How UTZ Certified Is Moving the Bars

How UTZ Certified is Moving the Bars

Management response to the KPMG 2013 evaluation “Moving the Bars – sustainability brought to the forefront in the cocoa chain” of the Solidaridad, IDH (The Sustainable Trade Initiative) and UTZ Certified Cocoa Improvement Program 2008-2012

Amsterdam, 16 July 2013

www.utzcertified.org

Scaling up sustainable cocoa

Backgrounds to the evaluation

From 2008 til 2012, together with Solidaridad and the Sustainable Trade Initiative IDH, UTZ Certified implemented a dedicated Cocoa Improvement Program (CIP) in Côte d’Ivoire, Ghana and several other countries, especially designed to scale up the production of sustainable cocoa. An important feature of the CIP is that it bundled efforts of key players in the cocoa industry.

After completion of the program, the three partners commissioned an independent evaluation to KPMG Advisory Service to gain insight in the effectiveness of the program in Côte d’Ivoire and Ghana. This evaluation, which looked at the sector and chain as a whole, can be considered as a complementary effort to the farmer level impact studies, which are currently being undertaken in the same countries.

The study relied mainly on a qualitative assessment of documentation and of input, given in the form of surveys and interview by organizations involved in the implementation of the program in Côte d’Ivoire and Ghana. A framework of specific, measurable criteria was developed, against which the data coming from internal documents, interviews with key stakeholders and other sources could be triangulated.

For UTZ Certified, being a sustainability standard and program, the CIP was especially valuable in developing and fine-tuning a standard and certification system for responsibly produced cocoa as well as in facilitating traceability along the supply chain. For this to happen, building local capacities for training and certification was essential, as well opening markets for sustainable cocoa. The cooperation with IDH and Solidaridad proved of invaluable importance to make this happen. As an accelerator of the program, IDH played a key role to enable the program. The expertise, network and work of Solidaridad were essential in the implementation, ensuring that producers, traders and other stakeholders in the producing countries joined the program and received guidance and training. The main findings

The report gives valuable insights in the achievements of the program and at the same time indicates where lessons were to be learned.

Achievements  The study has found that the Cocoa Improvement Program has contributed to making the cocoa industry more sustainable. Thanks to the program, sustainable practices and products have been implemented along the whole supply chain. This was made possible by significant and long-term private sector participation in the program. Increasingly, sustainable production is being considered by the industry as the default option.  The Cocoa Improvement Program has triggered substantial private sector investments to make the cocoa supply chain more sustainable.  The UTZ Certified code of conduct and chain of custody fulfilled the need for a flexible, focused and pragmatic sustainability standard, enabling the uptake of larger volumes.  The program helped to create a more enabling environment and to mainstream sustainable cocoa production. Sustainability in cocoa production has become a license to operate.  The Cocoa Improvement Program has helped to make farmers more professional.

 By the end of 2012, 151,000 producers were certified in CIP countries, with an estimated volume of 414,000 tons. Between 2009 and 2012, an estimated USD 19 million was paid in premiums in Côte d’Ivoire alone.1

Recommendations  Improve the monitoring of farmer benefits and other key targets  Improve the understanding of the differences between volumes produced, volumes certified and volumes actually traded as certified, and establish the root causes for the differences.  Develop pathways to increase uptake by: o furthering market development, o developing strategies to address issues of multi-certification (producers adhering to more than one certification scheme), o and continuing training to improve cocoa quality.  Protect certification assets: increase the robustness of systems and controls to more firmly mitigate risks of fraud or other factors that could undermine the reliability and impact of operations.  Focus on ‘additionality’ by: o stressing the business case for commercial companies under specific conditions (e.g. premium payment and productivity increases as result of good agricultural practices) o creating the right conditions to make remote farmers more ‘certifiable’ over time by investing in group forming, o training young (potential) farmers and improving rural infrastructure (e.g, access to finance, roads, training centers).  Support income diversification: to protect farmers against extreme price fluctuations, developments like growing multiple crops or – in certain cases – building processing facilities can create more stable farmer incomes.

UTZ Certified’s response and next steps

UTZ certified fully endorses the achievements highlighted by the KPMG study, such as the impressive uptake and growth of the program. We acknowledge the important role played by the private sector, IDH and Solidaridad in making this sector-wide transformation possible, and are keen to continue cooperation with both organizations, as is already happening in various forms and ways. Above all, UTZ Certified recognizes the efforts made by thousands of producers, cooperatives and traders in adopting and promoting the sustainable farming and management practices that form the basis of the transformation.

Improve the monitoring of farmer benefits To improve the monitoring of impact at the farmer level in cocoa, UTZ Certified has commissioned two independent impact baseline surveys for cocoa in Côte d’Ivoire and Ghana, in partnership with Solidaridad and IDH. Local stakeholders are collaborating with this research. These rigorous baseline studies include control groups of non-certified producers and are carried out by Wageningen University/LEI. They will provide a benchmark against which the outcomes of certification can be measured in 2015. The baseline reports are expected in the second semester of 2013 and will be shared with the stakeholders who are training and supporting the smallholder producers, so they can strengthen their programs. In addition to independent impact studies UTZ certified is investing in developing its overall Monitoring & Evaluation system and aligning a core set of indicators with other ISEAL standards and key actors.

1 Numbers may slightly deviate from other UTZ Certified reporting on global figures, as CIP did not cover all countries where UTZ Certified programs were implemented.

Understand the differences in volumes produced, certified and traded To increase transparency and develop a better understanding of the differences between produced, certified and traded volumes, UTZ Certified is implementing new collection data points within its traceability system, the Good Inside Portal. This will provide more information on actual production volumes, volumes sold to producer groups by smallholder producers and the division of certified volumes sold by producer groups through the supply chain (i.e. UTZ, conventional, or other label, in the case of multi-certification). The new system launch and start of the data collection progress is planned for early 2014. While improved monitoring will help, the difference is also influenced by contextual factors, which will require additional research to fully unravel the complexities. UTZ Certified is currently piloting a study in East Africa that addresses the gap between certified coffee volumes and what is sold as UTZ certified through the supply chain. The report is expected in September 2013. This type of study will be adjusted and developed for further research into cocoa volumes.

Develop pathways to increase uptake On the demand side, UTZ Certified’s market development strategy has broadened its scope. For Europe this means a focus on Germany and France to raise awareness for sustainable cocoa, communicate the long-term goals and results of the program and work with the industry to expand the market for sustainable cocoa. In Germany, UTZ Certified already has built a strong foundation and network, while in France, the UK, Spain, the Netherlands, Switzerland and other countries more and more UTZ certified products are found on shelve. In addition, UTZ Certified created a dedicated team to work on new UTZ geographies as the USA, Asia and Australia based along the same strategic pillars as for Europe, but adjusted to local market circumstances.

Regarding the disadvantages of multi-certification, since its very start, UTZ certified has worked with third- party certification bodies. This approach gives ample opportunity for farmers to be audited for various standards in one go. This is already the case in some regions with Organic, which has the same model. We are exploring pathways leading to joint auditing in cocoa with Rainforest Alliance within the next two years.

The UTZ Certified program is and will continue to train trainers, prepare training materials geared at compliance with the code of conduct, and work closely with training networks in the producing countries.

Protect certification assets In close cooperation with stakeholders, UTZ Certified has recently assessed how the overall robustness of its certification program can be further strengthened. For this purpose UTZ has launched a dedicated `Cocoa Credibility Project` in June 2013. This project will run until May 2014, and will assess credibility risks related to the UTZ cocoa certification program that may arise, including those mentioned in the KPMG report.

Focus on ‘additionality’ While UTZ Certified only works with smallholder cocoa farmers in the countries studied, it is true that most current private sector led programs have reached the more organized (and mostly male) producers in relatively accessible areas. With most of these producers now being integrated in sustainable supply chains, there is an urgent need to reach out to those in less favorable positions, the less organized and less accessible small-scale farmers as is already happening in the over 15 UTZ Certified projects, involving formerly unorganized farmers today. Also, various UTZ partners are now working towards inclusion of formerly unorganized farmers in their sustainable supply chains. UTZ Certified is exploring various ways to enable and support this important development, including the option to set up a dedicated facility to strengthen the position of less organized smallholders in the cocoa and coffee value chains in selected countries, by facilitating access to professional local service providers and capacity builders, as well as facilitating access to markets on the basis of UTZ certification.

Support income diversification UTZ Certified considers certification to be a tool towards sustainable farming, rather than an end in itself. We recognize and value that many partners promote certification as a component of broader interventions, aiming at improved food security and income diversification, amongst others. UTZ seeks complementary partnerships that will enable interventions that aim to create a more enabling environment for cocoa farmers and increase their range of options and thereby support UTZ Certified in its mission to create a world where sustainable farming is the norm rather than the exception.