The Memorandum of Understanding (MOU) signed by Melissa Duncan, Fairtrade’s executive director and Dr. Éliane Ubalijoro, CIFOR-ICRAF’s CEO, solidifies their commitment to advance nature-based solutions into key supply chains such as coffee and cocoa. This will later be expanded to other product areas such as tea, banana, cotton, sugar, and nuts.

This five-year partnership will also foster future mutual endeavours on advocacy and policy influencing, and collaboration on exchanging and co-developing knowledge and expertise on priority thematic areas such as climate and the environment, deforestation, and decent livelihoods.

They will work side-by-side to support countries and supply chain stakeholders, particularly smallholder farmers, in implementing new legislation, which includes the EU Deforestation Regulation and the Corporate Sustainability Due Diligence Directive. In addition, they will also assist stakeholders in building up their climate resilience and transition to agroecology.

“Fairtrade found in the alliance with CIFOR-ICRAF great synergies as well as a shared commitment to facing the challenges of climate change and the biodiversity crisis,” said Duncan. “With this partnership we aim to accelerate agroecology transitions, scaling agroforestry systems, and building further climate resilience among Fairtrade producers and workers.”

“This memorandum of understanding represents a significant step forward in our shared commitment to advancing sustainable and equitable livelihoods for smallholder farmers and forest communities,” said Ubalijoro. “By aligning CIFOR-ICRAF’s scientific expertise with Fairtrade’s market-driven approach, we can create meaningful pathways to empower producers, enhance climate resilience, and support biodiversity conservation. Together, we are fostering a future where environmental sustainability and social equity go hand in hand.”

This year’s World Soil Day theme of “Caring for soils: Measure, monitor, manage” is perfectly aligned with the aim of this new strategic partnership to safeguard people and the planet. Indeed, for farmers, healthier and more fertile soils can result in higher incomes through more productivity, less reliance on external inputs, higher crop quality, and increased resilience to climate change. For the planet, enhanced soil health can increase carbon sequestration in soils as well as allowing lower emissions per product thanks to higher yields, both supporting climate change mitigation.

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The declaration, signed by Melissa Duncan, executive director of Fairtrade International, and Jeroen Douglas, the Director General of ICA, has solidified the organisations’ commitment to work together to advance the principles of democracy, empowerment, economic prosperity and distribution, and the convergence of economic, social, and environmental components of development.

The announcement was made during ICA’s General Assembly held in New Delhi, India this week. Tone Cecilie Faugli, the CEO of Fairtrade Norway, together with Fairtrade Network of Asia & Pacific Producers CEO Erwin Novianto and Fairtrade certified cooperatives are participating in the event.

“We’re excited to launch this partnership with ICA as we embark on this shared opportunity to leverage our strengths and work together to build strong cooperatives that achieve better, fairer, and more dignified labour relations. Successful cooperatives are the lifeblood of Fairtrade and essential for sustainable global trade,” said Melissa Duncan, Fairtrade’s Executive Director.

“This declaration cements our joint efforts towards creating impactful change for cooperatives worldwide,” said Jeroen Douglas, Director General of ICA. “Together, ICA and Fairtrade International will drive forward initiatives that support cooperatives in their sustainable business case though fair pricing. Only a price tag on fair wages, clean water, gender inclusion and the pure air we breathe will transform our economy to the needs of communities.”

Fairtrade International and ICA, both EU Financial Framework Partnership Agencies, have had fruitful collaboration in the past on policy influencing, evidence gathering research, and the sharing of best practices focusing on the management of sustainable supply chains and people-centred business models. Advocacy work on cooperatives’ priorities include the EU Deforestation Regulation and the Corporate Sustainability Due Diligence directive. ICA and Fairtrade are also both members of the EU’s Global Gateway Dialogue Platform.

The partnership agreement will now facilitate closer co-operation between ICA and Fairtrade International on emerging areas of expertise needed, such as cooperative legal frameworks, agroecology, climate change, youth inclusion, gender equality, among others. It will contribute to strengthen both organisations’ work on promoting inclusive and sustainable cooperatives and their communities through wealth creation and redistribution, democracy, empowerment. It will also advance efforts towards an ever-increasing convergence between the economic, social, and environmental components of development.

Under the flagship of the UN International Year of Cooperatives, this partnership is expected to enable more cooperatives and their members to realise sustainable livelihoods, fulfil their potential, and decide on their future, given the growing risks and challenges they face.

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Why This Matters, and Why Now
The contemporary agri-food sector faces a profound challenge that threatens the socio-economic stability of smallholder farmers worldwide: the pervasive inability to secure a living income. This issue stems from multiple factors, including limited arable land, suboptimal agricultural productivity, and inequitable value distribution within supply chains. As global commodity prices fluctuate, smallholder farmers remain vulnerable, often unable to influence market trends or earn a fair share for their products.

Amid these challenges, the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD) marks a critical juncture for international supply chains, mandating higher social responsibility standards for commodity buyers. This regulation offers a unique opportunity to create a level playing field, benefiting all producing countries equally. The white paper’s release is timely, aiming to harness this regulatory shift to drive significant, data-informed changes across global supply chains.

Introducing the White Paper
The Commodity Living Income Strategy is a data-first intervention aimed at achieving living incomes in commodity supply chains. It is founded on principles of fair value distribution and data-driven decision-making, advocating for a two-pronged intervention approach: first, assisting producers, organized producer groups, and their supply chain partners in understanding their cost-efficiencies and living income price gaps; second, it leverages this data to design holistic intervention strategies tailored to local sustainability, production, and quality needs.

This white paper introduces two key methodologies:
1. Living Income Price (LIP): The LIP calculates the price per unit of a commodity based on its actual production costs across various supply chain stages (farmgate, producer organizations or “cooperatives”, and Free on Board. This approach helps establish a minimum viable price floor, ensuring that producers are compensated fairly for their sustainable and efficient production efforts.
2. Cost-Yield Efficiency (CYE): This CYE categorizes producers’ efficiency by considering both their costs and yields. It provides a nuanced understanding of efficiency levels among farmers, identifying areas for improvement and forming the basis for tailored intervention strategies.

The strategy presented within this white paper encapsulates both methodologies, providing a structured approach to understand both productivity and efficiency aspects of pricing, and identify the necessary interventions to bridge living income gaps. It addresses the critical question: Where is this supply chain currently, and how far do we need to go to achieve sustainability? Moreover, it promotes data-driven, defensible decision-making involving both efficiency and pricing interventions, strategically co-created with supply chain stakeholders, and, most crucially, with farmers themselves.

“By leveraging real, verifiable data, and investing in both efficiency and pricing interventions, we can set a new standard for transparency and accountability in global supply chains,” said Antoinette Marie, director of Heifer Labs, a digital technology unit within Heifer International.

Commitment to Transparency and Open-Source
By making the parameters and tools publicly accessible and open-source, Heifer and Fairfood aim to inspire industry-wide change. This transparency is designed to foster a community of informed stakeholders, enhancing dialogue and collaboration across the supply chain. The Open-Source Toolkit previewed in the White Paper will provide practical resources for implementing LIP and CYE methodologies, driving sustainable practices, and ensuring that all stakeholders can contribute to and benefit from these innovations. “This is not just about compliance or corporate responsibility,” said Sander de Jong, managing director of Fairfood International. “It’s about recognizing the human side of supply chains and committing to a future where every farmer can live with dignity.”

Download the white paper here.

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Reducing the burden of data management for green coffee traders, roasters and merchants in Italy, Dimitra’s DDS platform receives, manages, analyses and stores supply chain data for seamless communication with authorities and other supply chain operators. Once a supply chain is fully mapped, Dimitra’s DDS will automatically prepare a Risk Assessment and Due Diligence Report and upon user confirmation upload all required data to the EU Information System, documenting compliance. Dimitra’s DDS platform can act as a stand alone system or be fully integrated into any third party Enterprise Resource Planning (ERP) environment.

Alkaff will employ Dimitra’s tailored DDS platform and engage Dimitra’s leading industry experts to map Alkaff’s expansive supply chain, support Alkaff suppliers in farm-level data acquisition, and analyse the data provided by the suppliers to ensure a transparent, traceable, and EUDR compliant supply chain. Dimitra will integrate fully into Alkaff’s software environment and also deliver traceability data directly to Alkaff’s customer-facing application.

Maurizio Zugna, Dimitra, Italy project manager, said: “For Alkaff, the largest coffee merchant in Italy, to make this decisive step towards EUDR compliance proves once again that Rudi Albert, the company CEO, and his team understand the opportunities that come with the digitalisation of global coffee chains. Dimitra’s platform digitalises the process making compliance that much more achievable.”

Rudi Albert, CEO and founder of Alkaff, said: “At Alkaff we pair our passion for coffee with a dedicated focus on innovation. We are excited to streamline EUDR compliance with Dimitra’s advanced tools and origin experience.”

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The EUDR aims to cut greenhouse gas emissions and help limit biodiversity loss by influencing global action on climate change targeting commodities linked to deforestation. The EUDR will come into force from December 2024 to June 2025 and goes much further than previous regulation on this issue by outright banning materials linked to deforestation and applying to the entire value chain. The EUDR covers products made or derived from cattle, oil palm, rubber, soya, wood, cocoa, and coffee, if they are sold in the EU. The regulation must be followed by any company involved in the value chain of these commodities at any point, whether inside the EU or not.

Under this regulation, companies must prove that none of their product’s components, ingredients, or production processes have contributed to deforestation. The onus will be on companies to prove that not only their product, but their product’s value chain is deforestation-free.

Under the EUDR companies that trade in these commodities and their derived products in the EU market or that export them from the EU will need to follow mandatory due diligence reporting of the goods and supply chains they wish to trade in and demonstrate that their products are not linked to deforestation, or to forest degradation through, such as the expansion of agricultural land. The regulation will require companies and industries in countries that supply the EU to transition to a sustainable, deforestation-free supply chain and legal agricultural value chain if they wish to trade in the EU.

Agribusiness consultants at GlobalData, a data and analytics company, estimate that EUDR compliance premiums for companies operating in the supply chain for just two of the targeted commodities, oil palm products and their derivatives (such as crude palm oil (CPO) and palm kernel oil (KPO)), and rubber could be in excess of $1.5 billion* alone. GlobalData analysts believe that while companies operating in these supply chains will be able to absorb some of the costs themselves a good proportion of these compliance premiums are likely to be passed onto EU consumers in the form of food and drinks and product price increases.

GlobalData’s new study, EU Sustainability Regulations: How the EUDR and other Sustainability Regulations will impact consumer markets, explores some of the EUs key sustainability regulations focusing on the aims of the EUDR and the compliance challenges ahead for farmers, companies, and manufacturers trading in the commodities targeted by the regulation. The study also looks at what the EUDR could mean for the global supply chain of the target commodities, the potential impact on consumer markets and pricing within the EU and how the EUDR could affect the EU’s future competitiveness with China.

Food and drink categories likely to be most affected include coffee, chocolate, soy-based meat alternatives, and products containing palm oil, in addition to personal care products such as shampoo. The GlobalData study finds that operational costs for coffee suppliers will increase and the risk of sanctions for importers will become real. Many coffee suppliers save money by sourcing from multiple growers. This will become more expensive under the EUDR as each one will require GPS-based tracking and traceability protocols.

According to the study, the additional administration required by producers of coffee, cocoa, soya, and other products covered in the EUDR will add significant costs to smallholder farmers. Furthermore, the study reveals that governments in producer countries will likely have to step in to support them, noting that “this is already happening for cocoa farmers in West Africa and coffee farmers in South-East Asia. The EUDR will specifically impact agricultural practices in places like South America, sub-Saharan Africa, and South-East Asia as the industry looks to avoid its impact being classed as ‘deforestation’ by the EU. This will include more ‘agroforestry’- planting crops amongst other plants and trees.”

“The aims of the EUDR are understandable and cutting greenhouse gas emissions and protecting biodiversity is essential. However, there could be some disruption ahead,” said Fred Diamond, senior food & beverages consultant and analyst at GlobalData. “The extra demands of the EUDR could lead some commodity suppliers in what the EU terms ‘third countries’ to move away from the EU and increase trade with countries that impose fewer regulatory requirements such as China.”

Diamond further noted that the gap between big and small companies could get wider as larger companies are more able to shoulder the additional regulatory burden. “The exact impact on consumers will depend on a variety of factors, including how companies choose to respond to the regulation, the extent to which the regulation is enforced, and how much assistance EU member states are willing to give to supplier countries to help them align with the new rules. However, with recent news reports confirming that the world’s top climate scientists expect global heating to go well beyond the current 1.5C target, sustainability regulation associated with cutting greenhouse gas emissions, such as the EUDR which targets deforestation, remains an urgent priority for the planet,” he said.

To read GlobalData Food & Beverages Consultant’s new study EU Sustainability Regulations: How the EUDR and other Sustainability Regulations will impact consumer markets in full, click here.

*The $1.5 billion EUDR compliance premium figure is based on GlobalData Agribusiness consultants understanding of current commodity pricing and the likely impact of increased costs of EUDR compliance on the supply chain of these commodities. However, the company recognises that EUDR compliant commodity premiums are still being agreed confidentially between buyers and sellers so some uncertainty remains over the final numbers.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal

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“The Hub will open new market doors throughout the country, as it is strategically located in North America. We will be able to offer coffee with immediate delivery, in any quantity. This will be possible because now we will always have available coffee in warehouses, on behalf of Expocacer USA,” said Simão Pedro de Lima, managing director of Expocacer.

With this initiative, Expocacer also aims to boost the economy and consumption of specialty coffee, which is growing more and more in the internal and external markets. According to the Brazilian Agricultural Research Corporation (Embrapa), the global consumption of Brazilian specialty coffee has grown consistently at an annual rate of 12% in recent years.

“The search for a quality bean, that is produced with a concern of preserving the environment and taking care of social aspects, as it is already done in Brazil, is a trend that will remain, and Expocacer having its unit in the United States caters to this. Consumers want to know the origin and story of the coffee they consume, and nothing better than being closer to the consumer, with this new hub,” commented Italo Henrique Pereira Silva, Expocacer’s commercial director.

The logistic hub plays an important role in shortening the chain between producer and consumer. Expocacer, as a coffee growers’ cooperative, represents the effective presence of its members in the North American market, as it is the extension of the producer’s arm, forming the direct farm in its true essence.

“The cooperative’s mission is to take the name of its members directly to those who buy our coffee. Having one of our units in the United States is the result of our dedicated work, that produce coffee with quality and sustainability, generating a positive impact on the market,” said Fernando Beloni, chairman of Expocacer’s Board of Directors.

The cooperative, now present in the United States, will make available its entire quality portfolio and its experience in the production of environmentally friendly coffee, such as regenerative and low-carbon coffee farming.

“We have to be attuned to the global trends, and today, the reality of specialty coffee is of a fractionated market, direct trade, as well as social and environmental respectability. Consumers want to know where the coffee comes from, if it’s made sustainably, and Expocacer’s members do that very well,” concluded the managing director.

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Certifications are often seen as a tool to help bring more income back to the coffee farmer, however, the process can be cost prohibitive. In the past year, I was able to delve into several conversations about the challenges that continue to plague the industry, some of which were heightened since the pandemic. There is a clear consensus of the necessity for coffee to become economically sustainable.

A recent study conducted by the Columbia Center on sustainable investment, focused on ten coffee-producing countries that accounted for 89% of coffee exports. Their report discovered that only Brazil and Vietnam paid their coffee producers above the poverty line, with the average Brazilian farmer receiving an income above the living wage. However, coffee farmers from the remaining eight countries received an income either at or below the poverty line.

On 22 July 2021, Fairtrade Canada released a Living Income Reference Prices report for Colombian coffee for conventional coffee at 9,900 Colombian pesos (USD $2.75 per kilo) and 11,000 pesos ($3.06) for organic. Increasing consumer awareness of the challenges within the coffee industry, including the gap between what the producer is making and the cost of coffee, is essential. However, the solution is not as simple as paying more for your daily cup.

There is no question that producers need to be paid more, however, it still needs to be affordable to the end consumer. Consumers are tapped out, especially over the past eighteen months, where the pandemic has resulted in skyrocketing unemployment rates as well as rising F&B/consumables, gas and utility costs. If the price of coffee is placed too high, it could become a luxury, a product consumed once or twice or week, instead of daily. The lower demand has already been noticed with certified products, which, are often sold at higher prices than conventional coffee. However, this price increase, unfortunately, makes it challenging for every consumer to purchase these products.

There needs to be another way to secure a higher price of coffee without placing all the onus on the end consumer. This includes looking at the entire supply chain to determine the changes that need to occur, including a shift in price and premiums, changes in business practice, and producer support at the company level.

Securing a living wage, or ideally, a prosperous wage for coffee producers requires all sectors of the industry to work together to discover and implement the necessary actions to make producing coffee a viable option.

• Long-time T&CTJ contributor, Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at: annemariehardie1@gmail.com.

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Powered by technology and community, the Era of We platform will establish a digital global marketplace and social networking space that will promote direct relationships between coffee estates (farmers), facilitators, roasters and consumers and improve traceability of the brew through a new open ecosystem.  

The platform will empower coffee growers, regardless of size, to build their own coffee brands and market directly to both roasters and consumers, thus creating a more efficient and equitable supply chain where farmers can set their own prices. Despite the boom in value downstream, coffee growers and estates continue to face an unprecedented cost-squeeze crisis that threatens global supply and threatens the livelihoods of small-scale farmers around the world. Reports suggest nearly 61% of producers sell their coffee at prices below the cost of production – leaving many farmers struggling to survive. As a result, the children of these farmers are unwilling to continue the trade, which puts coffee at a risk for labour shortage and jeopardises the world’s supply of coffee. 

“We want to democratise the supply chain through transparency and collaboration,” said Martin Löfberg, founder and chairman of Era of We. “By helping farmers create individual brands based on their distinct coffee properties, Era of We will help increase the overall value of coffee estates.” 

Löfberg helped develop the Era of We concept to protect the future of coffee. He spent the last decade working with coffee farmers across the major coffee producing nations in South and Central America, East Africa and Asia, and he learned first-hand the state of the industry and what’s at stake. The Era of We was created to move the industry to a balanced and more income-sustainable model for the growers and secure the long-term future of coffee production.  

For roasters, the platform will unlock a range of new business opportunities through direct access to relationship building with outstanding, yet unknown, coffee estates from around the world. The platform will be a one-stop-shop to understand ongoing coffee estate and consumer trends, product innovations and prices, and bringing all of that information together to help develop and grow new opportunities – with the added benefit of marketing their own brands to a global audience. 

“Roasters and roaster clients are constantly on the lookout for new and exciting coffee estates and products to enhance their own brand to give consumers the best possible experience – unique, delicious coffee with a traceable story, said Fredrik Nilsson, Acting CEO of Löfbergs. Era of We provides roasters and roaster clients with infinite new business opportunities through direct access to exceptional estates around the world as a complement to the relationships they already have in place.” 

Era of We also serves as a platform for consumers who identify as coffee aficionados to discuss, learn and experience coffee in a new way.  

“People care more about their coffee than ever before, and those expectations continue to rise,” Erik Hedlund, CEO of Era of We adds. “Era of We builds that bridge for consumers and allows them to enjoy their coffee with the full knowledge of its characteristics and attributes. We see the coffee industry evolving in a manner parallel to that of the wine industry – where consumers seek out the coffee of specific estates for their characteristics, pedigree and process.” 

Era of We believes in a collaborative environment to enact positive change and welcomes the participation of anyone who embraces a vision to build a transparent and equitable coffee community. 

Era of We will launch first in Sweden in June, then it will roll out in other countries. Roasters can gain access to a customised suite of Era of We services and capabilities via monthly subscription. Visit www.eraofwe.com to learn more.  

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‘Coffee LENS’ – standing for ‘Livelihoods, Education and Nature at Scale’ – sets Olam Coffee’s first formal sustainability targets for 2025 across its global, direct coffee supply chain, covering 18 origins and a sourcing network of an estimated 424,000 farmers.

Aligned with the United Nation’s Sustainable Development Goals (SDGs), Coffee LENS focuses on four priority areas to improve economic opportunity, education and skills, climate action and ecosystems in the coffee sector, with the following goals:

• 200,000 households benefitting from improved productivity and incomes;
• All children of coffee farmers in Olam’s supply chain have access to education and young people are engaged in vocational training;
• Greenhouse gas emission intensity from Olam Coffee’s global footprint is reduced by 15%;
• All Olam’s coffee supply chains are deforestation-free with improved soil health and biodiversity at landscape level.

The strategy will be achieved through collaboration with partners – customers, governments, financial institutions, multi-lateral agencies and NGOs – and builds on a decade of sustainability experience, with over 60,000 coffee farmers across Africa, Asia and South America already receiving sustainability support from Olam Coffee.

Speaking ahead of the UN Day for the Eradication of Poverty on 17 October, Vivek Verma, managing director and CEO, Olam Coffee said, “While the coffee supply chain is highly fragmented making direct access to farmers difficult, our sustainability ambitions have grown each year, promoting the importance of traceability, quality, profitable farmers and living landscapes. Despite our collective efforts however, many of the complex challenges in coffee remain and are now compounded by Covid-19 imposed restrictions to markets and skilled labour squeezing incomes further.

He said that the Coffee LENS strategy focuses Olam’s efforts on increasing the impact of what they are already doing through a more structured approach. “Through dynamic alliances and tools such as our insights platform AtSource and buying app Olam Direct, we aim to deliver these targets by 2025, creating visible and scalable impact. As a result, we will then be able to expand those targets further, re-imagining the future of coffee.”

Heske Verburg, managing director, Solidaridad Europe, a sustainability partner of Olam Coffee in Peru, added, “Solidaridad and Olam share a vision of prosperous farmers and resilient farming systems, providing a solid base for a promising alliance to integrate shared value solutions into the coffee supply chain, creating positive impact at scale.”

Progress on Coffee LENS will be reported annually, tracked and supported by data from the 100 economic, social and environmental metrics of Olam’s AtSource program. AtSource is a comprehensive business-to-business sustainable sourcing solution for agricultural raw materials and food ingredients. Launched in 2018, AtSource is designed to help producers effect real change on their farms while meeting multiple social, economic and environmental targets, thus increasing resilience and transparency throughout the supply chain — and improving farmers’ livelihoods in the process.

For more information, download the Coffee LENS brochure here.

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According to the AMS, the USDA arm that oversees the National Organic Program (NOP), this proposed rule would amend several sections of the USDA organic regulations (7 CFR part 205) to strengthen oversight of the production, handling, certification, marketing, and sale of organic agricultural products as established by the Organic Foods Production Act of 1990 (OFPA).” If implemented, the AMS says this proposed rule “will improve organic integrity across the organic supply chain, and benefit stakeholders throughout the organic industry.” Furthermore, the proposed amendments will reportedly “close gaps in the current regulations to build consistent certification practices to deter and detect organic fraud, and improve transparency and product traceability…and will assure consumers that organic products meet a robust, consistent standard and reinforce the value of the organic label.”

The proposal comes as organic agricultural products sales continue to surge in the United States. Total sales of organic agricultural products in the US grew from $3.4 billion in 1997 to $55.1 billion in 2019. According to the AMS, the need for more consistent oversight to protect organic integrity is a product of the rapidly expanding organic market, increasingly complex organic supply chains, and price premiums for organic products. “This substantial market growth has allowed many additional types of business to participate in the organic supply chain, and organic agricultural products are now traded on a global scale,” writes the AMS in the proposal, noting that “today’s global organic marketplace is marked by a multifaceted supply chain with organic products increasingly sold and handled by entities not regulated by the USDA. The absence of direct enforcement authority over some entities in the organic supply chain, in combination with price premiums for organic products, presents the opportunity and incentive for organic fraud, which has been discovered in the organic sector by both the National Organic Program and organic stakeholders.” The amendments in the proposed rule are designed to mitigate the occurrence of organic fraud.

The AMS says the proposal is in response to stakeholders’ experiences in the organic system, as they have repeatedly called for the NOP to take steps to improve oversight of organic systems and enforcement of the USDA organic regulations. Commonly cited areas for improvement include certification of excluded handlers, organic import oversight, fraud prevention, organic trade arrangements, and organic inspector qualifications.

For more information on the proposal, click here or here. Additional information may be found here and here.

If approved, the changes would be the first significant revisions to USDA organic certification regulations since they were first adopted in 2000. [However, a new ruling that took effect in January 2019 requires all flavours to be certified-organic when commercially available. Organic-compliant flavours are no longer permitted under the 95 percent rule.]

An invitation to submit comments on the proposed rule changes began on 5 August 2020 and runs for 60 days (ending 5 October 2020). Those interested in submitting comments can do so by visiting: www.regulations.gov (document number, AMS-NOP-17-0065). T&CTJ will further inform readers as news becomes available.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

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Engage has collaborated with the Harrogate-based independent tea and coffee company for over five years on a range of projects including building websites, developing microsites and creating content.

The agency was selected to provide digital support for Taylors’ sustainability activity due to the longstanding partnership and its extensive experience with FMCG brands including Heineken and Britvic.

The three year project includes the development of a digital content hub to showcase the environmental and social work conducted by the Taylors and Yorkshire Tea brands in the UK and with suppliers overseas. It also features more information on the company’s sustainability credentials and insight into how other brands can become more sustainable. A dedicated sustainability report has also been produced to review past projects and impacts on people and the planet.

Samantha Gibson, sustainability communications manager at Taylors of Harrogate, commented: “Not only have the Engage team produced a beautifully designed platform to bring this work to life, they’ve also embraced the values behind the project, challenging themselves to build sustainable thinking into the development of the site itself. We couldn’t have asked for a better partner. We are excited about the opportunities the site brings to enable us to talk openly about our sustainability work, not only discussing our progress but also the challenges we’ve faced. It’s also a place to share more from our amazing suppliers around the world.”

Taylors is the first tea and coffee company in the UK to share full details of its supply chains and its impact on suppliers in the countries it operates. Alongside a strong focus on supply chain resilience, the business has spent the last five years working towards CarbonNeutral certification for its entire tea and coffee supply chain, and all of its products are now certified from field to shelf. Further sustainability work includes projects involved in access to water, planting trees and sustainable farming.

Tom Schofield, creative director at Engage, said: “We’re starting to see more of our clients following the lead of Taylors and investing in their sustainability resources and credentials. Thanks to programmes like Blue Planet II, sustainability is becoming more mainstream and consumers are increasingly expecting brands like Taylors to invest in both people and the planet.

“We’ve really enjoyed working on the sustainability hub and report so far, and we’re looking forward to working on the next steps of the project which includes collaborating with Taylors to deliver a sustainability webinar.”

Businesses which prioritise sustainability can reap the rewards and benefits, added Alex Willcocks, co-founder of Engage: “Sustainability is not only great for people and our planet, but it’s also great for business. Customers today have their pick from a number of competitively priced, high quality products and services. Adopting a visible and positive stance on the issues of Environment, Social, and Governance (ESG) that is both authentic and aligned to your customer values is a powerful differentiator, especially in a crowded market.”

For business leaders looking to find out more about how to achieve greater sustainability credentials and the benefits this can generate, Engage and Taylors of Harrogate will be hosting a webinar on Thursday 20 August to underline the business benefits and value of having a centralised sustainability hub, and the positive impact that sharing a sustainability story can have on brand value and reputation.

To register for the webinar, visit: app.livestorm.co/engage-3/the-value-of-showcasing-sustainability-online-with-taylors-of-harrogate.

For more information about the sustainability partnership, visit: engageinteractive.co.uk/work/taylors-impact

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The international non-profit organisation expects at least two million farmers around the world to use the new certification programme to produce better crops, adapt to climate change, increase their productivity and reduce costs. Major brands and businesses along the supply chain will rely on the programme to source a steady supply of certified ingredients, meet their commitment to responsible business, and address the rising consumer expectations for more sustainable products. 

The new programme consists of the Sustainable Agriculture Standard with requirements for farms and supply chains, along with a new assurance system and a suite of tools to measure progress towards sustainability objectives. The two years of work to reach this critical point build on the organisation’s combined 45 years of certification experience following the merger of the Rainforest Alliance and UTZ in 2018. 

The development of the new certification programme included public consultations that received input from more than 1,000 people in nearly 50 countries, representing more than 200 organisations. 

“The new certification programme incorporates new tools to support farmers and companies to set clear sustainability targets and focus investments to improve positive impacts for people and nature,” said Ruth Rennie, director of standards and assurance at the Rainforest Alliance. “These tools and innovations will support more resilient agriculture and help make responsible business the new normal. This is increasingly urgent in our age of climate change, biodiversity loss, and global inequality.”

“This ambitious and innovative certification programme is part of the Rainforest Alliance’s strategy of collaboration with farmers, companies, implementing partners, and third-party auditors, as well as other NGOs, governments, and consumers,” said Alex Morgan, chief markets officer at the Rainforest Alliance. “Only together can we restore the balance between people and nature and create a world where we thrive together,” he added.

In May of this year, the Rainforest Alliance also released its new seal, which can be used on product packaging and promotional materials from 1 September 2020. The new seal will eventually replace the current Rainforest Alliance Certified seal and the UTZ label. The new certification seal is a simple visual that shows consumers how to make a better choice and demonstrates that farmers and companies are taking steps to make their products more sustainable.

Key innovations of the Rainforest Alliance 2020 certification programme:

• Climate-smart agriculture: A climate-smart agriculture approach is vital for farmers and businesses around the world who need to adapt to a changing climate in order to secure the future of their crops and livelihoods, products, and supply chains. The 2020 Sustainable Agriculture Standard is inherently oriented towards climate-smart agriculture with a focus on adaptation and resilience.
• Human rights: A new “Assess-and-Address” approach to tackling human rights issues such as child labour, forced labour, discrimination, and workplace violence and harassment has been developed. Rather than imposing a simple ban that often drives the problem underground, Rainforest Alliance says the new approach focuses on assessing the risks and engaging local communities to work together to prevent and address the issues wherever and whenever they may occur.
• Improved data management: Better analysis of risks and measurement of performance, new digital tools for farmers and clearer performance insights for companies. Geospatial analysis is used to support and monitor performance against key requirements of the standard, such as the avoidance of deforestation.
• Shared responsibility: The programme seeks to address systemic imbalances in global supply chains, which put too much burden on producers alone to achieve more sustainable agricultural production. Buyers will have to reward producers for meeting sustainable agriculture standards by paying a mandatory ‘sustainability differential’ which is an additional cash payment over and above the market price for the sale of certified crops. Buyers will also need to provide investments to support producers to achieve their sustainability objectives and be transparent about those.
• Social and environmental requirements for supply chains: In the new certification programme, companies in the supply chain identified as having a high risk of negative social and environmental impacts will also need to implement improved practices. These include for instance ensuring decent working conditions and labour protections as well as wastewater management.
• Deforestation: Deforestation continues to be banned for certified producers, but prohibition will extend to the conversion of all natural ecosystems, including wetlands and peatlands, for more land to be protected and managed more sustainably.
• Risk-based requirements and assurance: The new certification programme is based on more in-depth risk assessment of the social and environmental risks to sustainable agricultural production in different crops and countries. Data from the risk assessment will be used to provide guidance to producers and companies on where to focus their improvements for maximum impact.

From September 2020, the Rainforest Alliance will start rolling out the certification programme around the world through a comprehensive global training programme and further development of supporting technology systems. From July 2021, all audits will be against the 2020 Sustainable Agriculture Standard. 

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The report says that the level of support available to the ‘squeezed middle’ is currently poorly focused and will not deliver the recovery plan the UK Government is working towards. Maintaining Post-Covid-19 Capacity in Hospitality and Food Service Supply Chain Businesses – ‘The Squeezed Middle’ has been produced by the Food and Drink Federation-convened Food and Drink Industry Roundtable, with input from the BCA.

Paul Rooke, executive director of the BCA, said: “Our primary aim has been to ensure that those businesses who supply the food service and hospitality sectors, the real engine room of the food and drink sector, and who are fundamentally viable businesses, get the targeted support they need to be ready to support their customers as they restart their operations.”

In addition to publishing the findings from the new report, the BCA has co-signed a letter to Rt Hon George Eustice MP, secretary of state for Environment, Food and Rural Affairs to advocate for the new report’s findings to be considered by the government.

Maintaining business liquidity reportedly remains a huge concern for the ‘squeezed middle’. Research undertaken for the report shows that fewer than half of food and drink manufacturers have applied for Coronavirus Business Interruption Loan Scheme (CBILS) or Bounce Back Loan Scheme (BBLS) support. Concerns over incurring additional debt and associated interest payments were cited as the main reason. At the same time, many companies are facing up to 50% of their customer base delaying payment or not paying outstanding invoices.

While the UK Government’s furloughing scheme has been popular and effective amongst the ‘squeezed middle’, there are concerns about whether the hospitality and food service markets will have recovered to viable levels when the scheme ends in October.

The UK government’s decision to underwrite Trade Credit Insurance was widely welcomed across the food and drink industry. However, many businesses continue to report concerns that trade credit insurers are not adjusting their criteria to take into account the pandemic, making unrealistic demands on businesses and their debt management.

The Food and Drink Industry Roundtable report outlines a series of practical steps the government can introduce to ensure the ‘squeezed middle’ are able to play their role in a post-virus recovery:

• Businesses supplying into the hospitality and food service industries should continue to receive furlough support through the UK Government at a rate of 80% of salary contribution until those markets return to commercially viable levels.
• The UK Government should place a requirement on the trade credit insurance industry to develop best practice rules of operation which include greater transparency and formal notification of the reason(s) for refusal or withdrawal of cover.
• Insurers should be required to reinstate reduced or withdrawn cover back dated to 1 March 2020, except where there are clear and identifiable reasons as to why this would no longer be appropriate.
• Governments should provide more targeted support for the ‘squeezed middle’ that does not incur additional business debt e.g. a relaxation of current rules for Apprenticeship Levy funds to allow businesses to maintain existing employment.
• Governments should create schemes for small, medium and micro businesses within the ‘squeezed middle’ that provide initial cashflow injections to businesses requiring support to secure orders for materials and/or build stock in readiness for the recovery of customer demand.

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The declaration, initiated by Singapore, calls for port authorities to collaborate and share best practices in ensuring that port operations can remain undisrupted.

Representing the Maritime and Port Authority of Singapore (MPA), Ms Quah Ley Hoon, chief executive, said, “As the world battles with the Covid-19 pandemic, it has never been more critical to keep our ports open and goods moving. Shipping is chartering into many unknowns and new challenges. Port authorities have to take enhanced precautions for their ports and on ships, as well as manage the stress faced by our seafarers and maritime personnel.

“We have come together to make a declaration of our commitment, exchange experiences and share best practices. This virtual declaration by members countries across different geographical regions is also a first for the PAR. We came out of the session gaining more valuable knowledge to ensure that necessities and essential medical supplies continue to be transported seamlessly across the world and into our respective countries.”

Through this joint declaration, the signatories are committed in working together to ensure that:

• Merchant ships can continue to berth at port terminals to carry out cargo operations and keep the global supply chain going;
• Best practices are adopted, according to national circumstances, including precautionary measures for the shipping community, advisories and assistance for shore personnel and ship crew, and safe handling of cargoes during this period; and
• Port authorities continue to share experiences in combating Covid-19 while safeguarding unimpeded maritime trade.

PAR has shared the declaration with the International Maritime Organisation and the International Association of Ports and Harbours to rally other port authorities to join this declaration.

Click here to see the list of 20 PAR members who signed the declaration.

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In April 2020, the ICO composite indicator averaged 108.91 US cents/lb, 0.1% lower than in March. After reaching a high of 113.86 US cents/lb on 15 April, the daily indicator price declined over the next two weeks and reached a low of 103.63 US cents/lb on 27 April. Concerns over disruptions to the supply chain are being weighed against the uncertainty over the future of demand in this unprecedented situation.

Prices for both Mild Arabica group indicators trended upwards in April 2020. Other Milds rose by 4.2% to 154.52 US cents/lb, and Colombian Milds by 1.8% to 161.92 US cents/lb. As a result, the differential between Colombian Milds and Other Milds narrowed by 30.6% to 7.40 US cents/lb. In contrast, prices for Brazilian Naturals fell by 1.5% to 111.22 US cents/lb, resulting in a price differential of 50.70 US cents/lb from Colombian Milds and 43.30 US cents/lb from Other Milds. Robusta prices also fell in April 2020, averaging 63.97 US cents/lb, 5.2% lower than in the previous month. This also represents the lowest monthly average for Robusta prices since June 2006 when it reached 60.23 US cents/lb.

The New York Arabica futures market fell by 0.5% to an average of 115.55 US cents/lb in April 2020, while the London Robusta futures market declined by 5.2% to 54.4 US cents/lb. As a result, the spread between Arabica and Robusta coffees, as measured on the New York and London futures markets, increased to 61.15 US cents/lb, which is 4.2% higher than in March. Certified Arabica stocks decreased by 7.9% month-on-month to 2.11 million bags in April 2020, which is the third consecutive month of decline.

The volatility of the ICO composite indicator increased by 1 percentage point to 10.6% over the past month, marking a second consecutive month of increased volatility. The volatility of all group indicators grew in April 2020. Other Milds rose by 1.4 percentage points to 12.9%, Brazilian Naturals by 1.1 percentage points to 14.2% and Colombian Milds by 0.6 percentage points to 11.1%. The Robusta group indicator volatility was 4.8%, an increase of 0.3 percentage points from March 2020.

Global exports in March 2020 totalled 11.06 million bags, 3.7% lower than the 11.49 million bags shipped in March 2019. Exports in the first half of coffee year 2019-20 reached 61.96 million bags, down by 3.9% compared to 64.5 million bags for the same period in 2018-19. In October 2019 through March 2020, shipments of Arabica fell by 7.8% to 38.6 million bags while Robusta shipments increased by 3.2% to 23.36 million bags.

Shipments from Brazil in March 2020 rose by 0.2% to 3.12 million bags, due to the sharp rise in prices for Brazilian Naturals that month as well as the depreciation of the Brazilian real against the US dollar. Its exports in the first six months of coffee year 2019-20 fell by 10.9% to 19.6 million bags, due largely to a smaller output of Arabica, which is in the off year of its biennial cycle. However, its shipments in crop year 2019-20, which ended in March 2020, reached 40.11 million bags, 6% higher than in 2018-19. Much of the growth in exports occurred in the first half of its crop year from sales of stock from its record harvest in 2018-19. Additionally, shipments of green Robusta grew by 40.5% to 4.1 million bags while exports of Arabica rose by 2.8% to 31.97 million bags. After a decline in 2017-18, shipments of soluble coffee have grown over the past two crop years, increasing by 5.5% to 4.01 million bags in crop year 2019-20.

In March 2020, Vietnam’s exports fell by 2% to an estimated 2.5 million bags. Its shipments in October 2019 to March 2020 declined by 3.7% to 13.65 million bags compared to the same period one year ago. The sustained losses in Robusta prices this season has likely discouraged farmers from selling their coffee.

Colombia’s exports in March 2020 fell by 20.9% to 903,000 bags. Their exports in the first six months of coffee year reached 6.81 million bags, 4.7% lower than in the first half of coffee year 2018-19. The decline in exports is attributed mostly to the fall in output in the second quarter of coffee year 2019-20. Production in the first six months of 2019-20 is estimated at 7.41 million bags according to the National Federation of Coffee Growers in Colombia (FNC), which is 6.1% higher than in the same period for 2018-19. However, this growth occurred in the first quarter of coffee year 2019-20, when output increased by 24.1% to 4.56 million bags while production in the second quarter decreased by 13.8% to 2.86 million bags. The lower volumes of Colombian coffee supported higher prices for Colombian Milds in March 2020, despite the depreciation of the Colombian peso against the US dollar.

Indonesia’s exports were 11.9% higher in March 2020 at 532,000 bags. Its shipments in the first six months of coffee year 2019-20 reached 3.12 million bags, 54.1% higher than in the same period for 2018-19, though output was significantly lower that season. Indonesia’s exports for crop year 2019-20 (April-March) are 60% higher, reaching 7.55 million bags, compared to 4.72 million bags last year. Compared to the previous two crop years, exports of soluble coffee more than doubled to 2.78 million bags.

Shipments from Honduras declined by an estimated 7% to 750,000 bags in March 2020. Its exports in October 2019 to March 2020 decreased by 2.3% to 2.75 million bags. In coffee year 2019-20, January was the only month in which its exports were higher than the previous year. Continued low prices, and for some farmers below the cost of production, as well as drought on some farms have impacted output this season after several years of strong growth.

Imports by major importing countries totalled 40.56 million bags in the first four months of coffee year 2019-20, which is 9.4% lower than in October 2018 to January 2019. Imports of all forms of coffee by major importing countries fell during this period. Green coffee imports fell by 3.7% to 31.73 million bags. Processed coffee imports, which accounted for 21.8% of the total also decreased. Roasted coffee fell by 22.5% to 5.39 million bags and soluble coffee by 28.8% to 3.44 million bags.

In January 2020, imports for the major importing countries decreased by 25.2% to 8.71 million bags compared to their imports in January 2019. This follows larger than expected imports by the European Union and the United States in coffee year 2018-19. Additionally, the sudden rise in prices from late November through December 2019 is likely to have encouraged importers to delay further purchases. While consumption in 2018-19 rose by 4.9% for Europe and 5.7% for North America, imports in the first four months of coffee year 2019-20 indicate that demand growth is not likely to continue at this rate, but instead would have been closer to the long-term average. However, the import data covers the period just prior to the spread of covid-19, and the impact of the pandemic now presents considerable downside risk to consumption growth in 2019-20.

In 2019-20, world coffee consumption is estimated at 166.06 million bags, an increase of 0.5% on 2018-19. Many countries have suspended non-essential activities and instituted social distancing measures, which have negatively impacted out-of-home coffee consumption. Additionally, job losses could lower demand, particularly for non-habitual consumers. As a result of the revision, production is now estimated to exceed consumption by 1.95 million bags in 2019-20. Output from 2019-20 is unchanged as much of the harvesting occurred before the global pandemic. Instead, the impact on production is more likely to be seen in the 2020-21 coffee year, for which harvesting has already begun for countries like Brazil where the crop year begins in April.

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“There are growing fears that the full impact of the coronavirus disease 2019 (Covid-19) on the supply chain in the United States and Europe will be felt from mid-March, when inventory at manufacturing and assembly plants that depend on inputs from China begins to deplete,” reported the Journal of Commerce (JOC) on 4 March.

In celebration of Chinese New Year annually, many companies and factories in China close for a week. This year, Chinese New Year began on 25 January, but the rampant spreading of Covid-19 caused week-long closures to be extended for another two weeks. Travel restrictions prevented workers from returning to work, resulting in manufacturing facilities remaining closed for most of February.

The JOC further reported, “With factories closed and an unprecedented number of blank sailings implemented by ocean carriers, very little has been shipped out of China in the past month…A shipper who did not wish to be identified said although manufacturing activity in China was slowly returning, the last of the containers shipped ahead of the Chinese New Year shutdown had arrived in the US and Europe, and nothing had been produced in China since those shipments left.”

The automotive, electronics, pharmaceutical and textiles industries – to name just a few – globally, have all been impacted by production issues in China.

Within China, coffee chains and consumption habits have also been affected.

Because of the outbreak, coffee chains have been forced to halt business. In January, Starbucks temporarily closed more than half of its 4,290 coffeehouses in China (as of 27 February, the company said it had reopened 85% of its stores in its second-largest market). McDonald’s also temporarily shuttered operations in hundreds of stores in China, including McCafés.

People have been encouraged to stay indoors and work from home to help minimize the spread of the virus. According to a recent Rabobank food and agribusiness report, this has incentivized a shift back to home consumption. The report also noted that coffee machines have continued to gain momentum in the Chinese market in recent years, and “will be more welcome in these extraordinary circumstances.”

Although out-of-home consumption has been the stronger performer in recent years, Rabobank advises that home consumption cannot be neglected in the Chinese coffee market.

Covid-19 could also have a positive effect on another coffee category — ready-to-drink. RTD coffee continues to perform well in China, growing in double-digits year-over-year in 2019. According to Rabobank, the robust growth was driven by innovative products from various players. Nongfu Spring introduced carbonated RTD coffee in April 2019, which, unsurprisingly, attracted younger consumers. It has since rolled out a low sugar/sugar free option to its RTD portfolio.

Coca-Cola and Costa recently co-launched Coca-Cola Coffee+, which Rabobank noted has led to an upsurge in carbonated RTD coffee consumption among younger consumers.

Seeing untapped opportunity, Chinese dairy companies have also entered the RTD coffee sector with their own drinks, Rabobank reported. Yili and Mengniu Dairy introduced Sunrelas and Shiny Meadow Cold Brew Coffee Latte, respectively. While Three Squirrels, a branded nut company, launched a plant-based dairy RTD coffee drink called Second Brain.

Rabobank sees further growth potential for RTD coffee in China amid the Covid-19 epidemic. Per the report, “Given the coronavirus outbreak, we expect many consumers will shift to RTD coffee as an alternative to freshly brewed coffee, which will further push the sales performance of RTD coffee in 2020.”

• Vanessa L. Facenda, editor Tea & Coffee Trade Journal. She may be contacted via vanessa@bellpublishing.com.

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Developed with leading companies across the global supply chain including Beyers Koffie, The Colombian Coffee Growers Federation, ITOCHU Corporation, Jacobs Douwe Egberts (JDE), The J.M. Smucker Company, Rabobank, RGC Coffee, Volcafe, Sucafina and Yara International, Farmer Connect is a traceability platform powered by IBM Blockchain designed to help increase traceability, efficiency and fairness in the coffee supply chain.

Coffee drinkers today consume more than half a trillion cups per year, and as many as two-thirds of consumers aged 19-24 surveyed say they prefer to buy coffee that is sustainably grown and responsibly sourced. But despite progress by international certifying bodies, there still a lack of knowledge around the need for coffee farmers to earn a sufficient living for bringing their product to market.

Its large, global supply chain makes tracing coffee difficult. Once grown, beans make several stops, including at coops, exporters, shippers, importers, roasters, distributors, and retailers before finally reaching the consumer. Each participant in this complex system tracks only their small segment of the journey, and each uses its own system to log data. This means that information about the product is fragmented.

Consumers hoping to close the gap between their neighborhood barista and the farmer who grew their coffee now have a solution, thanks to the same blockchain technology behind IBM Food Trust.

Farmer Connect is introducing the “Thank My Farmer” app, a consumer-facing application that pulls information directly from the blockchain in a standardised way that can be used across the industry. It connects the user to farmers, traders, roasters and brands. The information is presented on an interactive map, allowing each product to tell a story in a simple and scalable way. The “Thank My Farmer” app also presents sustainability projects in coffee communities and an opportunity for consumers to support them.

Blockchain technology brings all the parties in the coffee supply chain together, simplifying the exchange and tracking of information and payments, and enabling greater trust. It creates a permanent digitised chain of transactions that cannot be altered. Each network participant has an exact copy of the data, and additions to the blockchain are shared throughout the network based on each participant’s level of permission. Farmers, wholesalers, traders and retailers can interact more efficiently using comprehensive, near real-time access to this data, and consumers can have new insights about the origins of the products they consume.

“The aim is humanising each coffee drinker’s relationship with their daily cup,” said David Behrends, founder and president of Farmer Connect. “Consumers now can play an active role in sustainability governance by supporting coffee farmers in developing nations. Through the blockchain and this consumer app, we’re creating a virtuous cycle.”

The new mobile application will launch to the general market at the beginning of 2020. Users in the US and Canada will be able to scan QR codes on 1850 brand premium single-origin coffee. European consumers will be able to access the Thank My Farmer app through a new single-origin brand, Beyers 1769, roasted at Beyers Koffie.

As the app expands in 2020, large and small companies will be invited to join, and coffee drinkers will be able to support the communities where their coffee is grown by funding local projects. Farmer Connect is currently incorporating self-sovereign identity, a new form of digital identity built on distributed ledger technology, in collaboration with the Sovrin Foundation. This closes the loop on a circular economy that will enhance smallholder livelihoods while delivering transparency and a better experience for the consumer.

“This project is another example of how blockchain technology can enable a channel for real change,” said Raj Rao, general manager, IBM Food Trust. “Blockchain is more than aspirational business tech, it is used today to transform how people can build trust in the goods they consume. For business, it can drive greater transparency and efficiency.”

For more information on Farmer Connect and the Thank My Farmer app visit ibm.com/food or see it in action in this video.

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