The Sustainable Coffee Conundrum: A study into the effects, cost and benefits of implementation modalities of sustainable coffee production in Vietnam is an interesting study of the limited effectiveness of the UTZ Certified program (UTZ Certified) on its intended outcomes. I have been posing these very questions to the sustainable agriculture community for the past few years: Are certification systems, especially those with complex standards and robust credibility assurance processes, effective and scalable?
UTZ Certified is a leading sustainable coffee program that was launched in 2002. The program was originally called Utz Kapeh, which translates to “good coffee” in the Mayan language of Quiché. Now known simply as UTZ Certified, the program has been a model – at least in part – for many subsequent programs aimed at addressing key environmental, labor and economic issues. UTZ Certified centers on two activities:
· Compliance with the code of conduct, and
· Providing training to help farmers professionalize their business.
In addition to compliance and training at the farm level, UTZ Certified also introduced a platform that would help link buyers with sellers with the aim of controlling costs and premium mark-ups along the supply chain. I applaud UTZ Certified for testing a new model that promotes farmer training and for creating a more direct market-based model. Now let’s see what we can learn from the study.
Vietnam is the second largest supplier of UTZ Certified coffee, representing 20 – 25 percent of all UTZ Certified coffee.
The study analyzed five types of programs in Vietnam: one control group, one farmer field school (FFS) without UTZ Certified (FFS only), and three FFS with UTZ Certified with varying degrees of training (FFS + UTZ Certified) – one high-, one medium-, and one low-intensity. The study conducted three separate analyses:
1. Performance on the basis of 63 outcome and impact indicators.
2. Effect of implementation of professionalization activities (e.g. training quantity, quality of trainings, and quality of trainers) in comparison with effects of compliance with the UTZ Certified standard
3. Implementation costs of UTZ Certified certification and training
Some specific findings include:
· The FFS supported groups – with UTZ Certified or without – showed better overall performance compared to control groups with the highest gains from more intensive, high quality training programs. However, this has few effects on impact indicators.
· Efficiency of water and fertilizer – a significant issue in Vietnam – was only improved in the FFS + UTZ Certified group. However, the study indicates that other (unidentified) social and environmental factors had a greater influence on productivity and efficiency that training or UTZ Certified.
· Training costs for average productivity farmers (e.g. farming 3.68 metric tons per hectare (ha) on 1.35ha) were approximately $75 per farmer per year in the FFS only model. Lower intensity trainings cost less but showed limited impacts.
· There was no overall impact on farm economics for any of the groups. At farm level, in all groups, costs incurred to comply with the UTZ Certified code appear to have negative influence on production costs and earnings. Premiums associated with UTZ Certified can help farmers recoup some costs of implementation but not all.
The authors conclude that it’s time to dismiss UTZ Certified’s hypothesis that “efficiency improves with UTZ Certified certification.” With this said, they also found that the provision of more high quality trainings by competent trainers is the most critical factor to achieving overall positive results. Moreover, while UTZ Certified in this case can lead to access to some training and to the uptake of management tools (e.g. recordkeeping and investment planning), it does not lead to improvements in farming efficiencies and better farm economics.
The study also found issues with UTZ Certified’s assurance systems, specifically that up to 30 percent of UTZ Certified farmers were not actually in compliance. Such a discovery poses a risk to the credibility of the UTZ Certified program.
There is always a tension between the cost (and scalability) of a program and the credibility – both perceived and effective. I consider perceived credibility to be the belief that a program with high standards, good governance, and proper assurance processes and controls is “credible.” I view effective credibility as the belief that the program achieves the intended outcomes. I have long suggested that the credibility of a certification or standards system should be linked more closely to effective credibility. Stated more simply, is it working? This study, as with many others I have read – indicates that the classic certification model may not be as effective in reducing impacts and improving economics as we thought, and is certainly not in all situations.
My friend and colleague, David Rosenberg, former Executive Director of UTZ Certified, contends that improvement to yield and farmer income can reach as high as 30 percent in regions such as Ivory Coast where farmers are not yet as productive as those in Vietnam. David reminds me that certification should not be viewed as the end game and should be recognized for the multiple purposes it serves:
· Establish a 'better' baseline than non-certified products (e.g. minimum criteria must be met),
· Promote continuous improvement (especially for less productive farmers),
· Use a common language (and expectations) along the supply chain,
· Enable comparative and credible monitoring and evaluation, and
· Allow oversight by a multi-stakeholder body.
David and I both agree that certification is not the silver bullet but the common frameworks they provide are important. With this said, I have been quite vocal over the years on possible adjustments to the certification model that I believe will result in a larger overall impact. I envision a model that targets the most critical issues and provides resources to help farmers improve their operations. This new model would shift its focus from a product to a system. I have been promoting the following four potential adjustments:
1. Simplify standards. The original intent behind some of the commodity roundtables (e.g. cotton, soy, palm and sugar) was to engage numerous producers and then help them continuously improve their practices and productivity over time. Somewhere along the way, we have created a system where only producers who meet a long, complex set of standards and criteria can qualify. We should consider a simpler process, one very similar to the classic Plan, Do, Check, Act process, which allows participants to address their most critical issues the first year (e.g. fertilizer and water use in the case of Vietnam coffee producers), and to adopt additional standards or practices over time. I was a bit cheeky last winter when I proposed that we simplify standards to one indicator – soil health – and then measure all benefits that result from the farmer’s focus and link them back to this one critical condition.
2. Reduce costs. Programs must streamline and minimize non-critical, non-impactful activities and reallocate resources to more activities that result in measurable improvements and are not easily implemented by existing actors. I believe that supply chain actors can create a market and address the traceability and delivery of sustainable goods quite efficiently and effectively using systems that are already in place (possibly with some direction or standards for their performance). We should not be investing in traceability systems because they do not directly lead to improvements and they divert funds from more critical activities such as farmer training, access to quality inputs, and improved knowledge and support programs. As I like to say, “trace something through a supply chain and your efforts are only good for that time and that product. Train a farmer and the benefits will span over multiple generations.”
3. Improve access to quality training. I wholeheartedly believe that farmer training and access to knowledge and quality inputs is the area of greatest potential and should be the focus of any sustainability / certification – and where we invest. The subject study comes to the same conclusion. Some governments do provide farmer support services as well as research and development, but there are many more farmers who do not have access to these services or benefits. Sustainability programs should spend the majority of their budgets in training and support services to the extent possible.
A shift in the way brands’ communicate their support of such programs – from a product to a brand level – can also lead to greater efficiency and scale and allow consumers to have a stronger connection to the farmers and brand. Relieving the need to certify, trace and market at a product level would allow us to evaluate and communicate progress at a system or industry level rather than at the costly and piecemeal farm-by-farm level. My ideal model would also allow consumers to support the program more directly and efficiently (and hopefully scale up faster). We could establish a system by which a consumer could sponsor a farmer or a farming community, bypassing the costly exercise of certifying and tracking a product from the farm to their home, and, more importantly, allowing them to purchase any product they like (e.g. the jeans that fit them best) from a trusted brand rather than the few spotlighted products that have sustainable attributes (that may or may not fit as well). Retailers could facilitate the consumers’ contributions (or even matching them) – for example, adding a contribution at point of sale – knowing that this would result in enhanced brand image and even possibly creating a value based relationship with their customers that is more powerful than a product by product loyalty.
I am not sure if my model is the answer. But as we see more and more studies of the models we are operating today, they don’t appear to be the answer, either. It is time to adjust.
UTZ Certified is a leading sustainable coffee program that was launched in 2002. The program was originally called Utz Kapeh, which translates to “good coffee” in the Mayan language of Quiché. Now known simply as UTZ Certified, the program has been a model – at least in part – for many subsequent programs aimed at addressing key environmental, labor and economic issues. UTZ Certified centers on two activities:
· Compliance with the code of conduct, and
· Providing training to help farmers professionalize their business.
In addition to compliance and training at the farm level, UTZ Certified also introduced a platform that would help link buyers with sellers with the aim of controlling costs and premium mark-ups along the supply chain. I applaud UTZ Certified for testing a new model that promotes farmer training and for creating a more direct market-based model. Now let’s see what we can learn from the study.
Vietnam is the second largest supplier of UTZ Certified coffee, representing 20 – 25 percent of all UTZ Certified coffee.
The study analyzed five types of programs in Vietnam: one control group, one farmer field school (FFS) without UTZ Certified (FFS only), and three FFS with UTZ Certified with varying degrees of training (FFS + UTZ Certified) – one high-, one medium-, and one low-intensity. The study conducted three separate analyses:
1. Performance on the basis of 63 outcome and impact indicators.
2. Effect of implementation of professionalization activities (e.g. training quantity, quality of trainings, and quality of trainers) in comparison with effects of compliance with the UTZ Certified standard
3. Implementation costs of UTZ Certified certification and training
Some specific findings include:
· The FFS supported groups – with UTZ Certified or without – showed better overall performance compared to control groups with the highest gains from more intensive, high quality training programs. However, this has few effects on impact indicators.
· Efficiency of water and fertilizer – a significant issue in Vietnam – was only improved in the FFS + UTZ Certified group. However, the study indicates that other (unidentified) social and environmental factors had a greater influence on productivity and efficiency that training or UTZ Certified.
· Training costs for average productivity farmers (e.g. farming 3.68 metric tons per hectare (ha) on 1.35ha) were approximately $75 per farmer per year in the FFS only model. Lower intensity trainings cost less but showed limited impacts.
· There was no overall impact on farm economics for any of the groups. At farm level, in all groups, costs incurred to comply with the UTZ Certified code appear to have negative influence on production costs and earnings. Premiums associated with UTZ Certified can help farmers recoup some costs of implementation but not all.
The authors conclude that it’s time to dismiss UTZ Certified’s hypothesis that “efficiency improves with UTZ Certified certification.” With this said, they also found that the provision of more high quality trainings by competent trainers is the most critical factor to achieving overall positive results. Moreover, while UTZ Certified in this case can lead to access to some training and to the uptake of management tools (e.g. recordkeeping and investment planning), it does not lead to improvements in farming efficiencies and better farm economics.
The study also found issues with UTZ Certified’s assurance systems, specifically that up to 30 percent of UTZ Certified farmers were not actually in compliance. Such a discovery poses a risk to the credibility of the UTZ Certified program.
There is always a tension between the cost (and scalability) of a program and the credibility – both perceived and effective. I consider perceived credibility to be the belief that a program with high standards, good governance, and proper assurance processes and controls is “credible.” I view effective credibility as the belief that the program achieves the intended outcomes. I have long suggested that the credibility of a certification or standards system should be linked more closely to effective credibility. Stated more simply, is it working? This study, as with many others I have read – indicates that the classic certification model may not be as effective in reducing impacts and improving economics as we thought, and is certainly not in all situations.
My friend and colleague, David Rosenberg, former Executive Director of UTZ Certified, contends that improvement to yield and farmer income can reach as high as 30 percent in regions such as Ivory Coast where farmers are not yet as productive as those in Vietnam. David reminds me that certification should not be viewed as the end game and should be recognized for the multiple purposes it serves:
· Establish a 'better' baseline than non-certified products (e.g. minimum criteria must be met),
· Promote continuous improvement (especially for less productive farmers),
· Use a common language (and expectations) along the supply chain,
· Enable comparative and credible monitoring and evaluation, and
· Allow oversight by a multi-stakeholder body.
David and I both agree that certification is not the silver bullet but the common frameworks they provide are important. With this said, I have been quite vocal over the years on possible adjustments to the certification model that I believe will result in a larger overall impact. I envision a model that targets the most critical issues and provides resources to help farmers improve their operations. This new model would shift its focus from a product to a system. I have been promoting the following four potential adjustments:
1. Simplify standards. The original intent behind some of the commodity roundtables (e.g. cotton, soy, palm and sugar) was to engage numerous producers and then help them continuously improve their practices and productivity over time. Somewhere along the way, we have created a system where only producers who meet a long, complex set of standards and criteria can qualify. We should consider a simpler process, one very similar to the classic Plan, Do, Check, Act process, which allows participants to address their most critical issues the first year (e.g. fertilizer and water use in the case of Vietnam coffee producers), and to adopt additional standards or practices over time. I was a bit cheeky last winter when I proposed that we simplify standards to one indicator – soil health – and then measure all benefits that result from the farmer’s focus and link them back to this one critical condition.
2. Reduce costs. Programs must streamline and minimize non-critical, non-impactful activities and reallocate resources to more activities that result in measurable improvements and are not easily implemented by existing actors. I believe that supply chain actors can create a market and address the traceability and delivery of sustainable goods quite efficiently and effectively using systems that are already in place (possibly with some direction or standards for their performance). We should not be investing in traceability systems because they do not directly lead to improvements and they divert funds from more critical activities such as farmer training, access to quality inputs, and improved knowledge and support programs. As I like to say, “trace something through a supply chain and your efforts are only good for that time and that product. Train a farmer and the benefits will span over multiple generations.”
3. Improve access to quality training. I wholeheartedly believe that farmer training and access to knowledge and quality inputs is the area of greatest potential and should be the focus of any sustainability / certification – and where we invest. The subject study comes to the same conclusion. Some governments do provide farmer support services as well as research and development, but there are many more farmers who do not have access to these services or benefits. Sustainability programs should spend the majority of their budgets in training and support services to the extent possible.
A shift in the way brands’ communicate their support of such programs – from a product to a brand level – can also lead to greater efficiency and scale and allow consumers to have a stronger connection to the farmers and brand. Relieving the need to certify, trace and market at a product level would allow us to evaluate and communicate progress at a system or industry level rather than at the costly and piecemeal farm-by-farm level. My ideal model would also allow consumers to support the program more directly and efficiently (and hopefully scale up faster). We could establish a system by which a consumer could sponsor a farmer or a farming community, bypassing the costly exercise of certifying and tracking a product from the farm to their home, and, more importantly, allowing them to purchase any product they like (e.g. the jeans that fit them best) from a trusted brand rather than the few spotlighted products that have sustainable attributes (that may or may not fit as well). Retailers could facilitate the consumers’ contributions (or even matching them) – for example, adding a contribution at point of sale – knowing that this would result in enhanced brand image and even possibly creating a value based relationship with their customers that is more powerful than a product by product loyalty.
I am not sure if my model is the answer. But as we see more and more studies of the models we are operating today, they don’t appear to be the answer, either. It is time to adjust.
RSS Feed