New Study Examines Responsible Coffee Sourcing, Ensuring a Living Income for Producers
CoffeeNetwork (New York) – The Columbia Center on Sustainable Investment has just released a new study titled “Responsible Coffee Sourcing: Towards a Living Income for Producers.”
The report provides an overview of the coffee sector and responsible sourcing; a comparison of living income to producer income in 10 coffee-producing countries; descriptions of common voluntary sustainability standards (VSS) used in coffee; and assessments of the sourcing practices of 10 coffee companies, coupled with recommendations for those companies.
The study shows that in 8 of the 10 countries, the average coffee income (not household income) is at or below the poverty line. On average, only producers in Vietnam and Brazil earn enough from coffee to place them above the poverty line.
Brazil is the only country profiled where the average producer earns a net coffee income that is above some living income estimates.
Uganda has the largest gap to living income, with an average coffee producer earning $88 per year from coffee, relative to living income reference values that range from over $2,000 to nearly $6,000.
Of all commodities, coffee has the most widespread adoption of products that are certified or verified under a Voluntary Sustainability Standard. VSS allow producers and companies to show that their product meets particular sustainability criteria. The field of VSS has rapidly expanded, and now includes third-party certifications, second-party verifications, and first-party assurances. Evidence shows mixed impact from VSS. They are best understood as tools that can help in advancing and monitoring certain sustainability objectives, but with significant limitations. VSS also have been undermined by insufficient demand and purchasing commitments from companies. In general, only around 50% of coffee produced on certified production areas is sold as certified.
When it comes to living income, there is no evidence that the use of any VSS alone would enable most producers to achieve a living income. This means that 100% responsible sourcing commitments that rely on the use of VSS are not a complete solution for enabling living income. However, promising efforts are emerging from Fairtrade (to develop a Living Income Reference Price) and Rainforest Alliance (a new requirement to track sustainability payments made to producers). It remains too early to say whether such efforts will have impact, and their success will depend on companies’ willingness to pay those prices and significant premiums.
Company sourcing practices have impact. This is true even in countries where the gap between average coffee income and the living income is too significant for any specific company to overcome on its own. There are multiple sourcing practices that companies use or could use to help close the living income gap. These include interventions within supply chains on: prices and premiums; changes in business practices; producer support; and traceability. While the right mix of interventions may vary by company, our research indicates most companies should integrate interventions in all of these areas. Companies should also make time-bound commitments on living wages for farmworkers.
The report looks at sourcing practices by Nestlé, JDE Peet’s, Smucker, Starbucks, Lavazza, Tchibo, Keurig, Costco, Tata, and Unilever. While all of the companies have established sustainability commitments or projects relevant to producers, none are able to guarantee that all viable producers in their supply chains earn a living income. All could do more within their sourcing practices to positively influence producer prosperity.
Alexis Rubinstein
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