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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“We’ve seen a very positive response to GCP’s call for the use of a common language on the foundations of coffee sustainability,” said Annette Pensel, executive director, GCP.

“The three organisations we’re pleased to announce today are the latest to join the growing list of sustainability schemes owned by GCP Members that are answering that call. We applaud this commitment to the use of a common language and the increasing openness to transparency.”

GCP announced today the recognition of Fairtrade International, Small Producer Organization and Coffee Standard, and Fair Trade USA’s Agriculture Production Standard as equivalent to the Coffee SR Code 3^rd party assurance. In addition, Montesanto Tavares Group’s GMT Green has been recognised as equivalent to the Coffee SR Code, 2^nd party assurance.

The number of sustainability schemes recognised by GCP now amounts to 19, representing encouraging progress for sector alignment on coffee sustainability.

Hear from the schemes in their own words.

Sector alignment for coffee sustainability 

Sustainability schemes going through the GCP Equivalence Mechanism Process – which was strengthened with stricter sustainability and operational criteria in 2022 – are aligning their systems to become equivalent to the Coffee SR Code. The code is a sector-wide reference on the foundations of sustainability in economic, social and environmental dimensions for green coffee production and primary processing worldwide.

GCP’s Equivalence Mechanism also entails assessment against a set of operational criteria that ensures a credible and effective system for implementation and includes governance, standard-setting, assurance, data and claims requirements.

According to Mario Vega, GCP’s newly appointed senior manager sustainable sourcing, this announcement was the first of the year with more sustainability schemes planned to be announced in Q3 and Q4.

“Alignment is a critical feature to understand, advance and accelerate coffee sustainability and we applaud the action by these GCP Members to step up and publicly measure up to the Coffee SR Code and GCP Equivalence Mechanism,” said Vega.

For the assessment of the sustainability schemes, GCP partnered with the International Trade Centre, which, as GCP’s implementation partner, assessed the schemes against the principles and practices of the Coffee SR Code and the operating practices that schemes should have in place to be considered credible and effective.

“The Coffee SR Code serves as a baseline, and equivalent schemes meet at least these requirements. Some schemes – especially 3^rd party schemes – may go further with their principles and practices, their commitment to transparency, and their approaches to deal with sustainability issues,” said Vega.

“We hope that these GCP Members will inspire others to step up for coffee sustainability for the urgent and essential advancement of farmer prosperity.”

Click here to view all the schemes recognised by GCP as equivalent to the Coffee SR Code.

All sustainability schemes recognized by GCP are eligible for roasters and retailers to be included in the annual GCP Collective Reporting on Sustainable Coffee Purchases, another way companies are aligning and increasing transparency to advance coffee sustainability globally.

The Equivalence Mechanism, together with the Coffee SR Code and the GCP Collective Reporting on Sustainable Coffee Purchases, are connected assets developed by GCP to offer a common language on the foundations for coffee sustainability and promote the supply and demand of coffee produced following at least baseline sustainability principles.

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The London speciality-coffee roaster was paying a minimum of GBP £1.75 per lb before this point, and this change came at the same time as Fairtrade International’s price increase, which was up from $1.40 to $1.80 per lb. 

Prior to August 2023, the Fairtrade base price didn’t cover Fairtrade’s estimated cost of production for farmers, which was, based on the 2021 harvest, $1.76.  

Now, the Fairtrade minimum price covers the estimated cost of production, and certified farmers can also benefit from Fairtrade Premiums, which are additional sums of money invested in projects to improve productivity, climate adaptation, quality, infrastructure, and community services. 

Will Corby, Pact Coffee’s director of coffee and social impact, said:

“As coffee farmers face even tougher economic conditions due to climate change, increasing production costs and inflation, this is a massive change for good, and this is down to the fantastic work of the brilliant people at Fairtrade International.”

“But it’s not compatible with our sourcing model. Fairtrade requires that farmers join cooperatives to get certified. This doesn’t work for many of the small, independent farmers we’ve forged strong, mutually beneficial relationships with over a decade, and we’re sticking by them.”

“For some of these farmers, becoming Fairtrade certified would be too costly, require leaving their farms, and, ultimately, come at the expense of quality.”

“So we’ve instead raised our minimum price to $2 per pound to cover this increase while recognising the extra $0.20 Fairtrade Premium. As always, all of this will go directly to the farmer.”

“This way, we’re encouraging the pursuit of outstanding speciality coffee, while adhering to the Fairtrade Minimum Price and, in many instances, paying significantly more.”

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The global certification’s fifteenth edition of the report showed that Fairtrade Premium received by producer organisations for Fairtrade’s top seven products – banana, cocoa, coffee, cotton, flowers, sugar and tea – totalled about €210 million, while the Premium for the minor products topped €12 million. The Fairtrade Premium is an additional amount on top of the selling price that is paid to producer organisations and which they democratically choose how to invest in their business and communities.

The small-scale producer organisations invested 36 percent of their Premium into improving production and farming practice, such as building processing plants and warehouses, as well as purchasing farm materials for members. Another 23 percent was spent on financial benefits for farmers, whether direct cash payments to top up incomes or credit services. Meanwhile, workers on Fairtrade certified plantations allocated 75 percent of their Premium into social investments, including education and housing. Another 15 percent was invested in financial benefits for workers and their families.

In addition to the Fairtrade Premium, the report includes a full set of data about producer organisations and their farmer members and workers, as well as the global production of each product, land area, and regional breakdowns.

As of the end of 2022, 1,910 producer organisations were Fairtrade certified, including 1,563 small-scale producer organisations (including those certified for contract production) and 347 larger farms that depend on a hired workforce (known as hired labour organisations). These organisations were made up of 1,848,268 farmers and 197,118 workers.

For the first time, the monitoring report also includes information about organic sales of the six largest Fairtrade products (excluding flowers, for which there is no organic category). Sixty-four percent of the 231,188 metric tonnes of Fairtrade coffee sold by producers in 2022 was organic, while a similar 63 percent of the 730,176 metric tonnes of Fairtrade bananas sold were organic. In addition, organic cotton made up half of all cotton producers’ Fairtrade sales.

Women made up 21 percent of all Fairtrade farmers in 2022, with the highest proportion of women growing Fairtrade certified cereals (60 percent), oilseeds and oleaginous fruit like olives (41 percent), and dried fruit (35 percent). Forty-four percent of Fairtrade workers were women, with workers on farms producing fruit juices topping the list at 74 percent, followed by flowers and plants (54 percent) and tea (52 percent).

To read the full report, please click here.

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The update, approved by the Fairtrade Standards Committee, meets, and in some areas exceeds, the European Union’s Deforestation Regulation (EUDR) that went into effect in June 2023. In particular, the updated Fairtrade Coffee Standard sets the deforestation cut-off date at 1 January 2014, which means that no coffee should come from land deforested after that point. It also requires that all farms have recorded geolocation points, and farms larger than four (4) hectares must have polygon maps.

Juan Pablo Solis, senior advisor climate and environment, Fairtrade International, explained that the updated Coffee Standard is important because it represents a big step in the right direction. “There is no denying we are living in an era of climate crisis. For farmers and workers, the frequency and severity of climate variability means high exposure to human and environmental risks that jeopardise their livelihoods. It is no secret that climate change directly impacts smallholders’ future, hence a significant change in our global food system is paramount.”

In addition, the Standard requires coffee cooperatives to develop a prevention and mitigation plan, and they must conduct deforestation monitoring that will be facilitated by a satellite platform provided by Fairtrade. Fairtrade has established a partnership with Satelligence, a leader in deforestation tracking, that will allow producer organisations to have access to data and act on risks identified.

By updating the Coffee Standard, 600 Fairtrade coffee cooperatives, representing 870,000 Fairtrade coffee farmers cultivating 1.1 million hectares, would have the guidance and tools to meet the EUDR, which is part of the European Green Deal.

For instance, the EUDR requires geolocation data, but the Fairtrade Standard goes further by requiring producer organisations to collect this information, and payers and conveyors to report it to Fairtrade and also share this with the producer organisations to prevent deforestation. This detail points to the principle of fairness, meaning that the responsibility of protecting the environment must be shared by all those involved. The EUDR cutoff date is 31 December 2020, while the Fairtrade cutoff date is 1 January 2014. Plus, the Fairtrade Standard requires not only monitoring and risk assessment but also a biodiversity monitoring and management plan unlike the EUDR requirements.

The updated Standard will take effect in 2026, which will provide producers and traders with a transition period to adjust their practices and ensure compliance.

Fairtrade standards are reviewed and regularly updated through an inclusive and consultative process initiated and led by Fairtrade International’s Standards and Pricing Unit, with the participation of key stakeholders in the Fairtrade system, including farmers and farm workers, and then decided upon by the Fairtrade International Standards Committee. The committee, which includes representatives of the three Fairtrade Producer Networks, ensures that any decision considers the views of all the relevant stakeholders and are in line with Fairtrade International’s mission and policy statements.

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New research from the International Institute for Sustainable Development (IISD) reveals the latest consumption and production trends in the sector, explores why so many tea farmers are struggling to make a living, and examines whether VSSs make a difference to smallholder farmers’ livelihoods. 

There are 13 million people working in the global tea industry, two thirds of whom are smallholder farmers in developing countries. IISD research finds – and those in the tea industry know – that farmers are challenged with producing an affordable, quality, and more sustainable product in a highly competitive market and under increasingly harsh and unpredictable weather conditions. 

“Smallholder farmers bear the biggest brunt of low auction prices and volatility in the tea sector,” said Steffany Bermúdez, policy advisor, IISD, in a statement. “They receive meagre prices for their green leaves – prices that represent a minimal share of the price tea fetches after it has been blended and packaged – and the added unpredictability of auction prices exposes them to even greater financial uncertainty.” 

The international tea trade is unique in that three quarters of the world’s tea is traded through public auctions. Overall, tea auction prices have been declining for the past four decades, with more severe drops in recent years due to overproduction, pandemic-related disruptions, and the Russia–Ukraine conflict, among other factors. 

Similar to coffee, tea farmers also bear all the risks of extreme weather changes as well as variations in the cost and availability of necessary items like fertilisers. Furthermore, in some tea-producing countries, smallholder farmers make no profit at all, as their total production costs often exceed their earnings. Farmers can do little to change this scenario as they have no influence over tea auction prices and have limited market knowledge, therefore they continue to pay brokers steep prices to sell their tea. 

IISD’s new report examines whether voluntary sustainability standards (VSSs) such as Rainforest Alliance, Organic, and Fairtrade International make a difference to smallholder farmers’ livelihoods. 

Voluntary sustainability standards (VSSs) have been working to address sustainability challenges in the tea sector for 30 years, per the IISD. Many focus on building climate resilience while some seek to improve the prices and incomes of smallholder farmers. 

VSS-compliant tea now represents at least a quarter of total global production. However, evidence of VSSs’ impact on farmers’ incomes is limited and tends to be very context specific. “It is not clear if minimum prices, premiums, and other differentials really make a difference to tea farmers’ livelihoods—or even make up for the costs of certification,” states the IISD report. 

Farmers in some major producing countries can receive up to 23% higher prices than conventional producers when selling VSS-compliant tea. However, the IISD finds that further evidence of VSSs’ impact on farmers’ incomes is limited. “Results are context and location specific, and it is not clear if the prices they fetch even make up for the costs of certification. They certainly don’t if VSS-compliant tea is sold as conventional, which estimates suggest happens 90% of the time,” the report reveals. 

“Global demand for VSS-compliant tea climbed after the pandemic and is expected to keep on growing — with room to grow even faster,” said Vivek Voora, senior associate, IISD, said in a statement. “Challenges need to be overcome, particularly in producing countries, to make VSS-compliant tea more readily available — and more affordable.” 

In the report, IISD experts also argue that there is an urgent need to develop new approaches to recognising the social and environmental costs of conventional tea production so that farmers can be adequately rewarded for using more sustainable practices. “This is particularly challenging given that tea auctions are heavily influenced by multinational companies downstream in the value chain that hold all the power and most of the profit in the sector yet are rarely concerned with the social and environmental impacts of conventional tea production.” As a minimum, IISD experts believe the multinationals should be paying prices that cover farmers’ production costs and basic household needs. 

The report conveys the urgent need to develop new approaches to recognising the social and environmental costs of conventional tea production so that farmers can be adequately rewarded for using more sustainable practices. It further provides recommendations for how governments, private sector actors, and standard-setting bodies can better support smallholder farmers and make tea production fairer and more sustainable. These recommendations range from modernising tea auctions to place greater value on VSS-compliant tea to encouraging all standard-setting bodies to establish minimum prices and premiums — as well as strengthening those that already do. 

To read or download the IISD report, click here. To learn more about members of the global tea industry’s views on sustainability within the sector, read T&CTJ’s and Firsd Tea’s 2023 Tea Sustainability Survey. 

• 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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With corporations beginning to grasp that sustainability and corporate social responsibility (CSR) are important to customers and for the long term future of businesses, company claims of achievements and action plans are everywhere, alongside, of course, accusations of greenwashing. Which is why it is increasingly important for businesses to have certifications against their claims, to enlist consumer and stakeholder trust. Whether it be Fairtrade, Rainforest Alliance, organic, B Corp, non-GMO or vegan, consumers and company partners are looking for the certification labels, especially within the tea and coffee industry.

Certifications are notably prolific in the tea and coffee value chains. With 17 percent of tea, globally, certified Fairtrade, organic or Rainforest Alliance, and 25 percent of global coffee certified by these or similar schemes, according to Ethical Consumer (ethicalconsumer.org). This may be due to the fact that many tea- and coffee-producing areas are in developing countries, as well as the way in which both products are marketed to consumers; the origin of the tea and coffee is often one of its main selling points and helps the consumers build a narrative of the product before deciding to make the purchase. By instilling this focus and painting a picture of where the tea or coffee grew and was farmed, it is natural for consumers to want to imagine it with fair working conditions, nature friendly processes and beneficial to its local area, socially and environmentally. Amanda Archila, executive director, Fairtrade America, explained, “Coffee and tea are two critical commodities for Fairtrade. Globally in 2021, Fairtrade worked with 872,916 coffee farmers, and 400,402 tea farmers and workers. Premiums earned across coffee and tea amounted to over USD $102 million. We partner with traders, roasters, brands, and retailers around the world to ensure Fairtrade is easily accessible to consumers.”

As one of the biggest players in the tea and coffee certification field, Fairtrade as an organisation facilitates equitable and sustainable trading for producers in developing countries, working with co-operatives, businesses and governments. It does this by enforcing a Fairtrade Minimum Price for when the market price drops, as a safety net for producers, as well as an additional fixed Premium payment to be paid on top of the market price, to be invested in producers’ local communities.

It is an organisation and certification that is seeing a lot of growth; “The number of certified tea farmers in the Fairtrade system has been gradually increasing over the past few years: up to 347,000 in 2021 compared with 319,500 in 2019, in diverse origins,” commented Amy Collis, senior sustainable sourcing manager, Fairtrade Foundation.

Archila added that recognition among consumers has also increased: “Since 2019, recognition of the Fairtrade label has jumped by 118 percent among US shoppers,” demonstrating the building consumer interest in certified products. Archila continued, “Gen-Z shoppers showed the highest increase in recognition of the Fairtrade label among all age groups: 18-24 year olds who recognised the mark jumped by 121 percent, from 33 percent in 2021 to 73 percent in 2023. And millennial shoppers (25-34) are the most frequent purchasers of Fairtrade products.”

Archila agreed that “in the broader world of sustainability products, consumer awareness is definitely in the mainstream. Eighty-six percent of shoppers recalled seeing a sustainability or ethical label on a product while shopping. We also see this consumer connection to sustainable and ethical products growing stronger in the future.”

While the Fairtrade certification is seeing growth worldwide, Collis explained that the UK is currently the biggest market for Fairtrade tea, holding a share of 62 percent of Fairtrade tea sold globally. Collis said this was due to strong commitments from retail partners, “with Marks & Spencer, Waitrose and Co-op all having a 100 percent Fairtrade commitment on tea and coffee.”

Image: Kloth & Köhnken

Duncan Gray, head roaster and managing director, Bay Coffee Roasters, a west Wales, UK -based roastery, explained why the Fairtrade certification is important to his company: “Fairtrade is often far more than paying a good price to the farmer and also their workers, many of the Fairtrade cooperatives that we have worked with have community initiatives providing training and education for the families, health care and often other improvements to the local area.”

Consumers embrace organic

Bay Coffee Roasters’ other major certification that it champions, is organic, which often goes hand in hand with Fairtrade, with “over 50 percent of Fairtrade farmers [choosing] to go organic: tea, coffee, chocolate, bananas and cotton are among the products carrying dual Fairtrade and organic certification,” said Collis, as they both call for sustainable farming practices. “The nature of organic farming where farmers cannot rely on chemicals means that they generally have to care for their land, respecting its bio diversity and farming in a more sustainable way. Organic certification means that the farmers have to keep to their word,” said Gray. With organic farming, the emphasis is on techniques such as crop rotation, biological crop protection, green manuring and composting, and different regions have their own organic certifications, such as the EU and USDA Organic.

As discussed in ‘The Balance of Organic’ feature in the Tea & Coffee Trade Journal October 2023 issue, the organic market is seeing growth, with the tea market holding a value of USD $1.24 billion as of 2023, with a CAGR of 8 percent through 2033, while the organic coffee market estimates are even higher with a CAGR of 12.5 percent until 2028, according to market research companies FMI and Mordor Intelligence. Organic products are not only perceived as better for the environment and for the producers by the consumer, but they are also believed to be healthier, with less chemicals needed to grow and process them.

Gray added that they even have some customers who will buy only organic coffee, and whether that be for sustainability, ethical or health reasons, it is clear it is something that is important to many customers, or at a minimum regarded highly and as a bonus to their purchases.

Organic tea is something that it is ingrained in Kloth & Köhnken’s (K&K) identity, explained Sandra Nikolei, tea department/corporate social responsibility at K&K; “Organic farming can result in a better taste of a product as the plant grows slowly compared to most conventional products.”

Nikolei added that they are seeing much interest from their customers for organic products, but also for Rainforest Alliance-certified products. Rainforest Alliance, an even bigger scheme than Fairtrade and which now includes the UTZ label, is another non-profit organisation that promotes responsible business practices and strives to improve producer livelihoods and communities, especially in the face of the climate crisis. It does not do this with fixed pricing structures, but rather through policing production.

Image: Rainforest Alliance

“As we approach 2030 – a year experts mark as the potential point of no return – we must respond with unparalleled speed and scale to shift the course of sustainability transformation,” said Rainforest Alliance CEO, Santiago Gowland, “The hard truth is that the old sustainability models are good but not good enough.” The Rainforest Alliance certification has been going for 35 years, and, as of December 2022, has since achieved sustainability projects and certified farmers in 58 countries, worked with over 6,000 companies, and made Rainforest Alliance certified products available in 190 countries.

B Corp on the rise

Another major certification that is rising to the forefront of the tea and coffee industry, indeed most consumer industries as a whole, is B Corp. For a company to achieve B Corp certification, it must be verified by the ‘B Lab’ organisation, to “meet high standards of social and environmental performance, transparency and accountability,” B Lab explained. There are B Labs across the world, including UK Australia, East Africa, Europe, and North and South America, with 6,800 B Corp certified companies across 89 countries and 161 industries.

Duncan Gray that becoming a B-Corp is next on Bay Coffee’s agenda to achieve, joining the many tea and coffee companies certified as B Corps, such as Nespresso, Pact Coffee, English Tea Shop, Bigelow, and Pukka Herbs to name a few.

The cost of certifications

Many companies, including Bay Coffee and K&K, hold multiple certifications, particularly if they have a strong international presence as different certifications are more popular in different regions. K&K for one, lists Fairtrade, Fair Trade USA, Bio EU (organic), Bio Suisse organic, USDA Organic, Rainforest Alliance, FairBioTea, and kosher, among theirs.

Different certifications cover different areas and demand different requirements from companies, so perhaps the more the better, it could be argued. There is such a variety of certifications available, many much smaller than the ones listed here, and it comes down to a company’s specific operational practices, locations, and community needs as to what certifications will have the largest impact on its environmental and social undertakings. However, it is the big names such as Fairtrade, Rainforest Alliance, organic, and B Corp that seem to be major drivers of consumer and customer interest and purchases.

Image: Bay Coffee Roasters

But there are also a lot of conversations around certifications in relation to pricing and verification. Consumers realise that they will likely pay more for certified products than they do for those without certifications. “For a pound bag of coffee, shoppers said they were willing to pay a price premium of up to 35 percent more for certified coffee over uncertified. Nearly four in five consumers said they were willing to pay more for a product to ensure that producers received a fair price,” explained Archila.

While it is understandable that there must be additional costs to ensure the producer is receiving a fair price, it does mean the more price sensitive consumer may struggle to choose the ethical option when making their purchasing decisions. This allows the mass produced and possibly unethically sourced tea and coffee companies to keep a sizeable share of the market. Collis detailed that “Fairtrade-certified organisations sell only around 4 percent of their tea on Fairtrade terms – this means they don’t benefit from being certified to the extent that they could. When shoppers choose Fairtrade tea, tea producers can sell more of their product on Fairtrade terms.”

So, while there is growing demand for certified products, and a certain amount of consumer willingness to pay extra for them, there may not be enough for producers to justify the additional expense if it is not being bought from them at the certified price.

Certifications are costly for the producer as well as sometimes for the consumer. “Significant commitment is needed from producers to achieve and maintain compliance with the Fairtrade Standards: but it isn’t always feasible for producers who are facing other challenges, such as rising costs of inputs, low market prices and the effects of climate change,” said Collis. Likewise with organic, there is a conversion phase where anything grown cannot be sold under the organic title with the benefits that come with it, until the transition is complete, and no compensation is offered for the expense or yield loss.

K&K is proud of its certifications and recognises their value, but also their limitations; “Certifications are necessary to help to make the world a better place. But often they are too cost intensive and too difficult to implement, for farmers, small businesses and for start-ups. They should be less complicated and should focus on an easy way to make changes. Imposing the same requirements on everyone in this world and origin is, from our point of view, unfortunately very European and unidimensional. It should be more individually adaptable. Many certificates are too bureaucratic and rigid,” explained Nikolei.

Therefore, while they are an important mark of credibility and of good intentions to inform consumers, having certifications is not the only nor final step to sustainability and ethical business practices. “Certification can only ever form part of a company’s sustainability efforts,” articulated Collis, they do not “replace the duties of state or business actors with respect to human rights or sustainability.”

• Kathryn Brand is an associate editor on T&CTJ, while still writing for several of Bell’s other magazines. She joined Bell Publishing as an editorial assistant at the beginning of 2022 after graduating from the University of East Anglia with a degree in English Literature and Creative Writing. She may be reached at: kathryn@bellpublishing.com.

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The Fairtrade-Satelligence partnership and expansion plan will also support producer organisations – representing more than one million coffee and cocoa farmers cultivating 2.5 million hectares – to meet the European Union Deforestation Regulation requirements so they can maintain access to important markets in Europe and beyond.

“This partnership focuses on an increasingly important area of trade: access to risk management data, which defines what cocoa and coffee can enter the EU market,” said Jon Walker, senior advisor for Cocoa at Fairtrade International. “Whoever has the data has the key to market access. Many large buyers have their own monitoring systems that cover the cooperatives they buy from, but they don’t necessarily share what they see with the cooperatives themselves. Inequalities in trading relationships will only widen if producer organisations are reliant on their trade partners for access to this important data. This partnership enables producer organisations and their smallholder members to have access to the data and act on risks identified.”

Producer organisations are key partners in gathering this information, and contributing to risk assessments and mitigation and prevention efforts. By equipping cooperatives with data about the farms where their cocoa and coffee is produced, they can make informed business decisions as well as offer this value to their trade partners.

Building on a set of cocoa cooperatives that tested geolocation and monitoring functionality in Côte d’Ivoire and Ghana last year, the new three-year partnership aims to include all Fairtrade certified cocoa and coffee producer organisations by 2025.

“Our collective goal is that farmers have the data they need to move forward in a changing regulatory environment, which ultimately contributes to their sustainability as businesses and communities,” said Arisbe Mendoza, director of global impact for Fairtrade International. “The partnership provides a proven satellite monitoring system combined with technical support from Fairtrade to interpret and manage the data on an ongoing basis. This is an important step in our journey to bring more transparency to supply chains.”

Producer organisations provide geolocation data for each of their members’ farm plots. Satelligence’s platform verifies this geolocation data to ensure data quality. Second, the system detects any deforestation activity within members’ boundaries, and whether or not farms are located in protected areas. It also flags deforestation near the farm, an important piece of information that contributes to cooperatives’ risk assessments. Finally, the system generates reports that cooperatives can use themselves, and provide to their customers or potential customers.

“We strive for a more inclusive and sustainable future by giving smallholders the most advanced tools to empower and encourage them,” said Niels Wielaard, CEO at Satelligence. “We are proud to partner with Fairtrade, making sure we help prevent further marginalisation of farmers by unlocking access to markets with proof that their goods are deforestation-free. Many companies are still unprepared for EU Deforestation Regulation, but Fairtrade cooperatives will be ahead of the curve. It is a big task but it can be done. We hope the world will invest more in smallholders, in particular in supporting those doing the right thing in vulnerable, high deforestation-risk regions.”

The Fairtrade Cocoa Standard aligns with the EU Deforestation Regulation requirements, including that farms above four hectares in size or in high-risk areas must use polygon mapping, while smaller farms and farms in low-risk areas can use single geolocation points. Importantly, Fairtrade also requires traders to support producer organisations from which they buy in their deforestation monitoring and prevention efforts, whether through material or financial support. The Fairtrade Coffee Standard is being reviewed to include similar requirements, scheduled to be decided on by the Fairtrade Standards Committee in late 2023.

The scale-up of deforestation monitoring capacity is part of Fairtrade’s efforts to raise awareness about the importance of farmers and workers having more power as trade partners and in negotiations about regulations that affect their livelihoods.

Losing access to core markets, such as the European Union, would be devastating to smallholder coffee and cocoa farmers who mostly rely on these products for their livelihoods. If the economic realities of smallholder farmers are not taken into account, the legislation could lead to unintended consequences, such as a rise in illegal land use by farmers forced to find other sources of income. This would ultimately undermine sustainability, forest preservation, and the very intention of deforestation regulations.

“Deforestation legislation is an essential step, but the effects on smallholders are still unknown,” explained Walker. “The European Commission urgently needs to step up coordinated efforts to assess country-by-country readiness and impacts on covered sectors, in close collaboration with local stakeholders. It is worth noting that while technology such as satellite imaging continues to improve monitoring, the causes of deforestation are multi-dimensional, including poor legislation and governance, limited available economic opportunities, and poverty. Improving farmers’ livelihoods on the way to living incomes must be part of the approach to ensuring healthy forests and sustainable communities.”

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Coffee farmers continue to face relentless challenges including mounting economic and climate pressures. Available data show that smallholder farmers produce 60 percent of the world’s coffee yet nearly half of them live in poverty and nearly 25 percent of them live in extreme poverty (less than USD $2.15/day). Furthermore, although coffee prices in 2022 were relatively high, profits ultimately failed to trickle down to the farmers themselves. Studies have shown that producers typically retain around one percent of the retail coffee price — for a USD $4 cup of specialty coffee that equals around $0.04 per cup.

The new Fairtrade prices, which were announced in March and implemented 1 August 2023 (for contracts signed by that date), increase the baseline price by 29 percent and 19 percent for Fairtrade-certified Arabica and Robusta, respectively. The new prices come after a cost-of-production study and consultation – including outreach to more than 600 producer organisations and 745 commercial partners – confirmed that farmers need to be paid more or they cannot continue to grow coffee.

“Paying farmers a fair price for their crops is the bare minimum to keep them farming,” Benjamin Kouame, chair of Fairtrade Africa shared of the new price model.

The Bonn, Germany-based social justice organisation said the increase will provide farmers with significant price risk management support in times of wild market fluctuation and adapt to their needs as they face inflation in their home countries and substantial additional costs due to climate change adaption. The new Fairtrade Minimum Price for washed Arabica beans – which represent more than 80 percent of all Fairtrade coffee sold – is USD $1.80 per pound, an increase of 40 cents over the previous price of $1.40 per pound. For natural Robusta, the price increases by 19 cents to $1.20 per pound. The additional value for organic Fairtrade coffee has been increased by a third, from 30 cents to 40 cents per pound. According to the non-profit organisation, more than half of Fairtrade coffee beans sold in 2021 were also organic certified.

“Despite the recent spikes in global coffee prices, coffee farmers are struggling with inflation, skyrocketing production costs, and crop loss due to the effects of climate change. Many coffee farmers are abandoning their farms in search of opportunities elsewhere and young people today in coffee-growing communities struggle to see a future in coffee,” Monika Firl, senior manager for coffee at Fairtrade International, said in a statement when the new minimum price was first announced. “The fact that farmers cannot make a living in coffee is a tragic commentary for the industry and a huge risk for the future of the global coffee sector as a whole.”

With its new minimum price, Firl said that Fairtrade is offering coffee farmers and their cooperatives a pricing safety net, “better adapted to the uncertain times we are living in, while leaving the door open for them to earn more when market prices are above the Fairtrade Minimum Price.” She added, “This is an essential tool that coffee farmers must be allowed to leverage in order to find renewed stability in their profession.”

Fairtrade’s global coffee network comprises nearly 900,000 certified coffee farmers in over 650 producer organisations spanning 31 countries. In addition to the Fairtrade Minimum Price, Fairtrade-certified farmers also receive a Premium – an additional sum of money that is collectively invested in projects to improve productivity, climate adaptation, quality, infrastructure, and basic community services identified as priorities by the farmers themselves and their organisations.

“The future of coffee is one where fair pricing is the norm. It is not acceptable for coffee farmers to continue to subsidise the multi-billion dollar coffee industry, while also taking on the hard work of sustainable transition,” emphasised Firl.

• 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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Working alongside Bellwether and Fairtrade International to develop Living Income Pricing for Guatemala are La Coordinadora Latinoamericana y del Caribe de Pequeños(as) Productores(as) y Trabajadores(as)  de Comercio Justo (CLAC), La Asociación de Cooperación al Desarrollo Integral de Huehuetenango (ACODIHUE), and Sustainable Harvest Coffee Importers.

In April 2021, Bellwether signed the first-ever coffee contract based on Living Income Pricing in partnership with Heifer International and Sustainable Harvest. That pilot with ASOPEP in Colombia was called Verified Living Income, and set the stage for its current commitment to expand living income to Guatemala.

“We’ve made it our mission to partner with values-aligned organizations committed to ending poverty in the Coffeelands by paying coffee producers equitable prices based on living income. Our goal at Bellwether is to expand Living Income Pricing across all of our supply chains by 2025,” said Grayson Caldwell, senior sustainability manager at Bellwether Coffee.

To develop the Living Incoming Reference Price for Guatemala, CLAC worked directly with ACODIHUE to collect primary data on the cost of production, land size, and productivity levels of coffee producers to establish a baseline and agree on a reference price that will support closing the living income gap for producers in the association. The 2022 reference price for ACODIHUE is $3.40 per pound of coffee, which is 13 percent higher than the last contract Bellwether signed. Bellwether is committed to sourcing on Fairtrade terms as well as paying the price revealed in the data evaluation through its importing partner, Sustainable Harvest.

Fairtrade International’s living income strategy has sustainable procurement practices, including the payment of a Living Income Reference Price or LIRP, as a critical enabler of sustainable livelihoods for smallholder farmers. This is why building new partnerships with supply chain stakeholders remains vital to crafting a trade system that is fair for all. You can read more about Fairtrade International’s living income methodology and strategy at www.fairtrade.net.

“Fairtrade has long been committed to delivering a living income to the world’s smallholder farmers and enabling decent livelihoods for them is a key pillar of our global strategy,” said Senior Advisor for Sustainable Livelihoods at Fairtrade International, Carla Veldhuyzen. “This is our vision for the planet and it’s also one reason why Fairtrade continues to be the world’s leading certification for social justice and sustainability.”

ACODIHUE in Guatemala is Bellwether’s second sourcing partner where contracts will be signed based on Living Income Pricing. These coffees will be available to all Bellwether customers on December 8, 2022. As a result, Bellwether roaster customers will be able to transparently share with their own customers the price, methodology, and impact their purchases are making on farmer livelihoods and their communities.

“The volatile C-market price continues to threaten coffee producers and their families,” said chief coffee officer at Sustainable Harvest, Jorge Cuevas. “In the past 12 months, we’ve seen the market reach a record high and suddenly take a sharp downturn, resulting in chaos at origin. Coffee producers deserve a better mechanism to price their coffee, one that covers their production costs, provides a sustainable livelihood and incentivizes the next generation of coffee producers to run their farms instead of migrating.”

“We are happy to have commercial partners like Bellwether using Fairtrade’s living income methodology to promote sustainable livelihoods for farmers in Latin America and the Caribbean,” said CLAC´s commercial director, Joao Mattos. “We hope to strengthen our commercial relations in the future to benefit more coffee farmers and Fairtrade certified organizations”

Bellwether and its partners believe that coffee prices rooted in living incomes create more economic stability for coffee producers. Long term, paying Living Income Pricing helps close the living income gap for farmers, ensuring economic stability in the Coffeelands. For more information on Bellwether and Fairtrade International’s living income pricing, visit www.bellwethercoffee.com/living-income-pricing/.

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The study, titled Fairtrade certification and producer resilience in times of crises and conducted by Scio Network and Athena Infonomics, examined the experiences of Fairtrade and non-Fairtrade coffee, banana and flower producers in Indonesia, Peru, and Kenya, finding that households belonging to Fairtrade-certified producer organisations were 12% less likely to report “a high or very high impact” from COVID-19, as compared to non-Fairtrade households.

“Our research shows that Fairtrade certification increased the social well-being of households by up to 20%, as opposed to no or alternative certification,” said Manuela Günther, lead on monitoring and impact evaluation at Scio Network and the study’s research manager. “Households related to Fairtrade certified producer organisations also had a higher economic resilience, which helped them to better weather the impact of COVID-19 and will contribute to greater resilience in the face of future crises as well.

In preparing the study, the researchers developed a resilience index based on the United Nations Food and Agriculture Organization (FAO), which includes four criteria, covering social wellbeing, economic resilience, good governance, and environmental integrity. Households from Fairtrade certified producers scored 9% higher on the overall index than non-certified counterparts (64% compared to 55%). On the dimension of social wellbeing – which includes elements such as food and nutrition security and children’s school attendance – Fairtrade certified producers scored 18% higher. Economic resilience – which includes financial literacy, bookkeeping, insurance, and savings – received a score of 6% higher. Good governance and environmental integrity scores, on the other hand, were more similar between Fairtrade and non-Fairtrade households.

“Although good governance and environmental integrity are very important in their own right, during the pandemic we found that aspects of social wellbeing, such as income diversification and food and nutrition security, and economic resilience, meaning access to credit for producer organisations and savings among households, were associated with a lower impact from COVID-19,” noted Bilal Afroz, senior consultant at Athena Infonomics and co-author of the report.

“Our study is one of the first to examine the key elements that empowered some producer organisations and farmer and worker households to get through the most intense period of COVID-19 in better shape than others,” Mr. Afroz added.

In analysing different product supply chains, Kenyan flower workers’ households belonging to Fairtrade producer organisations scored the highest with a resilience score of 70%, followed by Indonesian coffee farming households (67%), and Peruvian banana farming households (53%). In each case, these scores are higher than those of the non-Fairtrade counterparts, with the greatest difference between certified and non-certified farmers observed in coffee farmers. Fairtrade certified households in coffee value chains, in fact, score a full 13% points higher in the resilience metrics, compared to non-Fairtrade households.

The study also identifies key factors that relieved some of the burden of the pandemic on Fairtrade-certified organisations and households, including whether an organisation had pre-existing financial sustainability and access to credit; whether it received support from Fairtrade’s €15 million COVID-19 Relief and Resilience Fund; and whether it delivered income diversification and food security initiatives for its members and workers.

The report, commissioned by Fairtrade International through funding from the German Ministry for Economic Development Cooperation (BMZ) and the Swiss State Secretariat for Economic Affairs (SECO), echoes the findings from a similar Fairtrade study released in June 2022 on producer resilience. Key findings are being discussed at a virtual panel event on 18 October.

“We know that with climate change and current global political and economic instability, farmers and workers will face increasing challenges in the near future,” said Dr. Arisbe Mendoza, director of global impact at Fairtrade International. “That’s why we call on all actors to ensure that farmers continue to receive emergency cash contributions to tackle urgent health and safety needs and losses and damages, fairer prices through long-term trade relationships so they can build financial stability, and access to credit and income so that they are empowered to invest in a more sustainable and diverse mix of income streams.”

“The conclusions from this report are clear,” Dr. Mendoza added. “And we urge everyone – from companies and governments to civil society actors and beyond – to read this report, understand its lessons and apply them immediately, so that agricultural households and communities can strengthen their resilience to face the expected growth in shocks and stresses set to come.”

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