Considering standards and certifications in the coffee industry

Recently I’ve been exploring more of the coffee industry focusing on the production side of the industry, and in particular thinking about the role of standards and certifications (and alternatives) for fostering a more sustainable approach to coffee growing.

coffee tree sustainability

Source: Flickr user Schlomo Stern

Growing coffee in a way that conserves the environment and better livelihoods for those involved in growing it is challenging. With over 120 million people relying on coffee for their livelihoods, many of which are small scale farms or farm workers, and the increasing vulnerability of coffee growing to climate change, the need to ensure sustainable practices are embedded in the coffee producing process is vital. The International Trade Centre (ITC)  has suggested coffee is on its way to becoming the first sustainable agricultural product because of the various standards and certifications programmes that are in place. A recent ITC report estimated at least a quarter of all coffee grown in 2015 was compliant with one of the five largest standards and certifications. However, it’s hard to gauge an exact figure as it is common for producers to hold multiple certifications in part due to the varied form, purpose and criteria of various certification schemes in the coffee industry.

Ultimately there is still a large proportion of coffee grown that is not certified, and there are a number of reasons for this for example suitability and costs of certifications, lack of ability to produce goods to standards or awareness of such standards, as well as a proportion of those in the industry who choose not to engage in certification but voluntary sustainability programmes, or direct trade arrangements instead.  Questions have been raised from across the industry about the benefits and impacts of standards and certification schemes for those involved, and what alternatives might exist.

Certification Schemes

certificateThere are a range of standards and certification schemes in the coffee industry, with some of the larger ones including: Fair Trade, Rainforest Alliance, Organic, 4C, and UTZ.

  • Fair Trade: designed to support a better life for farming family, focusing on sustainability and community development. Producers guaranteed a minimum price for the coffee.
  • Rainforest Alliance: designed to integrate biodiversity, conservation, community development, workers rights and agricultural practices to ensure a comprehensive sustainable farm management system.
  • Organic: works towards a sustainable agriculture system, protecting biodiversity and sol health. Normally costs of production are higher for organic grown coffee.
  • 4C: designed to unite coffee stakeholders working towards improvement of economic, social and environmental conditions of coffee production.
  • UTZ: designed to achieve a sustainable agricultural supply chain where producers and professionals are implementing good business practice which also protects the environment.
  • At the end of 2017 UTZ and Rainforest Alliance announced they would merge. It has kept the name Rainforest Alliance and suggests that it will endeavour to tackle environment and social issues including climate change, deforestation and unsustainable farming in a new certification standard to be launched in early 2019. The intention is to reduce costs for producers with less audits and lower costs of implementation.

The 2017 State of Sustainable markets report from ITC suggested: 4C, Fairtrade International, Organic, Rainforest Alliance and UTZ certified between 2.6 million hectares and 4.6 million hectares in 2015 (a 63.3% increase in certified areas from 2011). As an indication of the scale of these schemes according to ITC (2017):

  • 4C highest share of licenced coffee in 2015 – 15.2% of global coffee area (1.6 million ha), 2.6 million tonnes of compliant coffee.
  • Fairtrade International 12.4% of global coffee area (1.3 million ha), 560,000 tonnes coffee
  • Organic estimated harvested almost 7.6% of global coffee area (800,000 ha), 340,000 tonnes coffee.
  • Rainforest Alliance/Sustainable Agriculture Network certified 405,000 ha, 520,000 tonnes.
  • UTZ certificated 550,000 ha (5.2% coffee area), 821,000 tonnes coffee.

Some of the largest buyers for these certified coffees were the large commodity buyers and coffee chains including Nestle, Mondelez, D.E. Master Blenders, Tchibo, Keurig Green Mountain, UCC Coffee and Starbucks. However, the global growth of the coffee (and coffee shop) industry has meant there is a wider array of coffee business involved in the industry, many of which do not engage with the larger programmes, or even certified coffees.

Alongside these larger schemes, there are a range of smaller independent initiatives, and private voluntary sustainability initiatives (such as the Nespresso AAA Sustainable Quality Coffee Programme, or Starbucks CAFÉ Practices), as well as direct trade arrangements with coffee producers. Direct trade has been a practice that seems to be favoured among many in the specialty coffee industry.

Coffee farm

Source: Flickr user Colleen Taugher

While there remains strong support for many of these schemes, they have their critics too for their associated costs and auditing requirements, while others cite corruption from preventing benefits reaching farmers. International Initiative for Impact Evaluation (3ie) documented that while prices for certified products increased and producer income from certified products was slightly higher overall, average household incomes or asset ownership did not increase. Much of the academic and consultancy literature that has focused on these models questions the role of these models in generating real impact for farmers and their influence on consumer behaviour.

Many retailers are looking for alternative models. In 2017 Sainsburys dropped the Fairtrade label to pilot their own ‘Fairly Traded’ label for tea, seen as a symbol that big companies were reassessing their supply chains and considering ways to devise their own environmental and labour policies. In 2017 Tesco announced plans to swap its own label coffee from Fairtrade Coffee for Rainforest Alliance, another indicator that changes are taking place in the certification landscape.

Even Fairtrade International are altering their practices, launching a new supply chain services for business and expanding range of services for commercial partners, recognising that changes need to take place for them to maintain their position in the industry.

Specialty coffee and certifications

A particular area of the coffee market that has a low level of certifications for its coffee is the specialty coffee sector. Many specialty coffee roasters and coffee shops do not sell certified coffee, preferring the Direct Trade model citing preferences for being able to deal directly with farmers in order to have a better knowledge of the coffee’s (and farms) they are working with, as well as the inadequacies of other certification programmes (e.g. Fairtrade isn’t as concerned with coffee quality as many specialty coffee companies require) (Haight 2011). Has Bean Coffee has an excellent blog post on their view on the alternatives to Fairtrade.

One feature of the specialty coffee market mentioned in this post which appears to have become more prominent in recent years is the Cup of Excellence organised by the Alliance for Coffee Excellence (ACE) who state that their aim is to ‘live in a world that embraces excellence and sustainable economies’. Under this route coffees enter a national competition for consideration by judging panels with the winning coffees sold on online auction. In 2017 Cup of Excellence competitions took place in Brazil, Burundi, Colombia, Costa Rica, El Salvador, Honduras, Guatemala, Mexico, Nicaragua and Peru. Coffees sold here are found to be of the highest quality and consequently can command higher prices, which should in theory provide greater income for farmers allowing them to make greater investments in their coffee production systems, and to foster sustainable livelihoods more generally. I’ve been reading about many of the farms that have submitted coffees in Cup of Excellence competitions in the book Coffeography by founder of Has Bean Coffee, Stephen Leighton, a volume which demonstrates the importance of building relationships in the coffee industry.

Stephen is also co-founder of Tamper Tantrum a podcast about the coffee industry I listen to regularly. There is a series of podcasts about certifications and trading models that is worth listening to if you want to get up to speed on some of the current discussions in the industry.

Cracking Certifications Vol. 1 with a panel that discusses various certifications and trading models in the context of specialty coffee.

Cracking Certifications Vol.2 with a slightly different panel, including some coffee producers (via video shown below); here the focus on the views of some producers, as well as the more consumer side of the coffee industry and the role of baristas in consumer education.

Trading Models and Certifications: includes a panel which considers certification standards across the supply chain but with a particular focus on some of the issues faced by coffee roasters.

The importance of consumers

A repeated point in discussions of standards and certifications for coffee is about whether consumer values them, and how it affects their behaviour. Some argue that there is a consumer ‘perception that certification sector is outdated and not delivering on its mission to improve the livelihood of producers’.

While others highlight that ‘Consumers are powerful, and not afraid to wield their power both on their own behalf and on that of the planet…They are helping to ensure that the environmental impact and labour conditions associated with agriculture are duly monitored, and that appropriate sustainability standards are adopted and respected’.

Given the various certification schemes are marketed to consumers to obtain a higher price for coffee, it is important to understand consumer preferences in this area (and misconceptions).

A bit of a longer post than usual, and I don’t come to any particular conclusions other than this area of the industry, needs greater attention in terms of research to consider their impact on the coffee industry, and the people and places involved in it.

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This entry was posted in Coffee, Coffee Growing, Commentaries, Consumers, environment, Specialty Coffee, Sustainability and tagged , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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