Certifications

Certifications

What is the market share of eco-certified coffee?

Certified coffees (organic, Fair Trade, Bird-Friendly, Rainforest Alliance, Utz, and Starbucks C.A.F.E. Practices) make up only about 4% of world green coffee exports, or about 220,000 metric tons. The U.S. is a major importer of various types of certified coffee, which make up nearly 8% of green bean imports. Let’s take a quick look at the market share* and growth of the three certification labels that focus largely on ecological standards: organic, Rainforest Alliance, and Bird-Friendly.

Organic
North America imports around half of the world’s organic coffee. In 2006, this amounted to 30,000 metric tons, a 56% increase over 2005.  In 2007, sales reached $1 billion, with 38,000 metric tons representing a 29% increase from the previous year. Still, organic coffee is less than 3% of the total North American market. Farmers receive about a 20% premium (average $0.24/lb) over the C market commodity price of coffee. Nearly 80% of the Fair Trade coffee sold in the U.S. is also certified organic. All Bird-Friendly coffee (see below) is certifed organic.

Rainforest Alliance
As of late 2007, Rainforest Alliance (RA) had certified over 200,000 ha of coffee on nearly 17,000 farms; total production was around 40,000 metric tons. Their website currently states that 1.3% of the world’s coffee is RA-certified. The U.S. is the largest importer of RA-certified coffee, acquiring just over 40%, while Europe is not far behind. In 2006, RA-certified coffee was less than 1% of the total North American market, about 12,000 metric tons. RA is growing rapidly, with 100% average annual growth the last several years. RA does not specify a price premium, but farmers receive about 10 cents a pound over the C market price.

Bird-Friendly
Bird-Friendly is the shade certification of the Smithsonian Migratory Bird Center (SMBC). As of May 2008, it certified 28 producers growing on 7200 ha. Production is less than 3100 metric tons. This is a very small market share, and only a relatively small portion of the total production is sold labeled as Bird-Friendly. In 2006 this was less than 200 metric tons out of 3600 produced. Farmers receive a premium between 5 and 10 cents a pound, on top of the premium for the organic certification (Bird-Friendly coffee must also be certified organic).

The graphic below (click to enlarge) is a shot of a slide from a talk I attended by SMBC’s Robert Rice at the SCAA annual meeting and gives some sense of relative production and overlap in a variety of certified coffees.

As the numbers indicate, though, if there was a circle on the diagram representing mainstream commercial coffee, it would dwarf those of the certified coffees. Sustainable coffees are still a niche market.

What drives the market? Interestingly, a 2001 survey of the North American specialty coffee industry asked coffee business owners to rate the importance of various factors to their buying/selling choices for sustainable coffee. The most important was quality, but next to last was consumer awareness. Author Daniele Giovannucci notes, “This is an interesting indication that consumer demand may not currently be the primary driving force behind the sustainable coffee market. There are indications that the industry itself has played the key role in developing sustainable coffee markets by first providing the supply.”

This doesn’t mean the coffee industry wouldn’t respond to consumer demand; I think it would only enhance market growth in sustainable coffee. Let’s grow those eco-certified coffee circles!

Update: Other more recent data on market share of certified coffees:

*Not all certified coffee gets sold as such – some may be blended with non-certified coffee, the buyer may be interested in other attributes besides the certification and purchases it without intending to market it as certified, or other reasons. The estimated figures are market share of coffee actually sold as certified, not the amount of certified coffee produced under each scheme.

Sources. I had the pleasure of attending a talk by poverty and agriculture expert Daniele Giovannucci at the SCAA meeting. He is the author of the sources of the information used in this post.

Giovannucci, D., Liu, P. and A. Byers. 2008. Adding value: certified coffee trade in North America. In Pascal Liu (ed.). Value-adding Standards in the North American Food Market – Trade Opportunities in Certified Products for Developing Countries. FAO, Rome.

Giovannucci, D. and A. Villalobos. 2007. The State of Organic Coffee: 2007 U.S. Update (PDF). CIMS: San Jose, Costa Rica.

Giovannucci, D. and F. J. Koekoek. 2003. The State of Sustainable Coffee: A study of twelve major markets. International Coffee Organization, International Institute for Sustainable Development and UNCTAD.

Giovannucci, D. 2001. Sustainable Coffee Survey of the North American Specialty Coffee Industry. Working paper commission by The Summit Foundation, The Nature Conservancy, North American Commission for Environmental Cooperation, Specialty Coffee Association of America, The World Bank.

Fair and Direct Trade / Retail and specialty roasters

Counter Culture Coffee’s Direct Trade program

Counter Culture Coffee recently launched its Direct Trade program. It is a natural progression from their Source project, and is a robust example of similar models employed by other roasters, most notably Intelligentsia. Counter Culture is a pioneer, however, in that their Direct Trade coffees are certified by a third party (Quality Certification Services, paid for by Counter Culture).

Here are the standards:

  • Fair and sustainable prices. Counter Culture works with each farmer to determine their production costs and begins price negotiations accordingly. This is the beauty of a direct relationship: many farmers really don’t know how to determine or track their productions costs, and therefore accept pricing that may not realize a profit for themselves. A direct relationship like this Counter Culture model is a true partnership, with the roaster assisting the farmers in calculating, forecasting, and streamlining their production costs. The result: farmers make a good living, roasters have reliable sources of great coffee.Currently, CCC pays a minimum of $1.60/lb. for green coffee; this is expected to rise in 2009. There are also quality-based financial incentives paid to growers on top of this (see below), designed to encourage ecologically-responsible cultivation methods and sustained quality improvement over time.
  • Personal and direct communication. Counter Culture visits grower partners on a biennial basis, at minimum. CCC has an entire section on their web site devoted to posts on trips to origin.
  • Exceptional quality. Direct Trade coffees have scored at least 85 on a 100-pt. cup quality scale. The highest quality coffees are rewarded with higher prices paid to the grower.
  • 100% Transparency. All relevant financial information is is available to all parties — growers, buyers, seller, intermediaries, customers — always.

I think this is a superior model to that of Fair Trade certification in a number of ways. First, of course, is that FT certification only applies to small farmers organized into cooperatives, it is not available to family-owned farms or plantations or single producers. Farmers themselves also do not necessarily receive all or a large portion of any price premiums; this is decided by the cooperative. Second, FT pricing does not take into account any differences in cost of production or cost of living in different regions. Third, FT certification does not certify or verify relationships or communications between producers and roasters or retailer, they only certify the financial transactions between them. Finally, FT does not certify, reward, or incorporate quality into their standards.

Some of Counter Culture’s coffees are also Fair Trade certified, but not labeled as such. And not all Counter Culture coffees will be Direct Trade certified, as it takes some time to work with farmers to get to that level. But the sourcing and purchasing philosophy behind Direct Trade at Counter Culture applies to all their coffees. Congratulations to Counter Culture for this progressive move, which I hope is the future of all coffee sourcing!

Certifications / Coffee news and miscellany / Rainforest Alliance

Rainforest Alliance partners with the Coffee Quality Institute

A Problem
Judging by the enormous market shares of the Big Four corporate coffee multinationals, a lot of people don’t mind drinking lousy tasting coffee. However, plenty of people won’t do it. But more imporantly, if it doesn’t taste better, a lot of folks are not going to pay extra for certified coffee, and these coffees nearly always carry a premium. I’m not even willing to fork over more cash just for an eco-friendly label if the coffee is mediocre. If I can’t drink tasty, sustainable coffee, I just don’t drink it — although I’m as addicted as the next person. Unfortunately, I’m an exception.

Here’s the nasty truth: Even people who profess to caring about the environment tend to default to habitat-destroying, cheap coffee produced with tons of chemicals if there isn’t sufficient motivation to switch.  If they try a certified coffee and it doesn’t taste any better than the stuff they’ve been drinking, they don’t bother to buy it again.

A Partnership
That’s why it’s good news that the fastest growing and most familiar eco-labeller, Rainforest Alliance (RA), has inked an agreement with the non-profit Coffee Quality Institute (CQI). Among other things, this partnership will integrate CQI’s standardized coffee quality standards into RA’s tracking and traceability software and promote those standards within RA’s sustainable agriculture program. On a practical level, it means coffee buyers (importers, roasters, and consumers) will have some objective benchmark (the Q coffee score) indicating the quality of the coffee, as well as the flavor profile.

For the last five years, RA has had annual Cupping for Quality events and cupping competitions organized by CQI. These events and awards really help highlight the fact that sustainably-grown coffees can have amazing flavor, worthy of purchasing just for their taste alone. This partnership should really help buyer awareness and enhance interest in the quality of sustainable coffee.

A Conundrum
I’m not sure how RA will reconcile this commitment to quality — with an emphasis in this case on taste — with their partnerships with big corporate roasters like Kraft. Kraft’s Yuban coffee is 30% RA certified, and has been described by Ken Davids, one of the most respected coffee evaluators in the world, as “Cloyingly sweet, earthy/mildewed character with very distinct grassy notes.” This same review says that those who should drink Yuban are “on a budget with a commitment to organic growing principles that transcends the desire to drink decent coffee.” One could argue that the high-quality RA certified beans are being overwhelmed by the remaining 70%, mildewy, grassy, earthy, who-knows-where-they-come-from beans. But that certainly defeats the purpose. This odd dichotomy — fine work in environmentally and socially sustainable, high quality coffee, alongside helping corporate giants buff their green image by permitting their seal on products containing as little as 30% certified beans — produces not a small amount of cognitive dissonance among coffee lovers, myself included. This will eventually be the subject of its own post.

SCAA flavor wheel photo by AndyCiordia under a Creative Commons license.

Certifications / Coffee regions / Smithsonian Bird-Friendly

SMBC certifies its first African coffees

Smithsonian Migratory Bird Center (SMBC) recently certified its first Bird-Friendly coffee outside of Latin America: Anfilo Specialty Coffee Enterprise (SCE). This group of 118 farmers in the district of Wollega, in the sub-districts of Anfilo and Gidami in far western Ethiopia, grows nearly 600 ha of “forest coffee.” This coffee grows in natural forest at elevations of 1800 to 2400 m near the Gerjeda Forest Reserve (which I’m unable to find information about). These areas are crucial to preserve wild genetic coffee resources.

Coffee from this part of the country (also marketed as Lekempti or Nekempt coffee) generally has large beans, mild fruit flavors (less berry, more stone fruit), and medium body. You can view a professional, 15-minute video about coffee growing in this rather removed area of the country at this site. This video was produced by the brother of the man who owns and manages Afilio SCE.

I see that the SMBC site also now lists a second Ethiopian producer, Mullege PLC. As far as I know, this is an export company with at least ten wet mills in a number of regions.