Blog It Café

THURSDAY, JULY 21, 2016

TransSustain: Understanding Coffee Certifications

As I already mentioned in my blog, I am here in Germany working as a researcher for a German Institute and learning about the pros, cons and impacts of coffee Voluntary Standard Systems (VSS), which are basically the certifiers (Fairtrade, Rainforest, UTZ and former 4C Association, which now is Coffee Assurance Services), and alternative ways to assure sustainability in the Supply Chain, such as the Coffee Initiative, from a previous post.  

 

In the meantime, I got to know Janina Grabs, she is a German researcher developing a project about the same topic and the project is called TransSustain.

 

 

Basically, they are a group of researchers that will collect data from around 1200 coffee farmers in Central and South America and compare the effectiveness of various certification schemes. It is a long term study, since they will make a data collection this year and in 2018.

 

The project has four separate studies:

 

1. To evaluate the effectiveness of different VSS by comparing the strength of their rules as well as the strength of their enforcement mechanisms and constructing two separate indices to measure these aspects.

 

2. To investigate the implementation of standards on the ground in certified farms and compare them to the certifications’ expected practices.   

 

3. To look into the profitability of participation in certification schemes by drawing up income balances of farms that include variable and certification costs as well as value added through selling certified harvests.  

 

4. And the final step is to investigate the alternative sustainability strategies. In cooperation with the Hanns R. Neumann Foundation (HRNF), they will evaluate an HRNF project focused on gender empowerment in the coffee sector of Honduras to gain insights on the contribution of gender aspects to sustainable agricultural development.

 

I also had a chat with Janina about the subject and she explains quite well the main characteristics of each certifier and points out very important alternative sustainable strategies. You can read it below: 

 

What is your opinion about certifications? While doing the research have you seen any of them perform better than the other in terms of benefits for farmers and sustainable practices implementations?

 

I think when talking about the beneficial impact of certifications you have to differentiate a lot. I do believe they can be important instruments to improve farm-level sustainability in terms of environmental and, to a more limited extent, social terms. When I first started this research, I was rather critical of the reliability of audits, but from my field visits so far there are notable differences between certified and non-certified farms in terms of their knowledge and application of good agricultural practices.  

 

However, such changes require a lot of boots on the ground, and the reality is that small-scale producers have little chance to become certified without outside assistance of an NGO or some agronomic extension service, which may be funded by exporters, roasters or through development assistance. In that sense, I would attribute the positive effects more to these training and extension activities than to the certification itself, and I think to this point these actors have frequently been overlooked in the literature.  

 

Another issue, though, is economic sustainability, arguably the most pressing sustainability issue for smallholder farmers themselves, and here certifications have failed in my opinion to create lasting and growing market niches that allow for price differentiation. You will note that with the exception of Fairtrade (which is known to lose market share anytime prices drop below their minimum price) none of the other certification schemes explicitly address price in their theory of change; they tend to argue that better management practices and professionalization will allow farmers to increase yields and prices, but buyers are not required to pay a specific price premium. This issue combined with a proliferation of certified producers and a slugging growth in demand has caused premiums to drop significantly in recent years (they have been cut by half to two-thirds in many cases) which has disappointed producers who require investment capital to make the necessary changes on their farms. Of course, the situation may be different for larger estates, where investing in certification may be a more rational long-term investment decision, but for smallholders I would argue the economic equation has not changed significantly in the last 10 years.  

 

As differences in performance goes, Rainforest Alliance is the strictest standard environmentally and is seen in the field as the most difficult to implement, which speaks to its efficacy in proliferating sustainable practices. It is also the standard that has the solidest demand across countries from what I have heard, but again requires a lot of upfront investment which normally leaves it out of reach for very small farms. I would also venture to estimate that Rainforest Alliance demand is more correlated with high-quality coffees, though we would need to look at our data more to confirm.  

 

UTZ is relatively less costly in the market and thus popular particularly when prices are low (like now) and for the mid-range, non-specialty coffee. It is a bit less strict and more focused on farm business capacity-building, which is good for farmer livelihoods but maybe less so for the environment.

 

4C is the “beginner’s standard” that introduces farmers to the world of certifications, and has less impact on practice changes, but also does not gain important price premiums anymore such that from my understanding farmers either don’t bother if they are a bit more advanced (like in some parts of Colombia or Costa Rica) or sign up just to get access to technical assistance (like in Honduras) while hoping to quickly improve and jump into certification programs that still pay price premiums.  

 

I have heard the most positive feedback on Nespresso’s AAA program which improves environmental and social standards while asking for high quality beans. This pays by far the best price that farmers can get in the current price environment (with the exclusion of specialty coffee/direct trade) and Nespresso also has agronomists in the field that work with farmers and lead them to Rainforest Alliance certification. However, they are very niche both in their scope and their focus (specific growing regions with exceptional flavor profiles), so it is questionable how scalable this model is.  

 

What would you consider the best development strategy that could be implemented in a producing country?

 

I would say a focus on education and capacity-building, focusing simultaneously on diversification and specialization (though of course not for the same producers). In many rural regions, knowledge (both general and about coffee farming) is still very limited, so a comprehensive education strategy that focuses on real-life skills (including good agricultural practices) and is thereafter accompanied by long-term, consistent extension services might help youth to decide whether they want to stay in farming and become a ‘coffee specialist’ (particularly in regions with a comparative advantage in terms of altitude, soils or reputation), have a diversified farm with a variety of products, including wood, livestock and fruit trees, or to move out of farming into an alternative profession. There needs to be some sort of farm consolidation particularly in smallholder dominated economies with averages of 1 to 2 hectares per producer, since even with good prices and reasonable yields it is almost impossible to feed a family on less than 2 hectares. However, of course you don’t want rural-urban migration that ends up in slum expansion and large-scale urban poverty, so the ideal scenario (though of course much easier said than done) would be to create stronger local and regional economies.  

 

As I understand the last step of your project will be researching about alternative sustainable strategies, could you specify which of them?

 

Yes, we are identifying alternatives to certification simultaneously to investigating the impact of certification schemes. So far, this includes direct trade with a quality focus, the concentration on best practice proliferation through Farmer Field Schools, model farms and trainings, and focusing on including the whole family in the production process, which encompasses the gender equality project, but also for instance youth involvement initiatives. Of course, we don’t have the capacity to study all of these with the same intensity as certifications, but depending on time and financial resources we would like to provide a catalogue of alternatives in the current coffee landscape.

 

 

It was a very insightful chat and interview, I am very excited to see their conclusions :)



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