Coffee production needs clear rules

Coffee – Germany’s most popular drink – is grown by around 20 million small-scale farmers worldwide, who often live below the poverty line. Private sustainability standards, for example Rainforest Alliance or Nespresso AAA, promise consumers a fairly traded and ecologically sustainable product. Many of these standards, however, are not systematically observed – as Dr Janina Grabs reveals in her thesis at the Graduate School of Politics at the University of Münster’s Institute of Political Science. “The rapid upscaling of sustainability standards means strong market growth for certified coffee products – both among producers and in the shops,” says Grabs. “This, in turn, often leads to a more flexible definition of sustainability, a drop in prices and an incomplete implementation of sustainable production practices among the coffee farmers themselves. Sustainability standards therefore need clearer rules,” she says.

Growing coffee in tropical and subtropical regions represents the livelihood of many millions of people. These regions frequently have a high degree of biodiversity and, in many places, are characterised by great poverty. If there were ecological conditions for growing coffee and prices were based on fair trade, coffee production could contribute to a protection of natural resources and a reduction in poverty. In reality, however, growing coffee often leads to deforestation, erosion and water pollution. In addition, working conditions are often dangerous and child labour is widespread.

“Many farmers have to sell their coffee below its market value and cannot escape from the poverty trap. For this reason, better growing and trading conditions can help in achieving global sustainability targets,” says Grabs, who analysed the implementation of such standards in the field and in the value chain, on the basis of quantitative field data acquisition from over 1,900 coffee farmers in Honduras, Columbia and Costa Rica, as well as on the basis of interviews with more than 60 experts.

In Germany there are around 350 coffee products which carry a sustainability seal. According to a study carried out by the Forum Fairer Handel (Fairtrade Forum), coffee has a share of over 30 percent of all products fairly traded and, as such, has the largest turnover of all fairly traded products worldwide. In Germany alone, fair-traded roasted coffee has a market share of five percent. “Voluntary sustainability standards have become important political and economic instruments for binding international markets to the fundamental principles of sustainable development,” says Thomas Dietz, Professor of International Relations and Law at the Institute of Political Science at Münster University. He heads the research project “TRANSSUSTAIN”, funded by the state of North Rhine-Westphalia, which gave rise to Janina Grabs’ thesis. “There is a lot of international interest in the results of our research, because we are one of the few projects worldwide which are looking empirically at the question of how effective sustainability standards are in the global coffee value chain – and what benefits actually reach the farmers,” Dietz explains. “The results of the study reveal that the proceeds and the prices paid are too low for sustainability or social and ecological standards to be maintained in the business.

The reason is that, depending on the standard in question, farmers can frequently choose between the sustainability criteria required, or they only have to fulfil such criteria by degrees. For this reason, says Dietz, it is difficult to keep track of what kind of coffee growing the certified product actually represents. And, besides this – for reasons of efficiency – only a fraction of the farmers can be checked up on. One aspect which is particularly important is that many farmers find it difficult to observe strict rules if they do not receive any suitable remuneration for the extra work which they put in. “At a time when coffee with a sustainability seal is also being sold at discount stores, the results of price wars can also be seen, unfortunately, in the market for certified goods – and the prices paid to farmers have dropped rapidly,” Janina Grabs explains. Often, proceeds only cover cultivation costs, and many farmers can only sell part of their harvest to the certified market.

In a first step, sustainable practices can lead to increased costs, for example when safety standards have to be introduced or potential yields decrease as a result of restrictions on pesticides during a transitional phase. Fair trade tries to strengthen the farmers’ economic situation at various levels, as Dieter Overath, Managing Director of the TransFair organisation explains: “Mergers in cooperatives drive professionalisation among small-scale farmers. Management structures are improved, as is their position in negotiating contracts, training is offered, and the result is an improvement in productivity and quality. Two other aspects are especially important for fair trade: firstly, the payment of a fair trade minimum price, which is to be seen as a safety net and which covers the production costs for sustainable production; and secondly, the payment of a premium to all producers in addition to the selling price.”

However, only a few other standards offer reliable premiums which could provide such financial incentives. And fair trade cannot guarantee sales, which means that many farmers are dependent on additional support from NGOs or from the state in order to meet sustainability standards. “In my view it is imperative that private and public rules and legislation should mesh as well as they possibly can,” says Janina Grabs.

Author: Kathrin Kottke

This article was first published in the University newspaper wissen|leben, No. 3, May 2020.

Further information

• Institute of Political Science at the University of Münster
• Graduate School of Politics Münster
• Research project "TRANSSUSTAIN"
• Homepage of Dr Janina Grabs