Specialty coffee played the leading role in the adoption of certification systems whose labels attest to the environmental or socioeconomic sustainability of the supply chain for a particular coffee. Environmental certifications include Organic, Bird Friendly and Rainforest Alliance, which promote sustainable farming techniques that encourage biodiversity.
The first social certification programme was developed by the Fairtrade movement. In 1988, Solidaridad, a Dutch religious organization, established the Max Havelaar label – named after the novel denouncing the colonial coffee trade in Java. It started purchasing from producer cooperatives, initially in Mexico, and marketing the coffee in Germany and the Netherlands. In 1989, UK charities including Oxfam followed suit, creating the Cafédirect brand, and selling it through church halls and charity shops. In 1997, Fairtrade International was established to unite the various national schemes.
Fairtrade remains the only certification system to guarantee producers a minimum price for their coffee. Its pricing structures reflect whether the coffee is Arabica or Robusta, natural or washed, organic or non-organic. In addition, the exporting cooperative receives a social premium to be invested in improving the living conditions of the coffee-farming community. Since 2011, a quarter of this premium must be invested in improving quality. Should the world market price exceed the Fairtrade price at the time of delivery, then the higher price applies.
The Fairtrade organisations do not themselves buy or sell coffee. Instead, they grant permission and charge for products to be labelled as “Fairtrade”. For this to happen, all the participants in the commodity chain must be certified to ensure adherence to Fairtrade standards. Critics of Fairtrade argue that the price guarantee induces inertia among producers by protecting them from the market and the need to respond to it. Furthermore, the bulk of the price differential paid by the consumer remains within the developed world, either with the roaster or supporting the operational costs of the certification systems.
Analysing the impact of Fairtrade certification systems upon producers has revealed mixed results. The floor price provided a significant safety net during the mid-2000s coffee crisis and many communities benefitted from the reinvestment of the social premium. Since then, the gap between the Fairtrade and market price for coffee has remained relatively narrow. Research in Latin America suggests that this differential is not always sufficient to offset the potential losses in farmers’ incomes from requirements to pay pickers better wages, and the organic premium does not make up for the reduced yields resulting from conversion. A 2017 study discovered that while Fairtrade producers in Asia earn sufficient income to support their households, those in Africa cannot because their holdings are too small to reap the benefits of the premium.
The value of the Fairtrade label to roasters and operators is that it demonstrates their ethical convictions, while enabling them to charge a premium that covers the additional purchase costs. They became particularly sensitive to this during the coffee crisis years, when the paradox of premium-priced lattes and starving coffee farmers was regularly highlighted in the media. This contributed to Starbucks being targeted during the antiglobalization riots in Seattle in 1999, although it was high-volume commodity roasters who were paying the least to their suppliers.
There was, however, relatively little Fairtrade coffee available, because of the organisation’s insistence that this should be sourced through producer cooperatives. This excluded a priori coffee from large plantations, independent farmers and smallholders who were not attached to cooperatives, as well as a significant number of cooperatives which were also put off by the initial certification costs.
Alternative certification schemes evolved that could be accessed by these producers, but left traders and producers to determine the premium placed upon the label. The Common Code for the Coffee Community (known as 4Cs), developed by large roasters and producer states, introduced a baseline set of social, environmental and economic standards in 2007. The price of 4C producer certification is graduated according to output, making it within the reach of many smallholders, while its easily achievable standards make it attractive to multinational corporations sourcing from multiple suppliers.
In 2012, Fairtrade USA broke away from Fairtrade International to enable it to certify non-cooperatively organized producers. It argued that this extended protection to labourers and independent smallholders while offering more consumers the choice to buy Fairtrade. By 2013, around 40 per cent of coffee’s global production was in accordance with some form of certification standard. Enthusiasts have argued that this represents one of the greatest triumphs of imposing social responsibility on global capitalism. Critics say this is a triumph of public relations, enabling the coffee industry to simultaneously monetise consumers’ ethical concerns while engaging in “virtue signalling”.
Third-wave roasters object to Fairtrade’s lack of concern with quality and traceability. Buyers for Stumptown, Intelligentsia and Counter Culture, leading third-wave coffee roasters in the usa, developed an alternative model of “direct trade”: identifying growers of potentially outstanding coffee, working with them to ensure quality and purchasing from them directly at prices that reflect this, way beyond those achievable under Fairtrade. Such partnerships can be transformative in their impact on growers, but are confined to farmers in locations where cultivating specialty coffee is possible.
Interventions linking Fairtrade, direct trade and other development programmes have done much to improve conditions in certain countries. Rwanda’s coffee infrastructure, which centred on commodity production, was destroyed during the 1994 genocide. In 2002 a national coffee strategy was introduced, investing in the installation of washing stations, part-financed by foreign aid programmes. Roasters have developed direct relationships with farmers and processors, investing in training and constructing cupping labs to test for quality. Fairtrade organisations have certified cooperatives that operate the washing stations.
Rwanda nearly doubled the value of its coffee exports between 2006 and 2012 because of the much higher prices enjoyed by fully washed coffees. Much of this additional revenue is returned to producers; and encounters between farmers of different ethnicities using the washing stations have contributed to lowering tensions. Rwanda is now widely recognized as a specialty producer; in 2008, it became the first African country to host a Cup of Excellence competition.
Excerpted with permission from Coffee: A Global History, Jonathan Morris, Macmillan.
