Beyond Labels: What Certifications Really Mean for Your Coffee
Chris: So recently I’ve been talking to folks a lot about aspects of sustainability. You know it’s definitely a wide-ranging topic but I’ve asked Lauren to join me today to help give us some insight on certification specifically. Could you go ahead and introduce yourself to folks who don’t know you and like what you do for Royal.
Lauren: Sure! So my name is Lauren Cropper, and I’m a Sales Associate which means I work at the Trading desk, and I am also the Certification Specialist, so I manage many of our programs for certified coffees.
Chris: Nice! Thanks for joining me. And right before we started recording, we’re talking a little bit about the volume of certified coffees that Royal brings in. Can you just give us a sense of like how much of our coffee is certified one way or another?
Lauren: So in 2020, about just over half of our coffee was certified Organic, and much of the coffee that we import is Fair Trade certified and certified some other programs as well such as Rainforest Alliance and a couple of other things that we’ll get to later here.
Chris: Perfect! Let’s talk about the big two certifications first. Let’s just start with Organics, and can you kind of describe what it looks like to produce organic coffee in sort of broad strokes.
Lauren: At the farm level for an operation to be certified organic, they need to be in contact with an accredited organization or certifying body that is going to certify their farm and operation as organic or organic coffee. And so first, they will need to submit an organic plan for approval and that’s going to include a lot of their practices, the substances that they are planning on using, and they also need to have an inspection by a certifier as well that’s going to come and take a look at all of the processes that are happening. So once the farm is certified initially, then they also need to go through a renewal program each year where they continue to be inspected and have all of their documentation inspected as well.
Chris: So, some sort of third-party that’s accredited by the FDA is National Organic program for example of would be the inspector that they hire or that is certified now. Is that right?
Lauren: Correct. So for coffees that are imported into the US, it needs to be a certifying body that can work through all of the requirements for the National Organic program here in the United States and of course, other regions have their own demands as well for something needs to be organic certified.
Chris: Right. And you can’t just flip a switch and be organic like tomorrow if you get the inspection, right?
Lauren: No, it’s definitely not like that. For farms, there is a 3 year period where they need to certify that all of their operations have been switched over but this is mostly for land and soil management. So you know discontinuing the use of all of the prohibited substances for the organic plan.
Chris: Substances like synthetic fertilizers.
Lauren: Exactly. Fertilizers, it can be you know anything from pest control to you know weeds and fungus and you know anything that used to be controlled at a farming level.
Chris: It has to be done without any sort of chemical-based. I suppose there are probably alternatives for these things that are either plant-based or some sort of non-synthetic version that people can use for pesticides, yeah?
Lauren: Exactly. There are some more natural methods as well. Some of them are you know manual methods that will require labor, separation of specific things in the field or other things like that. There are definitely alternatives for the program.
Chris: So during this transition period, we switched over a bunch of practices and discontinued the use of things like fertilizers that are synthetic based which very likely means that the farmer is seeing lower yields on their crops as a result but they don’t have that certification yet so they can’t sell their coffee as organic even though it’s being produced under accepted practices. Is that right?
Lauren: Yes. This is sort of a Catch 22 that a farm can find itself in where maybe they are doing mostly conventional farming but they have an interest in becoming certified organic. They might have higher yields and lower production costs because they are using synthetic materials for their farming. And so the 3 year period is really long if you are looking at agriculture to be able to guarantee that income will sustain your operation. And then wait 3 years to get those organic premiums that are entailed with the organic certification.
Chris: My understanding is that there isn’t actually an established premium for just organic certifications. It has to be like to have an industry-accepted standard would have to be tied to Fair Trade for a specific dollar amount. Is that right?
Lauren: So if coffee is both Fair Trade and Organic certified, there is a 30 cent premium per pound, and so that is established, and it’s guaranteed to the operation. But yeah, if it’s just an organic certified coffee then there is no standard amount per pound that’s required to be paid. Though you know based on consumer trends, we would expect that buyer would be paying above the conventional levels.
Chris: Right. The market kind of drives the price for organic coffee in a lot of ways and because there is a demand for it producers can expect to achieve a premium despite the fact that there isn’t an established standard.
Lauren: While they can expect a premium of some kind, I think it can be a little bit challenging to really find what the return of their investment is for all these requirements that are in place for getting organic certified.
Chris: Sure. I spoke recently with Alfred Klein who runs Finca San Carlos in Mexico, and he was mentioning that he wasn’t able to continue his organic certification practices because of the unpredictable forces of nature. He was hit by rust really hard and had to start using pretty aggressive management practices to keep that fungus away from his coffee trees and that’s kind of unfortunate like he isn’t able to get certified at the moment because of this problem.
Lauren: I think that just ties into the unpredictable nature of agriculture in farming. There are things that are out of your control, and this organic certification process definitely eats up a lot of costs at the farm level, and so decisions need to be made whether it’s getting organic certification which does have a lot of costs, sometimes a lot of additional effort keeping track of all the documents, having the staff to be able to support a program like that can be very costly.
Chris: On the other side of that coin, there is a lot of smallholder producers worldwide that are probably using traditional farming methods, the stuff that goes back to the grassroots nature of the original organic movement which came out as a reaction against this sort of chemical warfare on macro agriculture scales. So these smallholder farmers are unlikely to be using high amounts of synthetic fertilizers but they also probably potentially lacking access to certification agencies or just rural don’t have the means to be certified.
Lauren: As we mentioned, with some smallholders in Ethiopia for example they are some barriers to certification just based on cost or a lot of the requirements for the organic program to keep up with all of the documentation, to keep up with a lot of the cost of getting certified and staying certified, sometimes there is a traveling cost for the certifier to come in and complete the inspection. So it can be quite a hefty fee for them. But, yes, there are coffees that may not be organic certified because the smallholder may not have access to the certification process but the coffee maybe produced under organic standards but just can’t be labeled as such. So there are definitely some situations like that.
Chris: For a company like Royal who is importing, storing, and shipping that kind of thing, you know we have to uphold certain standards for organic certifications on our end as well. What’s that look like in your experience?
Lauren: Since we are already organic certified and have been for quite some time, we are essentially renewing our certification every year. And what that entails is site inspection by certifying body that can make sure we’re upholding all of the requirements for the National Organic Program. And so for physical storage, that means the same thing as farm level, separation of conventional and organic coffee, and then from the operational side, all of the documents that we collect from either producers or transit of coffees, there needs to be traceability in every single step. So each document that we collect whether it’s the contract, Ocean Bill of Landing, needs to state that the coffee is organic. So we need to make sure we can show that every single step of the way, this coffee has continued to keep its organic certification.
Chris: In terms of like roasters might be expected to do, it’s pretty similar looking to what an importer is required in terms of organic stuff, true? They have to keep them in separate palates in their warehouse, and they have to show either they are using separate equipment for organics so that they are doing some sort of flush through the roasting machine or the blender or whatever.
Lauren: A lot of the same requirements that are throughout the supply chain also apply to roasters, and that would be a separation of conventional and organic, they also need to maintain all of the traceability documents, and they also recertified every year as well. So they get audit just like we do, and just like a farm gets audited. And also something that they need to consider is labeling because we bring the coffee in, it’s in the original bag, we ship it out to our customers, and then once it’s actually in the packaging, it needs to bear the seal. So there are some other requirements that are involved as well.
Chris: So let’s talk a little bit about Fair Trade then the kind of other big certification that Royal works with. And my understanding is that Fair Trade is less interested in environmental practices and more interested in guaranteeing the type of traceability. They are trying to guarantee a minimum price that they consider to be as close that they can tell some sort of living wage to a farm or farmers. Is that kind of the macro picture of Fair Trade?
Lauren: I’d say so. And while there are some environmental advantages as well to the Fair Trade movement, the main point is getting a specific minimum level of income to the farmers and that’s based on price per pound which is currently $1.90 per pound for Fair Trade Certified coffee.
Chris: That’s our FOB price, is that right? That’s what we would pay for an exporter.
Lauren: Correct
Chris: So that translates to further back in the supply chain, my understanding is that $1.45 minimum at the cooperative.
Lauren: Yes
Chris: We’re just talking about the organics and others – not really an established premium necessarily on the market, its the market demand that would drive prices for the farmer, but with the Fair Trade certification, there is a required minimum above the Fair Trade minimum for organic coffee right?
Lauren: Correct. So if the coffee is certified both Fair Trade and organic, then there is a 30 cents premium that needs to be paid if its organic under that program.
Chris: Are there specific practices or requirements at the cooperative or at the farm level for Fair Trade certification?
Lauren: There are some requirements in terms of how the contracts are written with the buyer, and then also for negotiating on the C Market – there are some requirements as well.
Chris: But it’s mostly kind of paperwork requirements. Is there someone coming by to inspect a farm to see if it’s fair or trade?
Lauren: Yes, there is. There are two bodies that we work with for Fair Trade. So there is FLOCERT Internation which is global level based in Europe. And we also Fair Trade USA. So a farm or an organization that wants to be Fair Trade certified does need to go through an annual certification process, they get audited just like we get audited – a lot of that also has to do especially you know this is where traceability is super important. So there are looking at the prices that are paid, they are looking at a lot of the financial documents that we have on hand and that the producer has on hand as well just to verify that those prices were indeed paid.
Chris: And Fair Trade USA is actually based right here in Oakland. They have offices just down the block.
Lauren: Yes, they are our neighbors.
Chris: That’s kind of fun. Here is a question because I think that a lot of people have seen some of the research that’s going on recently about Farmgate Pricing, and how much it takes to run a farm, and what it takes to be a successful producer in specialty coffee. And that $1.45 number rings a little low. Can you speak to whether or not Royal is paying on average above the minimum Fair Trade price?
Lauren: I can. So I do our reporting for this program. So I take a look at all of the prices that we’ve paid for all of our Fair Trade certified coffees. And I can say that while we do pay above the minimum level, I think in most cases, we pay well above the minimum that’s established by Fair Trade.
Chris: That’s I guess comforting to me to hear that because from my perspective, Fair Trade feels like the absolute like basement level, lowest common denominator and probably doesn’t necessarily guarantee that a producer is thriving at that $1.45 mark.
Lauren: Something that’s important to point out is that while Fair Trade is establishing a minimum that’s just what it is, it’s a minimum. It doesn’t necessarily mean like you said that it’s going to guarantee prosperity. It’s just really essentially in some cases covering costs and it doesn’t guarantee specific profit for the operation you know for the farm. So it’s a minimum.
Chris: I think it’s worth putting it in context to that for the past 2, 3 years, we’ve seen some ups and downs in the market but for the most part, historic lows. And coffee prices that are close to $1 in some cases and so that .45 cents per pound does make a significant difference above that market price. I think that it’s worth noting that just because a producer is certified to export Fair Trade coffee, they may not necessarily be getting that price for all the coffee that’s grown under their certification because there isn’t enough room in the market for all the Fair Trade coffee that’s certified. So what we’re seeing I think and you know obviously it doesn’t apply to the coffees that Royal is purchasing this way but I think it’s a little bit of tragedy that these producers in many cases have coffees that they can’t sell at that Fair Trade premium because there isn’t enough market demand for it.
Lauren: That’s a good point. While somebody may purchase a Fair Trade coffee that’s certified, they are going to be others that go uncertified even if the operation itself is certified.
Chris: In some ways, this kind of cuts to the core of what’s certifications can and can’t do like they are well-intentioned and they introduce sort of a third party that’s what we might consider disinterested in such a way that there is supposed to be guaranteeing for consumer or roaster that they are certain standards that are upheld in an objective way. But if we want to talk about true sustainability, certifications are really only a part of that picture.
Lauren: Exactly. It does give the consumer some peace of mind about what they are purchasing obviously it doesn’t cover a lot of the aspects of sustainability at all different levels. So I think it’s a good starting point but I think that there is also a lot of potential for where we can take this as well make sure we are providing sustainable environments for both our producing partners and for you know our consumers here in the US as well.
Chris: Absolutely. It’s easy though to recognize organic seal or the Fair Trade seal on a bag of coffee, and in some ways, it probably is better for the people growing the coffee and the environment surrounding them if you are interested in a base level, don’t have time to ask questions about the source or the roaster, that seal is probably a good sign that something is going right in some shape or form at the farm level.
Lauren: I think it does give as you said, it’s a form of assurance for the consumer.
Chris: I’m interested in some of the other certifications that are out there because they fill interesting niches in the market. And one of them that’s relatively large scale is Rainforest Alliance. What do you know about the RFA certification?
Lauren: The Rainforest Alliance certification touches on a lot of points that are both social and environmental. It’s a lot of community building at origin, and also land management, combating climate change as well and so that also carries a premium. That’s another one of the certifications that has a specific amount that is paid per pound for this coffee.
Chris: It’s interesting because it works a little bit differently than Fair Trade though where instead of guaranteeing a minimum per pound, there is a sort of distribution aspect based on volume. Is that kind of right?
Lauren: Right, the fees that we pay for Rainforest certified coffees don’t necessarily go back to the same producer, they are actually distributed by the Rainforest Alliance. They will redistribute it back to the community as they see fit.
Chris: We pay an amount based on the volume that we bring in every year, and that premium or the fee goes back to RFA, and they choose how to distribute it to supply partners.
Lauren: Correct.
Chris: I visited only one sort of large-scale Rainforest Alliance certified estate, and I visited at a point in a process where they were getting certified. It was interesting to see some of the changes that were taking place on the farm level. One thing that I know is that RFA certifies it’s in the name that they want to preserve the native forests. And so, blocking off parts of the farm that are original trees that are indigenous to the area is really important, or reforesting in cases where the land has been clearcut for example is one of the big things. And that encourages biodiversity, encourages healthy ecosystems. The other thing that I think is really interesting about this certification from the environmental standpoint is the interest in preserving the purity of local water waste. So fermented coffees, washed coffees, they produce a lot of water waste, and that water can’t really be cycled back into the local systems without first being treated. And it can be done fairly easily but there is a lot of folks that just don’t understand, haven’t been given the tools, and this was a fairly large estate and fairly technical organization, and RFA really helped them along to creating more healthy environmental on their farm which I thought was pretty impressive.
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Lauren: Just from the conversations that I’ve had with both our customers and producers, it sounds like this is one of the programs that really help with those types of improvements at a farm level.
Chris: They are fairly well-respected certification in that way which is I think encouraging to hear. And there is another kind of environmental might be the main focus of it I guess but there is a social aspect to it as well, and it’s one that’s a little bit less common, Biodynamic. What is that mean?
Lauren: We have a couple of producing partners that are biodynamic certified. One that comes to mind is in Brazil, and we have a couple of other producing partners that are also certified. And this one you’ll see in the descriptions of our coffee. It’s a little bit less common. It’s promoting biodiversity at a farm level – preserving the biodiversity of not only the plants but also insects and anything that’s in the environment of the coffee farm.
Chris: My understanding is that because most biodynamic farms and in fact, maybe all are also organic or not necessarily certified but they are definitely gearing to organic practices. In some ways, I feel like biodynamic preserves a little bit of that grassroots origin of the organic movement. But there is more to it because I think that biodynamic farmers tend to think of their systems as part of a whole: the people that are working on a farm and animals that coexist there as well as the coffee trees themselves are all part of this single living entity. This kind of mother earth situation. And making sure that that organism, that ecosystem is healthy is really kind of the core driving mission. There is some other idiosyncrasies about biodynamic which I find interesting would be the lunar harvest cycle that’s important which is kind of cool. You can download the calendar from demeanor and find when is the best time to harvest certain crops.
Lauren: And we talked about this you’ve mentioned before that it’s very traditional and I think you’re right in saying that letting the land be as it is and animals and insects, just kind of preserving the environment the way it is and then inserting the coffee later.
Chris: As something that can be done in a healthy and a part of a larger ecosystem.
Lauren: And this is actually a cool certification.
Chris: Yeah! I have a lot of respect for it, and it is very unique and I think you’ll find the farmers that work in this way are also likely to want to talk a little bit about it because I think there is not really any sort of enhanced premium for them in terms of market value for biodynamic cert. In a lot of cases, it just tends to be a labor of love. This is something they are really passionate about and likely to want to share their passion with the people who are buying the products.
Lauren: I agree. I think you mentioned that while biodynamic doesn’t have an established premium, they do tend to be Organic operations so maybe they are getting Organic premium but a lot of their motivations behind becoming biodynamic really is just the farmers own decision to preserve the environment that they are living near or growing their coffee on.
Chris: That ties in nicely to kind of the last sort of the minor certifications that we might talk about today. And it is designated under this Smithsonian Migratory Bird Council SMBC, and so it does speak in some way to biodiversity. It’s also the only certification that guarantees any sort of shade for coffee trees which a lot of folks, I don’t hear as much these days but it was an important topic of conversation not too long ago in specialty coffee – guaranteeing shade. What do you know about SMBC certification?
Lauren: This is a certification that you’ll see sold as SMBC. There is a minimum level of shade cover, so there are parameters that are established for how much shade needs to be established and what types of trees and so long and so forth. And then also protection for migratory birds that are in the environment of the coffee farms as well. It’s sort of two-part certification, and we actually have quite a few coffees that carry this certification, and it’s run by the Smithsonian. It’s a very serious program, and I think it’s a great one for you know when it ties to all these other programs as well. We tend to see a lot of Organic and SMBC certified coffees so to see these that are certified by multiple organizations just add different layers of sustainability in a lot of cases, and I think that’s a great thing to have.
Chris: Yeah, yeah, it’s just another one of those ways that kind of shows above and beyond, the next level of trying to protect the precious resources that each of us as human beings shares on Earth. So I know there is a couple of other certifications on the market out there but those will be the kind of the main 5 ones that we see coming through Royal. But I’m curious if you have a sense of what might be trending right now either in roasting or producing communities in terms of sustainability or certifications.
Lauren: One trend that I seem to get a lot of questions about is coffees that are from women-run cooperatives or women produced. And while there are some certification bodies that provide certification to those groups, again there will be some costs involved in getting one more certification on top of possible multiple others, but I think that consumer demand is definitely orienting a more robust program for that. As is now we are getting this information from our producers and from our partners at origin about who is producing the coffee but I think maybe that comes up to get a certification for women-run groups.
Chris: That’s a great point. We definitely see some organizations like the International Women’s Coffee Alliance. I bought a little bit of coffee from Jeanine Niyonzima-Aroian in Burundi this year that was produced under that banner which I suppose in some ways, it acts a bit like a certification but it’s more of a membership support group than anything. What about Blockchain? I hear about this a bit, and we’ve been talking to a few companies recently that are trying to guarantee traceability. What do you know about that?
Lauren: This is something that you know if you’re following coffee news and traceability, you’ll see that there are a lot of proposals from many different groups involving Blockchain, and obviously its become huge outside of coffee as well. But I think it has been identified as a solution to a lot of the traceability issues and of course people want to see increasing transparency with their purchasing and the types of coffee that they’re buying. So I think that there isn’t really a unified system quite yet but I think that a lot of initiatives are implementing blockchain. I think there is potential.
Chris: Yeah. It’s kind of another way to trust what your roaster tells you or the importer when saying we try to go beyond that FOB price back to what the farmer might have been paid at farmgate.
Lauren: I think just like any certification program with these initiatives whether its blockchain or otherwise, the key is to make sure that there is accessibility at the farm level. You have all different types of sizes and types of operations and so just making sure that if you are going to implement something does the farm or does the group or the smallholder have access to tools that they need whether its technology or is it all in English you know the language can also be a barrier as well. Just a lot to consider there.
Chris: Yeah. Well, what about like at the distribution or roasting, café even, what kind of certifications or sustainability practices do you see as important right now?
Lauren: There is a lot of roasters who have retail locations that are using the same certifications as the farmers and importers or distributers using which are Organic Fair Trade etc. But I think a lot of the trends that we probably see are more about the integrity of the company. Here in the US, we’ve discussed this in our conversation Zero Waste or becoming B-corp something geared toward the overall sustainability and the integrity of the company.
Chris: B-corp is real like the certified type of organization, you can get that sticker on your window as a cafe. Zero Waste is not really so much, just trust what people are saying I suppose. And then, there is Direct Trade which is a term we’ve had tossed around the coffee industry for more than a decade now maybe close to two which is also not really a certification right?
Lauren: Correct. It’s more of a method of trading. In a broad sense, it’s when the buyer of the coffee has a direct relationship with the farm. Oftentimes, going to the origin to visit the farm but not always. And so they are purchasing coffee directly from that producer but of course, it does involve somebody like Royal to actually you know carry out the logistics bit of it.
Chris: Right, they still need an importer or at least an importing license to be able to make that journey across the ocean. And I guess the language gets confusing because it’s similar in some ways to the way we talk about Fair Trade. A lot of times roasters will use direct trade as a sort of alternative or better than when they are talking about Fair Trade but there is in most cases no real third party that’s coming in to certify just because there is a stamp on a bag that says DT doesn’t necessarily mean anything specific. Each company is defining these terms in a lot of ways on their own, and absolutely there is some overlap but there is a lot of opportunity in some ways to be disingenuous. Just be careful when you’re talking about Direct Trade, being specific about what you actually mean by that that you’re talking to whether it’s the farmer or another person in the supply chain like the exporter even that you’re negotiating your prices with them and asking for specific coffees I suppose in some cases drawing the contract you know maybe years in advance but none of that is part of a unified program.
Lauren: There are no minimum requirements for Direct Trade. There are no guaranteed prices to the cooperative or the farmer or any of the staff. So there aren’t any universal standards.
Chris: Again, something that can definitely be beneficial but also be used by someone. I feel like we covered a lot of grounds here, and definitely have at least you know brought a little bit of attention to the various different types of certifications that we see. Is there anything that you are thinking of that I haven’t asked or any parting thoughts or anything from your perspective that we should hear about more?
Lauren: The roasting community is definitely a huge part of a lot of the certification programs, they are driving the demand for a lot of these certifications to exist. Another point is that while a lot of the programs do guarantee some kind of premium or in the case of Fair Trade, there is a minimum, the most sustainable way for us to support our partners abroad is to pay good money for good coffee.
Chris: Yeah. In a lot of ways, it comes down to being prepared to pay the right price. Well, thank you so much for your time, and I know that you did a lot of research to get ready for this but also everyday your work involved in certifications doesn’t go unnoticed. So I really appreciate it. Thanks, Lauren.
Lauren: Thank you, Chris.
