Coffee Certifications. Between Aspiration 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, bearing the keywords "fair", "responsible" and "friends" in their names, and giving me a good feeling, which is intentional.

But I'm confused:

which label is actually good?

Or are they all good?

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

More and more questions come up, and with them a lack of understanding that makes me uncertain, then critical, and finally skeptical. So I don't buy anything — not because I don't eat seafood — but because I also have the feeling that I don't understand what's going on here. I simply lack the background.

Fortunately, I work with coffee, and the whole label situation is much clearer there — or actually, it's not clear at all.

Because the coffee shelf in the supermarket, which I scan from time to time to feel the pulse of the times, unfortunately looks only marginally more organized.

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

sustainability communications 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 since become normal, and therefore precision apparently no longer seems necessary, even though it's needed more than ever.

There apparently is a desire for certifications, for products that have been manufactured according to a requirements catalog. If we look at coffee, however, it becomes clear: certified coffees don't all find their market. As citizens we want them, but as consumers we don't live up to our noble aspirations.

In the specialty coffee sector, there are even obvious currents that view certifications as poor references for their own practices and have nothing good to say about them. It seems to me that there's more hype than precise argumentation at work here.

One might ask: aren't certifications simply "okay" already, and shouldn't it be the coffees without certification that need to be examined more closely?

When I hear from coffee drinkers that they prefer to buy coffee without certification rather than buy coffee from an unclear label, it's a sign of overwhelm and a reflex we also know in climate discourse — companies that compensate for all emissions are often pointed at, yet more than 90% of companies don't compensate at all.

So what exactly do these certifications do, and what do they not 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 the way to the farm (Photo: Miguel Guevara)

The Basics of Coffee Certification

What is a certification?

I'm asking where linguistic precision is desired and verbal creativity is frowned upon: at DIN ISO, the German Institute for Standardization. According to this, a certification is

"a measure by an impartial third party that demonstrates that reasonable assurance exists that a properly designated product, process, or properly designated service is in conformity with a specific standard or other normative document."

In this case, the standard is abbreviated with a seal, the normative document would be the guidelines of a seal, and the impartial third parties would be the audit offices that, in our case, examine coffee producers and processing facilities against the ruleset of the respective seal.

In the coffee industry, there is no single binding seal that all actors along the supply chain must commit to. That's why we're 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 required to accept them.

These VSS are to date 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 accessible. Each label defines more or less clearly what the 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 with each other based on their social, ecological, qualitative and ethical components.

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

Both platforms go into detail about the requirements of the labels, and the Standards Map also points to the relevant legal basis. It's fun to click through the platforms and understand how many different criteria each seal actually addresses.

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

"It's certainly no walk in the park",

the managing director of one of our partner cooperatives told me. Because the transparency that is supposed to build trust on the consumer side only comes about because an audit body goes through all the questionnaires with the producers. Nothing is left unturned.

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

Like any audit, the goal here is to do as much as possible as well as possible, but definitely not to do anything wrong.

If a deficiency, such as "improper" storage of fertilizer according to the criteria catalog, is noted, remediation is needed. Other unmet criteria are considered deal-breakers and result in the label being withdrawn.

This stringency and severity give the label its credibility and its very reason to exist. But what role do certified coffees play in the market, what do they mean for producers who are certified and now want to bring their coffee to such a market?

The Reality Check

At the Retailer

"There are many different certifications, besides the well-known ones also company-owned 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 when it comes to robusta, there isn't much certified coffee yet. New farmers are being certified every year, but the numbers are still low."

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

"The trend is clearly moving toward certified coffees," says Cvrljak, "especially when we look at the new EU regulations. At the end of 2024, the Deforestation Law comes into effect. If the law comes as intended, you can only buy certified coffee in the EU and Switzerland."

The Market...

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

If so much coffee is being certified, there should be an effect and we should be able to read more positive news, right?

Graphic from the Coffee Barometer, 2023

55% of coffee was certified, but in 2021 only 26% of it was sold in the market as such. The other 74% of certified coffee landed in the conventional coffee market.

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

... doesn't exist

It won't happen that 100% of certified coffees find their intended market, since it's also about supply and demand here. "50-60% should be the goal," a well-informed contact tells me. Because: as long as the supply of certified coffees is greater than demand, certifications remain cheap.

With 4C, for example, premiums are at 2-3cts/lb (1 lb = 1 pound = 0.45kg), with Rainforest Alliance at around 5 cts/lb — that's significantly less and not comparable to the fixed prices and premiums that Fairtrade offers. Only Fairtrade is too expensive for many buyers (= traders and roasteries). Following the motto: it can be sustainable, but it just can't cost so much.

So those looking for a cheaper sustainability seal than Fairtrade find Rainforest Alliance, 4C, or company-owned 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 tips toward the supply of certified coffees becoming smaller, certified coffees will become more expensive and even less attractive to buyers than today.

When I realized what I had written in the last four sections, I had to pause several times — a system with good intentions recruits producers for something that offers no guarantee of success.

It's a bit like a lottery with 30 instead of 100 numbers. The odds are pretty good that I'll win something, but it also might not happen. At one place, a wheel of fortune decides, at another, those who do the buying.

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

"It's also just a business"

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

So more and more producers are being certified, yet at the same time the market for certified coffee is growing only marginally or not at all — Fairtrade and organic are stagnating, RFA and 4C — the cheaper alternatives — are growing.

It seems to me like the recycling rate for plastic. Apparently everyone is orienting themselves to make everything recyclable, but the rate is growing far too slowly. Consumption of new plastic is growing much faster.

So where exactly is the appeal for producers to participate?

Why would someone get certified when it comes with additional costs and hopes, but the chances of success are low?

The Importance of Certification for Coffee Producers

Cooperatives, producer organizations, and individual producers can open up new markets with certification. Again, Kleber Cruz from GEPA.

"Of course, certifications are needed if an organization wants to get into retail."

Retail loves to advertise that they're doing "more" for sustainability in coffee, and they often do that by committing to certifications. The coffees that made it as certified coffee to store shelves have arrived at 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 range, seek direct exchange and invest locally. In Switzerland, there are examples of this in Migros and Coop. Anyone who knows of other examples (from Germany and Austria) is welcome to share them in the comments.

The demand for certified coffee in supermarkets in Germany, Austria and Switzerland seems to be increasing, but compared to overall selection it remains a smaller portion. Retailers are fundamentally open to VSS , but very large roasters like Nestlé, JDE and others often have their own sourcing and sustainability programs that are only 2nd party verified, meaning not third-party audited, and therefore cheaper.

What does this starting position mean for everyone who produces coffee and gets certified?

Certification Costs for Coffee Producers

FairTrade and FairTrade/Organic

"The costs of certification are a problem," states 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 how much financial pressure is on the expense side:

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

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

Cruz reports. Anyone who wants 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 each has its own certification.

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

So those who can produce, certify and ship more overall have lower certification costs per kilogram in the end. But if the market isn't there to absorb all the certified coffee, then certification costs are additional expenses with no return value.

Rainforest Alliance

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

Producers pay for the audit at a certification body of their choice. The resulting costs depend on the audit body, not on RFA. In addition, as with any certification, there are 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 — that is, the party that first purchases the coffee from the cooperative or farm.

What premium do producers get for certified coffee?

In the following calculation example, we compare a Fairtrade, a Fairtrade Organic double-certified, and an RFA with each other.

Audit costs for producers, processors (e.g. roasteries) and distributors (e.g. supermarket) must be paid annually by all. This is the same for all certifications listed here.

A Brutal Bottom Line for Producers

Whether the effort is ultimately worthwhile for coffee producers needs to be discussed elsewhere. It requires a specific analysis with concrete targets.

But what I've heard repeatedly during my research is: that double-certified (Fairtrade/Organic) cooperatives have been selling their coffee increasingly on the local market in recent years because it's 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 the financing costs that would otherwise arise for bridging the time until money comes from the international buyer, fall away. Interest rates in Peru go as high as 30%. And these eat up the premiums from certified coffees again.

With Fairtrade's increase in the minimum price to 180 cts/lb, the problem described above becomes even larger. I'm told that demand in Europe has dropped significantly. Fairtrade and Fairtrade-Organic certified coffees are in strong demand in the USA right now, because Fairtrade USA simply didn't go along with the increase to 180cts/lb.

When the Cat Bites Its Own Tail

Let me summarize this circular logic point by point:

• Producers/organizations pay for the audit to get a label and thereby differentiated market access
• each market has its own requirements, so producer organizations often get certified multiple times, which always involves 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 considerably 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, for 74% of certified coffee there was no premium even though it met the criteria
  
• cooperatives are increasingly selling on the local market because they earn more doing so than they would by exporting certified coffee. Not because more is paid, but because there are fewer additional financing costs
  

The system doesn't work as intended across the board. Yet certification continues. I quote Kleber Cruz from GEPA again at this point: "It's also just a business."

What would be the alternative? No certification?

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

The Discourse

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 with them, there is naturally an understanding that certifications are the way to go.

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

"Rather Specialty Coffee Than a Label"

One of many promises from certain specialty roasters is that they skip labels because a label provides no sensory quality and the direct approach of working with producers is much more worthwhile.

The labels discussed here never had a focus on sensory quality, so this argument doesn't count. The "direct collaboration" is a vague formulation. How direct is direct? And who is eliminated and why and when on the supply chain, to what effect?

Direct collaborations are often designed for individual producers or smaller farms, which clearly does not match the intention of certifiers, which work as inclusively as possible. Abandoning labels for quality demands and a imprecise definition of direct trade are therefore reasons that one may well question.

"Labels and We're Good"

I perceive a different discourse with meso and macro roasteries where they rely on certified coffees. This often comes with big promises that a roastery is now particularly sustainable and that they — purely by buying certified coffees — would turn things for the better. As if a label were insurance for a good future and a safeguard to do the right thing.

However, a label can't bring about comprehensive change; they're not designed for that. The respective catalogs of requirements specify concrete points to be met, but these — even if detailed — are not tailored to each specific partner.

Labels don't address point solutions, and that's where traders and roasteries have a big opportunity, perhaps also together with a certifier: win-win-win.

Partnerships will be the future, something different certifiers are already pursuing. Beyond that, certifiers increasingly offer additional expertise. "It's increasingly about risk analysis and compliance," says Peter Lerch of Rainforest Alliance. For this, the programs of traders must be more transparent and externally audited.

"Lies and Fraud"

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

A potential customer was interested in our coffee.

When I spoke about the organic seal, the guest interrupted me and got into a lengthy tirade against every seal. Everything was lies, worthless, all fraudsters, no one would care, etc.

I showed the guest to the door.

Labels are subject to constant criticism, always having to reassert and justify themselves anew. Transparency is growing 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're not an underground organization.

Label 4.0

"Labels are no longer pure labels,"

Peter Lerch of Rainforest Alliance tells me. Certifiers work intensively and scientifically on various issues in the coffee chain and even issue discussion papers to open themselves to public reflection.

New EU laws like EUDR (Regulation on deforestation-free supply chains) affect certifiers too, so they must be directly at the pulse of the times and in dialogue with their partner producers and issue policy statements on it.

But there's still a lot of educational work needed to communicate all the changes made, Lerch continues. For me, that's the all-determining discourse, because that's where certification organizations can prove what added value they deliver in times when really nothing is stable anymore.

In 2012, I first heard of 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 end anytime soon. 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 is this for and what is it for. With labels, there are at least two addressees: consumers can learn to shop more mindfully with labels, and producers could find a market for those consumers.

The question of the what remains to be kept front and center and hasn't lost any relevance: the goal of the labels discussed is to improve the living conditions of small producers who are often backed into a corner. 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've done our job." Labels create visibility for problems that are addressed by buying a labeled coffee.

The effectiveness of labels in coffee is controversial. There are scientific papers, but mostly they have to select individual case studies. The impact reports of the certifiers themselves often lack depth and breadth — and if they do have depth, links are welcome to be shared 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 what labels make it possible to think and why it might be worth it. So making clear claims is difficult.

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

The risk of greenwashing is significantly smaller with certified coffees than with non-certified coffees, since the latter are not subject to external review.

Roasteries that work without labels are not forced to account for themselves. But there are voluntary alternatives where one can engage as a roasterie and share data. Transparency Coffee or self-published transparency reports like from Vote Coffee are means of voluntarily accounting for oneself.

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

Reaching for labels that have long been established is a safe choice, since the label organization must account for itself. Those who want to be safe in a supermarket buy double-certified coffee, FTO — Fairtrade and Organic.

Outro

I don't eat fish from oceans, only from Swiss rivers and lakes. So I don't find anything 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 good. That's how one can get the feeling that certifications give you certainty about something that may never happen, that you never fully understand, and perhaps shouldn't, because someone else takes care of it.

Label organizations have the very big ambition to tackle macro-challenges in the coffee sector. But it also takes the micro, and that's what individuals, companies and NGOs can work on, simultaneously. Their approaches are less scalable because they're point-based, but the underlying thinking is reproducible and good ideas get copied.

It will never be enough to rest on labels. But it also doesn't help to shoot sharply against certifications. If someone should be held accountable, it's all those who don't buy certified coffee, don't take point measures at origin, or buy coffee from dubious sources.