Coffee industry sustainability standards

Sustainability principles address food protection, financial, legal, and social problems that businesses use to assess corporate efficiency. Sustainability criteria and certification are a critical tool for fostering both sustainability and accountability in the manufacture of a wide range of market demands. Sustainability certification contributes to improving the global production bar. According to Von Hagen, Manning, and Reinecke (2), sustainability is the success of firms because they are in harmony with ecological and social processes in the economic practices in which they are rooted. Many voluntary organizations, not aligned with the government have emerged in the sustainability standards sector. These organizations play a very crucial and positive role in ensuring that good corporate standards are adhered to by companies. The standards aim at promoting sustainability along the value chain, and their procedures and results not legally binding. The standards have been recognized as a key tool to promoting sustainability in the food industry by improving farmers_x0092_ conditions and living standards, protecting the environment and improving marketing practices. Ponte (7) notes that sustainability standards inform of a product_x0092_s attribute. Such attributes are then classified in the manner that they can be measured such as through verification during transactions (search), after the transactions (experience), and trust (credence). The analyses of the attributes are based on the product or the process of producing it. The process of production involves other intricate determinants as physical origin, safety in terms of pesticide usage and toxins_x0092_ levels, environmental conditions and socio-economic conditions (Ponte 7).

The increasing requirement by corporations to be cautious of environmental degradation and check on the livelihoods of farmers and workers across the value chain has contributed to private regulations of business practices. Many organizations engage private regulations, through sustainability standards, with assorted interests. Different ideologies encompass different sustainability objectives, a factor that is at times controversial. This is more so due to the different aspects of sustainability existent. Major standards in effect today are similar in most aspects, though they have differing objectives and are set in different scopes (Manning et al. 213).

In the coffee industry, sustainability plays a fundamental role. The aspect of sustainable coffee started coming into effect in the specialty industry of North America, and the first cases of certified coffee was developed by the fair trade movement in Europe. Sustainable coffee is increasingly gaining significance in the specialty industry. Sustainable coffee, according to Ponte is attributed to the farmers_x0092_ economic feasibility, social responsibilities of producing companies, and conservation of the environment (9). Notable certification brands in the market today are _x0093_Organic_x0094_, _x0093_Bird-Friendly_x0094_, _x0093_Rainforest-Alliance-Certified_x0094_, UTZ and _x0093_Fair Trade_x0094_. Organic coffee production is done through sustainable agro-ecosystem methods; Bird-Friendly is grown under the cover of a forest, and thus conserves the birds_x0092_ habitats and migration routes and the Rainforest certified satisfy other sustainability conditions as stipulated by the alliance.

Fairtrade is associated with development work and aims at an alternative economy. The main objective of Fairtrade is empowerment of producers by aiding them in accessing the global markets. Fairtrade guarantees a minimum price to the product, and also has initiated a social premium that is paid to cooperatives. They also have a recently established environmental policy. Rainforest Alliance has a policy that is geared towards wildlife conservation. This is made possible through enforcing a sustainable farm management policy through a detailed plan. The Alliance also lobbies for improved livelihoods of farmers and other workers through an establishment of a secure and sustainable livelihoods program. As opposed to Fairtrade policy of a guaranteed minimum price, the Rainforest Alliance fights for a good economic state through high yields and improvement in cost efficiency. UTZ aims at a marketplace that is open and transparent, and one that guarantees both social and environmental sustainability in agricultural production. The standard makes use of the UTZ Traceability System as well as the UTZ Code of Conduct as the instruments of choice in achieving its objectives. The former instrument traces a product, in this case coffee, from the farmer (producer) to the buyer. The Code of Conduct stresses on environmental and social sustainability practices. In the environment, UTZ calls for conservation of the biodiversity, proper handling of waste materials, and sustainable use of water. In the social realm, UTZ advocates for reliable access to medical and health facilities for producers and other workers, and proper sanitation in the work environment. Organic standard, which is based on International Federation of Organic Agriculture Movements (IFOAM), advocates for sustainable organic farming. The standards_x0092_ policy has some minimum requirements for farming such restrictions to the use of agrochemicals, synthetic fertilizers and regulation of animal feeds. The movement is against genetic modified organisms.

What are the major objectives of Fair trade, and what role does the farmers_x0092_ premium play in that context?

The major objectives of Fair trade include working with small farmers and artisans, ensuring the members have good wages, ensuring the members have safe working conditions, ensuring environmental responsibility and creating long term relationships among members and between the members and the federation as well as buyers of the various products produced. The Fair Trade Federation works with small farmers and artisans by offering them advance payment to purchase raw materials rather than taking up huge interest bank loans (FTF 1).

Long term relationships are formed between the farmers, artisans and buyers of their products. This helps them in maintaining market share since they are able to know when a product is not doing well and ways of improving it or coming up with a different product that offers similar services. Good wages are essential in ensuring that the farmers and artisans can fend for themselves and their families comfortably. This also ensures that they do excellent work and hence produce good quality products.

A safe working environment and conditions are essential to ensuring that the farmers and artisans are able to work effectively. It also ensures that they are able to get their supplies in good time and are able to dispatch their products in good time. This is important as it ensures that there is a steady flow in their businesses and clients are assured of a steady supply of good quality products and at affordable prices (FTF 1).

Environmental responsibility is another major objective of Fair trade. There are various waste materials that come from their produce. These waste materials have to be discarded responsibly in order to avoid polluting the environment. Some of the waste may be harmful in one way or the other and so it has to be discarded in the right way and in the right place. This also helps in keeping the environment clean as well as safe.

Alleviation of poverty is another objective by Fair Trade Federation. It also promotes sustainable development. The members create social and economic opportunities for the small scale farmers and artisans so that they can be able to create employment for themselves and their future generations. This also helps in growing the national economy and ensuring that more people are able to create employment for them as well as for other young people in the society. Fair trade is also promoted in that the members provide guidelines by which the farmers and artisans work by. This alleviates unfair competition and exaggerated prices (FTF 1).

The farmers_x0092_ premium plays a major role in contributing towards various businesses and community projects. Every farmer pays a Fairtrade premium in addition to the Fairtrade minimum price. The premium is used to invest in business in order to increase production of certain goods or expand their market. The farmers and artisans are members of various communities that have various projects that need to be undertaken or are already underway. The premium can also be used in supporting these projects either from scratch or as a helping hand. These projects in turn help the members of the community and not only the farmers (Ericson 7).

What are similarities and differences between Fairtrade_x0092_s premium and Nespresso_x0092_s real farmers_x0092_ income, and how do you explain both similarities and differences?

Fairtrade aims at improving the living conditions for producers by giving high prices, availing financing options and creating sustainable relationships between buyers and sellers in the field. In addition, the movement advocates for creation of organizations for producers or the workers that effectively assists them, and the use of production processes that are friendly to the environment. For a corporation to receive Fairtrade certification, they should adhere to a set of minimum requirements that are in compliance with its objectives (Dragusanu, Giovannucci and Nathan 220).

Fairtrade_x0092_s price premium also referred to as the community development premium, or the social premium is paid as an addition to the total sales price. Before 2008, the value was 10cts per pound, but has consistently increased to 20cts. Of this amount, a part (5cts) is set for improvement of productivity. The payment of this premium is in line with the processes of democracy and association, vital doctrines of fair trade_x0092_s policies. These tenets are set so as the small scale producers can improve their livelihoods. The usage of the premium is decided in a democratic manner by the producers. Projects that are under the fair trade premium are community infrastructure investments like building schools, health facilities, storage facilities for crops, training of community members, educational scholarships, water treatment systems, and improving techniques for organic production of foods. Fair trade supposes that all actors in the supply chain need to be certified by the policy. The primary function of fair trade is improving the lives of poor workers and farmers in developing nations through better terms and assisting them in organizing organic certifications. The rationale that fair trade uses is provision of information that is vital to the consumer (Dragusanu, Giovannucci and Nathan 226).

The Sustainability Quality Program by Nespresso pays premiums for quality as well as sustainability. Nespresso banks on the need by most companies to respond to the challenging environments created by the call for corporate social responsibility. This phenomenon has led companies to create strategies that address these issues. Nespresso_x0092_s Creating Shared Value (CSV) model backs companies in identifying a core factor that connects between the activities of the company to the needs of the society. This process is referred to as mapping of social opportunities. Using this process, businesses contribute in creating value that is shared with other stakeholders. The CSV model in corporate social responsibility as well as sustainability is used by the company to report the manner in which it creates value to investors, and the rest of the value chain from farmers, customers to consumers. The close relationships created by the initiatives have made Nespresso more privy to the needs of AAA farmers, and low income smallholders who have fewer opportunities to improve their lands.

The Real Farmer Income (RFI) is a core Nespresso pillar created in 2008. It was created as part of the CSV principle as a way of giving back to the farmers. The program pays premiums to AAA farmers due to quality, and as an incentive to make them compliant to the rain forest alliance principles and standards. These are standards that have an impact on environmental, management and social constructs. Nespresso_x0092_s RFI aims at boosting farmers through initiation of projects that boost their incomes as well as yields. It also offers support to agronomists, who in turn offer training and technical assistance to farmers in a bid to improve their output and performance. This move has enabled it to improve the relationships between the company and the farmers (Nespresso 2017).

Nespresso_x0092_s Real Farmer Income and Fair Trades premium are both aimed at improving the status of the farmer or the producer. Both are aimed at creating sustainable conditions for farming and an improved economic status of the farmer. The programs are similar in that their aims correlate. Nespresso provides support as well as training to farmers so that they can improve their performance in the Real Farmer Income package. They also support the use of precision agriculture. Fairtrade, on the other hand, pays an amount through cooperatives that is used to improve the economic statuses of the farmers. The major difference between the two is the mode of disbursement and the manner that the funds are used. Fair trade_x0092_s funds are managed through cooperatives and directly used to support programs that have an impact on the farmers. Nespresso, pays the farmers directly so as to encourage them undertake the sustainability practice.

Conclusion

Sustainability standards are improving the production value chain in the coffee industry and creating a mark on the environment, social and economic wellbeing of the communities. This paper has looked at sustainability in the coffee industry, and the manner that the sustainability policies have improved standards of production, and contributed in environmental as well as social improvements. Aspects of corporate social responsibility have been looked at as well. The role of Fair Trade in improving the economic conditions of farmers is also discussed. Fair trades premiums have also been discussed in comparison with Nespresso_x0092_s real Farmer Income premium package. The two packages, although dissimilar in some aspects, are aimed at improving the farmers overall economic and living standards, especially in the developing countries.

_x000c_Works Cited

Dragusanu, Raluca, Daniele Giovannucci, and Nathan Nunn. “The economics of fair trade.” The Journal of Economic Perspectives 28.3 (2014): 217-236.

Ericson, Rose. The Conscious Consumer: Promoting Economic Justice through Fair Trade. New York: Fair Trade Federation. 1999. Print.

Fair Trade Federation, FTF. Fair Trade Federation. 2017. Web. April 13, 2017 .

Manning, Stephen. Boons, F., Von Hagen Oliver and Reinecke Jennifer “National Contexts Matter: The Co-Evolution of Sustainability Standards in Global Value Chains”. Ecological Economics. 83 (2012): 197_x0096_209. 

Nespresso. Coffee. Web. April 13, 2017. .

Ponte, Stefano. “Standards and sustainability in the coffee sector.” International Institute for Sustainable Development. 2004. Web. April 13, 2017 < http://www. iisd. org >

Von Hagen, Oliver, Manning Stephan, and Reinecke Juliane “Sustainable sourcing in the food industry: global challenges and practices.” (2010).