1 Matching Trends for Sustainability Standards: Case of Coffee Exports from Tanzania Evelyne A. Lazaro, Jeremiah R. Makindara & Fred Kilima

2 INTRODUCTION One of the key trends characterizing agro-food Exports is: increasing complexity of public and private standards that are applied to imports into developed countries

3 Objective Review key trends in relation to:  Sustainability standards in coffee,  A profile of (and the main challenges faced by) producers that comply with the Utz standard in Tanzania, and  The perceptions of those producers who have not yet attempted certification.

4 Source of data/information  Key actors in the Tanzanian coffee sector were interviewed to assess compliance to the Utz standard – the ‘fastest’ growing sustainability standard in the coffee sector.  Review of literature  Contact with Utz foundation

5 Sustainability standards  Standards are designed to address a wide variety of needs and goals  Food safety criteria are increasingly combined with requirements for the promotion of environmentally-sustainable production methods.  Producers and businesses’ adjustments needed for compliance have many cost implications.  Compliance offer opportunities for benefits in terms of reduction in undesirable effects to the environment and improvements in health effects on workers.

6 Sustainability standard in coffee  Standards that influence or relate to the sustainability of the coffee sector are many.  Example: Fair Trade (including the Max Havelaar label), Rainforest Alliance, Organic and Utz Certified.

7 Growth of Demand for Selected Certified Coffees Type of certificationPercent increase in 2006 over 2005 Fair trade53 Utz Certified25 Rainforest Alliance106 Organic coffee15

8 Utz Certified Standard  Utz Certified coffee, which is the focus of this paper, is a worldwide certification programme for ‘responsible coffee’.  Coffee producers certified by the Utz Foundation comply with the Utz Code of Conduct

9 Utz Code of Conduct The Utz Code of Conduct covers three main categories:  good agricultural and business practices,  social criteria based on the International Labour Organization conventions, and  environmental criteria Independent certifiers conduct annual inspections to ensure that producers and businesses comply with the requirements of the Utz Certified Code of Conduct

10 Findings  So far only large-scale coffee producers have managed to meet the costs of compliance with the Utz standard in Tanzania;  The rate of growth of Utz-certified coffee sales from Tanzania is quite low,  Does not match the trends in demand for sustainability Even when compared with neighbouring Uganda and Kenya.

11 Utz Certified in Tanzania  Percent of coffee purchases from Tanzania as Utz Certified was 0.06% in of total utz certified coffee purchases in 2006 and  0.09% of total utz certified coffee purchases by 1 st July This is relatively small compared to global trends. Figure 1 Purchases of Utz Certified responsible coffee

12 Challenges  The increasing number of Standards and the demands they place on others in the supply chain are posing big challenges to actors in developing economies. These challenges are associated with:  Awareness of changes in coffee consumers’ behavior;  Understanding the standards that are developed with the intention of meeting new consumer demands; and  The decision to comply with any of the standards.

13 Perceptions of costs and benefits of Utz certification Perceived costs by compliant producers and businesses management costs  Documentation that is critical for traceability –  Cost of certification:.  To ensure daily compliance of the codes of conduct,

14 costs related directly to the implementation of ‘good practices  Preservation and protection of river reserves:;  forgone revenue from land areas that are left natural  maintenance of a special nursery for indigenous trees  irrigation water and technology/equipment that ensure efficient use of water and reduced soil erosion – for example, use of spot irrigation instead of surface irrigation;  waste disposal,  maintenance of stores for farm inputs

15 Costs related to social criteria  On-job training to expand professional skills (e.g. book keeping) among employees;  Conducting workshops to improve social and environmental awareness among workers;  Employee salaries that comply with labour laws  Improvements of the quality of labour accommodation;  Protective gear for workers  Annual health check-up for all workers;  Creating awareness to surrounding communities  Signboards to keep away people from fields or premises that are potential hazards to human health.

16 Perceived benefits to compliant producers and businesses  Regular employment opportunities  Certification creates transparency and openness between management and employees;  water is saved due to use of efficient irrigation systems  Premium price and relatively better market access;  A sense of discipline from the top management to the low level workers and creates social responsibility for the workers and environment

17 MAIN CHALLENGES TO UTZ CERTIFIED CERTIFICATION  the use of chemicals in coffee  traceability of coffee  lack of forward contracting with buyers  producers & businesses may wish to seek multiple certifications

18 Perceptions by non-certified coffee producers and businesses  High-quality coffee is licensed for the direct export of coffee at a premium price.  When prices are satisfactory, there is no incentive to get certified ?.  Inadequate evidence that premium price offered to certified coffee is worth the effort. Between 2005 and 2006 the average premium offered to Utz Certified coffee sold from Tanzania was 5 USD cents per pound.  The cost of certification and auditing was perceived to be high compared to the premium price offered.

19 Conclusion  Coffee consumers, retailers, and roasters in Europe, USA, Canada, and Japan increasingly demand coffee that has been produced ‘sustainably’.  These demands have translated into various standards in the coffee sector that include Utz Certified.  Coffee producers therefore are faced with the challenge of responding to these demands

20 Recommendation Coffee producers need information to:  Make informed decisions on whether to comply or not with any of the many available standards  Make a choice of which of the many standards to comply with.  Meet the requirements for compliance to any of the standards they decide to comply with