Coffee certifications: Between expectations and reality

Intro

I'm standing in front of the fish counter at the supermarket. Half of the fish, mussels, oysters, and lobsters on display are certified in one way or another. The labels are almost exclusively blue and green, featuring keywords like "fair," "responsible," and "friends" in their names, and they give me that feel-good sensation, which is precisely their intention.

But I'm confused:

Which label is actually good?

Or are they all?

And what does "fair fish" even mean for a dead animal?

More and more questions arise, leading to a lack of understanding that makes me uncertain, then critical, and finally, suspicious. So I don't buy anything—not because I don't eat seafood, but because I have a creeping feeling that I don't have a clear grasp of the situation. I simply lack the background knowledge.

Luckily, I work with coffee, and the label situation there is much clearer—or, rather, not at all.

Because the coffee aisle in the supermarket, which I scan from time to time to gauge the current trends, unfortunately looks only marginally more transparent.

Labels are actually a heuristic, a shortcut to quickly grasp facts,

sustainability communication expert Anja Schröder told me in a podcast. "Actually," she says, because the multitude of labels can often be overwhelming. Because the use of buzzwords like fair, direct, organic, and sustainable has long become normal, and therefore, precision no longer seems necessary, although it is more needed than ever.

Apparently, there is a desire for certifications, for products that have been manufactured in accordance with a catalog of duties. However, if we look at coffee, it becomes clear that certified coffees do not all find their market. As citizens, we desire this, but as consumers, we do not act on our noble aspirations.

In the specialty coffee sector, there are even overt movements that consider certifications a poorer reference for their own actions and criticize them severely. It seems to me that this is more sensationalism than precise argumentation.

One might ask: Aren't certifications simply "okay" to begin with, and shouldn't coffees without certification be scrutinized more precisely?

When I hear coffee drinkers say that they prefer to buy coffee without certification rather than from an undefined label, it is a sign of overwhelm and a reflex we also know from climate discourse—often, companies that offset all emissions are pointed to, but more than 90% of companies do not offset at all.

So, what exactly do these certifications do, and what don't they do?

What do they bring to producers?

How expensive are they?

Are they trustworthy, and where does our distrust come from?

Don Roque from the Toca project in Mexico on his way to the farm (Photo: Miguel Guevara)

The Basics of Coffee Certification

What is a certification?

I inquire where linguistic precision is desired and verbal creativity is disdained: at DIN ISO; the German Institute for Standardization. According to them, a certification is a

"Measure by an impartial third party demonstrating that adequate confidence exists that a duly identified product, process, or service is in conformity with a specific standard or other normative document."

The standard, in this case, is abbreviated by a seal; the normative document would be the guidelines of a seal, and the impartial third parties would be the audit bodies that, in our case, check coffee producers and processing plants against the regulations of the respective seal.

In the coffee industry, there is no single binding seal that all actors along the supply chain must commit to. Therefore, we are talking about so-called VSS, Voluntary Sustainability Standards. The standards issued by Fairtrade, Rainforest Alliance, 4C etc. are all established, but no market participant is obligated to accept them.

These VSS are currently the most widely accepted tool for promoting transparency in the supply chain.

They also create a comparability between certified and non-certified coffees, as the criteria catalogs are publicly accessible. Each label defines, with varying clarity, its specific focus.

The ITC Standards Map is probably the best resource for identifying, understanding, and comparing various standards.

In this example, I compare three well-known labels based on their social, ecological, quality, and ethical components.

On https://www.labelinfo.ch/de/ you can also compare different labels based on product groups.

Both platforms precisely detail the requirements of the labels, with the Standardmap further referencing the corresponding legal basis. It's fun to click through these platforms and grasp how many different criteria individual seals address.

This also means how many criteria producers and their organizations have to fulfill.

“It's certainly no walk in the park,”

says the managing director of one of our partner cooperatives. Because the transparency that is intended to build trust on the consumer side is only achieved when an audit body goes through all the questionnaires with the producers. No stone is left unturned.

Don Adrian from the Toca project has been working on soil improvement for years

As with any audit, the goal here is to do as much as possible as well as possible, but by no means to do anything wrong.

If a deficiency, such as the "improper" storage of fertilizer according to the criteria catalog, is reported, remedial action is required. Other unmet criteria are considered deal-breakers and lead to the withdrawal of the label.

This stringency and strictness gives the label its credibility and indeed its raison d'être. But what role do certified coffees play in the market, what do they mean for certified producers who now want to bring their coffee to such a market?

The Reality Check

At the Trader's

“There are many different certifications, besides the generally known ones also company-specific ones like C.A.F.E Practices from Starbucks or AAA from Nespresso,”

notes Christian Cvrljak, trader at InterAmerican, the specialty division of the world's largest trader Neumann Kaffee Gruppe.

"But for Robusta, there isn't much certified coffee yet. While new farmers are certified every year, the numbers are still small."

The Neumann Kaffee Gruppe trades globally with approx. 40% third-party certified coffees, InterAmerican with approx. 70%.

"The trend is clearly towards certified coffees," says Cvrljak, "especially when we look at the new EU directives. By the end of 2024, the Deforestation Law will come into effect. If the law is implemented as planned, only certified coffee can be purchased in the EU and Switzerland."

The Market...

From 2010 to 2020, more and more producer organizations became certified. According to the Coffee Barometer, about 55% of globally produced coffee was certified in one form or another between 2020-22.

If so much coffee is certified, shouldn't there be a noticeable effect, and shouldn't we be reading more and more positive news?

Graphic from the Coffee Barometer, 2023

While 55% of coffee was certified, only 26% of it was recognized as such in the market in 2021. The other 74% of certified coffee ended up in the conventional coffee market.

This means that certified producers have likely done their homework to achieve certification, but at the end of the season, they don't receive a premium because the market for certified coffee is too small. Or because too much coffee is certified.

... is not there

It will not happen that 100% of certified coffees find their intended market, as this is also about supply and demand. "50-60% should be aimed for," a well-informed contact tells me. Because: as long as the supply of certified coffees is greater than the demand, certifications remain cheap.

For 4C, for example, premiums are 2-3cts/lb (1 lb = 0.45kg), for Rainforest Alliance just under 5 cts/lb - this is significantly less and not comparable to the fixed prices and premiums offered by Fairtrade. However, Fairtrade is too expensive for many buyers (=traders and roasters). According to the motto: it can be sustainable, but it just shouldn't cost too much.

So, those looking for a cheaper sustainability seal than Fairtrade will find it with Rainforest Alliance, 4C, or the company's own certifications, which are cheaper partly because they are not audited by a third party.

As long as there is an oversupply of certified coffees, they are theoretically attractive to buyers. If this imbalance shifts towards a smaller supply of certified coffees, certified coffees will become more expensive and even less attractive to buyers than they are today.

When I realized what I had written in the last four paragraphs, I had to pause several times—a system with good intentions recruits producers for something that doesn't come with a guarantee of success.

It's a bit like playing the lottery with 30 numbers instead of 100. The chances are pretty good that I'll win something, but it might not happen. In one place, the wheel of fortune decides, in the other, those who buy.

Coffee producers ask themselves daily: what will the market price bring? (Photo: Miguel Guevara)

"It's just business too"

"It's just business too," says Kleber Cruz from GEPA. On the one hand, producer organizations pay a fee to use the label. On the other hand, retailers pay the licensing costs, which currently amount to 20-24 cts/kg for Fairtrade, according to Cruz. Producers pay the audit fees, consumers pay the licensing fees. These are different billers, but it's about the same label.

So, more and more producers are getting certified, but at the same time, the market for certified coffee is growing little to not at all in some areas—Fairtrade and organic are stagnating, while RFA and 4C—the cheaper alternatives—are growing.

It reminds me of the recycling rate for plastic. Apparently, everyone is aiming to make everything recyclable, but the rate is growing far too slowly. The consumption of new plastic is growing much faster.

So what exactly is the appeal of participating as a producer?

Why should someone get certified, which comes with additional costs and hopes, but the chances of success are low?

The Importance of Certification for Coffee Producers

Cooperatives, producer organizations, and even individual producers can open up new markets through certification. Kleber Cruz from GEPA again.

“Of course, certifications are necessary if an organization wants to enter the retail market.”

Retailers like to promote doing "more" for sustainability in coffee, and they often do so by committing to certifications. Coffees that have made it to the shelf as certified coffee have reached their target market. Many others don't make it to the shelf at all, or were purchased under unfair conditions, so-called combos.

Few supermarkets take responsibility themselves and create new solutions within their assortment, seek direct exchange, and invest locally. In Switzerland, examples of this include Migros and Coop. If you know of other examples (from DE and AUT), please share them in the comments.

The demand for certified coffee in supermarkets in Germany, Austria, and Switzerland seems to be increasing, but it still remains a smaller portion of the assortment by comparison. Retailers are generally open to VSS, but very large roasteries like Nestlé, JDE, etc., often have their own sourcing and sustainability programs, which are then only 2nd party verified, meaning not third-party audited, and therefore cheaper.

What does this situation mean for all those who produce coffee and get certified?

The Cost of Certification for Coffee Producers

FairTrade and FairTrade/Organic

"The costs of certification are a problem," states Kleber Cruz, who is responsible for green coffee procurement at GEPA. The price of the annual certification audit depends on the size of the cooperative. Cruz refers to Fairtrade, which only certifies democratically organized cooperatives of small producers.

The certification costs for the following cooperatives give an idea of the financial pressure on the expenditure side:

Fairtrade certification costs depend on the size of the cooperative and the volume produced. All collected information ranges from 2500 - 3000 EUR per year - but only per audit.

"Audit bodies try to combine different certifications, but that's tricky,"

reports Cruz. Those who want to supply various markets with organically produced coffee must get certified for each target market. The EU, the USA, Australia, Japan - these are all large markets, but all have their own certification.

"If I don't want to lose the Japanese market, but can only send two containers there, I still get certified."

Thus, those who can produce, certify, and ship more will ultimately have lower certification costs per kilogram. But if the market that could absorb all the certified coffee is not there, then certification costs are additional expenses that have no equivalent value.

Rainforest Alliance

Unlike Fairtrade, Rainforest Alliance (RFA) also certifies individual farms. We could also become a member of RFA with our Finca Santa Rita if we meet the criteria catalog.

Producers pay for the audit to a certification body of their choice. The incurred costs then depend on the audit body, and not on RFA. In addition, as with any certification, there are the costs for implementing the required measures. For coffee, RFA charges 0.015 dollars per pound (lb) of green coffee as a fee, which the so-called first buyer has to pay, i.e., the party that first buys the coffee from the cooperative or farm.

What premium do producers receive for certified coffee?

In the following example calculation, we compare a Fairtrade, a Fairtrade/Organic double-certified, and an RFA certified coffee.

The audit costs for producers, processors (e.g., roasters), and distributors (e.g., supermarkets) must be paid annually by all. This is the same for all certifications listed here.

A Brutal Quintessence for Producers

Whether the effort for coffee producers ultimately pays off must be discussed elsewhere. This requires a specific analysis with concrete objectives.

However, what I heard several times during my research is that double-certified (Fairtrade/Organic) cooperatives have increasingly been selling their coffee on the local market in recent years because it is more attractive to them.

An example:

A cooperative in Peru sells its certified coffee in Peru because, firstly, the coffee is paid for within a few days, and secondly, the financing costs, which would arise for bridging the gap until the money arrives from the international buyer, are eliminated. Interest rates in Peru go up to 30%. And these eat away at the premiums for certified coffees.

The problem described above will become even bigger with the increase of the Fairtrade minimum price to 180 cts/lb. Demand in Europe has significantly decreased, I am told. Fairtrade and Fairtrade-Organic certified coffees are currently in high demand in the USA because Fairtrade USA simply did not participate in the increase to 180 cts/lb.

When the cat bites its own tail

Let me summarize this circular reasoning point by point:

• Producers/organizations pay for the audit to get a label and thus differentiated market access
• Every market has its own requirements, and so producer organizations often get certified multiple times, which always incurs multiple costs, often around 2500 to 3000 USD per audit.
  
• Fairtrade guarantees a minimum price for coffee; with RFA, producers and buyers negotiate the premium themselves, which is significantly lower than with FT.
  
• The market is too small for certified coffee; only 26% (2021) of certified coffee found a target market and received a premium, while 74% of certified coffee received no premium, even though it met the criteria.
  
• Cooperatives are increasingly selling in the local market because they earn more there than if they were to export certified coffee. Not because they get paid more, but because fewer additional financing costs are incurred.
  

The system is not working as intended across the board. And yet, certification continues. At this point, I would like to quote Kleber Cruz from GEPA again: "It's simply also a business."

What would be the alternative? No certification?

Those who diversify and cultivate more can find additional sales markets (Photo: Miguel Guevara)

The Discourse

Ever since I started working with coffee, I've been asked whether certifications are good, bad, effective, or useless. During this time, I've had many conversations with cooperatives, certifiers, audit authorities, and companies that are themselves certified. Especially among them, there's a natural understanding that certifications are the way to go.

Listening to the voices of consumers, I believe I can identify three different discourses.

“Specialty coffee rather than a label”

One of the many promises of certain specialty roasters is that they forgo labels because a label does not provide sensory quality, and the direct approach of working with producers is much more rewarding.

The labels discussed here never focused on sensory quality, which is why this argument doesn't count. The "direct collaboration" is a vague formulation. How direct is direct? And who is excluded from the supply chain, why, and when, and what are the consequences?

Often, direct collaborations are designed for individual producers or smaller farms, which clearly does not correspond to the intention of certifiers, who aim to work as inclusively as possible. Therefore, foregoing labels due to quality demands and a imprecise definition of direct trade are reasons that one is welcome to question.

“Label and good”

I perceive another discourse among meso and macro roasters, which is that they rely on certified coffees. This often comes with grand promises that a roastery is now particularly sustainable and that – purely by purchasing certified coffees – it would turn things for the better. As if a label were insurance for a good future and an assurance of doing the right thing.

However, a label cannot bring about comprehensive change; they are not designed for that. The respective catalogs of requirements specify concrete points to be fulfilled, but these – even if detailed – are not specifically tailored to the respective partners.

Labels do not address selective solutions, and therein lies the great opportunity for traders and roasters to build a bridge, perhaps even together with a certifier: win-win-win.

Partnerships will be the future, which various certifiers are already striving for. Furthermore, certifiers are increasingly offering additional know-how. "It's increasingly about risk analyses and compliance," says Peter Lerch from Rainforest Alliance. In this context, traders' programs must become more transparent and externally audited.

“Deception and fraud”

I thought the days of unsubstantiated rejection of transparent concepts were over. But no, I was recently taught otherwise.

A potential customer was interested in our coffee.

When I talked about the organic seal, the guest interrupted me and launched into a minute-long tirade against every seal. Everything was a lie, worthless, all fraudsters, nobody cared, etc.

I escorted the guest to the door.

Labels are subject to constant criticism, under which they must constantly reassert and justify themselves. Transparency increases every year, but precise long-term studies on their effectiveness are still lacking. However, there is no hidden agenda or dubious machinations. Labels are also a business, whether one likes it or not, but they are not an underground organization.

Label 4.0

“Labels are no longer pure labels,”

Peter Lerch from Rainforest Alliance tells me. Certifiers intensively and scientifically address various topics along the coffee chain and even publish discussion papers to allow for public reflection.

New EU laws such as EUDR (Deforestation-Free Supply Chains Regulation) naturally also affect certifiers, so they must be directly attuned to current developments and in dialogue with their partner producers, and they issue their policy statements on this.

However, a great deal of educational work is still needed to communicate all the changes made, Lerch continues. For me, this is the overarching discourse, because here, certification organizations can prove their added value in times when truly nothing is stable anymore.

In 2012, I first heard about the post-label era, a time when labels would no longer be needed. It was said to be very close. I still don't believe it, and I can't imagine an imminent end. Labels like Fairtrade, Bio Suisse, Rainforest Alliance, or Demeter are deeply anchored in consumer perception; these labels will still exist in 20 years – but the processes behind them will continue to evolve.

Conclusion

One of my guiding questions comes from marketing guru Seth Godin: who’s it for and what’s it for?

Who are we doing this for and what are we doing it for. For labels, there are at least two target groups: consumers can learn to shop more consciously with labels, and producers could find a market among these consumers.

The question of "what" remains highly relevant and has lost none of its topicality: the goal of the discussed labels is to improve the livelihoods of small producers, who often have their backs against the wall. Regardless of how well, often, and long-term this succeeds, nothing will change about the "what."

Labels are part of the coffee ecosystem. Katja Schmittner from Fairtrade Max Havelaar once told me in a podcast: “If Fairtrade is no longer needed, we will have done our job.” Labels create visibility for problems that are addressed by purchasing a labeled coffee.

The effectiveness of labels in coffee is controversial. There are scientific papers, but most of them have to select individual case studies. The impact reports of the certifiers themselves often go less deeply and broadly into detail – and if they do, then links are welcome to be shared in the comments.

And when I then directly ask cooperatives how great the impact is, the answers are never clear, but rather describe a state, what labels make it possible to think and why it could be worthwhile. So, making clear claims is difficult.

The great strengths of certifiers are that they create comparability, define what is sustainable, and enforce accountability through third-party audits.

The risk of greenwashing is significantly smaller for certified coffees than for non-certified coffees, as the latter are not subject to external scrutiny.

Roasters who work without labels are not obliged to provide accountability. However, there are voluntary alternatives where roasters can get involved and share data. Transparency Coffee or self-published transparency reports like those from Vote Coffee are means of providing voluntary accountability.

From a consumer perspective, it is understandable that a label jungle can sometimes confuse more than clarify. Especially when it comes to a roastery's or trader's own labels.

Choosing established labels is a safe bet, as label organizations must provide accountability. If you want to play it safe in a supermarket, buy double-certified coffee, FTO - Fairtrade and Organic.

Outro

I don't eat fish from the sea, only from Swiss rivers and lakes. So I don't find what I'm looking for at the fish counter and buy a smoked trout from the fish farm in the neighboring village.

The fish labels confused me, each one sounded really good. This can give one the feeling that certifications provide certainty about something that may never happen, something one never quite understands, and perhaps shouldn't, because someone else is taking care of it.

Label organizations have the grand ambition to address macro-challenges in the coffee sector. However, the micro is just as necessary, and there, private individuals, companies, and NGOs can work on it simultaneously. Their approaches are less scalable because they are specific, but the underlying thinking is replicable, and good things are copied.

It will never be enough to simply rely on labels. But it also doesn't help to fiercely criticize certifications. If anyone should be held accountable, it is all those who do not purchase certified coffee, do not take specific measures at the origin, or purchase coffee from dubious sources.