Archive
Slavery & Specialty: Discussing Coffee’s Black History
When you reach for a bag of Brazilian roasted coffee or order a pour over from Colombia, you may consider yourself well-informed about its origins. But how did coffee come to these regions in the first place? And who were the people who established coffee farms and labored in the plantations?
Let’s take a look back at the history of the coffee industry and how it relates to race and colonialism.
Coffee & Colonialism
Coffee is native to tropical Africa but today Brazil is the world’s largest coffee-producing country. Vietnam and Colombia are the second and third biggest producers. Coffee was traded through the Middle East, Asia, and Europe before being taken to the Americas by European colonizers. The crop’s success there was dependant on the slave trade. As such, it’s impossible to discuss the history of coffee without recognizing racism and the role of colonialism.
Mark Pendergrast is the author of Uncommon Grounds: The History of Coffee And How It Transformed Our World. He tells me that in the late 1700s, European colonial powers were starting to recognize coffee’s profitability. Demand for the drink was high in both European countries and their colonies. To establish profitable estates, European companies imported slaves from Africa to labor on plantations in the Caribbean, Asia, and the Americas in what is known as the Triangular Trade.
Barbados and Jamaica were some of the earliest British colonies, and slave traders provided the outposts with human labor from Africa to work the sugar and coffee plantations. Goods and people were moved in a triangle between West Africa, colonies in the Caribbean and Americas, and Europe.
Mark tells me that San Domingo in French-occupied Haiti was supplying half of the world’s coffee in 1788, as a direct result of slave labor. He describes living conditions there as appalling, with slaves routinely underfed, overworked, and housed in windowless huts. He also details how it was not uncommon for African slaves to be beaten, tortured, and killed by their white, European rulers.
Napoleon’s unsuccessful bid to regain Haiti in the early 1800s led to a decline in coffee production. This prompted the Dutch to fill the gap with coffee produced in their own colony of Java, Indonesia.
There was a rigid hierarchy between the native Javanese and their colonial overlords. In his book, Mark recounts that Eduard Douwes Dekker, a Dutch civil servant, wrote of the laziness and apathy of Dutch landowners who forced Javanese natives to harvest coffee for a pittance. Dekker noted that whole villages died of starvation as a result.
The Slave Trade in The Americas
As coffee declined in the West Indies, it thrived in Latin America. The first coffee bush in Brazil was reportedly planted by Francisco de Melo Palheta in Pará in 1727. Brazil would go on to become a coffee superpower under the rule of the Portuguese and continue to be so after independence. By the 1830s, coffee had become Brazil’s largest export and accounted for around 30% of world coffee production. But it was at great human cost.
Brazilian coffee plantations relied on black and indigenous slave labor. Mark tells me that indentured laborers worked and lived in horrific conditions. He says that plantation owners treated their laborers as dispensable, finding it easier to import new slaves when they died from overwork than to treat their existing slaves with any compassion. He says that most slaves didn’t last seven years from initial bondage.
Brazil made slavery illegal in 1888, but by then an estimated four million slaves had been brought there from Africa.
In other parts of Latin America, the coffee industry depended more on the labor of indigenous peoples. “Black people were not used as slaves so much in Central American countries, where instead Mayans and other native peoples served as semi-slaves,” Mark tells me.
He says that the Mayans occupied fertile land that was optimal for growing coffee and that they were increasingly disenfranchized by colonial governments. They were violently evicted by the military as the demand for coffee grew, and forced to work the land for their oppressors.
Mark tells me that revolts and rebellions were common during this time, and that government brutality and oppression was often the response.
Legacies of Colonialism in Coffee
Understanding the foundations of the coffee industry in Latin America goes some way toward explaining why this part of the world still dominates coffee production. Although slave laborers are no longer used, the structures put in place paved the way for today’s industry. Consider how many regions of Brazil and Colombia are now traditional coffee-growing areas with farming as their main resource.
In an article for Sprudge, Phyllis Johnson highlights how the legacies of colonialism are still obvious in the coffee supply chain. She tells of travelling in Latin America and seeing the racial divide between farm owners and laborers.
And when we discuss the falling C price, we’re talking about millions of people of color throughout Latin America, Asia, and Africa living in poverty in the production of affordable coffee for Western markets.
Despite some African coffees being touted as the best in the world and Tropical Africa being the birthplace of coffee, the continent has never risen to the same levels of production as Latin America. This is also tied to colonialism in that many former European colonies in Africa were left without robust infrastructure and stable political systems when occupation ended.
We have a collective responsibility to open our eyes to structural racism and to acknowledge that oppression still exists in the supply chain. It may be uncomfortable to address, but such honesty is important in opening up discourse about inequality in coffee production, as well as wider conversations about racism.
Pay attention to where you spend your money. As well as reading the information on your bag of coffee, make an effort to research how the roaster you choose works with producers. Talk to baristas and others in the supply chain about the economics of coffee.
And consider educating yourself on the politics of coffee-producing regions. Being an informed citizen can help you make choices that benefit coffee producers and the wider community in producing countries. These small steps can contribute to improving sustainability, working conditions, and quality of life for people around the world.
The Effect of Specialty Coffee Certification on Household Livelihood Strategies and specialization
Kopi spesial adalah seluruh jenis kopi yang dianggap berbeda dari umumnya dan terkenal sebagai kopi premium. Daviron dan Ponte (2005) menyatakan bahwa terdapat tiga hal yang menyebabkan suatu kopi dianggap premium, yaitu berdasarkan in-person service, material, dan atribut simbolik. Hanya berdasarkan material dan atribut simbolik saja yang dapat dipengaruhi oleh produsen, sedangkan in-person service hanya dipengaruhi oleh tempat kopi tersebut disajikan. Aspek material sangat dipengaruhi oleh kualitas biji kopi (intrinsic value) sedangkan aspek atribut simbolik dipengaruhi oleh lokasi penanaman biji kopi dan sustainable labels. Sustainable labels seringkali ditentukan oleh sertifikasi dari kopi tersebut.
Kopi spesial berdasarkan aspek atribut mulai dikenal sejak 1970 dan 1980-an, dikarenakan masyarakat mulai memperkenalkan kopi secara umum melalui perdagangan dan pengembangan kopi organik. Perkenalan kopi secara umum ini juga didukung dengan kesepakatan untuk memberikan sertifikasi khusus untuk budidaya kopi yang memiliki cita rasa lebih dan tidak merusak lingkungan. Gerakan ini disebut sebagai Latte Revolution.
Beberapa penelitian sebelumnya telah banyak yang membuktikan adanya peningkatan pasar kopi. Secara global, kopi bersertifikasi mengalami peningkatan volume transaksi hingga 433% dalam periode 2004-2009. Peningkatan pasar kopi ini juga ditandai dengan semakin banyaknya retailer yang masuk dalam pasar kopi. Secara global, terdapat 26 juta orang yang bekerja di sektor kopi dimana sebagian besar pekerja adalah golongan petani kecil.
Penelitian sebelumnya hanya menjelaskan mengenai perbedaan kopi bersertifikat dan non-sertifikat terhadap tingkat pendidikan petani atau aspek-aspek kualitatif saja. Padahal, petani-petani kecil sangat bergantung pada aspek pendapatan dari usaha kopi mereka. Oleh karena itu, penelitian ini bertujuan untuk melihat hubungan antara akses ke pasar kopi premium pada mata pencaharian masyarakat kecil di kelompok masyarakat kecil produsen kopi di Colombia Selatan. Penelitian ini juga bertujuan untuk melihat efek pendapatan yang dialami petani kecil kopi dari adanya kopi premium.
Industri Kopi di Kolombia
Kopi merupakan tanaman yang tumbuh di daerah pegunungan yang menyediakan lapangan kerja pada 563.000 produsen kecil kopi. Kolombia adalah salah satu negara dengan produsen kopi terbanyak dan penghasil kedua terbesar kopi Arabika. Kolombia juga merupakan negara dengan nilai pasar kopi terbesar berdasarkan International Coffee Organization (ICO). Kolombia memiliki keuntungan strategis sebagai negara yang cukup dekat dengan garis ekuator. Kementerian pertanian dan pembangunan desa Kolombia juga melakukan berbagai kebijakan yang aktif untuk meningkatkan potensi dari industri kopi. Pemerintah Kolombia berusaha meningkatkan subsidi pada petani kecil kopi dan menetapkan harga minimum yang lebih rendah dari sebelumnya untuk meningkatkan produksi kopi premium berkualitas tinggi dengan harga yang lebih terjangkau.
Akses Ke Pasar Premium
Secara umum, pasar kopi premium terbagi atas dua jenis yaitu pasar third party dan pasar swasta. Pasar third party adalah pasar tempat kopi berkualitas didagangkan tanpa merek tertentu berbeda dengan pasar swasta seperti Starbucks, Nestle, dan lain-lain. Dari segi produsen, penting diketahui bahwa terdapat perbedaan antara perkebunan bersertifikat dan pasar kopi premium. Walaupun produsen memiliki perkebunan tersertifikasi, namun itu tidak dapat menjamin ia untuk dapat masuk dalam pasar kopi premium. Namun, dapat diakui bahwa pasar kopi premium umumnya mendapatkan suplai kopi dari perkebunan bersertifikasi. Adanya peningkatan permintaan kopi premium menyebabkan peningkatan pada jumlah perkebunan bersertifikasi. Hal ini dilakukan hanya untuk dapat masuk ke pasar kopi premium dan terjual dengan harga yang lebih tinggi.
Data Penelitian
Penelitian dilakukan di daerah Nariono yang terbagi atas 3 wilayah geografis dimana terdapat 510 produsen kopi rumah tangga pada April hingga Mei 2012. Pemilihan responden dilakukan dengan metode stratified random sampling dari daftar yang sebelumnya telah disediakan oleh FNC. Data yang dikumpulkan berupa komposisi rumah tangga, karakteristik perkebunan, pendapatan rumah tangga, akses ke layanan finansial, kepemilikan tanah, dan beberapa data-data demografi. Untuk subjek yang memiliki perkebunan dengan jarak lebih dari 10.000 dari kota, maka akan dihitung menggunakan cost distance algorithms.
Diversifikasi Pendapatan
Berdasarkan tabel diatas, dapat terlihat bahwa sebagian besar penduduk di daerah Narino sangat menggantungkan kehidupan mereka dari perkebunan kopi. Untuk pengolah lahan sendiri, hasil dari perkebunan kopi bahkan mencapai 46% dari pendapatannya. Namun pendapatan dari perkebunan kopi justru memiliki nilai variasi yang paling besar ketimpang pos pendapatan lainnya. Hal ini bisa saja dikarenakan proporsinya yang besar terhadap pendapatan dan perbedaan pendapatan kopi yang tinggi di masyarakat sekitar.
Pendekatan Ekonomi
Dalam penelitian ini, disusun model untuk mengetahui bagaimana akses ke pasar spesial mempengaruhi strategi diversifikasi rumah tangga. Faktor yang dibuat yaitu efek dari aktivitas yang berubah dan efek dari perubahan pendapatan pada setiap aktivitas. Seharusnya, adanya peningkatan penghasilan pada salah satu aktivitas dalam perkebunan akan menjadikan pekerja cenderung mengalokasikan waktu lebih banyak pada aktivitas yang mendapatkan penghasilan lebih besar. Untuk mengamati keputusan partisipasi maka peneliti menyusun model regresi:
Dan untuk melihat korelasinya terhadap pendapatan rumah tangga, maka disusun pula model:
dij = variabel biner yang menunjukkan partisipasi rumah tangga i dalam aktivitas j
Yij = total pendapatan rumah tangga i dalam aktivitas j
Cij = dummy variabel dimana 1 untuk perkebunan bersertifikasi
Xij = kontrol variabel (land/labour ratio, land holding, and level of education)
Zij= kotrol variabel (jarak dari kota dan kondisi agro-ecological)
Persamaan pertama akan menggunakan model multivariate probit, sedangkan persamaan kedua akan menggunakan model multivariate tobit.
Hasil dan Pembahasan
Alokasi Aktivitas
Berdasarkan hasil regresi diatas, dapat dilihat bahwa kepemilikan perkebunan yang tersertifikasi dapat meningkatkan peluang seseorang melakukan usaha perkebunan non kopi atau kopi. Dari indikator pendidikan, ternyata hal ini tidak mempengaruhi keputusan partisipasi pada aktivitas perkebunan non kopi dan kopi. Dalam hal kepemilikan tanah, terdapat nilai signifikan pada peluang di sektor non kopi. Hal ini mengindikasi adanya kepemilikan tanah yang semakin besar cenderung mendorong seseorang untuk melakukan diversifikasi sehingga tingkat peluang partisipasi cenderung meningkat.
Pendapatan Rumah Tangga
Jika melihat dari segi pendapatan rumah tangga, adanya sertifikat perkebunan mengimplikasikan terjadinya realokasi dari pendapatan. Sertifikat perkebunan dapat meningkatkan pendapatan dari kopi namun terjadi penurunan dalam sektor perkebunan non kopi dan gaji perkebunan. Pendidikan juga ternyata mempengaruhi secara signifikan berbagai aktivitas kecuali perkebunan non kopi. Dari hal kepemilikan tanah, ternyata memiliki efek signifikan terhadap sektor perkebunan non kopi. Semakin jauh jarak perkebunan dengan kota juga ternyata mempengaruhi secara negatif pada sektor perkebunan non kopi.
Efek Total Pendapatan
Dari hasil kedua pendekatan ini, terdapat beberapa hal yang justru berbeda. Adanya sertifikasi pada perkebunan memanglah terbukti dapat meningkatkan pendapatan dari berkebun kopi, namun efek yang diberikan pada sektor non perkebunan kopi masih belum jelas diketahui. Terdapat implikasi bahwa sertifikat perkebunan secara keseluruhan tidak mengubah pendapatan total dari produsen karena tambahan keuntungan dari kopi tertutup oleh kerugian yang dialami sektor lain.
Kesimpulan
Pada masa sekarang, pemilik perkebunan memiliki kecenderungan untuk mendapatkan sertifikasi pada perkebunannya hanya untuk dapat masuk dalam pasar kopi premium. Kecenderungan ini ternyata dapat berdampak pada kehidupan pada pemilik perkebunan dari rumah tangga berpenghasilan ke bawah. Melalui penelitian yang dilakukan di daerah Narito, usaha untuk mendapatkan sertifikasi perkebunan ini ternyata dapat secara efektif meningkatkan pendapatan dari berkebun kopi. Namun, ternyata terdapat dampak lain dari sertifikasi ini. Adanya sertifikasi perkebunan yang berusaha didapatkan untuk menembus pasar kopi premium nyatanya justru menyebabkan penurunan pendapatan dari hasil perkebunan non kopi dan gaji. Hal ini pada akhirnya tidak akan memberikan efek apapun pada total pendapatan dari seluruh aktivitas yang dilakukan. Hal ini perlu untuk menjadi perhatian bagi pemerintah, dimana adanya peningkatan potensi di sektor kopi harusnya dapat diiringi oleh peningkatan kesejahteraan petani kopi golongan ke bawah.
Certification and Farmer organization: Indonesian Smallholder Perceptions of Benefits
Certification and participation in farmer organizations are associated with economic and social benefits for farmers. However, knowledge about the differences in the perceived benefits of participation in different organizations and certification schemes is limited. In this paper, we distinguish between three types of farmer organizations in the Indonesian coffee sector: farmer groups, cooperatives, and KUBEs. We compare the benefits farmers perceive from participating in these forms of organizations, including the benefits for unorganized farmers and farmers in different certification schemes (Fair Trade, UTZ, the Rainforest Alliance, and 4C). We find that certified farmers perceive higher benefits than uncertified farmers, and that organized farmers perceive higher benefits than unorganized smallholders. Farmers who hold dual membership (in a farmer group and a KUBE or cooperative) perceive greater benefits than farmers who participate in farmer groups. Although farmers in different certification schemes significantly differ in the benefits they perceive, we could not identify clear patterns based on the schemes. We conclude that integration of the different organizational forms, as well as a more concentrated collaboration between the ministries underlying each organisational form, may improve the benefits perceived by farmers in the Indonesian coffee sector.
Sertifikasi dan partisipasi dalam organisasi tani sering diasosiasikan dengan manfaat ekonomi dan sosial bagi para petani. Namun, pemahaman akan potensi perbedaan dalam persepsi atas manfaat berpartisipasi dalam berbagai organisasi dan skema sertifikasi masih terbatas. Dalam tulisan ini, kami membahas tiga jenis organisasi petani di sektor perkebunan kopi Indonesia: kelompok tani, koperasi, dan Kelompok Usaha Bersama (KUBE). Kami membandingkan manfaat yang dipersepsikan oleh para petani dalam bentuk-bentuk organisasi ini, termasuk manfaat bagi petani yang tidak ikut organisasi dan mereka yang memiliki skema sertifikasi lainnya (misalnya Fair Trade, UTZ, Rainforest Alliance, dan 4C).
Kami menemukan bahwa para petani bersertifikasi menerima manfaat yang lebih tinggi dibandingkan yang tidak bersertifikasi. Selain itu, petani terorganisir memiliki persepsi manfaat yang lebih tinggi dibandingkan mereka yang tidak terorganisir. Petani yang memiliki keanggotaan ganda (misalnya, ikut kelompok tani dan KUBE atau koperasi), memiliki persepsi manfaat yang lebih besar dibandingkan mereka yang hanya berpartisipasi pada kelompok tani. Meskipun petani dalam skema sertifikasi lain menunjukkan persepsi manfaat yang jauh berbeda satu sama lain, kami tidak dapat mengidentifikasi pola yang jelas berdasarkan skema yang ada. Kami menyimpulkan bahwa integrasi dari bentuk organisasi yang berbeda dan kolaborasi yang lebih terkonsentrasi antara kementerian yang menaungi setiap bentuk organisasi dapat meningkatkan manfaat yang diterima oleh petani di sektor tanaman kopi.
Sustainability standards and certification are regarded as tools to improve smallholders’ livelihoods, conditions and positions within the coffee market, and to enhance the environmental sustainability of coffee production (Giovannucci and Ponte 2005). However, research on the actual effects of certification can be considered inconclusive. Some studies on certification note negative effects, such as lower productivity and yields, increased costs, reduced prices, and decreased satisfaction with organisational service provision (Carlson and Palmer 2016; Ibanez and Blackman 2016; Ruben and Fort 2012; Valkila 2009; van Rijsbergen et al. 2016). Other studies on certification, however, find positive effects. These include higher prices, better productivity and coffee quality, better education, improved capacity building, better sanitation and networking, and enhanced organisational capacities (Astuti et al. 2015; Bacon 2005; Bacon et al. 2008; Barbosa de Lima et al. 2009; Giovannucci et al. 2008; Raynolds et al. 2004; Ruben and Zuniga 2011). These contrasting findings imply that the actual benefits of certification remain poorly understood and are therefore worth further exploration. Research on farmer benefits from certification in Indonesia occurs at the crossroads of research on certification and organisation. Indonesian coffee smallholders cannot become certified without being organised (Loconto and Dankers 2014), and farmer organisations have been promoted as an important means for linking smallholders to international, certified coffee markets. Organisations are believed to bring a form of collective action (e.g., internal group monitoring and training) that is essential to smallholders’ participation in certification (Narrod et al. 2009). Farmer organisations make the certification of smallholders economically feasible by offering economies of scale (Maertens and Swinnen 2009; Mausch et al. 2009) and by reducing the transaction costs for service providers working with smallholders (Thorp et al. 2005). Certification schemes therefore connect to farmer organisations rather than to individual farmers; this is also because connecting to the latter is considered inefficient due to the large number of farmers, and the variation in farmers’ financial opportunities, knowledge, and skills. Variations and individual limitations can be overcome by encouraging farmers to organise and work together. Therefore, membership of a farmer organisation has in practice become mandatory for smallholders to become certified (Brandi 2013; Pierrot et al. 2010), which makes it methodologically difficult to differentiate between the effects of certification and of organisation. Further, and though the literature tends to generalise farmer organisations, their manifestations are diverse. They cannot therefore be analysed or compared as homogeneous entities. In Indonesia we observe three types of farmer organisations in the coffee sector: farmer groups (kelompok tani), cooperatives, and KUBEs (kelompok usaha bersama, or joined business groups). These organisations have different structural characteristics and are managed by different ministries with varying sets of rules.
In this paper, we do not apply an empirical measurement of the actual effects of certification in the field, but we instead focus on the perception of benefits by smallholders. This differs from previous studies that evaluated actual effects in the field with robust longitudinal panel data or case studies (see Carlson and Palmer 2016; Ibanez and Blackman 2016; van Rijsbergen et al. 2016). We focus on the Indonesian coffee sector and analyse the perceived benefits that result from participation in the different types of farmer organisations and certification schemes. Most research on sustainability standards and certifications takes a managerial approach, in that it studies how the schemes unfold in practice and how their performance may be improved. By adopting such an approach, researchers implicitly accept the problematic definitions of the schemes as set by their northern- based initiators (mainly businesses that often collaborate with NGOs), although such definitions do not necessarily reflect the realities that smallholders face in their daily practices (Glasbergen 2018). Aside from this—considering a social constructivist research paradigm—the reality measured by ‘objective’ indicators in the field may not always correspond with the reality perceived by the farmers themselves (Offermans and Glasbergen 2017). In this study, we focus on farmers’ perceptions of benefits from organisation and certification, as farmers’ perceptions on sustainability standards and certifications are often neglected and this therefore presents a gap of knowledge that needs to be filled (Ibnu 2017).
Our research draws on two strands of literature: certification literature focusing on evaluating farmers’ benefits from participation in certification (Bray et al. 2002; Raynolds et al. 2004; Taylor et al. 2005); and organisation literature focusing on the benefits of organisation for farmers (Fischer and Qaim 2012; Hellin et al. 2009; Kaganzi et al. 2009; Markelova et al. 2009). Although both strands of literature are rich in their investigation and explanation of the effects and benefits of certification or organisation on farmer welfare and livelihood, very few studies consider and further question farmers’ own perceptions of benefits. We consider perceptions important because they significantly determine farmers’ satisfaction, which influences whether they continue participating in certification or not (Bravo et al. 2012; Oktami et al. 2014; Zainura et al. 2016). Furthermore, the existing literature fails to comprehensively understand the differences in potential benefits in different domains, and the extent to which perceived benefits vary among farmers belonging to different organisational forms or coffee certification schemes.
In a more concrete sense, this paper aims to contribute to knowledge about whether farmers participating in different certification schemes and organizational structures perceive variable benefits in differing benefit domains. This paper will address the following research questions:
- How do different forms of Indonesian farmer organisations differ, and how do they relate to certification?
- How do differences in perceived benefits relate to membership in differing types of organisations and certification schemes?
- What do the findings imply for more sustainable coffee production from the smallholders’ point of view?
In the following sections, we provide a literature review on the potential benefits of farmer organisation and certification, including an overview of the division of these benefits into five domains. Based on this review, we propose hypotheses on the influence of organisations and certification schemes on perceived benefits. We then outline our method and provide an overview of our respondents before we present our results, followed by our conclusions and reflection.
Potential Benefits of Farmer Organization and Certification
Although not specifically considering the role of certification, the existing literature extensively presents the benefits of farmer organisations. These benefits vary widely and range, from better job opportunities (Jena et al. 2015; Place et al. 2004; van Rijsbergen et al. 2016) to improved skills (Bitzer et al. 2013; Neilson 2008; Ruben and Zuniga 2011; Utting 2009), better bargaining power (Bacon 2010; Taylor et al. 2005), and greater networking opportunities (Taylor et al. 2005; Raynolds et al. 2004). In this paper, we divide benefits for farmers into five domains. The first domain comprises economic benefits such as cost savings through collective marketing, better prices for farmer products, improved access to inputs and production facilities, more secure land tenure, better access to credit, and the provision of options for saving money. The second domain is social or community benefits in the form of better education, health and housing, access to public facilities (e.g., safe drinking water and sanitation), support for organising social events, strengthened social relations among community members, and employment provision. The third domain relates to representation, as organisations may represent farmers in formal meetings and negotiate on their behalf with external parties such as the government or private firms. The fourth domain relates to capacity building through improved knowledge and skills; for example, through training, the provision of information and technical support, and encouraging participation in decision making (Bitzer et al. 2013; Neilson 2008; Ruben and Zuniga 2011; Utting 2009). In the fifth domain, we identify benefits in terms of networking, which often takes the form of collaboration with other organisations (such as private companies) to enhance financial capital and secure market access.
Some of these benefits, however, are associated not only with farmers’ membership of an organisation but also with their participation in certification. In the domain of economic benefits, for example, certified farmers are found to obtain higher prices for their coffee (Astuti et al. 2015; Bacon 2005), and to have higher productivity and better coffee quality than conventional farmers (Astuti et al. 2015; Ruben and Zuniga 2011). Certification may bring further social benefits such as improved education and sanitation (Barbosa de Lima et al. 2009) and is also found to play a role in improving capacity building (Raynolds et al. 2004), enhancing organisational capabilities (Ruben and Zuniga 2011), and improving networking capacities (Bacon et al. 2008).
In the literature, it is assumed that assets and/or (financial) capital affect an organisation’s ability to provide services (cash payment, credit, etc.), which in turn influences its members’ perceptions of benefits (Chandler and Hanks 1998; Holagh et al. 2014). As such, members may perceive more benefits in organisations with greater assets and/or capital than organisations with fewer assets and less capital.
The Landscape of Coffee Certification In Indonesia
Indonesian coffee smallholders are today faced with different certifications that differ in scope and history. The first coffee certificate in Indonesia was issued by the Rainforest Alliance (RA), implemented in Aceh province in 1993, followed by Fair Trade (FT) in the same province in 1997. UTZ became involved in the coffee sector in 2002, followed by 4C in 2006 (see appendix a). RA aims to support farmers in creating more sustainable livelihoods, improving farm productivity, and becoming more resilient to climate change. RA certification consequently concentrates on how farms are managed, with certification being awarded to farms that meet the standards of the Sustainable Agriculture Network (SAN). FT focuses on realising a better life for farming families in the developing world, through direct trade, community development, environmental stewardship, and guaranteed prices for their products. To further support farmers’ economic development, FT requires the first coffee buyers (i.e., cooperatives) to provide pre-financing for long-term contracts with farmers (Fair Trade 2017). UTZ aims to create transparency along the supply chain and to reward responsible coffee producers (UTZ 2017), whereas 4C aims to achieve global leadership to enhance economic, social, and environmental production, processing, and trading conditions for all who make a living in the coffee sector (GCP 2017). Given its baseline character, 4C is often considered to be the least demanding private certificate. More information on coffee certification schemes in Indonesia can be found in Astuti (2018).
In Indonesia, most coffee smallholders remain uncertified (around 93% in 2014) (Directorate General of Estate Crops 2014; ICO 2017; SCP 2014).
The Landscape of Farmer Organization In Indonesia
Organisations can be defined as intelligent systems in which groups of people deliberately cooperate with each other to achieve shared goals (Holagh et al. 2014). Individual smallholders participate in farmer organisations to achieve the benefits of these shared goals. In the Indonesian coffee sector, we distinguish between three types of farmer organisations: farmer groups, cooperatives, and KUBEs.
Farmer groups
In Indonesia, the central government initiated the formation of farmer groups in 1979 to facilitate the distribution of governmental aid to farmers, and, as from 2001, to negotiate the use of protected forests for coffee production (Arifin 2010). Farmer groups have formal status in the country (Nuryanti and Swastika 2011) and are currently regulated by the Ministry of Agriculture. According to a ministry regulation (Law 82/2013 on Farmer Groups), a farmer group is defined as a group of farmers formed on the basis of mutual interest, similarity in commodities, and geographic proximity. On average, a farmer group consists of 30 members, most of whom live in the same village. A farmer group’s main functions are to enhance cooperation among farmers, facilitate learning processes, and to help distribute tools, farming inputs, and credit from the government to farmers. Cooperation between farmers in a farmer group may result in economies of scale and improved coffee quality. It may also help the members to process their coffee cherries by providing them with shared access to equipment. We see that certified Indonesian coffee farmers commonly have a dual organisational membership, wherein their membership of a farmer group is combined either with a KUBE or a cooperative. Uncertified farmers may be part of a farmer group but not part of a KUBE or cooperative. They commonly connect to conventional channels involving middlemen and local traders (Astuti et al. 2015).
The establishment of a farmer group requires the participation of smallholder farmers, the village leader, community leaders, and agricultural extension officers. The members need to develop and present a formal agreement that needs to be signed by representatives of the different member groups. The management of a farmer group consists of a group leader, a secretary, and a treasurer. Any changes to the managerial structure need to be approved by the village leader and acknowledged by agricultural extension officers, as outlined in Law 82/2013. There is no need for farmers to contribute individual assets to a farmer group, although some financial contributions are usually made. As a non-legal entity, a farmer group may largely depend on support from the government; for example, to build its initial assets and/or capital.
Cooperatives
Cooperatives are developed based on the principles stated in Law 25/1992 on Cooperatives to increase economies of scale, improve production efficiency, and enhance the bargaining position of members. In practice, we see that cooperatives often help farmers buy inputs, and that they provide credit to coffee producers. According to the law, a cooperative must be founded by at least 20 individuals who contribute some of their wealth to the initial capital of the organisation. Their agreement to form a cooperative must be drawn up by a notary and legalised by the Indonesian Ministry of Cooperatives and Small and Medium Enterprise. A cooperative therefore has authorised rights and responsibilities but can also be sanctioned if it acts against the law.
The management of a cooperative comprises a general assembly, a board of directors, an audit committee, and an election committee. The assembly represents the highest policy-making body and meets at least once a year to decide the organisation’s policies and select its board of directors and committees. A cooperative generally prioritises democratic decision-making through voting, although the assembly mostly tries to reach consensus. Unlike in other organisational types, income generated by cooperatives (e.g., income from trading activities) must be equally shared among all members. As a legal entity, cooperatives are entitled to increase their assets and/or capital by obtaining loans from various sources (e.g., banks, private creditors, and other cooperatives), or by issuing obligations, as outlined in Law 25/1992. Therefore, cooperatives are generally more asset- and capital-rich than other organisations in the Indonesian coffee context. Legally, farmers do not have to join farmer groups in order to become members of cooperatives, although in practice most cooperative members do. This enables them to claim government support for things such as tools, fertilisers, and pesticides, and to participate in government programs in rural areas.
KUBEs
The Ministry of Social Affairs initiated the formation of KUBEs in 1983 to support the regulations on welfare services for the poor. The underlying idea was to strengthen existing micro-businesses1 by integrating them into larger business ventures. KUBEs may differ in size. Conceptually, a small KUBE is a collaboration of five to seven micro-businesses that agree to merge their assets. Medium KUBEs consist of eight to fifteen micro-businesses, while large KUBEs consist of sixteen to thirty. KUBEs are generally smaller than cooperatives in terms of assets and capital, and they mostly pay their farmers after receiving payment from buyers/ exporters, whereas cooperatives, if required, can pay their farmers in advance (Ibnu et al. 2015). KUBEs are also considered non-legal entities and therefore, unlike cooperatives, depend on contributions from owners for assets and capital, or on support from external parties, particularly the government.
KUBEs take care of cleaning, drying, and transporting coffee beans from farmer groups to the roasting companies (in the case of conventional coffee) or to exporters (for certified coffee) (Ibnu et al. 2015). Unlike cooperatives, KUBEs always connect to individual farmers through farmer groups. This means that KUBEs require farmers to first organise themselves in farmer groups. To be formally acknowledged by the government, and to be entitled to receive additional capital investments from the Ministry of Social Affairs, KUBEs must be verified by leaders at the village and sub-district levels (Roebyantho 2013; Suradi 2012).
In Indonesia, most smallholders (up to 75%) are still unorganised (Directorate General of Estate Crops 2014; ICO 2017; SCP 2014). Although most literature focuses on the effects of being organised or certified, uncertified and unorganised farmers may also experience benefits—for example, they may benefit from selling their coffee to local markets and maintaining long-term reciprocal connections with local traders or intermediaries (Wahyudi and Jati 2012).
Based on the certification and organisation literature referred to above, we have developed three hypotheses:
- Farmers participating in the more demanding schemes (RA, UTZ, FT) perceive more benefits than farmers participating in a less demanding scheme (4C).
- Farmers participating in organisations with more assets and/or capital perceive more benefits than farmers participating in organisations with fewer assets and/ or capital.
- Certified and organised farmers perceive more benefits in all domains than uncertified or unorganised farmers.
Method
We used semi-structured questionnaires to randomly survey certified and conventional coffee farmers in the two most important Robusta and Arabica coffee- producing provinces in Indonesia: Lampung (Tanggamus and West Lampung districts) and Aceh (Central Aceh and Bener Meriah districts). Lampung contributes 23.6% to national Robusta production, whereas Aceh contributes 25% to national Arabica production (Directorate General of Estate Crops 2014). In the study sites, most certified Arabica farmers register with cooperatives and participate in FT schemes, whereas certified Robusta farmers typically register with KUBEs and UTZ, RA, or 4C. In the field, and corresponding with what we have presented above, we found that most certified farmers have dual organisational memberships that combine participation in farmer groups with participation in either KUBEs (FGKUBE) or cooperatives (FG cooperative) (table 1). Uncertified farmers either participate in a farmer group (IFG) or act wholly independently (i.e., without organisational membership). From various villages, we indiscriminately selected 14 farmer groups that have affiliations with 5 KUBEs and 3 cooperatives. We then randomly distributed the questionnaires to 80 certified farmers who are members of the selected farmer groups. Together with the 80 uncertified smallholders, our total sample equals 160 respondents that can further be grouped into independent and uncertified farmers (n = 50), certified farmers with dual organisational memberships (n = 80), and uncertified farmers with single organisational memberships (n = 30). The uncertified farmers were randomly surveyed in the same regions (but in different villages) as the certified farmers. Table 1 shows the average characteristics of respondents.
To answer the first research question about the differences among the organisational forms, and the relation between organisation and certification, we determined organisational characteristics based on the government’s rules and regulations, such as Law 82/2013 on Farmer Groups, Law 25/1992 on Cooperatives, Law 42/1981, and Law 20/2008 on KUBEs. We then had open discussions with farmers, internal control system (ICS2) personnel of the certification schemes, and staff members of cooperatives and KUBEs. The aim of these discussions was to obtain a complete and verified overview of the characteristics of the organisation types. We discussed characteristics such as administration, focus of activities and orientation, decision-making processes, leadership, membership, and information flow.
To answer the second research question, we gathered benefits referred to in the literature (see appendix b), classified these into five domains of perceived benefits, and operationalised the benefits in concrete question items. In this process, we paid attention to the applicability of the question items to the Indonesian context. To assure a proper fit, we added questions on Indonesian cultural aspects such as arisan (a form of social gathering) and gotong royong (a form of communal work). We observed that the literature does not really connect these different benefits to one another. Accordingly, we assumed that some benefits (within each domain) would not be valued more (or considered more important) than others. We therefore treated all benefits (and all domains) equally by adopting equal weighting for all of them.
All question items are directly derived from the literature (see appendix b) and are presented on a five-point Likert scale, ranging from one (strong disagreement towards perceiving the mentioned benefit) to five (strong agreement). We use a t-test to analyse whether differences in perceived benefits correspond to differences in organisational membership status (unorganized versus organized smallholders) and participation in certification (uncertified versus certified farmers). We use a one-way ANOVA test to further analyse whether different organisational memberships (IFG, FGKUBE, and the FG cooperative) or participation in different certification schemes (4C, UTZ, FT, and RA) significantly contribute to differences in perceived benefits. We also applied an ordinal logistic regression model for each domain of perceived benefits (five in total) to gain knowledge on the extent to which organization, certification, and demographic variables explain variation in perceived benefits. The literature shows that demographic variables such as age, education, family size, experience in farming, and land ownership may explain variation in farmers’ perceptions (Adesina and Baidu-Forson 1995; Sherrick et al. 2004; Somda et al. 2002; Wheeler 2008). We test this through the inclusion of these variables in our regression model. In our ordinal logistic model, the perceived benefits are therefore explained by participation in certification, organizational membership, age (in years), education (in years), family size (number of people in a household), experience in farming (in years), and landownership (in hectares).
To quantify the composite dependent variable of perceived benefits, we have summed up farmers’ responses, resulting in n = 160 scores per benefit domain. The higher the score, the more the farmer agrees that benefits are perceived in the respective domain. In theory, the scores could vary between 3 (3 times a score of 1 in the domain of networking) and 75 for the domain of social benefits (covering 15 items that could in theory all be answered with a 5). The results indicate that the span of potential scores is covered relatively well, as the scores fluctuate between 6 (for networking) and 70 (for social benefits). We treat each sum of scores as ordinal. We justify this choice by using the test of parallel lines, which is based on different chi- square tests and assesses whether there are (undesirable) significant differences in the coefficients (Brant 1990). Table 2 shows the results of the test of parallel lines and reveals that all domains of perceived benefits have P-values (substantially) exceeding 0.05. This means that there are no significant differences in the coefficients, indicating that the distances between the ordinal scores can be considered the same, thereby justifying the treatment of the dependent variable as ordinal.
The (decomposed) perceived benefits, organisation, and certification are categorical (i.e., nominal). Therefore, we have used dummy codes as an input to the regression model. For organisation, the dummy code 0 refers to independent smallholders, and 1 to organised smallholders. For certification, a score of 0 represents the uncertified smallholders and 1 the certified smallholders. The strength of the influence of certification and organisation on perceived benefits is shown by an estimate (i.e., the regression coefficient) in the regression model, which needs to have a P-value of 0.05 or lower to be considered significant. The value of the estimate (positive or negative) reveals the direction of the influences of a predictor variable (either organisation or certification) on the perceived benefits. The interpretation of the estimate is that for a one-unit change in the predictor variable (moving from being unorganised towards being organised, or from being uncertified to certified), the benefits are expected to change by the value of its estimate. The higher the estimate, the stronger the variable’s contribution to the perceived benefits.
Different Organisations and Their Relation to Certification
Table 3 presents the organizational characteristics of farmer groups (FGs), KUBEs, and cooperatives. Here we see that the different organizations share some similarities (e.g., in their decision-making procedures). The cooperatives tend to be most distinctive, as they differ from the other types of organization in terms of administration and administrative sanctions, member participation in decision- making, leadership style, membership type, funding source, and legal status. The FGs differ from the other two in terms of their focus (on production only) and their orientation (inward oriented).
In practice, all certified farmers are members of an FG and either a KUBE or cooperative. In the case of FT certification, all farmers become member of an FG cooperative. The interviews revealed that an FG’s connection with a KUBE or cooperative—being mandatory for certification—improved the FG’s administration in terms of recording the quantity and prices of coffee sold to KUBEs/cooperatives. It also broadened their focus from production-only toward post-harvest and marketing activities, with the aim of delivering good quality beans as requested by the KUBEs/cooperatives. Some FG characteristics are not influenced by FG relations with KUBEs and cooperatives. For example, FGs maintain their methods for recruiting new members, obtaining funding, and making decisions. FGs are also still considered non-legal entities and cannot be confronted with legal sanctions for administrative failures.
For cooperatives and KUBEs, certification requires management practices involving administrative tasks, such as updating farmer profiles, tracking the quantity of coffee sold by every farmer to the organization, providing regular information on prices, and administering the price premium paid to farmers. Farmers have realised that they no longer need to depend on group leaders for information but can rely on ICS staff for information. Both certification and dual group membership expand the farmers’ base of information. In the next section, we elaborate on the perceived benefits of organisational membership and participation in different certification schemes.
The Influence of Organisations and Certification Schemes on Perceived Benefits
Table 4 shows the descriptive statistics of the mean scores for the perceived benefits in the five domains. If we compare the average scores with the maximum scores within each domain, we see that, in general, farmers perceive relatively high benefits in all domains (with an average score of 3.43 on a 5-point scale for all domains). Differences between domains are small and vary between average scores of 3.3 for perceived benefits in the domain of networking and 3.5 for benefits in the domain of representation and capacity building. We further see that certified farmers perceive higher benefits than uncertified farmers in all benefit domains. Similarly, organised farmers perceive higher benefits in all domains, compared with unorganised smallholders. Overall, in all domains certified farmers have higher average benefits than organised farmers. However, since the certified farmers in our survey are also organised, we cannot methodologically separate the effects of organisation and certification on perceived benefits.
Table 5 and 6 show the results of the t-test for certification and organisation respectively. Table 5 shows that the mean scores of certified and uncertified smallholders differ significantly (sig. 0.000) in all benefit domains. Certified farmers perceive significantly higher benefits than uncertified farmers. Table 6 reveals that the mean scores in all benefit domains are considerably higher for organised farmers than for unorganised smallholders (sig. 0.000), implying that the organised farmers perceive considerably higher benefits than the unorganised smallholders. If we compare the relative differences in mean scores as presented in tables 5 and 6, we see that farmers evolving from unorganised to organised are likely to perceive a more profound increase in benefits than farmers evolving from uncertified to certified, although the latter will also experience an increase in benefits. This result is probably influenced by the perception of uncertified, organised farmers (IFG farmers, n = 30) who feel the organisation (FG) provides benefits for them.
Furthermore, figure 1 and table 7 show differences in perceived benefits resulting from farmers’ participation in different certification schemes (ANOVA test). We found significant differences between the schemes, although we cannot identify clear patterns based on the schemes. In the economic domain, we see that 4C farmers perceive more benefits than FT and RA farmers, and considerably more benefits than the farmers participating in UTZ. In the social/ community domain, we see a reversed pattern in which UTZ farmers perceive more benefits than FT and 4C farmers, and considerably more than farmers participating in RA. In the third domain (representation and negotiation), participation in 4C again leads to the perception of greater benefits than in FT, UTZ, and especially RA. Although participation in RA is associated with a relatively low perception of benefits in the domain of representation and negotiation, it is also associated with a relatively high perception of benefits in the capacity-building domain. In this domain, farmers participating in RA score significantly higher than FT and 4C farmers, and considerably higher than farmers participating in UTZ. In the last domain, networking and/or partnership, we see that farmers participating in 4C perceive higher benefits than farmers who are part of FT, UTZ, or RA. Overall, we conclude that participation in 4C seems to lead to higher benefits in three domains (economic, representation and negotiation, and networking), whereas participation in UTZ and RA leads to higher benefits in the social community domain (UTZ) and in the domain of capacity building (RA). UTZ scores relatively low in terms of farmers’ perceived benefits in the domains of economy and capacity building, whereas RA scores rather low in the social, representation, and networking domains. Although there are significant differences in benefits between FT and other schemes (see table 7), FT never scores particularly well or badly in comparison with the other schemes. Based on these findings, we cannot accept hypothesis 1: farmers participating in the more demanding schemes (RA, UTZ, FT) perceive more benefits than farmers participating in a 4C scheme.
Next, we found that different types of organisational membership lead to differences in perceived benefits. Table 8 reveals that the members of FGKUBEs and FG cooperatives perceive significantly higher benefits in all domains than farmers who are only part of an IFG. For all benefit domains, the differences in perceived benefits are larger between the FG and the FG cooperative than between the FG and FGKUBE. We could not, however, identify any significant differences between the FG cooperative and FGKUBE. Therefore, we reject hypothesis 2: farmers participating in organisations with greater assets and/or capital perceive more benefits than farmers participating in organisations with fewer assets and/or less capital.
Table 9 presents the results of the ordinal logistic regression. The results reveal that both certification and organisation significantly influence all benefit domains. We can also see that the values of all estimates are positive, meaning that a one- unit increase in organisation (i.e., going from 0 = unorganised to 1 = organised) or certification (from 0 = uncertified to 1 = certified) leads to higher perceived benefit scores. Hypothesis 3 (certified and organised farmers perceive more benefits in all domains than uncertified or unorganised farmers) can therefore be confirmed. We acknowledge that the effects of organisation on perceived benefits mix with the effects of certification. These effects are more difficult to separate as certified farmers have dual organisational memberships, whereas uncertified farmers have no organisational memberships or only one. We do not suggest further analysing and comparing the strengths of the estimates, as they are counterfactual and influenced by each other. The influence of certification and organisation on benefits can therefore not be strictly separated.
Regarding the demographic variables, only family size significantly and positively influences the perceived benefit of capacity building (P value = 0.035) (see table 9). The value of the estimate tells us that the perceived benefit of capacity building is likely to increase by 0.229 after adding one person to a household. Although the effect can be considered relatively small, an increase in family members may enable people to share information and to learn from one another. Based on this, we conclude that capacity-building processes, at least partially, may take place inside a household.
Conclusion
Participation in organisation, as well as participation in certification, is often associated with benefits. However, both certification and organisation do not represent homogeneous entities and their manifestations are diverse. In the Indonesian smallholder coffee system, three different organisations play a role: cooperatives, KUBEs, and farmer groups. We can also distinguish different certification schemes in the coffee sector. This paper contributes to the literature on coffee certification and organisation by investigating the perceived benefits of farmers in five domains: economic, social and community, representation and negotiation, capacity building, and networking.
From our research, we observe that certification schemes seem to determine organisational structures that evolve in the coffee sector in particular regions. As observed in Aceh province, FT requires the first buyers to collect coffee directly from farmers, implement floor prices, give farmers a price premium, and give payment in advance/credit if the farmers ask for it. The buyers consequently need sufficient financial capital, and in this case it appears that only cooperatives are feasible for doing so. The other schemes (4C, RA, and UTZ) in Lampung do not emphasise FT-like requirements, allowing KUBEs to emerge as an alternative to cooperatives in the province. Comparing Arabica and Robusta, farmers producing the former typically use a wash processing method that requires more skill than farmers cultivating the latter with a dry processing method. Indonesian Arabica is commonly produced as specialty coffee with specific attributes (e.g., tastes and origins) that has further developed a niche market with relatively loyal consumers. This differs from Indonesian Robusta, which is typically produced with little qualitative differentiation from Robusta coffees in other countries, and subsequently the market prefers lower prices. As the price of Robusta (mostly produced in Lampung) is generally lower than that of Arabica (typically produced in Aceh), this may further explain why incentives for stakeholders to develop cooperatives in the Robusta region are also low.
Regarding the benefits of certification, our conclusion is twofold. First, we conclude that certified farmers perceive higher benefits than uncertified farmers in all five domains. Certification creates more market opportunities (economic and representation benefits) and provides training that improves the farmers’ skills and knowledge (capacity building). Training mostly takes place in a group, which may further strengthen the feeling of belonging to a community, contributing to a higher perception of social benefits, and benefits in the domain of networking. Second, we conclude that farmers participating in different certification schemes also perceive differences in benefits. Although we cannot distinguish clear patterns based on the certification schemes the farmers participate in, we can conclude that 4C—being known as one of the less strict schemes—scores relatively well in three benefit domains (economic, networking, and representation and negotiation). A plausible explanation is that, according to farmers and ICS staff, participation in 4C is less burdensome for the farmers in terms of compliance with the scheme’s requirements. This may result in a rather positive perception of benefits. It is also possible, however, that time alters perceived benefits, such that the benefits perceived by farmers who have participed in certification for more than five years (UTZ, FT, and RA) are lower than those of farmers who are relatively new to certification (4C).
Regarding the benefits of farmer organisations, our conclusion is also twofold. First, we conclude that organised farmers perceive higher benefits than unorganised smallholders. The existing farmer organisations seem to perform relatively well in bringing benefits to the farmers and thereby creating additional value for their members. The different types of organisations seem complementary, rather than overlapping or conflicting. FGs, for example, enhance farmers’ knowledge and skills regarding the technical aspects of coffee production, whereas KUBEs and cooperatives link farmers to certified coffee markets. FGs are more product-oriented and valued as a social organisation that strengthens communal relationships (among friends and neighbours). The unique value of a KUBE, which is more market-oriented, assists the FGs to comply with certification requirements and improve management. In contrast, cooperatives work with individual farmers and assist them on an individual or cluster basis. Given the value of each form of organisation, the question should deal not so much with the prioritisation of one farmer organisation over another, but rather with how to improve their respective strengths. Second, we conclude that organisational forms in which certified farmers participate (FG cooperatives and FGKUBEs) lead to higher perceived benefits than organisational forms in which uncertified farmers participate (IFGs). We can explain this through the KUBEs’ and cooperatives’ efforts to connect farmers to buyers (e.g., exporters or multinational companies), and through the opportunities they provide to meet and connect with farmers outside their own FGs. However, the benefits farmers perceive from participating in FG cooperatives and FGKUBEs do not significantly differ. Therefore, we conclude that organisational differences in (financial) assets and capital have no significant influence on farmers’ perceptions of benefits.
Indonesian coffee farmers in Lampung and Aceh generally perceive a substantive amount of benefits. We cannot distinguish large differences in benefits among the different domains; a positive feeling regarding benefit, in general, seems to translate into a balanced, positive feeling in all benefit domains. Empirical and objective measurement of actual benefits in the five domains may reveal different patterns, or may reveal that the benefits in each domain differ in intensity. However, independent from the actual benefits, the farmers perceive that they benefit from certification and organisation. We consider this information to be relevant in the policy domain, as it is the farmers’ perceptions that partially drives the decision to participate in a sustainability scheme or organisation, or to continue or terminate their membership.
This paper is relevant from an academic point of view as it contributes to the debate on the effects of sustainability standards and certification in the coffee sector. While some studies claim that certification effects are limited, our findings suggest that both certification and organisation (from a farmer perspective) lead to perceived benefits in five domains. However, focusing on perceived rather than actual benefits also implies that we must acknowledge that different farmer communities may vary in their interpretation of reality. Perceived benefits may differ among groups, even when the farmers are confronted with the same realities. We noted, for example, that cultural differences may influence the type of benefits that farmers value. In some farmer communities, wedding ceremonies, social gatherings (arisan), and communal work (gotong royong) are considered cultural cornerstones and are valued for strengthening social relationships. In other communities, however, these events are neither part of the culture nor considered to be important communal activities. Organisational support in arranging such ceremonies will therefore be valued differently by farmers in other communities.
Further reflecting on our research model, we realise that the Indonesian context has challenged our intention to strictly separate (and therefore compare) the different groups of farmers. For instance, this applies to the separation between certified and uncertified farmers, because many certified farmers continue their ‘traditional’ practices (e.g., selling on the side to local traders to obtain direct payments in cash). Certified and uncertified schemes are also less distinguishable in practice than on paper. Further, it is impossible to isolate the influence of organisation and certification on farmers’ benefits, as certified farmers are part of (dual) organisational structures, whereas uncertified farmers are not organised, or participate only in a single organisational membership. We acknowledge this as a limitation of our study and suggest that future studies should be designed to provide a matching of reliable control groups. This will distinguish the effects or benefits of participation in certification and organisation. Further, we have highlighted some differences in perceived benefits for farmers participating in different schemes. Here we must acknowledge that our sample may have been rather small. However—and following the earlier described connection between cultural similarities and similarities in perceived benefits—farmers joining organisations and certifications tend to live in the same or neighboring villages and have similar practices and cultures. This means that increasing our sample size by adding respondents from the same population is likely to lead to the same results. We are therefore confident that the results derived from our sample are reliable and reflect the general characteristics of the respective populations. However, as schemes continue to expand their regional scope, increasing the sample size by including coffee farmers in regions that were not covered in this study may lead to a more complete understanding of farmers’ perceived benefits.
Another point of critique may be that it is logical that farmers participating in an organization or certification scheme would perceive benefits. Otherwise, the farmer would have already left the organization or certification scheme. Even if we ignore the fact that Indonesian smallholders tend not to withdraw from memberships easily, this reasoning would tell only part of the story. This paper not only adds information on the types of benefits perceived but also contributes to knowledge on the differences in perceived benefits resulting from different organizational memberships and certification schemes.
Finally, we reflect on the potential role of certification and organization in contributing to a more sustainable coffee production. Our research shows that efforts to better organize farmers may, from a farmers’ benefits point of view, be equally effective as attempts to involve more farmers in certification. The implication is that improvement of farmer organisations should not only be viewed as part of the certification process but also as a direct means to achieve more sustainable coffee production. What could also be improved is the inclusion of farmers in organisations, particularly in remote areas where thousands of farmers are not yet part of any form of organisation. In some areas, farmers have access to FGs, but participation in KUBEs or cooperatives (and therefore also in certification) remains practically impossible. Farmers in these (remote) areas therefore miss out on opportunities to improve their situation in relation to the five benefit domains. Establishing farmer organisations is not an easy task, because FGs, KUBEs, and cooperatives need to be acknowledged by different ministries within the government, and a dual organisational membership is required for farmers who want to become certified. The Ministry of Agriculture can take the lead in developing FGs, but to establish KUBEs and cooperatives, the ministry needs to collaborate with the Ministry of Social Affairs and the Ministry of Cooperatives and Small and Medium Enterprise. New KUBEs and cooperatives can be established, for example, by supporting prospective members (farmers) and providing them with managerial training and assistance to collect initial capital and attract investors.
Notes
1 A micro-business is defined in Law 20/2008 as a business owned by an individual or a group with assets up to Rp 50 million (less than $4,000) in total.
2 ICS staff are hired by cooperatives and KUBEs to work as private extension officers to help farmers (mostly by trainings) to comply with the certification requirements.
REFERENCES
Adesina, Akinwumi A., and Jojo Baidu-Forson. 1995. ‘Farmers Perceptions and Adoption of New Agricultural Technology: Evidence from Analysis in Burkina Faso and Guinea, West Africa’. Agricultural Economics 13 (1): 1–9. doi: 10.1016/0169-5150(95)01142-8.
Adong, Annet. 2014. ‘Impact of Households’ Membership of Farmer Groups on the Adoption of Agricultural Technologies in Uganda: Evidence from the Uganda Census of Agriculture 2008/09’. Agrekon 53 (2): 108–36. doi: 10.1080/03031853.2014.915485.
Arifin, Bustanul. 2010. ‘Global Sustainability Regulation and Coffee Supply Chains in Lampung Province, Indonesia’. Asian Journal of Agriculture and Development 7 (2): 67.
Astuti, Esther Sri, Astrid Offermans, Renatus Kemp, and Ron Corvers. 2015. ‘The Impact of Coffee Certification on the Economic Performance of Indonesian Actors’. Asian Journal of Agriculture and Development 12 (2): 1–15.
Astuti, Esther Sri. 2018. ‘The Impact of Coffee Certification on the Economic Performance of Indonesian Actors’. PhD diss., Maastricht University.
Bacon, Christopher, V. Ernesto Mendez, María Eugenia Flores Gómez, Douglas Stuart, and Sandro Raúl Díaz Flores. 2008. ‘Are Sustainable Coffee Certifications Enough to Secure Farmer Livelihoods? The Millenium Development Goals and Nicaragua’s Fair Trade Cooperatives’. Globalizations 5 (2): 259–74. doi: 10.1080/14747730802057688.
Bacon, Christopher. 2005. ‘Confronting the Coffee Crisis: Can Fair Trade, Organic, and Specialty Coffees Reduce Small-scale Farmer Vulnerability in Northern Nicaragua?’. World Development 33 (3): 497–511. doi: 10.1016/j.worlddev.2004.10.002.
Bacon, Christopher. 2010. ‘Who Decides What Is Fair in Fair Trade? The Agri-environmental Governance of Standards, Access, and Price’. Journal of Peasant Studies 37 (1): 111–47. doi:10.1080/03066150903498796.
Barbosa de Lima, Ana C., Andre L. Novaes Keppe, Fabio E. Maule, Gerd Sparovek, Marcelo Corréa Alves, and Rodrigo F. Maule. 2009. Does Certification Make a Difference? Impact Assessment Study on FSC/SAN Certification in Brazil. Brazil: Imaflora.
Beuchelt, Tina D., and Manfred Zeller. 2013. ‘The Role of Cooperative Business Models for the Success of Smallholder Coffee Certification in Nicaragua: A Comparison of Conventional, Organic and Organic-Fair Trade Certified Cooperatives’. Renewable Agriculture and Food Systems 28 (3): 195–211. doi: 10.1017/S1742170512000087.
Bitzer, Verena, Pieter Glasbergen, and Bas Arts. 2013. ‘Exploring the Potential of Intersectoral Partnerships to Improve the Position of Farmers in Global Agrifood Chains: Findings from the Coffee Sector in Peru’. Agriculture and Human Values 30 (1): 5–20. doi: 10.1007/s10460-012-9372-z.
Brandi, Clara. 2013. Sustainability Certification in the Indonesian Palm Oil Sector: Benefits and Challenges for Smallholders. Bonn: Deutsches Institut für Entwicklungspolitik GmbH.
Brant, Rollin. 1990. ‘Assessing Proportionality in the Proportional Odds Model for Ordinal Logistic Regression’. Biometrics 46 (4): 1171–78. doi: 10.2307/2532457.
Bravo, Carlos Padilla, Achim Spiller, and Pablo Villalobos. 2012. ‘Are Organic Growers Satisfied with the Certification System? A Causal Analysis of Farmers’ Perceptions in Chile’. International Food and Agribusiness Management Review 15 (4): 115–36.
Bray, David Barton, Jose Luis Plaza Sanchez, and Ellen Contreras Murphy. 2002. ‘Social Dimensions of Organic Coffee Production in Mexico: Lessons for Eco-labeling Initiatives’. Society & Natural Resources 15 (5): 429–46. doi: 10.1080/08941920252866783.
Carlson, Anna, and Charles Palmer. 2016. ‘A Qualitative Meta-synthesis of the Benefits of Eco-labeling in Developing Countries’. Ecological Economics 127: 129–45. doi: 10.1016/j.ecolecon.2016.03.020.
Chandler, Gaylen N., and Steven H. Hanks. 1998. ‘An Examination of the Substitutability of Founders Human and Financial Capital in Emerging Business Ventures’. Journal of Business Venturing 13 (5): 353–69. doi: 10.1016/S0883-9026(97)00034-7.
Directorate General of Estate Crops. 2014. ‘Statistik Perkebunan Kopi Indonesia’. Jakarta, Indonesia. http://ditjenbun.pertanian.go.id/tinymcpuk/gambar/file/statistik/2015/KOPI%202013%20-2015.pdf.
Elder, Sara D., Hisham Zerriffi, and Philippe Le Billon. 2012. ‘Effects of Fair Trade Certification on Social Capital: The Case of Rwandan Coffee Producers’. World Development 40 (11): 2355–67. doi: 10.1016/j.worlddev.2012.06.010.
Fair Trade. 2017. ‘Aims of Fair Trade Standards’. https://www.FairTrade.net/standards/aims-of-FairTrade-standards.html. Accessed 15 January 2017.
Fischer, Elisabeth, and Matin Qaim. 2012. ‘Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya’. World Development 40 (6): 1255–68.
GCP (Global Coffee Platform). 2017. ‘4C Baseline Common Code v.2.1’. http://www.globalcoffeeplatform.org/assets/files/GCP_Doc_01_Baseline-Common-Code_v2.1_en.pdf.
Giovannucci, Daniele, and Stefano Ponte. 2005. ‘Standards as a New Form of Social Contract? Sustainability Initiatives in the Coffee Industry’. Food Policy 30 (3): 284–301. doi: 10.1016/j.foodpol.2005.05.007.
Giovannucci, Daniele, Jason Potts, Bernard Killian, Christopher Wunderlich, Susana Schuller, Gabriela Soto, Kira Schroeder, Isabelle Vagneron, and Fabrice Pinard. 2008. ‘Seeking Sustainability: COSA Preliminary Analysis of Sustainability Initiatives in the Coffee Sector’. Winnipeg, Canada: Committee on Sustainability Assessment.
Glasbergen, Pieter. 2018. ‘Smallholders Do Not Eat Certificates on Global Sustainability Standards and Local Practices in Indonesia’. Ecological Economics 147: 243–52.
Hellin, Jon, Mark Lundy, and Madelon Meijer. 2009. ‘Farmer Organization, Collective Action and Market Access in Meso-America’. Food Policy 34 (1): 16–22. doi: 10.1016/j.foodpol.2008.10.003.
Holagh, Sam Rahimzadeh, Hossein Bodaghi Khajeh Noubar, and Babak Valizadeh Bahador. 2014. ‘The Effect of Organizational Structure on Organizational Creativity and Commitment within the Iranian Municipalities’. Procedia-Social and Behavioral Sciences 156: 213–15. doi: 10.1016/j.sbspro.2014.11.175.
Ibanez, Marcela, and Allen Blackman. 2016. ‘Is Eco-Certification a Win–Win for Developing Country Agriculture? Organic Coffee Certification in Colombia’. World Development 82: 14–27. doi: 10.1016/j.worlddev.2016.01.004.
Ibnu, Muhammad, Pieter Glasbergen, Astrid Offermans, and Bustanul Arifin (2015). ‘Farmer Preferences for Coffee Certification: A Conjoint Analysis of the Indonesian Smallholders’. Journal of Agricultural Science 7 (6): 20–35. doi: 10.5539/jas.v7n6p20.
Ibnu, Muhammad. 2017. ‘Gatekeepers of sustainability: On Coffee Smallholders and Certifications in Indonesia’. PhD diss., Maastricht University.
ICO (International Coffee Organization). 2017. ‘Trade Statistics’. http://www.ico.org/trade_statistics.asp?section=Statistics.
Jena, Pradyot Ranjan, Till Stellmacher, and Ulrike Grote. 2015. ‘Can Coffee Certification Schemes Increase Incomes of Smallholder Farmers? Evidence from Jinotega, Nicaragua’. Environment, Development and Sustainability. 19 (1): 45–66. doi: 10.1007/s10668-015-9732-0.
Kaganzi, Elly, Shaun Ferris, James Barham, Annet Abenakyo, Pascal Sanginga, and Jemimah Njuki. 2009. ‘Sustaining Linkages to High Value Markets through Collective Action in Uganda’. Food Policy 34 (1): 23–30. doi: 10.1016/j.foodpol.2008.10.004.
Kilpatrick, Sue. 2007. ‘Building Social Capital in Groups: Facilitating Skill Development for Natural Resource Management’. Rural Society 17 (3): 248–257. doi: 10.5172/rsj.351.17.3.248.
Loconto, Allison Marie, and Cora Dankers. 2014. Impact of International Voluntary Standards on Smallholder Market Participation in Developing Countries: A Review of Literature. Series 3. Rome: Food and Agriculture Organization of the United Nations.
Maertens, Miet, and Johan FM Swinnen. 2009. ‘Trade, Standards, and Poverty: Evidence from Senegal’. World Development 37 (1): 161–78. doi: 10.1016/j.worlddev.2008.04.006.
Markelova, Helen, Ruth Meinzen-Dick, Jon Hellin, and Stephan Dohrn. 2009. ‘Collective Action for Smallholder Market Access’. Food Policy 34 (1): 1–7. doi: 10.1016/j.foodpol.2008.10.001.
Mausch, Kai, Dagmar Mithöfer, Solomon Asfaw, and Hermann Waibel. 2009. ‘Export Vegetable Production in Kenya under the EurepGAP Standard: Is Large “More Beautiful” than Small?’ Journal of Food Distribution Research 40 (3): 115–29.
Mujawamariya, Gaudiose, Marijke D’Haese, and Stijn Speelman. 2013. ‘Exploring Double Side-selling in Cooperatives, Case Study of Four Coffee Cooperatives in Rwanda’. Food Policy 39: 72–83. doi: 10.1016/j.foodpol.2012.12.008.
Narrod, Clare, Devesh Roy, Julius Okello, Belem Avendaño, Karl Rich, and Amit Thorat. 2009. ‘Public–Private Partnerships and Collective Action in High Value Fruit and Vegetable Supply Chains’. Food Policy 34 (1): 8–15. doi: 10.1016/j.foodpol.2008.10.005.
Neilson, Jeff. 2008. ‘Global Private Regulation and Value-Chain Restructuring in Indonesian Smallholder Coffee Systems’. World Development 36 (9): 1607–22. doi: 10.1016/j.worlddev.2007.09.005.
Nuryanti, Sri, and Dewa Ketut Sadra Swastika. 2011. ‘Roles of Farmers’ Groups in Agricultural Technology Adoption’. Forum Penelitian Agro Ekonomi 29 (2): 115–28.
Offermans, Astrid, and Pieter Glasbergen. 2017. ‘Spotlights on Certification and Farmers’ Welfare: Crossing Boundaries in Social Scientific Research’. Development in Practice 27 (8): 1078–90.
Oktami, Nita, Fembriarti Erry Prasmatiwi, and Novi Rosanti. 2014. ‘Manfaat Sertifikasi Rainforest Alliance (RA) dalam Mengembangkan Usahatani Kopi yang Berkelanjutan di Kecamatan Pulau Panggung Kabupaten Tanggamus’. Jurnal Ilmu-Ilmu Agribisnis 2 (4): 337–47.
Parrish, Bradley D., Valerie A. Luzadis, and William R. Bentley. 2005. ‘What Tanzania’s Coffee Farmers Can Teach the World: A Performance-based Look at the Fair Trade–Free Trade Debate’. Sustainable Development 13 (3): 177–89. doi: 10.1002/sd.276.
Pierrot, Joost, Daniele Giovannucci, and Alexander Kasterine. 2010. ‘Trends in the Trade of Certified Coffees’. Geneva: International Trade Centre.
Place, Frank, Gatarwa Kariuki, Justine Wangila, Patricia Kristjanson, Adolf Makauki, and Jessica Ndubi. 2004. ‘Assessing the Factors Underlying Differences in Achievements of Farmer Groups: Methodological Issues and Empirical Findings from the Highlands of Central Kenya’. Agricultural Systems 82 (3): 257–72. doi: 10.1016/j.agsy.2004.07.001.
Raynolds, Laura T., Douglas Murray, and Peter Leigh Taylor. 2004. ‘Fair Trade Coffee: Building Producer Capacity via Global Networks’. Journal of International Development 16 (8): 1109–21. doi: 10.1002/jid.1136.
Roebyantho, Haryati. 2013. ‘Kebijakan Penanganan Kemiskinan Melalui Kelompok Usaha Bersama/KUBE’. Jurnal Pusat Penelitian dan Pengembangan Kesejahteraan Sosial Kementerian Sosial Republik Indonesia (Informasi) 18 (02): 117–132.
Ruben, Ruerd, and Guillermo Zuniga. 2011. ‘How Standards Compete: Comparative Impact of Coffee Certification Schemes in Northern Nicaragua’. Supply Chain Management: An International Journal 16 (2): 98–109. doi: 10.1108/13598541111115356.
Ruben, Ruerd, and Ricardo Fort. 2012. ‘The Impact of Fair Trade Certification for Coffee Farmers in Peru’. World Development 40 (3): 570–82. doi: 10.1016/j.worlddev.2011.07.030.
Rueda, Ximena, and Eric F. Lambin. 2013. ‘Responding to Globalization: Impacts of Certification on Colombian Small-Scale Coffee Growers’. Ecology and Society 18 (3): 215–27. doi: 10.5751/Es-05595-180321.
SCP (Sustainable Coffee Program). 2014. ‘Indonesia A Business Case for Sustainable Coffee Production’. Sustainable Coffee Program (SCP). http://www.sustainablecoffeeprogram.com/en/resources.
Sherrick, Bruce J., Peter J. Barry, Paul N. Ellinger, and Gary D. Schnitkey 2004. ‘Factors Influencing Farmers’ Crop Insurance Decisions’. American Journal of Agricultural Economics 86 (1): 103–14. doi: 10.1111/j.0092-5853.2004.00565.x.
Somda, Jacques, A. Joseph Nianogo, Suleymane Nassa, and Seydou Sanou. 2002. ‘Soil Fertility Management and Socio-economic Factors in Crop-livestock Systems in Burkina Faso: a Case Study of Composting Technology’. Ecological economics 43 (2): 175–83. doi: 10.1016/S0921-8009(02)00208-2.
Suradi. 2012. ‘Pendekatan Kelompok Sebagai Modalitas Dalam Penanggulangan Kemiskinan’. Jurnal Pusat Penelitian dan Pengembangan Kesejahteraan Sosial Kementerian Sosial Republik Indonesia. http://puslit.kemsos.go.id/upload/post/files/2d197badf554aba1dfc58ed23781be80.pdf.
Taylor, Peter Leigh, Douglas L. Murray, and Laura T. 2005. ‘Keeping Trade Fair: Governance Challenges in the Fair Trade Coffee Initiative’. Sustainable Development 13 (3): 199–208. doi: 10.1002/sd.278.
Thorp, Rosemary, Frances Stewart, and Amrik Heyer. 2005. ‘When and How Far is Group Formation a Route out of Chronic Poverty?’. World Development 33 (6): 907–20. doi: 10.1016/j.worlddev.2004.09.016.
Utting, Karla. 2009. ‘Assessing the Impact of Fair Trade Coffee: Towards an Integrative Framework’. Journal of Business Ethics 86 (S1): 127–49. doi: 10.1007/s10551-008-9761-9.
UTZ. 2017. ‘The UTZ Standard’. https://UTZ.org/what-we-offer/certification/the-standard/. Accessed 21 February 2017.
Valkila, Joni. 2009. ‘Fair Trade Organic Coffee Production in Nicaragua: Sustainable Development or a Poverty Trap?’. Ecological Economics 68: 3018–25. doi: 10.1016/j.ecolecon.2009.07.002.
Van Rijsbergen, Bart, Willem Elbers, Ruerd Ruben, and Samuel N. Njuguna. 2016. ‘The Ambivalent Impact of Coffee Certification on Farmers’ Welfare: A Matched Panel Approach for Cooperatives in Central Kenya’. World Development 77: 277–92. doi: 10.1016/j.worlddev.2015.08.021.
Wahyudi, Teguh, and Misnawi Jati. 2012. ‘Challenges of Sustainable Coffee Certification in Indonesia’. Paper presented at the Seminar on the Economic, Social and Environmental Impact of Certification on the Coffee Supply Chain, International Coffee Council 109th Session, London, United Kingdom, 25 September 2012. http://www.ico.org/event_pdfs/seminar-certification/certification-iccri-paper.pdf.
Wheeler, Sarah Ann. 2008. ‘What Influences Agricultural Professionals’ Views towards Organic Agriculture?’. Ecological Economics 65 (1): 145–54. doi: 10.1016/j.ecolecon.2007.05.014.
Zainura, Ulya, Nunung Kusnadi, and Burhanuddin Burhanuddin. 2016. ‘Perilaku Kewirausahaan Petani Kopi Arabika Gayo di Kabupaten Bener Meriah Provinsi Aceh’. Jurnal Penyuluhan 12 (2): 126–43.
Capitalism’s Favorite Drug
Filling those cans of Hills Brothers coffee involved a few different forms of brutality. Because growing coffee requires a tremendous amount of labor—for planting, pruning, picking, and processing—a planter’s success depends on finding enough people in the countryside willing to work. The essential question facing any would-be capitalist, as Sedgewick reminds us, has always and ever been “What makes people work?”
Chattel slavery had provided a good answer for Brazil’s coffee farmers, but by the time Hill arrived in El Salvador, in 1889, slave labor was no longer an option. A smart and unsentimental businessman, Hill understood that he needed wage labor, lots of it, and as a son of the Manchester slums, he knew that the best answer to the question of what will make a person work was in fact simple: hunger.
There was only one problem. Rural Salvadorans, most of whom were Indians called “mozos,” weren’t hungry. Many of them farmed small plots of communally owned land on the volcano, some of the most fertile in the country. This would have to change if El Salvador was to have an export crop. So at the behest of the coffee planters and in the name of “development,” the government launched a program of land privatization, forcing the Indians to either move to more marginal lands or find work on the new coffee plantations.
Actually the choice wasn’t initially quite so stark. Even the lands newly planted with coffee still offered plenty of free food for the picking. “Veins of nourishment”—in the form of cashews, guavas, papayas, jocotes, figs, dragon fruits, avocados, mangoes, plantains, tomatoes, and beans—“ran through the coffee monoculture, and wherever there was food, however scant, there was freedom, however fleeting, from work,” Sedgewick writes. The planters’ solution to this “problem”—the problem of nature’s bounty—was to eliminate from the landscape any plant that was not coffee, creating an ever more totalitarian monoculture in which nothing else was permitted to grow. When a chance avocado tree did manage to survive in some overlooked corner, the campesino caught tasting its fruit would be accused of theft and beaten if he was lucky, or shot if he was not. Thus was the concept of private property impressed upon the Indians.
In Sedgewick’s words, “What was needed to harness the will of the Salvadoran people to the production of coffee, beyond land privatization, was the plantation’s production of hunger itself.” James Hill did the math and found that workers showed up most promptly and worked most diligently if he paid them partly in cash—15 cents a day for women and double that for men—and partly in food: breakfast and lunch, which consisted of two tortillas topped with as many beans as could be balanced on them. (The local diet became as monotonous as the landscape.) Hill thus transformed thousands of subsistence farmers and foragers into wage laborers, extracting quantities of surplus value that would be the envy of any Manchester factory owner.
The whole notion of surplus value of course is Karl Marx’s and, as Sedgewick points out, emerged from Marx and Friedrich Engels’s analysis of industrial capitalism in James Hill’s birthplace. Communism was another Manchester export that found its way to Santa Ana, this one arriving during the Great Depression, when coffee prices collapsed and unemployed coffee workers could no longer eat from the land. It turns out that leftists were also able “to transform hunger into power.” The climax of Sedgewick’s narrative comes in the early 1930s, when thousands of mozos, organized by homegrown Communists who had spent time abroad, rose up against the coffee barons, seizing plantations and occupying town halls.
Revolution was afoot, at least until 1932, when the Salvadoran government, again at the behest of the coffee planters, launched a vicious counterinsurgency. Rounding up anyone who looked like an Indian, soldiers herded them into town squares and then opened fire with machine guns. The government’s campaign against the coffee workers came to be known as La Matanza—“The Massacre”—and its memory burns bright in the Salvadoran countryside. When El Salvador erupted for a second time half a century later, the coffee barons were under siege again; James Hill’s grandson, Jaime Hill, was kidnapped by rebels and held for a multimillion-dollar ransom, which the family had no trouble paying.
I’m making Sedgewick’s story sound more schematic than it really is. Though his analysis of coffee’s political economy does owe a debt to Marx, his literary gifts and prodigious research make for a deeply satisfying reading experience studded with narrative surprise. Sedgewick has a knack for the sparkling digression and arresting jump cut, hopping back and forth between El Salvador and the wider world, where coffee was being consumed in ever-increasing quantities. He is especially good on the marketing of coffee to Americans, going back to independence, when the country broke from England’s tea habit and drinking coffee became a patriotic act. He shows how coffee has long been promoted in America less as a tasty beverage or pleasurable experience than as a means to an end: “a form of instant energy—a work drug.”
American scientists studied coffee intensively in the early years of the 20th century, seeking to understand how a beverage that contained virtually no calories could nevertheless supply energy to the human animal, seemingly in violation of the laws of thermodynamics. Coffee had the extraordinary ability to generate surplus value not only in its production but in its consumption as well, as an episode in the history of the coffee break makes clear.
Sedgewick tells the story of a small Denver necktie maker called Los Wigwam Weavers. When the company lost its best young male loom operators to the war effort in the early 1940s, the owner, Phil Greinetz, hired older men to replace them, but they lacked the dexterity needed to weave the intricate patterns in Wigwam’s ties. Next he hired middle-aged women, and while they could produce ties to his standards, they lacked the stamina to work a full shift. When Greinetz called a company-wide meeting to discuss the problem, his employees had a suggestion: Give us a 15-minute break twice a day, with coffee.
The effects of caffeine mesh with the needs of capitalism in myriad ways. Before the arrival of coffee and tea in the West in the 1600s, alcohol—which was more sanitary than water—was the drug that dominated, and fogged, human minds. This might have been acceptable, even welcome, when work meant physical labor performed out of doors (beer breaks were common), but alcohol’s effects became a problem when work involved machines or numbers, as more and more of it did.
Enter coffee, a drink that not only was safer than beer and wine (among other things, the water it was made with had to be boiled) but turned out to improve performance and stamina. In 1660, only a few years after coffee became available in England, one observer noted:
’Tis found already, that this coffee drink hath caused a greater sobriety among the Nations. Whereas formerly Apprentices and clerks with others used to take their morning’s draught of Ale, Beer, or Wine, which, by the dizziness they Cause in the Brain, made many unfit for business, they use now to play the Good-fellows in this wakeful and civil drink.
“This wakeful and civil drink” also freed us from the circadian rhythms of our body, helping to stem the natural tides of exhaustion so that we might work longer and later hours; along with the advent of artificial light, caffeine abetted capitalism’s conquest of night. It’s probably no coincidence that the minute hand on clocks arrived at roughly the same historical moment as coffee and tea did, when work was moving indoors and being reorganized on the principle of the clock.
The intricate synergies of coffee and capitalism form the subtext of the historian Augustine Sedgewick’s thoroughly engrossing first book, Coffeeland: One Man’s Dark Empire and the Making of Our Favorite Drug. At the center of Sedgewick’s narrative is James Hill, an Englishman born in the slums of industrial Manchester in 1871 who, at 18, sailed for Central America to make his fortune. There, he built a coffee dynasty by refashioning the Salvadoran countryside in the image of a Manchester factory. Hill became the head of one of the “Fourteen Families” who controlled the economy and politics of El Salvador for much of the 20th century; at the time of his death, in 1951, his 18 plantations employed some 5,000 people and produced more than 2,000 tons of export-ready coffee beans from more than 2,500 acres of rich soil on the slopes of the Santa Ana volcano. For many years, much of what Hill (or rather his workers) produced ended up in the familiar red tins of Hills Brothers coffee.
“What does it mean to be connected to faraway people and places through everyday things?” Sedgewick asks in his early pages. Coffeeland offers a fascinating meditation on that question, by rendering once-obscure lines of connection starkly visible.
Greinetz instituted the coffee breaks and immediately noticed a change in his workers. The women began doing as much work in six and a half hours as the older men had done in eight. Greinetz made the coffee breaks compulsory, but he decided he didn’t need to pay his workers for the half hour they were on break. This led to a suit from the Department of Labor and, eventually, to a 1956 decision by a federal appeals court that enshrined the coffee break in American life. The court ruled that because the coffee breaks “promote more efficiency and result in a greater output,” they benefited the company as much as the workers and should therefore be counted as work time. As for the phrase coffee break, it entered the vernacular through a 1952 advertising campaign by the Pan-American Coffee Bureau, a trade group organized by Central American growers. Their slogan: “Give yourself a coffee-break … and get what coffee gives to you.”
Near the end of Coffeeland, Sedgewick attempts to quantify exactly how much value a pound of coffee gives an employer (or, put another way, extracts from an employee), using Los Wigwam and Hill’s plantation as examples. He estimates that it takes 1.5 hours of Salvadoran labor to produce a pound of coffee. That’s enough to make 40 cups of coffee, or supply two coffee breaks for Wigwam’s 20 employees, which Greinetz calculated yielded the equivalent of 30 additional hours of labor. In other words, the six cents that Hill’s plantation paid for an hour and a half of labor in 1954 was transformed into $22.50 worth of value for Phil Greinetz, an alchemy that reflects both the remarkable properties of caffeine and the brute facts of exploitation.
But the symbiotic relationship that coffee and capitalism have enjoyed for the past several centuries may now be coming to a sad close. Coffea arabica is a picky plant, willing to grow only in the narrowest range of conditions: Sunlight, water, drainage, and even altitude all have to be just so. The world has only so many places suitable for coffee production. Climate scientists estimate that at least half of the acreage now producing coffee—and an even greater proportion in Latin America—will be unable to support the plant by 2050, making coffee one of the crops most immediately endangered by climate change. Capitalism may be killing the golden goose.
Yet capitalism is nothing if not resourceful. Employers who now offer coffee breaks might, someday soon, instead hand out tablets of synthetic caffeine, one in the morning, another in the afternoon. This would offer the employer several advantages. Pills are cheaper than coffee, and less messy. And because they take mere seconds to ingest, the coffee break itself would no longer be necessary, giving the company every reason to claw back the 30 precious minutes the courts bequeathed to the American worker 64 years ago. The fate of the coffee workers in El Salvador will likely be far worse, but perhaps the “veins of nourishment”—nature’s edible bounty—will flow again after the monocultures of coffee collapse.
Michael Pollan
This article appears in the April 2020 print edition with the headline “The World’s Favorite Drug.”
Should We Pay More For Coffee?
In the current age of going green and sustainability permeating every facet of our daily routine, the coffee industry is one that has taken the mission to heart, incorporating the concept into every aspect of the supply chain, from seed to cup. But for all of its efforts, one fact that stubbornly remains is that by nature coffee is a fundamentally unsustainable product: environmentally, socially, and economically.
I often lament how little the average consumer knows about and respects the amount of work that went into that cup of coffee they so desperately need to get them through their morning. Coffee, being easily one of the most labour-intensive agricultural products in the world, is grown exclusively in developing countries, populated by a great many of the three billion people in the world living on less than $2 a day.
The economics of coffee for the producers is untenable as it is, for one simple reason — we don’t pay them enough for their product. Five dollar lattes and Fair Trade premiums notwithstanding, coffee is disturbingly inexpensive when you take a closer look at the numbers.
The cost of production of a pound of coffee is around $2.00/lb (this varies greatly country by country). Most farmers make a very small profit when they sell their coffee to the first of many middlemen that stand between them and you. When it finally gets to a café in Toronto, the cost of the beans is around $8.00/lb, which will make 30 good, strong cups of liquid coffee at about $0.27 per cup. The café has additional costs, like milk, labour, rent, etc., but a cup of black coffee still has one of the highest profit margins in the food industry.
Now, imagine for a minute that the entire coffee community could get together and agree to pay $1 more per pound, all of which was guaranteed to get into the farmers’ hands. With that cost being passed all the way through the chain to the end consumer, that now $9.00/lb coffee would raise the cost per cup by just $0.03.
Think of the good we could do when considering a few more numbers: Canadians drink just shy of three cups of coffee per day, so with the $0.03 extra per cup, that would amount to $30.66 ($0.03x3x365) out of your pocket per year. Canadians alone drink in the neighbourhood of 14 billion cups of coffee every year, so just considering our consumption here, that extra three cents could conceivably result in $420,000,000 flowing directly into the hands of those who need it most — the rural, the marginalized, those who have the least access to social programs or government assistance, and who are the most difficult to reach through development projects.
And it should be said that, while development work is crucial, the people that know the needs of third-world farmers the best are the farmers themselves, many of whom face a difficult question every year when they are paid for their crop: do I feed my family or my farm?
This idea may sound like international wealth redistribution, but really, it’s more akin to a long-overdue market correction – fixing the lopsidedness of an industry that has been built on an intensive agricultural product being treated as an easy-to-manipulate commodity. So while this dollar-more-per-pound-model is not perfect, or even feasible at the moment, it illustrates a point.
We are facing a new reality in not just the coffee industry, but the food system as we know it: the things that we consume are simply going to cost more than they have in the past. Not only because costs of production are constantly rising, but because that market correction isn’t just something that should happen… it’s something that needs to happen to fix what has become an unsustainable agricultural model.
Buying great quality coffee is one way to ensure we’re paying more for it — as with anything, growing something of great quality costs money. But quality shouldn’t be the only reason we pay more. Bad farmers don’t grow bad coffee. In fact, little if any coffee is grown by bad farmers. Some grow quantity, some grow quality, and many fall somewhere in between. While there is no doubting that a higher quality of product deserves a higher price, the average price must come up to ensure that every coffee farmer’s quality of life improves.
We need to create, or rather adapt to, a truly sustainable business model for coffee; one where the producer, consumer, and everyone in between are all financially, environmentally, and socially stable. I know I can comfortably speak for the coffee industry by saying that we’re actively working on it, every single day.
What can the average coffee drinker do to support this? There is no one answer, yet. So buy your daily cup(s) of coffee from roasters and shops that are going above and beyond for the benefit of the farmers that are producing their coffee — they’re quite easy to find with just a little bit of research. And the next time you see an infomercial that asks you if you are willing to save a child’s life for “just the cost of a cup of coffee a day,” think about just how much more good you could do by spending an extra $0.03 on your actual cup of coffee every day.
The Global Grind: Capitalism through Coffee
The coffee industry provides a prism through which the nature and history of capitalism can be viewed, writes Ben Hillier.
Coffee’s roots lie in the Islamic world, but it was European capitalism that created a global addiction. “[U]ntil the mid-seventeenth century, most people in England were either slightly – or very – drunk all of the time”, writes historian Matthew Green. “Drink London’s fetid river water at your own peril; most people wisely favoured watered-down ale or beer. The arrival of coffee … triggered a dawn of sobriety.”
It may have been true of much of Europe. That didn’t make the importation of the bean necessarily welcomed by the upper classes. Defending tradition, and wine, French doctors protested in 1674 that the coffee drinker “suffers delusions, and the body receives such a shock that it is as though it were bewitched”. A century later in Prussia, Frederick the Great condemned as “disgusting” the increase in local coffee consumption. “My people must drink beer. His Majesty was brought up on beer, and so were his ancestors, and his officers.”
It wasn’t sobriety itself that the elites were afraid of. The brew was said to promote rational thought. According to novelist and playwright Honore Balzac, “Coffee falls into your stomach, and straightaway there is a general commotion. Ideas begin to move like the battalions of a grand army of the battlefield … Things remembered arrive at full gallops, ensuing to the wind … the artillery of logic hurry up with their train and ammunition, the shafts of which start up like sharpshooters.”
A Seditious Bean
Coffee was not simply a drink. It became an institution. The first coffee houses were established in the mid-17th century. Particularly in London, they rapidly proliferated. Charles II attempted to ban them in 1675 because they were considered “seminaries of sedition”. He wasn’t necessarily wrong. Many houses established a reputation as centres for debate and learning and often fostered a democratic atmosphere at odds with aristocratic privilege – at least for those who could manage the 1 penny entrance fee that kept the labouring classes out. The anti-establishment spirit is captured in the rules and orders of one 17th century outlet:
First, gentry, tradesmen, all are welcome hither,
And may without affront sit down together:
Pre-eminence of place none here should mind,
But take the next fit seat that he can find:
Nor need any, if finer persons come,
Rise up to assigne to them his room.
Anthony Wild, author of Dark History, a gripping narrative of the origins and development of the commodity, writes that the secret ballot “re-emerged in the [republican] ‘Coffee Club of Rota’… [W]hen a member wished to sound out the meeting’s view of the subject under discussion, he could call for the ‘wooden oracle’ [i.e. the ballot box] to be consulted.”
Paris’ Cafe le Procope was frequented by Voltaire, Rousseau and Diderot. Later it was a meeting place variously for Robespierre, Danton and Marat. During the French Revolution, the Phrygian cap, symbol of liberty and headwear of the sans-culottes, was reportedly first displayed at the cafe.
It would be a stretch to locate in coffee the seeds of the new capitalist order that emerged in Europe. But the relations bound up with the production and consumption of coffee were the quintessence of capitalism; the commodity became deeply embedded in the culture and commerce of the time. “The stock exchange, insurance industry, and auctioneering”, writes Green, “all burst into life in 17th-century coffeehouses – in Jonathan’s, Lloyd’s, and Garraway’s – spawning the credit, security, and markets that facilitated the dramatic expansion of Britain’s network of global trade in Asia, Africa and America.”
The great transformation that followed wasn’t simply the triumph of liberty and reason over serfdom and superstition, let alone sobriety over intoxication. Nor did it represent the birth of genuine equality. Far from it. The democratic pretensions of the rising bourgeoisie were a facade of a regime of oppression and exploitation that would engulf the world – as would the drink they sipped as plans were hatched for commercial dominance.
New Worlds, Exotic Markets
Colonial expansion created an era of plantation cropping and rampant pillage of all corners of the globe. In the Congo the Belgians presided over a reign of terror to secure rubber exports. In the Philippines hemp became dominant. But coffee, sugar, tea and tobacco would be the king crops – sourced from Asia, Africa and the Americas and labored on by indentured Scots and Irish, West African slaves, newly dispossessed indigenous farmers and the poorest of the working class.
The Dutch East India Company established forced labour coffee cultivation in Java (Indonesia) in the 1690s. Over time, much of the archipelago was turned to plantation farming, to the detriment of subsistence agriculture. The economy and the entire social structure were transformed. The resulting famines and misery were replicated wherever the bean was cultivated.
In the 1700s, the center of world production shifted to the slave-rich Caribbean. The French colony of Saint Domingue (Haiti) was the world’s largest producer until one of the greatest revolts in history. In 1791, almost half a million slaves ripped the plants from the ground, burned the plantations and drove the French from the island. Brazil then became the dominant producer in the 1800s, importing 1.5 million slaves from West Africa to work the farms.
Coffee by now was becoming one of the world’s most widely traded commodities. But the greater the riches amassed in trading house safes and European government treasuries, the poorer and more degraded the colonised world became.
As in other markets, trading became more complex as capitalism expanded. Some of the early appearances of derivative contracts – used to such destructive effect in the recent North Atlantic financial crisis – were in the coffee market. With the rise of these “securities” in the 1800s, the wealthy didn’t have to possess the beans to make money from them. In 1880, with the world harvest totalling fewer than 7 million bags, 61 million bags were reportedly bought and sold on the Hamburg futures market.
Trade was still based on the promise of something tangible. The original “forward contracts” were simply designed to give price certainty. For example, a coffee roasting company agreed to pay a coffee grower $10 a bag in six months’ time. The market price at that later time would likely be different to that specified in the contract, but it at least provided “peace of mind”. The futures market, however, became a gamblers’ den.
The logic of speculation goes something like this. Trader X makes a contract to pay Grower Y $10 per bag at a future date. Assume that the current price is also $10. The trader gambles on a price movement of, say, 0.2 percent (to $10.02) in the intervening period. S/he then sells the contract for $10.01 to Trader Z. Trader Z now tries the same play with a different starting price. A 1 cent return sounds like the prize for a fruitless endeavour. But if the contract is for 1 million bags, then a $10,000 profit results from this minuscule price movement. If the price rises 2 percent, the profit could be $100,000 or more.
By the 21st century, upwards of 2 billion bags per year were being traded despite actual harvests of around 110 million bags. With these markets, obviously, there are substantial risks. If the price moves in the wrong direction, large losses can accrue, sparking a sell-off as traders attempt to rid themselves of contracts. That can result in a collapse. Growers without a price locked in can be hit hard.
Even those with a contract to sell might find their buyer, whoever that now is, unable to pay. That’s because speculators are often not in possession of the money required to fulfil a contract – the expectation is that they will sell it before the due date. So to trade the contract requires only a fraction of the money needed for the final settlement. If they get stuck with the contract after the price has dropped significantly, then the game is up. In that regard, the speculative movement resembles musical chairs as much as a casino.
Fair Trade Fraud
It is the perverse logic of capitalism that the promise of a bean can destroy the livelihoods of millions. No one knows that better than the 25 million peasants and workers involved in growing coffee across the world. Low prices and high volatility characterize the coffee market in which underdeveloped world producers sell their beans. Many can expect less than $3 per day.
The last, and biggest, crisis in the industry was just over a decade ago. A market glut pushed prices so low that in Central America alone around 600,000 jobs were lost. Millions more were affected. One attempt to improve the situation for producers is the multi-billion dollar “fair trade” industry. Fair trade involves Western NGOs and corporations guaranteeing farmers a minimum price on those occasions when the floor falls out of the market. It might sound good. There is, however, a major problem with this fashionable industry.
“The fact that Fair Trade has achieved a significant impact in some regions of the world is undeniable”, writes Ndongo Samba Sylla, a former employee of Fairtrade International and author of The fair trade scandal: marketing poverty to benefit the rich. “But isolated and limited successful experiences are insufficient to argue that this tool has been effective …
“Fair Trade is a logical continuation of free trade and not a remedy to its weaknesses. The reason for this is quite simple. Can the excesses of the market economy be overcome using the same principles and methods? Can the grip of the free market on human lives actually be loosened while still promoting further trade, albeit in innovative ways? The answer is most certainly no.”
Capitalist trade can never be fair because it is based on an established inequality of resources. On one hand this is about large multinational companies like Nestle dominating the system to get the cheapest price possible.
Fundamentally, however, the poor deal for coffee growers is the result of the anarchic way that production is carried out. The growers – whether small farmers, cooperatives or agribusiness – compete for market share. All capitalist industries produce goods only with the expectation, or the gamble, that they will be sold. There is always some degree of speculation involved. That makes for an unstable and crisis-prone system. When the going seems good, capacity is expanded, creating greater output, driving down prices and some out of business. That’s what happened in the last crisis.
Further, the “developing world producers” narrative that often dominates discussions of coffee is only one part of the story. Production isn’t always carried out by a small farmer. In places such as Guatemala, for example, a landed elite controls most of the plantations. Coffee pickers, migrant workers and farm workers are, like most employees, often left out of the picture – that’s also true of the fair trade industry, which focuses on building a business model, not on equality for the labouring classes.
In Peru there are 200,000 predominantly small farms. But the conditions are no better for the labourers working for a small producer. Eduardo Montauban, head of the Peruvian Coffee Chamber, told the Financial Times in 2006, “No one in the industry is paying minimum wage. It’s simply not feasible.” That may have been a slight exaggeration, but of five Fairtrade-certified farms that journalist Hal Weitzman visited in the country, casual labourers were being paid below the national minimum wage in four. That’s the logic of capitalist competition. There’s nothing fair about it.
High, But Not on Life
Just as the stereotype of the small farmer papers over class divisions in the “developing world”, so too the undifferentiated image of the Western consumer masks the class nature of the so-called developed societies.
As the 1 penny coffee house entry fee earlier indicated, liberty and democracy in practice excluded the labouring classes. Working class men did not get the vote until the 19th or 20th century, depending on the country. The Jacobin constitution of revolutionary France included universal suffrage, but in practice it wasn’t implemented. Universal suffrage was not won prior to the 20th century in any capitalist democracy.
As the European economy rapidly expanded in the 1800s, it required pliant and disciplined wage workers capable of performing repetitive tasks over extended periods of time. This profit-driven industrial production destroyed the workforce. The individual worker, wrote Karl Marx and Friedrich Engels, “becomes an appendage of the machine, and it is only the most simple, most monotonous, and most easily acquired knack, that is required of him”. It is hardly surprising that stimulants became staples throughout the workday.
In Britain, coffee was displaced by tea. But central was the combination of caffeine and sugar, which enabled work intensity to be maintained and quelled hunger pangs in otherwise empty stomachs. In the rising industrial powerhouse of the United States, where the 1773 Boston Tea Party rebellion (planned in the Green Dragon coffee house) had been an opening salvo in what became the American Revolution, coffee was promoted as an alternative to British Empire-sourced teas.
“Coffee is perfect for those who work on a production line”, writes Morton Satin, former director of the United Nations Food and Agriculture Organization’s Global Agriculture Program. By the 20th century, it “was often supplied freely or at subsidised rates – all with the goal of keeping employees working at high outputs through their long shifts – and on into overtime whenever necessary. How could anybody complain about free or cheap coffee?
“It was not long before coffee became the national beverage that accompanied nearly everyone throughout the day … This was the case whether you were a New York government employee, a West Coast fisherman, a worker in a Chicago packing house, or a cowboy driving cattle a thousand miles to the railhead.”
The corollary of competitive mass industrial production was the industrial slaughter of imperialism. Wild notes of the Second World War, “[T]he combination of intense wartime factory production and the fighting itself made caffeine a vital chemical ingredient of the war effort. If there is any truth in the idea that capitalism depends on caffeine because it lengthens the productive day to a theoretical twenty-four hours, then the war provided further proof … [T]he instant [coffee] manufacturers found that literally everything they could produce was requisitioned by the army.”
Caffeine consumption had dramatically increased in the 19th century. By 1933 coffee was one of the most advertised products in the country. But war truly made coffee a mass commodity, keeping the working classes wide-eyed as they were sent to the slaughter.
Today coffee is so integrated into working life, and so many people have come to depend on a caffeine hit to get going in the morning or continue in the afternoon, that in most workplaces it is expected to be provided. Where many bosses now refuse, it isn’t so much that the drink isn’t valued, but that they know their workers, if they have no other option, will pay out of their own pockets – if not for coffee, then for some other caffeinated or high sugar drink to provide the needed “kick”.
Coffee and Capitalism
Starbucks is today’s corporate descendent of the democratic elites and coffee houses of yesteryear. The company began with a single Seattle outlet in 1971, but now boasts almost 20,000 stores worldwide. It publicly promotes “ethical trading and responsible growing practices” and even partnered with the British left-liberal newspaper Guardian to run advertising heavily disguised as a feature series under the guise “A guide to ethical living”. The company obviously ticks all the right boxes to be considered “socially responsible” – it promotes “sustainable” growing and “fair” trade, and CEO Howard Schultz advocates same sex marriage rights.
But while Schultz is paid $9,637 per hour, the average worker in his 120,000-strong US workforce earns $8.79, according to research by finance website NerdWallet. That’s $350 for a 40-hour week. Aimee Groth, who was employed at a New York Starbucks in 2011, related for Business Insider the working conditions at the outlet: “The intensity of what goes on behind the counter is simply not visible from the customer’s point of view. During the peak morning hours, we’d work through around 110 people every half hour with seven employees on the floor …
“We got two 10-minute breaks and one unpaid 30-minute break for every 8 hours on the floor, where we’d have to decide between running next door to use the restroom (because ours always had a line of customers in front of it), quickly eating a bag lunch (there was never time to stand in line and buy something from the store), or making a cell phone call. If you’re lucky, you got to sit down on the one chair in the break room, or on the ladder, because there were never any open seats in the store … On more than one occasion I walked into the break room to see someone crying.”
Such is the modern grind of a wage worker that, with mass unemployment still afflicting the Western world, they are expected to consider themselves lucky to have such a job. The story of coffee, however, is not just about one or two examples of indecency. Nor is it simply about the failings of individual firms or the greed of individual traders or CEOs. The coffee industry provides a prism through which the nature of all industry under capitalism is on display. It is a bitter drink indeed.
Ben Hillier is the author of Losing Santhia: life and loss in Tamil Eelam and The art of rebellion: dispatches from Hong Kong.
“Sustainability Looks Different Wherever You Are”: Coffee Production Practices in a Risky Landscape
The coffee sector indeed appears to be in its heyday, but what do consumption and production trends tell us of its long-term sustainability?
The annual World of Coffee event, held in early June in Berlin, Germany, is known as the largest professional conference devoted to the coffee sector in Europe, where the sheer breadth and depth of the sector can be seen in full force.
A wide range of attendees converged on Messe Hall: everyone from baristas competing for who can make the best “latte art,” to farmer organizations presenting their products and approaches to coffee cultivation, to brewing machine manufacturers exhibiting their wares.[i]
The coffee sector indeed appears to be in its heyday: coffee consumption is on the rise and is no longer concentrated in just the traditional markets of North America and Europe.[ii] The International Coffee Organization (ICO) found that global coffee consumption hit a record of over 160 million bags of coffee in 2017/18, with much of that coffee traded across national borders.[iii]
Yet the buzz around the growing demand for coffee belies some of the sector’s many challenges, which were raised by research organizations, non-profit organizations and sustainability advocates during the lecture series held within the Berlin event, as well as at the International Coffee Congress on Sustainability held the day before by the German Coffee Association in cooperation with the World of Coffee and organized by the Specialty Coffee Association.[iv]
Consumption and Demand Trends
Currently, coffee production is heavily concentrated among a select set of countries: only five countries account for nearly three quarters of overall production in 2015.[v] With consumption on the rise, the world will need at least 21 million more bags of coffee produced per year by 2031—a number that could double, or even triple, depending on growth trends.[vi]
Coffee production needs to diversify among more countries and producers to meet this demand, while ensuring that growth does not lead to severe environmental strain. This has proven difficult: despite the growth in coffee consumption, which is due largely to having greater retail options available, the production side of the sector struggles constantly with uncertainty due to years of volatile prices, along with the effects of changing weather patterns on coffee yields.[vii] Many coffee farmers, for their part, have a challenging time making ends meet, and in some cases find it too expensive to stay in the coffee sector at all. Some of these farmers, both in the world’s least-developed countries and in many emerging economies, still live in poverty.
Moving the sector toward a wider uptake of sustainable production practices in this landscape is thus a challenging but necessary task, despite the costs of investing in these practices. Speakers at two of the Berlin lectures found that there are some promising signs across different coffee-producing countries that speak to the interest in and benefits of moving in this direction.
Looking more closely at coffee production, recent figures suggest that the level of certified coffee has been on the rise in recent years.[viii] Coffee that complies with one or more voluntary sustainability standards (VSSs) can be identified by a seal or other type of labelling to denote that the product in question has undergone a process that is mindful of environmental and social impacts, as well as a rigorous VSS certification process. In the coffee sector, the main VSSs include primarily 4C, UTZ/Rainforest Alliance,[ix] Fairtrade and Organic.[x]
“Coffee is a particularly strong example of the potential for certified product,” said International Institute for Sustainable Development (IISD) Associate Laura Turley in Berlin while presenting the inaugural Global Market Report: Coffee. The report is published by IISD’s State of Sustainability Initiatives as part of a series devoted to providing a market performance overview for key VSS-compliant agricultural commodities.[xi],[xii] “The trends that we’ve noticed in this report is that the growth of VSS-compliant coffee outpaces conventional coffee growth. In this period, from 2008–2016, conventional production is down by 8 per cent, while VSS-compliant production is up by 24 per cent,” she continued, referring to the compound annual growth rates measured over that time.
While coffee consumption is on the rise, getting consumers to pay for certified coffee rather than conventional coffee is another challenge, with the demand for certified coffee often not matching up with the growing supply. In 2016, where the latest data is available, 34.5 per cent of the coffee market overall was compliant with at least one VSS.[xiii] This share may actually be even higher: up to 21.4 per cent of the coffee market may be compliant with one of these standards, but data limitations make it difficult to know for sure.[xiv]
The production of conventional coffee does not account for environmental and social costs, and therefore neither does its price. Conventional coffee therefore appears to be cheaper to produce than certified coffee, and thus have a lower price when being sold. Given that overall price environment for coffee, most farmers will often produce coffee at prices that are actually below their production costs.
Until end consumers are willing to pay the higher price for certified coffee, farmers who choose to meet VSS requirements can find it difficult to recoup the investments they have made in meeting those standards. There are also well-documented cases of certified coffee ultimately being sold as conventional coffee, which some research suggests could be a product of end consumers not being fully aware of the label and what it means, and therefore not willing to pay the higher price.xv]
“There seems to be an oversupply of VSS-compliant coffee, which is good for end-users, but for producers this is a real challenge: we’re making this effort, we’re taking these steps, but where is the demand? Who is buying this compliant coffee?” Turley said, describing some of the challenges facing sustainable coffee production.
Growing Interest in Sustainable Practices
According to sustainability advocates, the growing demand for coffee overall will need to be matched with a boost in consumption of VSS-compliant coffee, particularly given that the supply of this certified coffee is already on the rise. If these efforts are successful, they can have important implications for the social and environmental contexts in which farmers live and work, especially in countries that are facing a suite of developmental challenges, such as biodiversity loss, income inequality and environmental degradation.
“If this trend in VSS-compliant coffee continues to grow, then maybe we should look at the potential for low human development countries (LHDCs) and not just the top growing countries,” said Steffany Bermúdez, a data collection and analysis specialist at IISD who co-authored the Global Markets Report: Coffee.[xvi]
The Global Market Report: Coffee found that LHDCs represent 11 per cent of total coffee production, but the growth in VSS-compliant coffee production in those countries has been significant. The report showed a compound annual growth rate in VSS-compliant coffee of 19 per cent in LHDCs from 2008 to 2016, much higher than the growth seen in those same countries for conventionally produced coffee.[xvii]
“We know that there are existing challenges in developing this potential [in LHDCs],” Bermúdez added. Among these challenges are the high cost of certification, the multiple certifications available, meeting the “sometimes complex criteria for VSS” and the need for “supportive services” to implement these requirements at the farm level. Boosting demand for certified coffee across the value chain is also crucial, she said, as is dealing with the existing environmental challenges that many farmers deal with.
The multiple VSS certifications mean that farmers are often juggling several costly processes at once; at the same time, the number of certifications available does speak to the private sector’s interest in VSS-compliant coffee.
“There are a lot of other companies that are playing around with having some certified coffee, companies investing in their own systems and their own sourcing and standards systems, with the idea that it’s cheaper and more efficient than adhering to the existing standards systems,” said Sjoerd Panhuysen from Hivos, a Dutch-headquartered development organization devoted to social change. Panhuysen works with Hivos’s productive landscapes program and is the lead author of the Coffee Barometer 2018.[xviii]
“What we see in the sector is a lot of double, triple and even quadruple certification,” said Panhuysen in Berlin. “There are a lot of underlying, different standards, which are aligned with Fairtrade and Rainforest, and then you get double- and triple-certified farms.” Moreover, there is clear evidence of a gap between how much standard-compliant coffee is available at the producer level, relative to the volumes procured in practice by the buyer as standard compliant. That gap is growing, though the statistics are not sufficiently clear due to problems in recording data when multiple certifications are involved. One example, he noted, is that the figures for Organic coffee are believed to overlap by some 50 to 70 per cent with coffee that is certified under the Fairtrade standard.
Research by IISD’s State of Sustainability Initiatives has also highlighted the importance of making sure that new initiatives, including industry ones, have the necessary third-party overview and the appropriate governance structures in place, with stakeholders’ involvement from the standards’ design through to their implementation and audits.[xix],[xx]
Norbert Schmitz, of 4C, noted during a separate presentation that despite these challenges, there have been signs of how producing certified coffee can boost crop yields, farmer incomes and the implementation of conservation measures. This does not ignore the fact that certification has yet to live up to its full potential, as shown by farmer incomes not matching up with the efforts they make in producing sustainably, and the costs of implementing these requirements not being compensated by the market. Poorer smallholders often cannot undergo these certification processes, and certification audits are costly and difficult.
Farmers bearing the cost and risk of trying to produce sustainably must be able to sell their products at sufficiently high prices to recoup the costs of their investments and earn a sufficient profit; in addition, these prices must be consistent enough that they can make long-term business decisions. Cooperation and collaboration across the value chain will thus be crucial in addressing those challenges, so that this clear interest in VSS-compliant production, despite the associated difficulties, is not lost.
Adapting to Different Circumstances and Sharing Risks
Looking ahead, the challenges that are involved in transitioning to more sustainable coffee production practices cannot be addressed solely in the aggregate, and sustainability, while now a common term, actually can hold varying definitions depending on the starting point of the countries and coffee producers involved.
“Sustainability looks different wherever you are,” said Miguel Zamora, Director of Market Transformation at Rainforest Alliance, in Berlin.[xxi] More specifically, the challenges that farmers face in different countries, and therefore the solutions that need to be developed, will often vary, such as when it comes to improving land ownership and labour rights regimes in their respective countries. This holds especially true for LHDCs.
“What we have found in some of the challenges to help producers to become certified is that smallholders in Ethiopia and Uganda are small in terms of the land they own,” Zamora added. “That makes it more expensive to get them to trainings, to get the investment they need to be compliant [with these sustainability standards]. […] We want to make sure producers have the chance to choose the sustainability path that brings the most value to them.”
Growing coffee is an activity that is indeed fraught with risk: the coffee sector is famous for its price volatility, for example, with prices fluctuating regularly and, at times, wildly. According to José Dauster Sette, Executive Director of the International Coffee Organization, the ICO composite indicator price shows an “almost continuous drop” since the start of 2016, and that price in January sat at 32 per cent below the 10-year average.
The implications of this price volatility are damaging both for producers and for the coffee value chain overall, Dauster Sette said in Berlin. Not only does price volatility create an economic disincentive for coffee producers, but it has also been linked to increased migration from coffee-producing countries, especially in Central America; greater social unrest; the “pauperization” of rural areas; and environmental harm, due partly to producers being increasingly concentrated in certain countries.
Climate change is also making its mark on the sector, with multiple examples already demonstrating how changing weather patterns or freak weather events can hurt coffee yields or create marked differences in coffee quality.[xxii] This risk also tends to affect farmers first, rather than being spread out across the coffee value chain.
“What we see, when we talk about risk sharing, is that there is no risk sharing: the risk is pushed toward the farm at this moment,” said Panhuysen. While some research is trying to quantify the environmental and social risks that farmers face, those risks have yet to translate into an appropriately representative “price definition.”
“A farmer actually takes a certain amount of risk going into a trajectory to become certified, which comes back every year. It comes at a cost to the farmer,” who expects these efforts to translate into a better income, Panhuysen continued. The success of these VSSs requires that all stakeholders in the coffee sector are committed to the necessary capacity-building supports and measures, as well as trade relations, to ensure that farmers and the communities in which they live ultimately see improved livelihoods as well as working, social and environmental conditions.
Private and Public Sector Actions, Options: Looking ahead
Current trends confirm that there is a need to increase coffee supply to meet demand, especially in the near term, which will require expanding production beyond the traditional countries and actors to newer participants. Whether this will require the uptake of VSSs or other approaches, and what role certification will have in this context, remains to be seen. These are important questions to consider going forward. To ensure that this supply involves sustainably produced coffee, however, it is essential to find ways to make these production methods more profitable for farmers and draw in investments. It will also involve ensuring that the coffee produced is of high quality, and that farmers have access to both alternative income sources and to high-value market segments.
To ensure that farmers have the incentive to adopt more sustainable production methods, despite their costs, also requires making sure that consumers, including end consumers, show a higher demand for sustainable, certified coffee, rather than their conventionally produced equivalent. Sustainability advocates argue that this change in consumer preferences is vital to ensuring that there is a high incentive to produce sustainably, even with the level of investments required.
Mechanisms for sharing risks will also be vital, sustainability experts say, and require actors from across the value chain to take action. Governments must adopt practices and policies that provide an enabling environment for coffee production, especially sustainable production, to thrive. Among the options that are being debated by policy-makers is establishing a minimum price, which Ghana and Côte d’Ivoire have recently announced they will do with cocoa.[xxiii] Those governments have also pledged to communicate that price information to producers, among a host of other steps to address price volatility for that sector. Governments also have a role in developing legal and regulatory frameworks that support the uptake of sustainable coffee production practices, including when it comes to improving labour and environmental laws and practices, making it easier for female farmers to obtain credit and other productive inputs, and facilitating access to markets.[xxiv]
Another option could involve finding ways to ensure that farmers can cultivate larger plots of land, potentially making it easier to reap the returns of their investments and any support they receive. Tackling costs and mapping out the impact that certification has in practice will also be key, and some promising steps have emerged in this respect, such as the use of new technologies by 4C and Rainforest Alliance to capture information about deforestation and other key metrics about supply chain traceability and sustainability. These are just a few examples; context and collaboration are key to making sure the right tools are chosen for the right situation.
Some of the steps that the private sector can take include providing better support to smallholder farmers, improving chemicals management in production and pushing for biodiversity conservation, according to Nanda Bergstein, Director of Corporate Responsibility at Tchibo, a coffee retailer headquartered in Germany that sells products such as coffee machines. Tchibo is one of the top roasters and retailers globally, as ranked by Euromonitor.[xxv] Speaking in Berlin, Bergstein also raised the point that any private sector initiative would need to cater to farmer needs, rather than what the private sector assumes their needs to be.
The private sector has a role to play in ensuring that end consumers, as in those people that buy and consume coffee as part of their daily lives, show the necessary interest in buying more sustainable products, even if it means paying a higher price. The private sector also needs to consider ways to share some of this risk so that it does not fall solely or primarily on farmers.
Ultimately, the various challenges that the coffee sector faces —price volatility, climate variations, consumer preferences—make the road to adopting more sustainable production methods difficult. However, there is a clear interest in many developing countries, and the benefits could far outweigh the costs in the medium and long terms. The growing demand from non-traditional markets provides a clear window of opportunity for expanding coffee production into newer markets, including in poorer countries that already have some share of global coffee production. This transition, however, will involve the uptake of sustainable production practices in those newer markets, which will need to be adapted to those producer countries’ particular needs. It will also require new approaches to collaboration among value chain actors that focus on supporting farmers as they adopt these practices, thus averting environmental and social harm and ensuring that they receive the necessary returns on their investments.
Looking ahead, this collaboration across value chain actors will be vital in safeguarding against risk and in ensuring that the efforts of producing sustainably can ultimately reap the desired rewards. Communication channels will need to be open and experiences and ideas must be shared regularly among industry players. This should go beyond just the major players in the industry, such as the top roasters and retailers, to include everyone from smallholder coffee producers to government officials to baristas to end consumers. Transparency along all steps of the value chain could play an important role in changing consumer preferences, so that the end consumer is ultimately aware of the benefits of certified coffee and willing to pay that higher price point, whether at the store or at their local coffee shop.
[i] World of Coffee. (2019). Home. Retrieved from https://www.worldofcoffee.org/
[ii] Voora, V., Bermúdez, S., & Larrea, C. (2019). Global market report: Coffee. Retrieved from https://www.iisd.org/sites/default/files/publications/ssi-global-market-report-coffee.pdf
[iii] International Coffee Organization (ICO). (2018, October). Record exports in coffee year 2017/2018. Coffee Market Report. Retrieved from http://www.ico.org/documents/cy2018-19/cmr-1018-e.pdf
[iv] International Coffee Congress on Sustainability (2019, June 5). Home Retrieved from https://congress-on-sustainability.com/index.php
[v] Voora et al., 2019.
[vi] ICO, 2018.
[vii] Panhuysen, S., & Pierrot, J. (2019). Coffee barometer. Retrieved from https://www.hivos.org/assets/2018/06/Coffee-Barometer-2018.pdf
[viii] Voora et al., 2019.
[ix] UTZ and Rainforest Alliance were merged in 2017 under one certification.
[x] Voora et al., 2019.
[xi] Voora et al., 2019.
[xii] State of Sustainability Initiatives. (n.d.) About SSI. Retrieved from https://www.iisd.org/ssi/
[xiii] Voora et al., 2019.
[xiv] Voora et al., 2019.
[xv] State of Sustainability Initiatives. (2014). Chapter 8. Coffee market. SSI Review. Retrieved from https://www.iisd.org/pdf/2014/ssi_2014_chapter_8.pdf
[xvi] The term “LHDC” is a category from the UN’s Human Development Index, which ranks countries based on a combination of factors, such as life expectancy, education and national income per capita.
[xvii] Voora et al., 2019.
[xviii] Panhuysen & Pierrot, 2019.
[xix] State of Sustainability Initiatives. (n.d.). Credibility: Conformity assessment. Retrieved from https://www.iisd.org/ssi/credibility-2/
[xx] International Institute for Sustainable Development. (2019). Voluntary sustainability standards. Retrieved from https://www.iisd.org/topic/voluntary-sustainability-standards
[xxi] Rainforest Alliance. (n.d.). Home. Retrieved from https://www.rainforest-alliance.org/
[xxii] Panhuysen & Pierrot, 2019.
[xxiii] Government of Ghana. (2019). Ghana, Cote d’Ivoire sign agreement on cocoa. Retrieved from http://www.ghana.gov.gh/index.php/news/4512-ghana-cote-d-ivoire-sign-agreement-on-cocoa
[xxiv] Sexsmith, K. (2019). Leveraging voluntary sustainability standards for gender equality and women’s empowerment in agriculture: A guide for development organizations based on the sustainable development goals. Retrieved from https://www.iisd.org/library/leveraging-voluntary-sustainability-standards-gender-equality-and-womens-empowerment
[xxv] Euromonitor. (2017). Tchibo GmbH in hot drinks. Retrieved from https://www.euromonitor.com/tchibo-gmbh-in-hot-drinks/report
By Sofia Baliño, Steffany Bermúdez on July 17, 2019
Sustainability Programs, Livelihoods and Value Chains in Southern Sumatra, Indonesia.
This study explores the impacts of voluntary sustainability standards (VSS) on the livelihoods of coffee producers. The study takes a producer-centric view of VSS interventions in the southern Sumatran coffee value chain, including its interaction with producer livelihoods, and the perception of VSS among enrolled producers.
Attempts to address non-economic costs of production, particularly those related to local social and environmental concerns, by communities, government and industry, have relied on VSS to normalise good agricultural and social practices. But the dominance of lead firms over the coffee value chain means they are closely involved in the way VSS are rolled out across producer communities, without necessarily committing to appropriate levels of community consultation and involvement. This is important because of the purportedly large impact on producer livelihoods to arise from VSS enrolment.
The study comes at a time when global coffee production faces an existential threat from climate change, particularly in southern Sumatra, and the proportion of final coffee sales that are returned to producers remains small. This is indicative of the precarious livelihoods of coffee producers around the world.
The southern Sumatran highlands, which I define as the areas of the Bukit Barisan mountain range within South Sumatra and Lampung provinces (refer to Figure 1), are the major contributor to Indonesia’s total coffee production. Indonesia has firmly cemented itself in the world’s top four coffee producing countries, with the majority of Indonesia’s coffee produced by smallholders: family-run farms of one to two hectares. Mono-cropped plantations are very rare on smallholdings, with most producers choosing to include coffee in a mixed-cropping scenario. Despite these similarities, the quality of coffee produced varies wildly, presenting challenges for downstream buyers.
While the southern Sumatran highlands have supplied the world with cash crops for centuries (Andaya 1993), the governance of today’s coffee supply chain comes from major coffee exporters and roasters, usually based in the global north. The “value chain” describes the full range of activities required to bring a product or service from conception, through the different phases of production, delivery to final consumers, and final disposal after use.” Roasters are known as “lead firms”, and generally possess superior technical knowledge enabling them to dictate the conditions of production along the value chain. This typically requires the commodification of coffee, leading to stringent buying conditions, which in turn, influences growing requirements. Their influence is compounded by the absence of authentic group representation of Indonesian smallholders, beyond very small farmer groups of around 20 members, which have rarely developed beyond their original intent as distributary vehicles of government supports.
In Indonesia, the insubstantial contribution made by industrial scale coffee plantations and the absence of united producer representation may be attributable to the rugged, remote and tropical landscape that is typical of coffee production, combined with the specific political history of the area, which is referenced throughout the thesis. This geography also causes the value chain to be highly segmented between producers, small traders and transporters, and large traders and exporters. This segmentation allows major coffee roasters to hold superior technical and financial power, towards the end of the supply chain, which leads the governance of the coffee value chain to be strongly “buyer-driven”.
However, this dominance of the value chain has not shielded lead firms from two major challenges outlined at the outset; climate change and demonstrating social and environmental responsibility. Without changes to the way coffee is produced, Indonesian coffee supply is forecast to fail to meet increased demand from consumers, particularly in the context of a rapidly expanding domestic market. Sumatra acts as a major global source of Robusta coffee along with Vietnam and Brazil. While more resistant to warm weather, pests and diseases than Arabica coffee, Robusta is still susceptible to a warming climate. The second challenge is to provide adequate supports to demonstrate social and environmental responsibility by improving coffee producers’ livelihoods and preventing environmental degradation within their supply chain. The control of lead firms over the coffee value chain means they are increasingly held responsible for the social, economic and environmental conditions of production even when they are not proximately responsible.
These problems require solutions on a landscape-scale, and specific partnerships and cooperation between smallholders, their communities, governments and corporations. With a third, competing incentive to secure their supply in a hyper-competitive global market, major roasters and international traders have experimented with coffee value-chain interventions as a way of meeting all three challenges. VSS have been described as “instruments to translate the vision of sustainable development into concrete and practicable steps”. They may be developed by industry, civil society, the government or a combination of these to find solutions to specific problems, although the extent to which VSS is contributing to improved producer livelihoods continues to be debated in the literature.
This problem of accountability is a recurring theme of this study, which seeks to contribute to the literature by examining how VSS is used as part of corporate policy, and to examine their consequent impacts on producer livelihoods. The study details the interaction between these interventions, which have been rolled out across southern Sumatra with support from several large exporters, and the communities of southern Sumatra’s coffee producers. The study forms part of a broader push from civil society to compel good quality impact evaluation of sustainability standards at the producer level (Rangan et al. 2017).
Sustainability Standards in the Coffee Sector
Sustainability standards were first used in the 1960s, after Rachel Carson’s 1962 book Silent Spring acted as a catalyst for community awareness of the use of chemicals in food production. A number of small, independent organic certifications were established, firstly in the United States and then across Europe, before being unified by the International Federation of Organic Agriculture Movements (IFOAM). In the same period, growing awareness in developed countries of unfair agricultural trade rules between the global north and south led to the establishment of an “alternative trade organisation” in Europe. This included Max Havelaar, the precursor of Fair Trade. Community awareness of a number of differing labour- and environment-related challenges around the globe continued to grow, which saw the establishment of a variety of voluntary standards, including Fairtrade and Rainforest Alliance in the 1980s, and Utz Kapeh in 2002.
Undoubtedly due to the unique biodiversity of coffee producing regions and the generally low living standards of communities in these areas, standards were soon expanded from foods, to forests and to coffee. Coffee was first certified by IFOAM in 1995, by Fairtrade in 1997, by Rainforest Alliance in 1995 and by Utz in 2002. The emergence of these third party VSS was likely assisted by the end of export quotas imposed by the International Coffee Organisation’s member countries in 1989. This effectively ceded governance of the global coffee market to a non-stateregulated regime that persists today. Rainforest Alliance and Utz have recently merged, and while the market is crowded with VSS, the major third party schemes of IFOAM, Fairtrade and Rainforest Alliance have shown a remarkable persistence. In 2003, the German Coffee Association developed cooperation between representatives of industry, producers, trade unions and others to develop the Common Code for the Coffee Community (4C); a non-branded, internal VSS that encourages a “baseline” of social and environmental sustainability.
Today, sustainability standards are estimated to cover 55% of global coffee production – up from 40% in 2013 and while only 20% of global production is sold as certified, this still accounts for an annual value of $350 million. The inability of sales to match the supply of certified produce indicates a willingness among lead firms to continue their (financial) support of VSS despite limited market demand. This is part of a push to normalise VSS within supply chains for corporate purposes, potentially shifting the underlying intent of VSS away from its earlier concerns for labour and the environment.
In the eyes of its advocates (including lead firms), the application of sustainability standards to coffee production represents a major point of confluence between the increasing environmental stress on supply chains, consumer ethical concerns about coffee production and the economics of capturing and sustaining supply for lead firms in the coffee value chain. Organisations like the International Trade Centre have breathlessly promoted coffee as being “on its way to becoming the first sustainable agricultural product” (Global Coffee Report 2017). VSS are cited as being able to fill gaps in governance, because they can influence “all stages of the policy process: agenda setting and negotiation; implementation, and monitoring and enforcement”. For firms in the coffee value chain, VSS are used as a tool to reduce liabilities associated with perceived inefficient production, and to secure their supply through relationship building with producers.
The primary mechanism through which improvements are theorised to occur is through “upgrading”, whereby producers who participate in a value chain may acquire skills, knowledge or technology that can improve production. This may include upgrading farm management practices or processing capabilities, which are seen as crucial (among other requirements) to remove the worst quality practices and coffee from the supply chain. Such a broad goal requires explicit coordination throughout the value chain, which is proving difficult given its dynamism in the form of constant shuffling and takeovers of lead firms. This has frequently necessitated the re-introduction of concepts of improved social and environmental practices through process-related upgrading to new lead firms, making progress slow.
Despite this, the breadth of VSS roll-out (55% of global coffee production) offers potential for change at a landscape scale. A representative of Rainforest Alliance told me that 4C was becoming the norm in global coffee production and, together with Rainforest Alliance, offered a genuine opportunity to implementing change on a landscape scale. Some lead firms have claimed a desire to source 100% sustainable coffee, largely in response to pressure from NGOs. However, many continue to buy only a small proportion of final sales as certified. Even so, “the implementation, monitoring and impact of the industry’s inclusive 4C baseline verification system has hardly been investigated”, while the commitment of lead firms to sustainability of supply is yet to result in validated outcomes. It is ultimately this validated evidence of improved (sustainable) producer practices, improved livelihoods through increases in human and social capacities, improved natural resource management, and improved access to markets that will determine the success of VSS.
One barrier to the success of VSS is the often poor relationship between lead firms and producers, which is crucial for the success of upgrading. Upgrading through VSS relies on the longterm provision of training in good agricultural practices or their equivalent, but it is not always clear whether lead firms are willing to commit to this investment. Southern Sumatra is a case in point. JDE, the largest lead firm in the coffee supply chain, has withdrawn support for purchase of verified coffee and associated training, despite extensive prior investment by Mondelez, which JDE acquired in 2015. At the same time, other companies, like Nestle, have had a presence in southern Sumatra for over 25 years.
This has been enabled through a mechanism referred to as “strategic coupling”, whereby Lampung based exporters (in this case) have come to a commercial agreement with lead firms. The commercial benefits of strategic coupling accrue to both parties. The local exporting firms typically supply coffee exclusively to a given lead firm, and in return the firm has greater capacity to influence on-the-ground activities. In particular, training activities associated with upgrading stem from lead firm influence and demands on commodity specifications, not from lead firms (the latter view the training programs as a significant expense). Nevertheless, the prospect of more certain sales in a tightly competitive market is enough to encourage local exporters into these agreements.
Detractors attack the use of VSS by lead firms as “greenwashing” –the use of standards to manage reputation, quality and supply chain risk, rather than actively improving the livelihoods of enrolled producers or achieving environmentally positive outcomes. This is true for both private/internal VSS (such as Starbucks CAFÉ practices) and third party VSS (such as Rainforest Alliance and 4C), although this thesis focuses primarily on the latter. In the 13 years since Daviron & Ponte (2005) detailed the extent of control by lead firms over the supply chain, there is little to indicate these challenges have been met.
Recognizing the need for greater engagement with their producers, many lead firms are using VSS as a prompt to extend their direct influence further up the supply chain by establishing warehouses and training services in producer communities, where previously this role was outsourced to local firms and small traders. These firms are providing directives regarding quality management requirements directly to their suppliers at the farm-gate, through measures such as training and semi-formal contracts.
In the Sumatran context, VSS have had a long presence in the Arabica regions of Northern Sumatra, but there have been much lower levels of penetration in the Robusta regions of southern Sumatra. This is primarily because Indonesian Robusta is valued approximately four times less than Indonesia’s specialty Arabicas by global markets, making any VSS-associated cost premiums risky in a competitive market. Indonesian Robusta producers compete with counterparts in Vietnam, which is not only the world’s largest exporter of Robusta, but also has the world’s highest Robusta productivity at ~3.5 t/ha (although Haggar & Schepp (2012) note that this comes with extensive environmental degradation). There is certainly limited market access to be currently gained through verifying Robusta.
Despite this, demand for Robusta (particularly in Indonesia and emerging markets like China and the Middle East) is forecast to increase, prompting firms to search for ways to meet the shortfall. The perception of inefficient production of Robusta among Sumatran exporters has been a primary target. Given its aims of improving baseline levels of production (described in further detail below), 4C appeared well suited to improve production among southern Sumatran producers. As a result, lead firms and their local export partners in southern Sumatra made a concerted effort to introduce and normalize practices associate with 4C over the last five years.
Joshua G.P. Bray (2018). Sustainability Programs, Livelihoods and Value Chains in Southern Sumatra, Indonesia.
Jeff Neilson & Russell Toth (2016) Evaluation of the Early Impacts of Sustainability Standards on Smallholder Coffee Farmers in Lampung and South Sumatra, Indonesia; Demonstrating and Improving Poverty Impacts
Marketing Strategies to Increase Profits from Retailing Fair Trade Coffee
Corporate social responsibility (CSR) is a business strategy that is continuing to grow in popularity with consumers. Business managers incorporate socially responsible practices as a part of an organization’s strategy for sustainability, and as a marketing tool to attract and maintain consumers. CSR contributes to the likelihood of a consumer engaging in a long-term relationship with the firm.
Fair trade (FT) coffee is a commodity that emerged out of a movement to protect product pricing and quality by ensuring that farmers operate within fair labor conditions and compensation practices are provided to farmers. CSR can benefit financial performance, there is not enough information as to whether the CSR attributes of FT coffee represent a potential factor of consumer loyalty or preference. While consumers’ purchased traditional coffee exclusively for an average of over 15 years, consumers exclusively purchased FT coffee for a little over 3 years. In all locations in which Fairtrade International measures FT coffee sales increased by an average of over 20% from 2011 to 2012; however, during the same time, the collective FT coffee sales data showed a decrease of 36% in the United States (Fairtrade International, 2013). By exploring the experiences and insights of FT coffee marketing managers, I identified and explored themes that can assist marketing managers in understanding how to better market FT coffee, thus increasing the sustainability of coffee farmers and maintaining coffee business owners’ investment in (a) CSR, (b) triple-bottom line, (c) people-planet-profit (PPP), and (d) business ethics.
Many small business owners are ignoring the essential phase in the supply chain of knowing what business strategies they should apply when offering fair trade coffee. Business leaders spend an average of $28 billion dollars a year on corporate social responsibility (CSR) initiatives, such as triple-bottom line, people-planet-profit (PPP), and business ethics; however, many business owners are not getting a favorable return on their CSR investments. The general business problem is that consumer loyalty to fair trade coffee is low, negatively affecting the sustainability of the fair trade coffee market and CSR investment. The specific business problem is that some coffee marketing managers do not have well-defined strategies and decision making processes to successfully market fair trade coffee products.
While previous researchers have indicated that consumers value CSR initiatives and that coffee brands increased their sales by 10% when labeled as FT, there is not enough information to conclude that FT is a potential factor for consumer coffee choice. Exploring the lived experiences of FT coffee marketing managers might assist marketing managers in understanding best practices for promoting FT coffee to consumers. Researchers have mentioned the need for marketers to understand and consider the consumer’s perspective With knowledge of consumers’ perspectives, coffee marketing managers can make more effective decisions on how to better market the FT label brands of coffee, thus leading to increased sustainability of the FT coffee market.
Knowles, E. C. (2015). Marketing Strategies to Increase Profits from Retailing Fair Trade Coffee.
Mr. Rows Namoura Coffee 
Questions of Race In Coffee
Do a simple Google search of “coffee & race” and the first two pages of hits will be devoted to whether or not you should drink coffee before running a marathon. A search engine might not be the greatest indicator of what we as a culture are or aren’t talking about, but it’s a starting point. Today, there is a growing amount of discussion related to gender equality and the coffee industry, but race has yet to enter our common dialogue in the same way. Yet race is inextricably woven into the entire coffee supply chain, having historically given shape to the coffee trade as we know it, and continues to impact how it grows and evolves.
Race is difficult to talk about, and it is difficult to write about. It is so difficult that I debated whether it was something that I even wanted to take on, the task of writing about race seemingly too great, my white privilege perhaps preventing me from asking the right questions, or even worse, asking the wrong ones. But I believe that coffee can be a lens for looking at larger issues and that if we let that discomfort silence us, let it prevent us from asking questions, we keep ourselves from the discussions and actions that are essential to creating a cultural shift.
I wanted to start with my own questions to Phyllis Johnson, founder and president of BD Imports and an outspoken advocate for diversity in the coffee industry and beyond. Our conversation on race and coffee spurred a lot of new questions in my head, ones to continue to ask, not because they necessarily have answers, but because the act of asking them is a part of advocating for change.
This interview has been condensed and edited for clarity.
Race and coffee is not a common topic in the coffee community. Why do you think that is?
Racism and inequality are the most difficult topics to discuss. They are hot buttons in our political language. It’s not uncommon that it’s not a topic for us, in the coffee industry or in any industry. For me, as an African-American I grew up talking about race. Being a minority you feel the effects of racism. So it’s not a subject that’s foreign to me, but it is foreign in the mainstream society. Not so much foreign as uncomfortable really. I think sometimes when we talk about it, we get labeled as racist. We really need to move beyond that to be able to have honest conversations about how race impacts so much of what we do.
I have perhaps experienced a bit of this in talking about women’s rights, when instead of just being seen as someone asking questions, you’re criticized for criticizing the system.
You’re kind of ostracized. This is a horrible analogy that I often use, but talking about racism in social settings can be like placing a turd in the punch bowl. Everyone sees it, it’s disgusting, and no one really wants to call it out. But I think that people need to bring up things that aren’t so comfortable for everyone; we have to get comfortable discussing difficult subjects.
When you talk about racism, oftentimes people see someone spouting horrible things about people of a certain race. That one crazy uncle comes to mind. But that’s not really what we’re talking about. We’re talking about participating in environments where people are all the same, where there is no one that’s different than you and the team especially in high-level decision-making roles. You can argue the point that diversity is bringing a difference of perspective and I would agree with that. I also believe that a Latino, Black, Asian, whomever, will have experienced a different walk in life. The environment, earth, life, oppression–the wind has hit them from a different angle, and they are going to come in the room with a different perspective. Agree or not, it’s our physicality that causes the world to treat us differently, and we in turn have a different perspective. That is what we need to appreciate.
Race is an issue that impacts coffee across the supply chain. Let’s first talk about the coffee production. How is race an issue that impacts coffee from a producer perspective?
Coming into the industry in 1999, it was obvious to me that there were not many African Americans working in coffee. I felt like I really didn’t belong, and it may sound strange, but people really do need to see themselves in certain spaces to feel comfortable. You walk in, you look around, you say, “It’s OK for me to be here.” Even if you don’t know the person who aligns with you in the room, you at least know that the barriers have not been so great that people like you can’t get there. So you go in, you do a check and you say, “OK, it’s cool.” Well, for me, I went in, I did a check, it wasn’t cool; so I had to begin to search for where I might become connected to the industry.
My connections to coffee came from learning its history. Which, you know, isn’t a pretty story. But unfortunately, that was my connection. Once I understood that history, I said, “I belong. Not only do I just belong, but my presence here can be incredibly valuable.”
In 2006, I was traveling in Latin America, I had this epiphany when I was sitting in a truck, driving around looking at coffee farms. All of a sudden, I noticed something. I said to the guy in the truck, “Hey, the people picking the coffee, they don’t really look like you.” It was an uncomfortable question, but being a black woman who had grown up chopping cotton on a farm in Arkansas, to me this was a question that I needed to know the answer to. He said, “Well, they’re more Mayan, and I’m more Spanish.”
Tears came to my eyes, at that moment I actually had to go silent. I then realized that I was no longer the little black girl in the field chopping cotton, I had elevated to riding in the truck with the white owner and to me that was very sad, because my heart was there on the ground, but I was happy from my elevated point of view. That was one of my first glimpses of global racism in our industry.
Coffee, as you mentioned, has an ugly history of oppression and colonialism. When we think about those producers on the ground, do you find that the way we talk about them in the specialty coffee world reinforces racial and socioeconomic hierarchies?
We’re doing it for our own personal gain. We feel good about what we’re doing. Or that we tell people, “We’re doing this and you should purchase my product because you feel good about helping these poor people.” I think that when promoting farmers, we need to consider, it’s about empowerment and self-sufficiency. Do you seriously think that these farmers picking coffee beans have been sitting there and waiting for you to come along to save them? They are incredibly resilient and have often lived through travesties I shudder to even think of. The thought that what you’re doing, your small intervention, is completely saving their lives, is a disservice to them and to you.
We have to stop presenting black women and children as the poster child for poverty. I think that is a disservice to us because there are really hurting people who don’t fit that profile who are just as bad off, and they are hidden because global society doesn’t view them as being the poster child.
On the consumer side, there are so many ways that race impacts the industry, but one thing that comes to mind is the topic of class and race. With its high price tag, do you think that specialty coffee has come to represent a certain social status? Does this in turn push certain communities out from enjoying it, even if they can afford it, because they don’t identify with it?
I do. Because of the lack of diversity in ownership of cafes and working in cafes. Gentrification as well doesn’t help bring black and brown people into cafes. In gentrification you have folks coming in, doing things differently in a way that can often antagonize existing communities. If I have lived there for years and years and all of a sudden I am being pushed out, I’m not going to say, “Hey, let’s go up to this new cafe!” because my mindset is, “That cafe is really for them, it wasn’t here before they got here, they’ve created the cafes for them.”
You know, most black people are conversational. If you say coffee shops are really for interactions, meeting up with friends, networking, working on your laptop, enjoying great coffee, etc. I don’t know what people on earth who don’t like doing that stuff. Black and Hispanic people like getting out of the house too.
We can hide behind “the price is too high” but it’s also the environment. Environments have to be nurturing, environments have to feel good on you, and that’s not happening. Should we leave it to white people to figure out how to create cafes that are comfortable for people other than themselves? Maybe not, maybe that’s asking too much. That in itself is the reason why you need diversity, at the retail level.
That’s interesting, because even if you’re in specialty coffee, usually we come to coffee because we all have some story or emotional attachment to a moment in time and space with people that involved coffee. If you don’t have any physical or emotional connection to that thing, why would you have any interest in consuming it?
Exactly. I enjoy drinking my coffee every morning not just because it tastes good, but because I know who grew the coffee. I think about Pauline in Burundi organizing the farmers in the rural communities, training them to select the cherries, and Isabelle tasting the coffees and providing feedback on ways to improve the production. I also think about my friends at Bunn when I use the brewer. When I drink it, I’m inspired. I am thinking about our shared interest in life, hope, ambition, and change and all of these things floating around in your head that give good energy; it’s so much more than just a cup of coffee.
So it’s not that the coffee in and of itself is bad, it’s that the coffee represents a bad system and coffee becomes the thing that embodies all of that, which then makes that cup of coffee a very loaded thing.
Coffee has been and, unfortunately in some ways, still is a vehicle for racism and unbalanced and inequitable relationships throughout the supply chain. We can’t glamorize altitude, varietals, and all the new inventions without addressing the history and its present effects of this product. To look at the heaviness of it and try to untangle some of that, that’s where the real work is and the real value is.
I admire the way that the barista community is starting to dig deeper. I didn’t think it would be them to say, “something’s got to change.”
Why didn’t you think that it would be them?
I was not connected to them. I’m always fighting the fight from where I am in the supply chain, working with farmers, fighting for gender equity. I have truly been enlightened that baristas are also in a vice that makes them speak out and they are living at a time where they have the right tools to have a voice.
The only thing that I would advise is that for those who are oppressed or feel the weight of oppression: systems have been in place for a long time, our entire structure is built on racism and oppression. It’s so ingrained, you have to work hard to see it, but when you start seeing it, you can see it and you can start to think differently. But you can’t take a system that is so old and so stabilized and tear it down quickly; you have to commit yourself to be a participant of change, knowing that it’s going to take a while.
Yes, we all have a role to play, and to accept that there’s an enormous problem at hand and ask ourselves how we each individually work on a daily basis to change that. We have to think—what are the things that we experience on a daily basis that may seem small and insignificant but are actually a part of that whole structure that keeps this system in place?
I think a perfect example is my friend Miriam Monteiro de Aguiar, estate owner and manager of Fazenda Cachoeira. She is a seventh generation coffee estate owner and is the first woman to be in charge of the farm. When I met her she said, “I’m from Brazil,” and I said, “Oh shoot… what about slavery in Brazilian coffee?” I just threw it out there. She said, “Phyllis, I’ve always wanted to engage Afro-Brazilians in coffee, that has been a dream of mine.”
She and I began a conversation three years ago that has taken us on an incredible journey.
Her farm was known to have had slave labor and that was one of the first things she said to me. When I visited her recently, I slept in the room that her 90-year-old father was born in whom I had the pleasure to meet. I stayed up most of the night looking out the windows and wondering what life must have been like during the time of slavery.
Miriam said, “When I took over the farm, me, my husband, and children, we felt a heaviness, and before we could move on, we had to come to grips with our history. We needed to acknowledge what happened here, show respect for all those who labored here.” Her daughters are just amazing; they are saying things, they are doing things, to engage the Afro-Brazilian community. We were sitting in her kitchen and talking about racism as openly as one can imagine. Miriam shared the insights of her daughter, that maybe her ancestors were afraid of the greatness that existed in the laborers.
I had never talked about racism at such a deep level with anyone who wasn’t Black and just the opportunity to exchange at that level, I wish that everyone had that opportunity. I owe my good friend Josiane Cotrim Macieira, an incredible woman who has led gender equity programs in Brazil a lot of respect. She listened intently when I talked about racism in coffee outside of my home and community. She listened and acted. Together we have both grown tremendously. The door to gender equity in coffee allowed me to engage in the conversation of racism and coffee with a broader audience.
Do you think that Miriam is able to be that open because she has acknowledged the history and chosen to come to terms with it and move forward instead of masking over it?
Exactly. We went to visit Neide and her husband Roberto Paxoto, the only Afro-Brazilian farm owners in Miriam’s region. Miriam knew they lived not far away but had never visited the family. Neide showed us around her family farm, told us the story of how they became landowners through sharecropping; she knew of no other Afro-Brazilian families who owned land in the southern part of Minas Gerais region. Later in the year, Miriam invited her back to her farm for quality training, Neide ended up winning the quality competition locally after the training that Miriam helped her with. Neide and her family have never been able to sell their coffee into an export market, but that looks like a near future reality.
That’s the importance of asking questions and digging deeper about where we source our ingredients from. What if I had not asked Miriam about the presence of Afro-Brazilians in coffee today and the history of slavery? I’m just one person. Think of the outcomes if we had major players engaged in bringing to light previously unacknowledged disparities. We run away from talking about racism in coffee like the plague. It’s not good for marketing, “I had nothing to do with that.” There are plenty of reasons to ignore this history.
So if we could more freely ask these questions that would allow us to move forward?
Yes, because I think something starts within yourself and others when you start asking questions. For me, it started at home and in my community and today I’m talking to you and your readers. That’s cool.
You don’t have the answers, I don’t have the answers. When you start asking questions, that opens the door for future exploration and eventually action to address the problems seen. It’s not to “call people out” but really to just to ask, “why”, “how”.
Everybody has a perspective and that’s the loss in not having everybody engaged in the supply chain. That’s a loss to everyone because you’re not hearing the multitude of perspectives and letting them learn from each other. We have to move beyond lip service to diversity. It’s an opportunity to grow for everyone involved.
Anna Brones (@annabrones) is a Sprudge.com staff writer based in the American Pacific Northwest, the founder of Foodie Underground, and the co-author of Fika: The Art Of The Swedish Coffee Break. Read more Anna Brones on Sprudge.
Top photo by Lanny Huang for Sprudge Media Network, from the feature “At The Coffeewoman Panel: Building Influence And Changing Power Structures“.
Additional photos courtesy of Phyllis Johnson and BD Imports.
Source: