Ethics and transparency in the coffee supply chain has received huge attention over the past decade, and with good reason! Traditionally, Arabica coffee is traded on the stock market based in New York which dictates the global price for coffee based on supply and demand.
In the late 90s, Vietnam’s coffee production boomed and the market was unexpectedly flooded with an excess supply of coffee. This triggered an 8 year crash with the market operating at levels never seen before.
Generally speaking, an estate in Central America has production costs of around $1.75/lb of coffee. During this period, the market reached points as low as $0.20c/lb which meant farmers were literally growing debt and were forced to abandon their land. There were instances of suicide across the coffee lands leaving families to beg on the streets.
Some buyers rubbed their hands delighted with the opportunity to buy low and sell high, others were more conscious of what this meant for the producer and organisations like Fairtrade really came into their own, protecting the farmer in hard times with a guaranteed minimum price of $1.40c/lb along with a social premium.
Certification systems like Fairtrade, Organic, Rainforest Alliance and so on have played a vital role in growing a market of more conscious consumers and the larger corporate organisations have often committed to working solely with at least one of them to fulfil their corporate social responsibility programmes.
However, in the last decade or so, we have seen an increasing number of consumers asking more questions of their suppliers. Globalisation is bringing people closer together and the world, it seems, wants greater transparency, traceability and provenance in their purchases.
This growing sentiment has enabled the specialty coffee industry to gain momentum, whereby coffee is purchased at a price that recognises its superior quality and therefore the role of the producer. It is thought the specialty coffee industry currently only makes up around 3 per cent of the global market but it is a growing sector encompassing growers, exporters, importers, roasters and independent cafes – all of whom are committed to doing things better. The newly unified Specialty Coffee Association (www.sca.coffee) uses the slogan ‘Make Coffee Better’ in all of their marketing material. The last few years in the UK has seen an army of committed coffee professionals marketing their skills or products on this basis, but we still find ourselves asking after the ethics of this growing market.
Certification systems in general are widely disregarded in the specialty coffee industry as they can seem irrelevant in terms of price protection – this is because specialty grade coffee commands prices that cover the farmers costs of production along with a quality premium that is often up to 100 per cent higher than what would be paid by a Fairtrade buyer.
Certification systems also generally operate on a ‘one size fits all’ model – something that specialty buyers know to be ineffective. However, as a result, we have seen terms such as ‘direct trade’ grow in popularity, this is not regulated and has not really been defined therefore doing nothing to help with the understanding of the end consumer.
Consumers of specialty grade coffee will not find a logo on the packaging of their favourite coffee to explain what has been done to guarantee it has been procured ethically. There is therefore an element of trust that is required and unfortunately, quality does not always guarantee ethics.
So what can be done? Below, we outline the approach we take here at Toast Coffee Pods with all of the single estate, specialty grade coffees we source for our Nespresso® compatible espresso pod range (www.toastcoffeepods.com/collections/nespresso-compatible-coffee-pods):
OUTRIGHT PRICES – all of our coffees are purchased outright whereby a price is paid for the quality. We therefore divorce ourselves from the world coffee market and guarantee to pay a price that covers the cost of production and includes a healthy margin for the farmer which is always at least 20% above the cost of production.
CERTIFICATION – When sourcing coffee, quality is generally our first priority but when working with larger estates in Latin America, we feel it is essential to work alongside certifications such as Rainforest Alliance or Utz. These organisations have principles embedded in International Labour law (ILO) which assure us that a great price is not only paid to the farmer but that the benefits of working with a specialty buyer cascade down to all of the farm workers too. Such certifications also include environmental standards designed for the sustainability of agricultural land and its natural eco-systems.
NGO SUPPORT – We support community projects and NGO’s that are committed to quality improvement and consequently price improvements for the coffee farmers – organisations such as TechnoServe for example have worked across East Africa to assist with coffee infrastructure and producer knowledge.
FAIR TRADE – If the quality is high enough we will buy Fair Trade coffees. This organisation contributes a social premium to a smallholder cooperative which can be used towards projects which are beneficial to the whole community such as primary schools or medical dispensaries.
INNOVATION – We encourage creativity and innovation by supporting farmers in coffee flavour enhancement. If farmers can produce honeyed and natural coffees, micro lots and stand out single varietals then they can add value to the cup and their prices.
PRE-FINANCING – Some of our coffees are pre-financed by organisations such as Root Capital and ResponseAbility. This enables farmers to access funds for farm inputs and labour prior to the harvest when their costs are at their highest.
You can be rest assured that we believe the principles of quality and ethics do need to go hand in hand to guarantee the future of the coffee industry. To be truly sustainable we must pay fair prices for our coffee, encourage quality improvement to bring about better cup profiles and ultimately better prices, and ensure that land is farmed in a way that respects the environment for future generations.
We firmly believe that one size doesn’t fit all. A system of price protection and land management for smallholder farmers in Rwanda might not yield the right results for an estate owner in Nicaragua. This is why we will not work solely with one certification system and instead utilise a number of approaches to make sure we are working on a case by case basis with our producing partners – we believe this ensures that the producer is the focus of our efforts at all times and allows us to have a more engaged involvement, helping to create long term partnerships for the future.
If you have any questions at all about how we do things here at Toast Coffee we would love to hear from you (firstname.lastname@example.org)!