Experimental Design Details
Sustainability standards are meant to verify the ethical, social, environmental, and economic merits of coffee production, which can be promoted to final consumers. In Sumatra, these standards are implemented through four key processes:
1. The training process. Training materials are developed by independent standard setting organisations, by partner NGOs, or by private sector companies, to convey to farmers the practices necessary to meet the standards. This usually involves an intensive initial training phase with weekly or monthly training for a few months, and then ongoing supplemental training over a 3 or 4-year cycle. Training is often implemented by the companies who directly source coffee from farmers, since they have the best access and local infrastructure to reach the farmers, sometimes with the support of standard setting organisations. Training is commonly integrated within an Internal Control System (ICS) managed by the companies and implemented through trained agronomists;
2. The auditing process. Third-party, independent auditors are hired to travel to the field and verify the extent to which farmers are actually complying with the practices dictated by the standards. This is usually done by randomly selecting a small subset of farmers in a farmer group for detailed auditing on an annual basis. Farmers are typically allowed to improve performance over time – e.g., for initial certification compliance with 50% of the standards might be sufficient, whereas after 3 years 70% compliance could be necessary.
3. The 'certification' process. Farmer groups that comply with the standards will hold certification (or verification, depending on the program). In the Sumatran context, this certification or verification is commonly held by the company on behalf of the farmers. Such coffee can then be sold as SAN-certified or 4C-verified coffee in the domestic and international market.
4. Marketing processes. These above processes are commonly associated with a new marketing channel and often the establishment of a new local-level buying station, whereby verified or certified farmers obtain certain market privileges. This new marketing channel involves price premiums at the farmer-level for both: i) certified / verified coffee; and ii) for higher quality coffee. The ‘certification’ premium in the Sumatra site is 300Rp (3c) per kg, whereas the ‘quality’ premium may be up to 2000rp (20c) per kg. In general, certification is associated with a more direct marketing chain for farmers.
The study described in this report will evaluate the impacts of the two sustainability standards. First, the 4C Code of Conduct is considered a baseline standard for sustainability, comprising a set of practices that could be considered a minimal package for sustainable coffee production. The Code includes a list of 10 unacceptable practices that must be eliminated, alongside 28 social, environmental, and economic principles for the sustainable production, processing, and trading of green coffee. 4C uses a 'traffic light' system to identify the level of sustainability (compliance with the standards), so that a farmer group must receive an audit score of at least yellow to receive a 4C premium.
Second, our studies will additionally focus on the Sustainable Agriculture Network (SAN) coffee standard, which is linked to the Rainforest Alliance (RFA) label that is familiar across many consumer products. The SAN standard includes more advanced criteria for sustainability that extend on the 4C standard. The standard’s key principles cover management systems, ecosystem conservation, wildlife protection, water conservation, working conditions, occupational health, community relationships, integrated crop management, social conservation, and integrated waste management.
The process of moving to sustainable coffee production can take a number of years, both in terms of discrete steps such as from not being involved in a sustainability program to an entry-level standard such as 4C, and then from 4C to a more advanced standard such as SAN, There are also frequently continuous steps up the compliance ladder within a given standard. This involves changes not only within a farmer household and on their farm(s), but also in farmer group governance, and the local socio-economic system around coffee production.