From Bean to Cup the Impact of UTZ CERTIFIED on Coffee Growers

From bean to cup The impact of UTZ CERTIFIED on coffee growers

www.utzcertified.org Contents

A Better Price for a Better Product 3

Economic results 7

Environmental effects 11

Social improvements 15

The results for the farmers 19 A Better Price for a Better Product UTZ CERTIFIED is one of the largest sustainability programs for coffee, cocoa and tea in the world. In its endeavor to make supply chains more sustainable, UTZ CERTIFIED has adopted a practical approach: working together with major companies that source large volumes of raw materials. This way, UTZ CERTIFIED can make a difference at a fast pace for large numbers of farming families and communities across the world who grow the raw materials. UTZ CERTIFIED activities focus on reinforcing the farmers’ position of independence and at the same time enhancing their entrepreneurial skills. By improving their agricultural practices, the farmers achieve a higher yield per hectare of land and produce a higher quality crop each harvest. This way, farmers earn a better price for a better product. Moreover, farmers who are UTZ CERTIFIED negotiate an additional premium on top of the price that they receive for their harvest.

In the Netherlands, brands like Albert Heijn, Douwe Egberts, IKEA, De Ruijter, Chocomel and Mars have attached their name to the UTZ CERTIFIED program. As a result, the range of sustainable products on supermarket shelves is increasing with leaps and bounds. Already, nearly 70% of Dutch households have one or more UTZ CERTIFIED products in their pantry. When a brand enters into a partnership with UTZ CERTIFIED, the product is closely monitored throughout the entire chain, from the field to the supermarket shelf.

De Ruijter is om op te eten!

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 3

Code of Conduct At the very foundation of the program, one finds the Code of Conduct: a set of social, environmental and economic requirements for sustainable production. The Code is based on the principles of international agreements like the ones formulated by the International Labor Organization (ILO). Participation in the program is only possible after an independent, third-party auditor has ascertained that the farm meets the sustainability requirements. Training and operational support are used to help farmers raise their standards. Every year, farms are revisited on location by an auditor to ensure the Code of Conduct is adhered to.

Field study in six countries In order to gain further insight into the results of the UTZ CERTIFIED program, Universidad del Istmo (UNIS) in Guatemala has coordinated a field study focusing on ten farms and cooperatives that work together with UTZ CERTIFIED. This study was conducted in six countries, namely Vietnam, India, Kenya, Guatemala, Colombia and Brazil. The research makes it clear what farmers’ expectations are with regard to certification by the UTZ CERTIFIED program and to what extent the certification actually improves the lives of these farmers, their employees and their families. The changes that the sustainability program focuses on can be categorized into economic results, environmental effects and social improvements.

Methodology Ten certified producers – both large-scale farms and cooperatives made up of small- scale farmers – were selected in six countries that are important for the production of UTZ CERTIFIED coffee (Vietnam, India, Kenya, Guatemala, Colombia and Brazil). Within each co-op, interviews were held with a group manager and a number of group members. Independent consultants, selected on the basis of their knowledge of coffee production and sustainability, interviewed the farmers about their reasons for taking part in the program, the changes that were implemented and the advantages of and challenges experienced with the program. The main objective of the study was to gain better insight into farmers’ experiences with the UTZ program; the results are consequently based on the stories of individual farmers.

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 5

Economic results Virtually all farmers who participated in the study indicate that the requirements set for certification by UTZ CERTIFIED have improved their business operations, leading to higher returns at lower costs.

Improved productivity Thanks to training in better production methods, farmers are able to increase the volume of their harvest. The farmers of the Phuoc An Coffee Company and Thai Hua Company in Vietnam explain that training in good agricultural practices is an important motive for taking part in the program. At the Well managed nursery cooperative San José el Obrero-Fedecocagua in Guatemala, one of the members has even managed to triple the harvest due to the improved production methods: from 1,650 lb. in 2006 to 5,500 lb. in 2009.

Improved quality Besides a higher yield, the farmers are also able to improve the quality of the harvest. This is due to the fact that, for Sorting example, farmers pick a great deal less of unripe coffee cherries and bring the picked cherries to the processing plant within a shorter period of time. By subsequently sorting the harvest according to quality, the farmers are able to increase their revenue. At the farms and co-ops in Colombia, Guatemala and Kenya, the quality of the coffee has been improved by investing in the renovation of the processing facilities. In addition, the staff have been trained to safeguard hygiene and quality.

Example of good agricultural practices: mulching

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 7 Farmer field book Improved access to the market For the farms and co-ops in Guatemala, Colombia and Brazil participating in the study, market access has also improved as a result of the UTZ CERTIFIED program. In India, at The Amalgamated Bean Coffee Trading Company, the certification program primarily helped to tap new markets in Europe and to improve the relationship with existing clients. ‘UTZ certification improves our market share,’ explains Thomas Mathew, Senior Manager at the Indian coffee company that was the first coffee producer in India to be UTZ CERTIFIED (November 2003). Moreover, commercialization and a better market position have led to improved cash flow. Since the coffee is turned over quicker, the company can also make investments at an accelerated rate, which in turn leads to further improvements and growth.

Lower costs Revenue is not the only aspect that improves as a result of farmers supplying more and better quality produce. The farms which were studied also report they are able to reduce costs. For example, the co-ops in Colombia and Guatemala make more efficient use of fertilizer. At the farm Los Cerros in Guatemala, applying the appropriate doses at the appropriate moment has led to a cost reduction of 25%. At Cooperativa Anserma in Colombia, producers reduced fertilizer costs by using fertilizer plans and intercropping with plantain. For example, one of the producers saved US$ 39 per ha by fertilizing twice a year applying 100 gram per tree instead of three times a year with 80 gram per tree. Healthy soil due to intercropping

Farmers have noticed that buyers value the UTZ CERTIFIED label. They know that the production meets the requirements of a global standard, which results in improved sales opportunities. ‘The certification enables us to produce high-quality coffee that complies with social, economic and ecological standards,’ says Silvio Rios of the Anserma co-op in Colombia. ‘Certification has facilitated professionalization on the farm, which has allowed us to obtain higher quality products.’ For Rianjagi in Kenya, the percentage of coffee of class 3 & 4, which fetch better prices, has increased above 80% since certification, unlike 2006/2007 when they only produced 26,1 % of class 4 and no class 3 coffee.

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 9 Waste water filtration pond Protection of water streams

The water circulation in Guatemala Environmental effects Cleaner and less water use Processing of coffee often consumes sizeable quantities of water and produces a large volume of waste water pollution. For this reason, the UTZ CERTIFIED Code of Conduct makes it mandatory for the producer to protect water sources and to treat the contaminated water coming out of the wet processing unit. The interviewed farmers explained that waste water is currently collected Composting, large farm, Brasil and filtered instead of being flushed away. The residue that results from coffee processing, the pulp, is collected and turned into compost that can be used as organic fertilizer for the farmland. The farmers at Phuoc An Coffee and Thai Hua in Vietnam, who at the time of the field research were busy collecting the compost, tell the researchers that the compost makes the coffee fields healthier.

The minimization of water use in the process is another criteria of the Code. The Rianjagi Coffee Farmers

Cooperative Society in Kenya has been UTZ certified since Composting, small farm, April 2008. The co-op has 1,373 members. According Guatemala to the co-op, the water consumption of the coffee processing plant has been reduced by an average of 25%, through the collection, purification and recycling of waste water. The waste water is purified with the aid of micro-organisms. In Finca los Cerros in Guatemala, water re-circulation has reduced water use in the processing facility from 2,000 liters per quintal (100 pounds) of parchment used in the traditional system, to 150 liters using this new technique.

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 11 Separation of waste

Worm composting Reduced use of pesticides and herbicides Another major environmental outcome of the program is the reduced use of pesticides and herbicides. Phuoc An has been UTZ certified since 2005. Like its fellow coffee producer Thai Hoa-Lam Dong Limited Company (certified since 2007), this Vietnamese coffee farm currently relies on improved techniques to keep a check on harmful insects and diseases. Farmers are trained in the use of efficient methods to control pests and diseases. According to the farmers, this has led to a strong reduction in the use of chemical products. This is also the case with the co-op Anserma in Colombia who manages weeds by using natural and selective methods.

Less waste The reduction and sorting of waste is another important point of attention for the farms and co-ops. Enrique Villada, who works within the co-op Anserma, indicates that good waste management yields economic and ecological benefits. ‘Nowadays, waste is no longer treated as waste, but recycled,’ he explains. For the reuse of the coffee pulp to produce fertilizer, the co-op uses a composting method that involves earthworms.

More trees and shrubs Planting trees and shrubs is important to prevent erosion and improve the structure and fertility of the soil. The studied farms and co-ops have planted trees to prevent streaming water from causing soil erosion. Furthermore, Finca Borneo in Colombia presently uses gas instead of wood for its cooking, so that trees are no longer cut down for fuel. The producer estimates that the number of trees found at the Colombian farm has Cooking ladies with gas stoves increased by 80%.

An additional advantage of tree planting identified by various producers is that they create shade and improve the soil’s fertility. For example, by planting trees and growing coffee together with other crops in the same soil, one of the farmers has managed to reduce his use of fertilizer and associated costs by 25%.

A majority of farmers indicate that their increased attention to the environment also has an impact on their immediate surroundings: thanks to the new sustainable production methods and the planting of trees, birds have returned to the farms and the rivers are considerably cleaner. Conservation area

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 13 Health and safety training Social improvements Increased opportunities thanks to education To improve social conditions, farmers and laborers receive training in a number of areas. At the farm Rancho Fundo in Brazil, training participation is even rewarded with higher wages: those who successfully complete a program receive a raise. In the management’s experience, staff with a diploma can work more efficiently. Moreover, training enables employees to improve their career options. Another Brazilian farm that was studied, Ponto Alegre, has set up projects in partnership with local trade unions to improve the computer skills of the employees and local residents, increasing their opportunities in the labor market. At Rancho Fundo in Brazil, the recruitment of female employees is encouraged and women are trained to work as a tractor driver or in some other traditionally male-dominated job. In all the studied cases, children of farmers and laborers have access to education. For the producer groups, awareness raising has been important to change traditional ways of working. One of the producer groups in Guatemala explained that members are now aware of child labor issues and incentives have been created to stimulate school attendance.

Improved health and safety At all the studied farms and co-ops, farmers and their families are provided with healthcare. Furthermore, the mandatory use of protective clothing and access to first aid facilities considerably improves the level of safety at the First aid facilities farms. In addition, according to the studied companies, the sanitary facilities and housing facilities for the laborers have improved strongly. The farmers and employees of the Rianjagi Coffee Farmers Cooperative Society in Kenya attend information programs about HIV and AIDS prevention. Such changes increase the motivation of the farmers and employees: they are proud of the company they work for. The farmers of the Rianjagi Farmers Co-operative Society Limited in Kenya are proud of their renovated factory, where they produce coffee of high quality.

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 15 “UTZ CERTIFIED has meant a significant step forward in our efforts to address the issues of better returns for the grower community, while bringing out a product that suits the present and future needs of our business environment.”

S.R. Hussain, Quality Systems Manager

“When I became aware of the possibility to become certified, the farm had cash flow problems due to low productivity. I saw it as a good opportunity to start a process of improvement on the farm. Thanks to the documentation required for certification, we now have historic records that allow us to take better decisions and evaluate the economic performance of the farm.”

Silvio Ríos, Cooperativa Anserma, Colombia

“The Code has many of the same objectives as we have for the farm, e.g. to produce high quality coffee, to receive better prices for our coffee, to be a front-runner in coffee production and to conserve the environment of the farm.”

Enrique Villada, Cooperativa Anserma, Colombia

“With the certification we can produce more coffee that meets the quality levels that today’s buyer demands.”

Omar Orozco, Cooperativa Anserma, Colombia

“The requirements of the program are well adapted to the logistics of production on a coffee farm.”

Manager of Finca Borneo Challenges To be able to satisfy the requirements of the UTZ CERTIFIED program, the farms occasionally need to take far-reaching measures. During the interviews, farmers named various factors that hamper the certification process. Particularly, the constant quality control involved in the sustainable growing of coffee and the administration entailed by an internal control system require farmers to initiate a significant change. But also the requirement to work with improved storage facilities for agrochemicals, a water recycling system and the annual external inspection have a profound impact on daily business operations and can involve extra expenditure, both in terms of time and money.

To ensure that a healthy balance is maintained between income and necessary investments, the Code works with a four-year stepwise improvement system. In the fourth year of operations the farmer needs to satisfy more requirements than in the first. This way the farmer with the UTZ certification label can continue to operate as an independent and autonomous entrepreneur.

Conclusion The performed studies offer insight into practical and concrete changes that have been realized as a result of UTZ certification in six different countries. Farmers indicate that it is not always easy to obtain certification, but that they have observed major improvements in the productivity and overall health of the farm as a result. Better agricultural practices and a better planning have led to improved operational management, cost reduction and a better quality product. The results also clearly show the extent to which social, economic and environmental improvements are interwoven.

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The results for the farmers The expectations held by the farmers when enrolling in the UTZ certification program have for the most part materialized. The key findings of the study are:

Economic • Increased productivity; • Lower costs as a result of the reduced use of herbicides and pesticides and artificial fertilizer; • Better quality coffee thanks to improved harvesting methods; • Better management of the farms themselves thanks to improved documentation; • Improved quality and higher income thanks to better prices; • Additional sources of income, for example the sale of coffee pulp as fertilizer and the branches of the shade trees as firewood; • Improved cash flow accelerates the growth of the company.

Ecological • Less use of water in the production process thanks to reusing water through a recirculation system; • Less water pollution thanks to filtration methods and the reuse of coffee pulp; • Improved protection of water sources; • Reduced damage to the environment as a result of the improved disposal of waste and agricultural chemical residues; • Increased fertility and improved soil structure of farmland thanks to the combined cultivation of crops and the planting of trees; • Reduced waste thanks to recycling.

Social • Co-op members and employees receive better training in agricultural methods, product quality and food safety; • Better housing, clean water, electricity and improved sanitary facilities; • Improved access to schooling and healthcare; • Safer and healthier working conditions thanks to training, instructions, protective clothing and equipment and improved access to first aid; • The quality of the laborers’ job has improved. They receive higher wages and bonuses and feel more appreciated; • Thanks to better social conditions, it is easier to hire laborers. They work more productively and their output is of a higher quality.

From bean to cup | The impact of UTZ CERTIFIED on coffee growers 19 so you know your product is Good Inside

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