Selling an ethical cup of coffee has become big business. Likewise, the continued growth of guilt-free cappuccinos is one of the biggest recent success stories of the ethical consumer movement.
Sales of Fairtrade coffee sales alone increased by 8% in the year 2013-14. This is consistent with a longer term trend that has seen Fairtrade retail sales of coffee beans grow by 250% in the decade from 2004 to 2014. This period has also seen a proliferation of other ethical coffee accreditation schemes, including Rainforest Alliance and UTZ.
The coffee market appears to be heading the same way as the market for tea, where you’ll now struggle to find a tea brand that doesn’t carry some type of ethical accreditation. Research by Ethical Consumer has shown that nine out of 10 tea brands carry some kind of ethical accreditation, while seven out of 13 brands of coffee bean are ethically accredited.
As the prevalence of ethical products grows so does the scrutiny of them, and rightly so.
Fairtrade in the spotlight
The most stark example is the recent controversy over Fairtrade and the payment of a living wage to coffee workers on smallholder farms in Ethiopia and Uganda. Research from SOAS, found that the Fairtrade Foundation is unable to ensure that all workers get paid a living wage. Most coffee is produced by smallholders who employ some workers - the latter tend to be the worst paid. This is partly because their employers are poor themselves, and also because it is hard to police what happens on thousands of tiny farms.
Fairtrade Foundation standards do not regulate wages if a smallholder employs less than a “significant number” of workers, which is generally interpreted to mean 20. If they employ fewer than 20, they aren’t even required to pay the legal minimum wage.
This controversy is important, firstly because it shows how far we have come. Fairtrade is now firmly established on our supermarket shelves - a huge achievement not only for the organisation but also for the campaign groups that started the label in the late 1980s. If Fairtrade was only accrediting niche ethical products, the story wouldn’t have had the media pick up that it has.
Secondly, it will ultimately help Fairtrade improve what they do. A statement at the time said, “We welcome this focus on the low wages that persist among too many agricultural workers, particularly those who carry out informal work and who are very hard to reach.” The organisation is now researching ways to improve their reporting and, more importantly, ways to improve the pay of workers. Needless to say they must improve if they are to retain the trust of the increasingly ethically savvy consumer.
inally, the reports can give exposure to alternative methods of progressive coffee trading relationships. Scrutiny of one brand of ethical accreditation opens the door for other organisations to push their models. This leaves consumers, who are demanding more ethical products, with a more difficult choice but also one based on more information.
The aim is that coffee brands and their accreditors will develop and adapt their models to compete on ethics rather than just price. In this instance consumers will ideally gravitate to the more demonstrably ethical products, pushing the ethical bar ever higher. We can see some of this already happening in the coffee market.
However, we should issue a note of caution. There can also be competition between schemes themselves to attract businesses to their models, which in some cases can drive standards down as they focus on efficiency.
The other players eluded to above are growing in number but assessing the impact and quality of each can be problematic.
Each has a different set of criteria, some stronger on environmental performance of producers, others on workers’ rights. Some demand total compliance, others demand compliance only for a percentage of crops or for a producer to fulfil only a certain amount of the criteria. Some have the all important Fairtrade floor price (US$1.40 per pound for certified washed Arabica coffee and US$1.35 for unwashed Arabica, or the market price if higher), some do not.
There are also additional monies paid for organic coffee plus the Fairtrade Premium, which is used by producers for social and economic investments). This makes it extremely difficult to assess the various merits of each scheme and even harder to assess their impacts.
For example, the UTZ accreditation scheme has over 120 different criteria. Only 66 of these are mandatory in the first year, rising to 113 in the fourth. There are more criteria for specific products, for example 11 in the coffee market. In comparison, for a product to be certified by the Rainforest Alliance, only 30% of the coffee has to have been produced in line with their criteria.
Some of the other players
This accreditation scheme covers both environmental issues and workers’ rights. Its code of conduct is based on International Labour Organisation conventions and they work with the standards of the global sustainability standard association, the ISEAL Alliance. There is no floor price as per Fairtrade certified commodities. In the UK, Douwe Egberts, Burger King and IKEA are among those using this accreditation for coffee.
Also members of ISEAL, for growers to be certified they must adhere to a list of sustainable principles, including conserving local wildlife and water resources, minimising soil erosion and treating workers fairly. However, the Rainforest Alliance also does not guarantee a minimum price for suppliers. Around 75 brands use this label in the UK, including Costa, Lavazza and Kenco.
Proudly Made in Africa
The “value added” model addresses some models that don’t focus sufficiently on producer countries taking responsibility for processing. Finished products command much higher prices than raw agricultural produce, and being able to get that added value may be one of the most critical factors in enabling producers to escape from poverty.
Proudly Made in Africa is a new label focused on this issue, and certifies products as produced entirely in the countries where the original crops were grown. It is not yet widely available in the UK, but has certified coffee brands like Solino and Out of Africa.
Over 80% of fair trade coffee is organic. This is because coffee is usually produced on smallholder farms and farmers are often unable to afford expensive pesticides. However, organic certification alone doesn’t guarantee the rights of workers or set a minimum price. Aside from fairly traded products, several well known brands offer organic options, including Douwe Egberts and Whittards.
This is different from a traditional accreditation scheme and more of a concept. Union Roasted, which uses this approach, describes its model as “dynamic engagement ... compared to a static a tick-box approach employed by the certification schemes.”
They pay a premium 25% greater than the Fairtrade minimum price, plus an equivalent Fairtrade social premium and additional quality premiums for the coffee as they tend to sell better quality coffee that requires increased inputs. They currently hold the Ethical Consumer Best Buy logo for several of their brands.
Additional research for this piece was provided by Josie Wexler and Heather Webb. Ethical Consumer is co-hosting a conference on ethical labeling in London on 26th July. For more details visit the Ethical Consumer website.
The spotlight on commodities series is funded by the Fairtrade Foundation. All content is editorially independent except for pieces labelled “brought to you by”. Find out more here .