Coffee Eco-labeling: Profit, Prosperity, & Healthy Nature? Brian Crespi Andre Goncalves Janani Kannan Alexey Kudryavtsev Jessica Stern

Presentation Outline I.Introduction Question at hand Background of Coffee and Eco- labeling II.Environmental Impacts III.Socio-Economic Impacts Growers and Consumers IV.Conclusions Future and Alternative Options

Question at Hand Is eco-labeling of coffee an effective market incentive to promote environmentally friendly production methods?

Background Coffee –2 nd most traded commodity in world, next to oil –5.3 million tons produced globally and exported in 2002 (U.N. Food and Agriculture Organization)

Background Eco-labeling –A strategy to encourage strong environmental practices through incentives for the producer Price premium Competitive advantage –Appease pressures from environmentalists Future considerations (sustainability) –Future market concerns –Conservationist outlook

Eco-labeling Not a standard process –Third party certification Own criteria for certification under certain principles for different aspects i.e. organic Credibility is key –Gives consumer advantage –Schemes of Coffee Labeling Fair Trade Organic Shade Grown

Fair trade Organic Shade-grown

Coffee Certification Schemes Schemes are not mutually exclusive –Many growers are certified organic, shade grown and fair trade Must meet criteria for each, but does not mean being certified as one means you are or are not certified by another

Fair Trade Seeks to offer small farmers and cooperatives of farmers a fair price for their coffee –Ensures access to credit for farmers among other mechanisms Often coexisting with stated sustainable growing practices –Modern plantation farming is not conducive to small farmers due to high resource costs and involved methods

Organic Grown free of pesticides, herbicides, fungicides and other chemicals –Environmental benefits Often coexisting with shade grown certification Most developed current certified coffee market

Shade Grown Grown under a canopy of trees –The traditional method of growth before the modernization of coffee agriculture –Typically yields a high- quality product with a lesser need for chemical inputs –Most often organic also

Environmental Impacts TraditionalModernized Perfecto and Snelling. (1995) “Biodiversity and the transformation of a tropical agroecosystems.” In: Ecological Applications 5:

Loss of biodiversity Invasive species Soil erosion Deforestation Agrochemical pollution High energy demand More yield Control over ecosystem Cheaper production But: Environmental Impacts

Working landscape? Working for people: Food safety Coffee + fruits + timber Natural pests control Stable yields …and for nature: No habitat lost Conserve species Carbon sequestration Environmental Impacts

Socio-Economics How far does the world-wide coffee industry extend?

Current trends affecting growers deal with - Drive for a better profit, not a better environment

Flaws in Eco-Labeling for Growers “In practice, small farmers need additional help and incentives to adopt the [bio-diversity friendly] certification criteria... Small farmers with [conventional polyculture] farms need to be presented with strategies to lower the risk of investment... (Gobbi, 2000).”

Flaws in Eco-Labeling for Growers “The entry cost to organic production, even subsidized, appears to be too high for the smallest producers, but organic production is a significant option for the slightly larger producers (Bray et al. 2002).”

Pro-Certification Arguments: Growers cannot get a premium Big companies cannot be held accountable unless they have certification Confidence that the coffee purchased actually serves the purpose Ensures good scientific criteria Helps make an informed decision Consumers

Arguments Against Certification :  Certification price is too high  Does not control possibility of fraud  Broker should be certified  Deciding between labels becomes difficult

Consumers Three approaches: 1. Farmers should not bear the burden of certification costs. 2. “Relationship coffee” - trading coffee through known sources; certifying brokers 3. Good quality would ascertain good premium like gourmet coffee

Figure 2: (National Coffee Association) Percentages of both awareness and total purchase of eco-labeled coffee increased from 2003 to Consumers

Drawbacks and Failures 1.Inversion of Values 2.Cost of certification schemes Difficult without third party support 3.Certification Methodology neglecting social relations 4.Organic norms and regulations across different landscapes

Alternative Certification Systems Origin: Southern and Northern countries Reasons: certification costs paradigm for ensuring credibility more adapted system to local realities Definition: A process which generates credibility for the organic product based on the participation and integration of all stakeholders who have interest to guarantee the quality of the product. (Meirelles 2003)

Alternative Certification Systems Characteristics: Involve several stakeholders Based on negotiated standards Trustworthy relationships Attempt to integrate social and environmental concerns Examples: Community Support Agriculture Farmers Markets Box schemes Home deliveries Popular fairs International Workshop on Alternative Certification

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