Coffee certifications: Between expectations and reality

Intro

I'm standing in front of the fish aisle in the supermarket. Half of the fish, mussels, oysters, and lobsters on display are certified in some way or another. The labels are almost exclusively blue and green, bear the keywords " fair ," " responsible ," and " friends ," and give me the good feeling that's intended.

But I'm confused:

Which label is exactly good?

Or are they all?

And what does “fair fish” mean when it comes to a dead animal?

More and more questions arise, and with them a lack of understanding, which makes me uncertain, then critical, and ultimately suspicious. So I don't buy anything at all—because I don't eat seafood—but also because I have the creeping feeling that I don't have a clue. I simply lack the background.

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

Because the coffee shelf in the supermarket, which I scan every now and then to get a feel for the latest trends, unfortunately looks only slightly clearer.

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

Sustainability communications expert Anja Schröder told me in a podcast . Actually, she says, it's because the multitude of labels can often be overwhelming. Because the use of buzzwords like fair, direct, organic, and sustainable has long since become normal , and therefore precision seems to no longer be necessary, even though it's needed more than ever.

Apparently, there's a desire for certification, for products that have been produced according to a set of standards. However, if we look at coffee, it becomes clear that not all certified coffees find a market. As citizens, we desire this, but as consumers, we fail to live up to our noble expectations.

In the specialty coffee sector, there are even obvious trends that view certifications as a lesser reference for their own actions and criticize them. It seems to me that this is more about propaganda than precise argumentation.

One might ask : Aren’t certifications simply “ok” in the first place, and shouldn’t coffees without certification be examined more closely?

When I hear from coffee drinkers that they would rather buy coffee without certification than buy coffee from an unclear label, it is a sign of being overwhelmed and a reflex that we also know from climate discourse - often people point to companies that offset all their emissions, 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 the producers?

How expensive are they?

Are they trustworthy and where does our mistrust 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 certification?

I ask where linguistic precision is desired and verbal creativity is spurned: at DIN ISO ; the German Institute for Standardization. Certification is therefore a

“A measure taken by an impartial third party to demonstrate that there is reasonable confidence that a properly designated product, process or service is in conformity with a specific standard or other normative document.”

In this case, the standard is abbreviated to a seal; the normative document would be the guidelines of a seal, and the impartial third parties would be the audit bodies, which in our case check the coffee producers and processing companies for compliance with the rules of the respective seal.

In the coffee industry, there is no single, binding seal to which all actors along the supply chain must commit. That's why we're talking about so-called VSS, the 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 VSSs are currently the most widely accepted tool to promote transparency in the supply chain.

They also create comparability between certified and non-certified coffees by making the criteria catalogs publicly available. Each label defines, to varying degrees of clarity, what its focus is.

The ITC Standards Map is probably the best place to identify, understand and compare different standards.

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

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

Both platforms address the label requirements precisely, and the standard map always refers to the corresponding legal basis. It's fun to click through the platforms and see how many different criteria the individual labels address.

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

“It’s certainly not a walk in the park,”

the managing director of one of our partner cooperatives tells me. Because the transparency that is supposed to engender trust among consumers can only be achieved if an audit body goes through the entire questionnaire with the producers. In the process, no stone is left unturned.

Don Adrian of the Toca Project has been working on soil improvement for years

As with any audit, the goal is to do as much as possible, as well as possible, but under no circumstances to do anything wrong.

If a defect is found, such as "improper" storage of fertilizer according to the criteria catalog, remediation is required. Other non-compliance with criteria is considered a deal-breaker and will result in the label being withdrawn.

This stringency and rigor gives the label credibility and legitimacy. But what role does certified coffee play in the market? What does it mean for certified producers who now want to market their coffee to such a market?

The Reality Check

At the dealer

“There are many different certifications, in addition to the well-known ones, there are also company-specific ones such as CAFE Practices from Starbucks or AAA from Nespresso,”

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

"But with Robusta, there isn't much certified coffee yet. New farmers are certified every year, but the numbers are still small."

The Neumann Coffee Group trades globally with approximately 40% third-party certified coffee, while InterAmerican trades with approximately 70%.

"The trend is clearly toward certified coffee," says Cvrljak, "especially when we look at the new EU guidelines. The Deforestation Law will come into force at the end of 2024. If the law is passed as planned, you will only be able to buy certified coffee in the EU and Switzerland."

The market...

From 2010 to 2020, an increasing number of producer organizations became certified. According to the Coffee Barometer, approximately 55% of globally produced coffee was certified in some form between 2020 and 2022.

If so much coffee is certified, surely there should be a noticeable effect and we should be able to read more and more positive news?

Graphic from the Coffee Barometer , 2023

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

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

... is not there

It won't happen that 100% of certified coffees will find their intended market, as this is also a matter of supply and demand. "The goal is 50-60%," a well-informed contact tells me. Because as long as the supply of certified coffees exceeds demand, certifications remain affordable.

At 4C, for example, the premiums are 2-3 cents/lb (1 lb = 1 libra = 0.45 kg), while at Rainforest Alliance they are just under 5 cents/lb – significantly less and not comparable to the fixed prices and premiums offered by Fairtrade. However, Fairtrade is too expensive for many buyers (i.e., traders and roasters). The motto is: it can be sustainable, but it just can't cost that much.

So those looking for a cheaper sustainability label than Fairtrade will find what they are looking for in Rainforest Alliance, 4C or the company's own certifications, which are cheaper 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 tips in the direction of a shrinking 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've written in the last four sections, I had to pause several times - a system that has good intentions recruits producers for something that has no guarantee of success.

It's a bit like the lottery with 30 numbers instead of 100. The odds are pretty good that I'll win something, but it's also possible that I won't. In one place, it's the wheel of fortune that decides, in another, it's the shoppers who decide.

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

“It’s just a business too”

"It's simply a business," says Kleber Cruz of GEPA . On the one hand, producer organizations pay a fee to use the seal. On the other hand, retailers pay the licensing costs, which for Fairtrade currently amount to 20-24 cents/kg, according to Cruz. Producers pay the audit fees, and consumers pay the licensing fees. They're different billers, but it's the same label.

So, more and more producers are being certified, but at the same time, the market for certified coffee is growing little to nothing - Fairtrade and organic are stagnating, while RFA and 4C - the cheaper alternatives - are growing.

It seems to me like the plastic recycling rate. Everyone seems to be focused on making 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 getting involved as a producer?

Why should someone get certified, which involves additional costs and hopes, but the chances of success are slim?

The importance of certification for coffee producers

Cooperatives, producer organizations, and even individual producers can tap into new markets with certification. Kleber Cruz from GEPA again.

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

Retailers like to advertise that they're doing "more" for sustainable coffee, often by promoting certifications. The coffees that make it to the shelves as certified coffee have reached their target market. Many others never make it to the shelves at all or were purchased under unfair conditions, so-called combos .

Few supermarkets take responsibility themselves and create new solutions within their product range, seek direct dialogue, and invest locally. In Switzerland, Migros and Coop are examples of this. If you know of other examples (from Germany and Austria), please share them in the comments.

The demand for certified coffee at supermarkets in Germany, Austria, and Switzerland appears to be increasing, but it still accounts for a comparatively small portion of the product range. Retailers are generally open to the VSS , but the very large roasters like Nestlé, JDE, and others often have their own sourcing and sustainability programs, which are then only second-party verified (i.e., not audited by a third party), and are therefore cheaper.

What does this situation mean for everyone who produces coffee and is certified?

The certification costs for coffee producers

FairTrade and FairTrade/Organic

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

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

Fairtrade certification costs depend on the size of the cooperative and the volume of production. All collected information ranges between €2,500 and €3,000 per year—but only per audit.

“The audit bodies try to combine different certifications, but that is tricky,”

reports Cruz. Anyone who wants to supply different markets with organically produced coffee must obtain certification for the respective target market. The EU, the US, Australia, Japan – these are all large markets, but they all have their own certification.

“If I don’t want to lose the Japanese market, but can only send two containers there, I’ll still get certified.”

So, those who can produce, certify, and ship more have lower certification costs per kilogram. But if there isn't a market to absorb all the certified coffee, then the certification costs are additional expenditures that have no return.

Rainforest Alliance

Unlike Fairtrade, the 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.

Producers pay for the audit at a certification body of their choice. The costs then depend on the audit body, not RFA. As with any certification, there are also costs for implementing the required measures. For coffee, RFA charges a fee of $0.015 per pound (lb) of green coffee, which must be paid by the first buyer , i.e., the party that first purchases the coffee from the cooperative or farm.

What premium do producers receive for certified coffee?

In the following calculation example, we compare a Fairtrade, a Fairtrade Organic double-certified and one from RFA.

The audit fees for producers, processors (e.g., roasters), and distributors (e.g., supermarkets) are payable annually. This applies to all certifications listed here.

A brutal quintessence for producers

Whether the effort is ultimately worthwhile for coffee producers is a matter for discussion elsewhere. This requires a specific analysis with concrete targets.

What I have heard several times during my research, however, is that dual-certified (Fairtrade/Organic) cooperatives have been selling their coffee more and more on the local market in recent years because it is more attractive for them.

An example:

A cooperative in Peru sells its certified coffee in Peru because, first, the coffee is paid for in a few days, and second, because it eliminates the financing costs that would otherwise be incurred while waiting for the money from the international buyer. Interest rates in Peru can reach as high as 30%, and these erode the premiums for certified coffees.

With the increase in the Fairtrade minimum price to 180 cents/lb, the problem described above is becoming even more acute. I'm told that demand in Europe has declined significantly. Fairtrade and Fairtrade Organic certified coffees are currently in high demand in the US because Fairtrade USA simply didn't participate in the increase to 180 cents/lb.

When the cat bites its tail

I will summarize this circular argument again point by point:

• Producers/organizations pay for the audit in order to obtain a label and thus differentiated market access
• Each market has its own requirements, and so producer organizations often have to be certified multiple times, which always involves several 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 the certified coffee found a target market and received a premium, for 74% of the certified coffee there was no premium, although it met the criteria
  
• Cooperatives are increasingly selling more on the local market because they earn more than if they exported the certified coffee. Not because they pay more, but because there are fewer additional financing costs.
  

The system isn't working as intended across the board. And yet certification continues. I'll quote Kleber Cruz of GEPA again: "It's simply a business."

What would be the alternative? No certification?

Those who diversify and grow more can find additional 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, auditing authorities, and companies that are themselves certified. They, in particular, naturally assume that certification is the way forward.

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

“Better specialty coffee than a label”

One of the many promises made by certain specialty roasters is that they do not use labels because a label does not provide sensory quality and the direct approach of working with producers is much more worthwhile.

The labels discussed here have never focused on sensory quality, so this argument doesn't count . "Direct collaboration" is a vague term. How much direct is direct? And who is eliminated in the supply chain, why, when, and with what consequences?

Direct collaborations are often geared toward individual producers or smaller farms, which clearly does not correspond to the intention of certifiers, who work as inclusively as possible. The reasons for foregoing labels due to quality standards and a vague definition of direct trade are therefore certainly worth questioning.

“Label and that’s it”

Another discourse I'm noticing among meso- and macro-roasters is that they're focusing on certified coffees. This is often accompanied by grand promises that a roaster is now particularly sustainable and that—by simply purchasing certified coffees—they will change things for the better. As if a label were insurance for a bright future and a guarantee that they're doing the right thing.

However, a label cannot bring about complete change; they are not designed for that. The respective lists of requirements specify concrete points to be met, but these—even though they are detailed—are not specifically tailored to the respective partners.

Labels are not interested in isolated solutions, and this is where retailers and roasters have a great opportunity to build a bridge, perhaps even together with a certifier: win-win-win.

Partnerships will be the future, something several certifiers are already striving for. In addition, certifiers are increasingly offering additional expertise. "It's becoming increasingly important to focus on risk analysis and compliance," says Peter Lerch of the Rainforest Alliance. Traders' programs must be more transparent and externally audited.

“Lies and deceit”

I thought the days of unfounded rejection of transparent concepts were over. But no, I was recently proven wrong.

A potential customer was interested in our coffee.

When I spoke about the organic label, my guest interrupted me and launched into a minute-long tirade against every label. He claimed they were all lies, worthless, all fraudulent, no one cared, etc.

I accompanied the guest to the door.

Labels are subjected to constant criticism, forcing them to constantly assert and justify themselves. Transparency increases every year, precise long-term studies on effectiveness are still lacking, but there is neither a hidden agenda nor dubious machinations. Labels are also a business, whether you like it or not, but they are not an underground organization.

Label 4.0

“Labels are no longer pure labels”,

Peter Lerch of the Rainforest Alliance tells me. The certifiers work intensively and scientifically on various issues within the coffee chain and publish their own discussion papers for public reflection.

The new EU laws such as the EUDR (Deforestation-Free Supply Chain Regulation) naturally also affect certifiers, so they must be on the cutting edge and in dialogue with their partner producers and issue their policy statements on these issues.

However, a great deal of educational work is still needed to communicate all the changes made, Lerch continued. For me, this is the all-important discourse, because this is where the certification organizations can demonstrate the added value they provide in times when absolutely 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 very close, they said. I still don't believe it, and I can't imagine an end anytime soon. Labels like Fairtrade, Bio Suisse, Rainforest Alliance, and Demeter are deeply embedded in consumer perceptions; these labels will still be allowed to exist in 20 years – but the processes behind them will continue to change.

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 ? Labels have at least two target audiences: Consumers can learn to shop more mindfully with labels, and producers could find a market among these consumers.

The question of what remains is still relevant and has lost none of its relevance: the goal of the labels discussed is to improve the livelihoods of small-scale producers, who often have their backs against the wall. Regardless of how well, often, and in the long term, the "what" will not change.

Labels are part of the coffee ecosystem. Katja Schmittner of Fairtrade Max Havelaar once told me in a podcast: "When Fairtrade is no longer needed, we've done our job." Labels create visibility for problems that are addressed by purchasing labeled coffee.

The effectiveness of coffee labels is controversial . There are scientific papers, but most of them rely on individual case studies. The impact reports from the certifiers themselves often go into less depth and breadth—and if they do, feel free to share the links in the comments.

And when I ask cooperatives directly how big the impact is, the answers are never clear, but rather describe a state of mind , what labels enable us to think about, and why it might be worthwhile. Making clear claims is therefore difficult.

The great strengths of certifiers are that they create comparability of what is sustainable and define "sustainable" in the process. They also demand accountability, as a third party conducts an audit.

The risk of greenwashing is significantly lower with certified coffees than with non-certified coffees, as the latter are not subject to external auditing.

Roasteries that operate without labels are not required to provide accountability. However, there are voluntary alternatives where roasters can get involved and share data. Transparency Coffee or self-authored transparency reports like those from Vote Coffee are tools for voluntary accountability.

From a consumer perspective, it's understandable that a jungle of labels can sometimes confuse more than clarify. Especially when it comes to the proprietary labels of a roaster or retailer.

Opting for long-established labels is a safe bet, as the labeling organization is accountable. If you want to play it safe in a supermarket, buy coffee that is double-certified: FTO (Fairtrade) and Organic.

Outro

I don't eat fish from the ocean, only from Swiss rivers and lakes. So, when I can't find any at the fish counter, I buy a smoked trout from the fish farm in the neighboring village.

The fish labels confused me; each one sounded really good. This can lead to the feeling that certifications give you certainty about something that might never happen, something you never fully understand, and maybe shouldn't, because someone else is taking care of it.

Label organizations have a very ambitious goal of addressing the macro challenges in the coffee sector. However, the micro level is equally important, and private individuals, companies, and NGOs can work on this simultaneously. Their approaches are less scalable because they are isolated, but the underlying thinking is replicable, and good things are copied.

Resting on labels will never be enough. But it won't help to lash out at certifications either. If anyone should be held accountable, it's all those who don't buy certified coffee, don't take specific measures at the source, or buy coffee from dubious sources.