Brazil produces about a third of the world’s coffee.
Ethical certification means more of it now commands a premium
Neat rows of coffee bushes cover the rolling hills surrounding Estancia Lecy. Dotted around the plantation are attractive copses of natural forest, recently renovated workers’ cottages and a lake brimming with fish.
About 250km north-east of São Paulo, in the heart of Brazil’s coffee-growing country, Estancia Lecy is at the forefront of the country’s gradual take-up of ethical certification.
“It has taken us just under a year to meet all the necessary social and environmental requirements,” says João Carlos Gabriel, manager of workplace safety at Estancia Lecy.
The farm, which produces 9,000 100kg sacks of coffee a year, received formal certification for 812 hectares of its coffee plantation in January. Work is still being carried out to certify the farm’s remaining 500 hectares.
Brazil is the world’s largest coffee producer. Most of its vast crop is destined for the low-grade, low-value end of the market. But certification is changing this.
“Before, we used to sell everything though an exporter,” Gabriel explains. “Now, with the stamp of certification, we are in a position to negotiate directly with our buyers as well.”
The company supplies US-based food manufacturer Kraft and restaurant chain McDonald’s and has already struck a deal with one of its main buyers for a $12 per sack premium. At current prices, that’s roughly 10 per cent more than its coffee was previously worth.
Costs and benefits
On the social side, the company was required to refurbish the accommodation for its 143 permanent employees, as well as build a health centre and dental surgery. It also had to invest in ongoing health and safety training for its workers. As for mitigating its environmental impacts, it installed a new sewage treatment facility and reduced the amount of chemical fertiliser it uses.
Usually certification takes longer, but in this case the farm already met many of the certification criteria, explains Eduardo Trevisan, a project co-ordinator at Imaflora. Estancia Lecy, for example, already ran a school for workers’ children and paid above Brazil’s minimum wage.
“Becoming certified does require an up-front investment, but it quickly pays off,” Trevisan says. “Because certified coffee is relatively new, though, many producers still need convincing.”
Confusion over different certification standards also remains a barrier to faster market take-up. Agricultural commodities, such as coffee, are now advertised under a range of different labels, all of varying standards.
At one end of the spectrum, there are rigorous, independently verified schemes such as Rainforest Alliance’s. At the other end, there exist broad policy commitments with little or no assurance, such as the “4Cs” protocol recently introduced by Cecafé, the Council of Brazilian Coffee Exporters.
Low-quality soil and other technical restrictions make shade-grown and chemical-free production methods difficult. This exempts most Brazilian coffee from environmentally-specific coffee labels, such as Organic and Bird-Friendly.
Rush to certify
Supply outstretching demand can also represent a potential problem, according to Augusto Souza, quality manger at Sumatra, one of Brazil’s top 15 coffee exporters.
A case in point is Utz Kapeh (now rebranded Utz Certified), a certification scheme aimed at the mainstream coffee market that emphasised traceability, Souza says. “Initially, the scheme had a good premium because there were few farms certified under the scheme. Now that there are more, the premium has dropped drastically,” he explains.
Ethically certified coffee in Brazil does not face that problem yet. Imaflora currently counts 22 farms among those certified according to Rainforest Alliance standards. That could change, however. The first coveted certification of a Brazilian farm came only four years ago.
All depends on consumer demand. The market for certified speciality coffee in Brazil grew 30 per cent between 2006 and 2007, according to figures from Imaflora.
Bom Dia, for example, one of Brazil’s few roasters with organic, Fairtrade and Rainforest Alliance certifications, recently signed a deal to supply the US supermarket giant Wal-Mart.
Sumatra has also struck a deal with Kraft to provide 5,400 sacks of certified coffee in the coming year for the company’s Kenco Sustainable Development brand. The exporter, in turn, is now pushing more of its suppliers to become certified.
“The final consumers are asking the manufacturer, who then asks the seller, who then asks the producer. The push for more ethical coffee is all part of a chain,” Souza says.
Tchibo in Germany, Italy’s Lavazza and Japan-based UCC Ueshima Coffee are among the international importers now also sourcing certified beans from Brazil. Certified coffee still remains only a tiny percentage of the country’s total coffee crop of 46 million sacks per year. The price Brazilian coffee farmers can expect depends on the speculation of futures markets, global production rates and a multitude of other factors.
In an uncertain market, however, one constant appears to be the premium that consumers – and subsequently manufacturers – are increasingly prepared to pay for a cup of ethically certified coffee.
http://www.ethicalcorp.com/content.asp?ContentID=5693
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