard adopted by the group.
The group will market the products under a single entity. For trading the
products from the group of producers, the IQS shall draw up relevant
procedures.

Check Your Progress Exercise 3

Note : a) Space is given below for the answer.
b) Compare your answer with that given at the end of the Unit.
1) What is the purpose of ICS Manual? What are its contents?
The format of Farm Entrance Form is given below: Development of Internal
Control System (ICS)
Farm Entrance Form

Farmer's Name
Village name
Farmer Code
Farmer address and contact details
Name of buying station
Farm (all fields, including conventional plots)
Farm Code Area (ha.) Main crop Intercrops Date last use of
Number chemicals (Product/
monthlyear)

Total
Notes on field situation in Organic Crop
Organic holding in field with multiple
owners, no clear borders. All owners are organic.
Field is clearly separated from other fields by:
Other : (describe)
Crop Details (Plantation crop e.g. Coffee)
Plot Approximate Date planted Estimated Animal Description

husbandry (how

Total acre
(coffee)

Declaration
I, the farmer, declare that this information I, the field officer, confirm that
is correct and that I have understood the the above mentioned information
conditions for organic production. I have is correct.
also received a copy of the farmer's organic
contract.

Date : Date :
Place : Place :

Signature of Farmer Signature of Internal Inspector

Documentation and 1.5.2 Provision of Documents to the Members of the Grower
Documentation Control
Group
Each member of the Grower Group will be supplied with a docket in local
language, which will contain the following:
Copy of TQSflCS Manual.
Internal Standard document.
NPOP document (Each memberlstaff shall be communicated when there
is a revision in the standards).
Definition of the production unit.
Farm data sheet including last use of prohibited inputs.
Field records (main cultivation measures, use of inputs, harvested
quantities, post harvest procedure).
Prevailing farming system and package of practices available for the
area.
Details and description of the various steps required for the process flow
right from cultivation to harvest and sales of the products.
Written contract (for formal commitment) of each grower within the
group.
Annual farm inspection checklist.
Information on training programmes and provision of advisory services
by the field officers.

1.5.3 Operating Document

The Quality Manager shall maintain some operating documents that will
contain:
An overview map showing location of each member's production unit.
Farmers' list with code and name of the farmer, total area, area under
crop, date of registration, date of internal inspection, name of Internal
Inspector, result of internal inspector etc.
List of farmers who have been issued sanctions with the reason and the
duration of the sanction.
Risk assessment .periodically.and its correction measure.

1.5.4 Critical Control Points for Risk Assessment by the

External Certification Body
The initial risk assessment is the very first step towards raising awareness of
critical aspects to be tackled in the ICS. So it is necessary to repeat the risk .
analysis exercise regularly to ascertain whether earlier detected risk is still
posing a threat. The earlier risk may be with organic conversion, but in the
next year the crisis may be with some other issue. Therefore, to minimize risk,
it is essential to keep a check on critical control points as identified below:
 Measures taken by the farmers to deal with part conversion (if farmers Development of Internal
Control System (ICS)
still grow some non-organic crops).
Conversion period.
Production rules for the whole production unit e.g., seeds, fertilization
and soil management, pest management, approved inputs, prevention of
drifts, animal husbandry.
Harvest and post harvest procedure.
Processing and handling standards.

1.5.5 Internal Inspection

The internal inspection is very important in Internal Control System. The
success of external inspection on sample inspection depends fully on internal

As per NPOP guideline, the directives for internal inspection are as below:
At least two inspections of the group (one in growing season of each
crop) are required to be carried out by the internal inspector and should
be documented.
The inspection should be carried out in the presence of the member or
hislher representatives and must include a visit of the whole farm.
The internal inspector should verify whether the internal standards have
been followed and suggestions of the previous internal inspection fulfilled.
The visit of the internal inspector should be documented in the farm
inspection checklist duly signed by the inspector and countersigned by
the member or his representative.
In case of severe non-compliance, the results should be reported
immediately to the IQS Manager and all measures to be taken according
to the internal sanction procedures.

1.5.6 External Inspection

The internal inspection is very important in the internal control system. With
the help of internal inspector, the grower group basically monitors all farmers
for compliance with organic production rules. The external certification body
only needs to check whether the internal control system is maintained efficiently.
For this, the external inspector re-inspects a certain number of farmers and
their documents for compliance with the NPOP standard or any other required
standard. The certifier determines the level of external control on the basis of
risk assessment. The sampling plan for inspection should be based on the
inspector's perception of risk based on the following factors:
1) Size of holding.
2) Number of members in the group.
3) Degree of similarity between the production system and crop system.
4) Intermingling/contamination.
5) Local hazards.
Sampling methods for different size of the grower group is based as per NPOP
norms of group certification. 15
Documentation and 1.5.7 Yield Estimates
Documentation Control
The internal control needs to provide yield estimates of the crop to be certified
for each farmer. The estimates need to be available before crop harvest.
It is very difficult to get correct yield due to various factors like climatic
condition, pest attack and disease incidence. Realistic yield estimates are based
on the quantities delivered by farmer in the previous years, plus an assessment
' of the on-farm crop situation.
As per NPOP directives, yields should be estimated for each crop for individual
farmer in the group. This activity should be carried out especially during
harvesting and should be counter-checked with the estimates during buying.
The field officer should record updates on yield estimates shortly before harvest.

1.5.8 Internal Approval

The results of the internal inspection must be formally confirmed in an approval
procedure. This is usually done by a second competent person or group
generally known as Internal Approval Staff.
In respect of internal approval, the IQS Manager will have a defined procedure
to approve or impose sanctions on the farmers in the group. All internal farm
checklists are required to be screened by internal approved staff with special
focus on criticalldifficult cases. For providing internal certification status, the
approval committee will check the assessment of internal inspector.

1.5.9 Non-compliance and Sanctions

Non compliance of recommendation has adverse impact on certification process.
If a grower fails to comply with the organic regulations/standards, he/she
exposes all of hisfher fellow members to the risk of de-certification of the
project. The internal control should be alert to such situations. It is therefore
necessary to take appropriate corrective or mitigating measures by the IQS/
ICS in the case of non compliances and the following methods to be adopted:
Procedures for implementation of sanctions.
Imposed sanctions have to be documented (list of farmers issued sanctions,
documentation of identified non-conformities in the files).
Farmers who have used prohibited inputs on their farms must undergo
again the full conversion period (if they remain in the group). In such
cases, it has to be checked whether the farmers have already delivered
the produce and whether this sub-standard produce has got into the overall
produce. If this has happeaded, the certification body needs to be notified
immediatelyTand the inferior produce separated.

1.5.10 Training of IQSIICS Personnel and Farmers

It is very much important that all organic staff in the group should be trained
properly. The main objective of training is to equip the organic growers and
project staff with the necessary knowledge and expertise for organic agriculture.
As per guideline of NPOP:
Each internal inspector should be trained annually by a competent trainer.
The date of training, list of participants etc should be documented.
 The date of participation and content of the training of all IQS staff Development of Internal
needs to be documented in the staff files. Control System (ICS)

The IQS manager should organize regular training to the farmers in the group:
Each farmers needs to receive at least one initial advisory visit by the
extension service or in an organized training.
The list of participants and training content should be well documented.

1.5.11 Additional Procedures

It is also necessary to define procedure for buying, storage and handling or
processing, particularly for the organization that would market the organic
products. These procedures are required to ensure the integrity of the certified
product in all aspects of the product flow and avoid mix up of different
qualities. Vigil should be kept on contamination with chemicals during purchase,
storing, transport or processing.
The NPOP has the guidelines for minimum requirements as below:
a) Buying Procedure
The status of the farmer in the group should be checked.
The supplied amount should be compared with the harvested amount
and estimated yield. In case of doubt, the produce shall be kept apart
until clarified by the IQS coordinator.
The delivered quantity of the product should be registered in the
purchase record.
Farmer will be issued a receipt duly signed by the purchase officer
stating the quantities of the product delivered with date.
All documents have to indicate the status of the certified product
(organic or in conversion).
Bags should be labeled as "Organic" or as "In conversion".
b) Storage and Handling Procedures
Identification of the product at all stages of product flow during
transition.
Segregation of organic products from in-conversion products.
Fumigation of containers, irradiationlionization etc. are prohibited.
The location in the warehouse during storage must be labeled as
"organic" or "in-conversion".
c) Processing
Central Processing Units will be inspected .by the external inspection
and certification body.
Ingredients and processing aids must be used as per the standard of
NPOP.
During the product flow (transition), the products should be separated
from non-organic products.
The processing steps need to be documented.
Documentation and
Documentation Control 1.6 ROLE OF SERVICE PROVIDER IN ICS
The Department of Agriculture and Cooperation, Ministry of Agriculture,
Government of India, is helping capacity building through appointment of
"Service Provider" under the National Project on Organic Farming scheme.
Such Service Provider should:
i) Motivate farmer group/clusters
ii) Act as team leader of Internal Control System and liaison with certification
agencies by coordinating internal inspection and external inspection.
iii) Maintain record of organic farm by coordinating field staff, growers etc.
iv) Act as a technology messenger and to advise farmers on package of
practices, technology package, imparting training on preparation of on-
farm organic inputs. Educate farmers on 'do and don'ts' in organic farming
without having any conflict of interest that might hinder the work.
V) Other services expected from such supporting group are:
a) Drawing of village map.
b) Registration of the growers.
C) Inspection of each farm at least once a year.
d) Providing assistance in packaging and storage of the produce.
e) Visit to market and arrange of sale.
f) Providing training to growers of the group.
A Service Provider may serve cluster of farms in a village.
p~- -- ~

Check Your Progress Exercise 4

Note : a) Space ,is given below for the answer.
b) Compare your answer with that given at the end of the Unit.
1) Briefly Mention the Procedures of Internal Control System.
 What Do You Mean by Critical Control Points for Risk Assessments? Development of Internal
2) Control System (ICS)
......................................................................................................................
.....................................................................................................................
.....................................................................................................................

1.7 LET US SUM UP

Group certification process is being encouraged in organic farming across the
world. It is of particular help to small and medium farmers because of the low
cost of certification. As per criteria, the growers seeking Group Certification
should be located in closed geographical proximity. It is desirable that the
crops as well as farming practices of the groups should be uniform.

Success of group certification depends on proper quality management, known

as Internal Quality System (IQS), by the group. Internal Control System (ICS)
is an important component of the Group Certification. In ICS, growers' group
basically controls all farmers for compliance with organic production rules.
The organic certification body only needs to inspect whether ICS is working
well and efficiently. They make random inspection of farmers in the group, by
checking ICS documentation system to evaluate effective implementation of
ICS.

For effective implementation of ICS, the group prepares ICS manual and
internal standard. Among responsible growers, the duties are divided between
personnels like internal quality system manager, internal inspector, approved
manager, field officer, purchase officer, warehouse manager and processing
manager. For ICS, grower groups also maintain documents like ICS manual,
internal standard, NPOP document, farm entrance form, field record, written
contract etc. The percentage of internal control will be determined by external
certification body on the basis of risk assessment. If a grower fails to comply
with the organic regulations/standards, there may be risk of de-certification.

KEY WORDS
Group Certification
Conflict of Interest
: Certification of an organized group of producers,
processors and exporters in geographical
proximity, and having similar farming and
production systems.
: The situation where an individual's capacity for
objectivity is put to risk by financial or personal
interests in conflict with their interests in
conducting fair and impartial inspection or
certification.
Documentation and Critical Control Points : There may be some points of risk in ICS that
Documentation Control
are critical and need control/correction. These
are called critical control points.
Service Provider : Under the govt. scheme 'National Project on
Organic Farming', one of the component is
capacity building through Service Providers(SP),
where SP will be responsible for supervising 1
Internal Control System (ICS) in grower group
certification.
I

1.9 FURTHER REFERENCES

National Programme for Organic Production (2005).Department of Commerce,
Ministry of Commerce and Industry, New Delhi.
IFOAM (2003). Small Holder Group Certification - Complication of Results.
IMORVature Land Manual for Quality Assurance (2002). A guideline for
Internal Control System (ICS) in small holder organization.
EU Guidance Document for the Evaluation of the Equivalence of Organic
Product (2003) Group Certification Schemes Applied In Developing Countries.
Guideline of National Project on Organic Farming. Department of Agriculture
and Cooperation, Ministry of Agriculture, Government of India.

1.10 MODEL ANSWERS

Check Your Progress Exercise 1
1) It is certification of an organized group of producers, processors and
exporters with similar farming and production systems and which are in
geographical proximity. It saves cost of certification and the cost is shared
by group.

2) The producers should be located in close geographical proximity to one

another. The crops and farming practices of the group should be uniform
and reflect a consistent vrocess or methodolo~y.
Check Your Progress Exercise 2
1) The internal control system (ICS) is a documented quality assurance
system that allows the external certification body to delegate the inspection
of individual group member to a body identified from within the operators
of the group.

2) Basic steps for the development of an ICS may include the following
information:

Identification of farmers group based on certain criteria

Imparting ICS training to internal qualified personnel.
Preparation of manual for ICS in easily understandable language.
Development of pertinent forms for gathering the relevant information
Check Your Progress Exercise 3 Development of Internal
Control System (ICS)
1) The groups that are to be certified on the basis of an ICS are expected
to present an internal ICS manual which should be written in simple
language for better understanding of the growers. The ICS manual shall
reflect current requirements of the certification standard. Its contents are:
- An overview of the organic project site.
- Risk assessment and required measures.
- Internal Organic Standards
- Farm control and Approval procedure, internal inspection, yield
estimate, farm data etc.
- Organization, ICS personnel and their specific job description.
- Training of ICS personnel/farmers.
- Procedures of buying, handling, processing and export.
- External inspection and certification.
2) Naturally, if an individual farmer in a group or alone is complying with
the standards of organic production (laid in NPOP), the certification
process is eased. The inspector may be able to certify the product on the
basis of available documents maintained at the farm.

3) The conflict of interest is very sensitive issue in Internal Control System.

It is the situation where an individual's capacity for objectivity is put at
risk by financial or personal interests in conflict with their interest in
conducting fair and impartial inspection. It can be prevented; if possible
the inspector should not have any relationship with the farmers whose
farm is under inspection/certification. All possible conflicts should be
declared in writing by all the members. The conflict of interest can be
prevented to some extent if any two organizations exchange ICS inspectors
for internal inspections.

Check Your Progress Exercise 4

1) The procedure of Internal Control System (ICS) involves the different
steps like registering the members, internal auditing, ICS training to the
members etc.

2) The initial risk assessment is the very first step towards raising awareness
of critical aspects to be tackled in the ICS. So it is necessary to repeat
the risk analysis exercise regularly to get an idea whether earlier detected
risk js still continuing or not. The earlier risk may be with organic
conversion, but in the next year the crisis may be with some other issue.