Matching Trends for Sustainability Standards: Case of Coffee Exports from Tanzania

1. 1 Matching Trends for Sustainability Standards: Case of Coffee Exports from Tanzania Evelyne A. Lazaro, Jeremiah R. Makindara & Fred Kilima

2. 2 INTRODUCTION One of the key trends characterizing agro-food Exports is: increasing complexity of public and private standards that are applied to imports into developed countries

3. 3 Objective Review key trends in relation to: Sustainability standards in coffee, A profile of (and the main challenges faced by) producers that comply with the Utz standard in Tanzania, and The perceptions of those producers who have not yet attempted certification.

4. 4 Source of data/information Key actors in the Tanzanian coffee sector were interviewed to assess compliance to the Utz standard � the �fastest� growing sustainability standard in the coffee sector. Review of literature Contact with Utz foundation

5. 5 Sustainability standards Standards are designed to address a wide variety of needs and goals Food safety criteria are increasingly combined with requirements for the promotion of environmentally-sustainable production methods. Producers and businesses� adjustments needed for compliance have many cost implications. Compliance offer opportunities for benefits in terms of reduction in undesirable effects to the environment and improvements in health effects on workers.

6. 6 Sustainability standard in coffee Standards that influence or relate to the sustainability of the coffee sector are many. Example: Fair Trade (including the Max Havelaar label), Rainforest Alliance, Organic and Utz Certified.

7. 7 Growth of Demand for Selected Certified Coffees

8. 8 Utz Certified Standard Utz Certified coffee, which is the focus of this paper, is a worldwide certification programme for �responsible coffee�. Coffee producers certified by the Utz Foundation comply with the Utz Code of Conduct

9. 9 Utz Code of Conduct The Utz Code of Conduct covers three main categories: good agricultural and business practices, social criteria based on the International Labour Organization conventions, and environmental criteria Independent certifiers conduct annual inspections to ensure that producers and businesses comply with the requirements of the Utz Certified Code of Conduct

10. 10 Findings So far only large-scale coffee producers have managed to meet the costs of compliance with the Utz standard in Tanzania; The rate of growth of Utz-certified coffee sales from Tanzania is quite low, Does not match the trends in demand for sustainability Even when compared with neighbouring Uganda and Kenya.

11. 11 Utz Certified in Tanzania Percent of coffee purchases from Tanzania as Utz Certified was 0.06% in of total utz certified coffee purchases in 2006 and 0.09% of total utz certified coffee purchases by 1st July 2007. This is relatively small compared to global trends.

12. 12 Challenges The increasing number of Standards and the demands they place on others in the supply chain are posing big challenges to actors in developing economies. These challenges are associated with: Awareness of changes in coffee consumers� behavior; Understanding the standards that are developed with the intention of meeting new consumer demands; and The decision to comply with any of the standards.

13. 13 Perceptions of costs and benefits of Utz certification Perceived costs by compliant producers and businesses management costs Documentation that is critical for traceability � Cost of certification:. To ensure daily compliance of the codes of conduct,

14. 14 costs related directly to the implementation of �good practices Preservation and protection of river reserves:; forgone revenue from land areas that are left natural maintenance of a special nursery for indigenous trees irrigation water and technology/equipment that ensure efficient use of water and reduced soil erosion � for example, use of spot irrigation instead of surface irrigation; waste disposal, maintenance of stores for farm inputs

15. 15 Costs related to social criteria On-job training to expand professional skills (e.g. book keeping) among employees; Conducting workshops to improve social and environmental awareness among workers; Employee salaries that comply with labour laws Improvements of the quality of labour accommodation; Protective gear for workers Annual health check-up for all workers; Creating awareness to surrounding communities Signboards to keep away people from fields or premises that are potential hazards to human health.

16. 16 Perceived benefits to compliant producers and businesses Regular employment opportunities Certification creates transparency and openness between management and employees; water is saved due to use of efficient irrigation systems Premium price and relatively better market access; A sense of discipline from the top management to the low level workers and creates social responsibility for the workers and environment

17. 17 MAIN CHALLENGES TO UTZ CERTIFIED CERTIFICATION the use of chemicals in coffee traceability of coffee lack of forward contracting with buyers producers & businesses may wish to seek multiple certifications

18. 18 Perceptions by non-certified coffee producers and businesses  High-quality coffee is licensed for the direct export of coffee at a premium price. When prices are satisfactory, there is no incentive to get certified ?. Inadequate evidence that premium price offered to certified coffee is worth the effort. Between 2005 and 2006 the average premium offered to Utz Certified coffee sold from Tanzania was 5 USD cents per pound. The cost of certification and auditing was perceived to be high compared to the premium price offered.

19. 19 Conclusion Coffee consumers, retailers, and roasters in Europe, USA, Canada, and Japan increasingly demand coffee that has been produced �sustainably�. These demands have translated into various standards in the coffee sector that include Utz Certified. Coffee producers therefore are faced with the challenge of responding to these demands

20. 20 Recommendation Coffee producers need information to: Make informed decisions on whether to comply or not with any of the many available standards Make a choice of which of the many standards to comply with. Meet the requirements for compliance to any of the standards they decide to comply with