What is Ethical Coffee?

North Star Coffee was founded from a desire to create a more rewarding supply chain for producers in some of the most environmentally, socially and politically volatile parts of the world.

Ethical procurement underpins every decision we make to ensure we are practicing what we preach. Our customers value this approach and are like minded in the way that things should be done, but for our working relationships to be effective it is essential that our customers understand exactly what we mean by ‘ethical coffee’.

Despite huge growth and interest in responsible consumer habits, it seems that now more than ever we have greater confusion about what this phrase really means. Given the rise of various certification schemes and approaches along with the complexities of true sustainability, this is totally understandable.

There is a problem with this though when consumers end up standing by certain certification schemes or logos when in many cases these systems do not work for the producer and they may benefit more from a different approach. My own dissertation at university along with a recent article published by The Guardian discussed this very possibility in regard to the impact of Fairtrade on the rural poor.

With coffee shop culture in the UK doubling over the past decade (Allegra Strategies 2017) versus a decline in the number of producers growing coffee, it seems vital to me that we all understand the many factors that need to be taken into account to help guarantee the longevity of our industry.

So, what is ethical coffee?

A history of coffee sourcing and the C market

Historically, the coffee supply chain has been long and complex with a number of people involved working in systems that were often put in place during colonialism or just after independence. These systems were created to continue passing value to the consumer as opposed to the producer and are answerable for the existing manner in which coffee is traded.

Before I talk about what we deem to be ethical procurement, it seems important to first discuss how we have reached this point in our industry to understand the different options on offer. This is particularly relevant given the appalling state of the world coffee market (the ‘C’ market) in the past 12 months which has valued coffee using a figure that would not have been out of place 50 years ago. Coffee is traded in US cents per lb, some of the costs I have seen involved in producing coffee can be up at around $1.80/lb – over the last 12 months, we have seen it hovering around $1.00/lb and at the time of writing, it is now at $0.90c/lb which is the lowest price we have seen in 12 years.

The ‘C’ market was established in 1882 and in the 20th century, was adapted to stabilise prices to assist with and enable the growth of corporate global brands such as Nestle and Douwe Egberts. It is a market that operates much like any other stock market and is based on supply and demand allowing speculators to buy and sell contracts depending on which way it will go. What is often underestimated here is the staggering impact this can have on the lives of millions of coffee farmers. The world coffee crisis of the late 90s and early 2000s was proof of just how unfair this mechanism is, so much so that it is pretty unbelievable it is still in place in 2019 given the human cost of such low market levels. Like any business, coffee farming is dependent on the costs of production being met with a profit generated to be able to reinvest in the next harvest or in the farming infrastructure. This simply does not happen when the global market starts to freefall to current levels that fall way below the costs involved in producing the coffee, let alone the level needed to produce any profit.

Presently, the C market is not working for coffee producers and is resulting in abandonment of farms in favour of more profitable crops such as maize and commonly heroin or coca. Commercial grade coffee is generally purchased using this mechanism and ensures that companies are able to buy low and sell high at the detriment of the millions of smallholder farmers and their families across the globe.

Further volatility in coffee production exists due to the growing impact of climate change which is really starting to make its presence felt in most coffee growing regions that sit between the Tropics. Excessive rainfall, drought and a rise in pests and disease have impacted recent harvests dramatically which increase the costs of production even further. We cannot continue to benchmark the prices we pay for coffee against the prices we paid 20-30 years ago. Looking beyond the question of whether or not it is specialty grade, this price is not even adapted to take into account inflation and increased costs of farming inputs. This mechanism continues to prioritise the buyer and not the producer and it is not in keeping with the principles of sustainability. Times are changing and it is time our approach to coffee procurement did too on a global scale if we still want to be buying coffee 20-30 years down the line.

Ethical Coffee and North Star

How does this system relate to the coffee bought and sold by North Star?

The global industry is split into coffee that is either specialty or non-specialty (commercial). Specialty grade coffee makes up just 4-5% of total production and it requires very specific growing conditions and approaches to attain this quality. The literal definition of specialty grade coffee is coffee that has scored over 80 out of 100 on the SCAA (Specialty Coffee Association of America) cupping form for attributes such as flavour, body, acidity, aftertaste, balance, uniformity, cleanliness and sweetness.

This definition means specialty grade coffee is analysed purely on its cup qualities and cleanliness of the raw product. There is no specification on how it must be produced when it comes to social and environmental responsibility and there is no instruction on how it should be priced and purchased. The result of this is that a coffee can be classed as specialty grade and still be produced in a manner that does not respect the people or environment growing it, or purchased in a manner that does not recognise its true value exploiting the producer. It is not enough to just purchase specialty grade coffee and assume that ethics have been a vital part of this transaction, it is sadly more complex than that.

For all of the coffees we purchase, we set an outright price that is totally divorced from the global C market. This presents complications in terms of determining a starting point but it allows the price paid to be dictated by the potential cup quality presented by the coffee in terms of what we can sell for. The starting point has to be to review the costs of production (which are not fixed and slide year on year dependent on yield/factors at play in each producing region) and then to include a margin that represents the quality of the coffee and allows coffee farming to be profitable for the producer. In many cases, this profit is needed to provide the basics for living such as healthcare, food and shelter – let alone education or re-investment back into the farm. The trips we make to visit our producing partners are vital in having these conversations and in getting to grips with their costs and challenges. This system ensures that we are able to work directly with coffee producers and exporters to maintain real transparency and trust, enabling us to forge lasting relationships to have a truly positive impact in our business practices.

Paying an outright price is just the start though, depending on the type of producer this can either be a smallholder farmer operating individually or as part of a cooperative or it can be direct to an estate owner who is then employing 300-500 pickers as a migratory workforce during the harvest season. If the latter, what good is it paying a profitable price if the benefits of that ethical approach do not cascade down to everyone working on the farm. Whilst an outright price may have been negotiated directly with the farm owner, there is no guarantee that the benefits of this responsible purchase have filtered through to the farm workers. There are farms I have visited across Central America that have featured in Cup of Excellence competitions (and have therefore been recognised for the quality of coffee they produce) that have had some of the worst conditions for their staff and are not necessarily adopting responsible growing techniques. How ethical does that make your coffee purchase?

The crucial thing to understand is that any mechanism employed in procurement has its benefits and disadvantages. This is why we do not utilise just one approach or certification and instead, look to a multi-faceted approach to ensure we are working with impact in each producer relationship.

Sustainability and Certification

When it comes to identifying coffee producers who are working in a sustainable manner, it is important to review their social and environmental practices and to work in a way that will improve their economic development ensuring that we can meet the needs of the present without compromising the ability of future generations to meet their own needs. (Our Common Future, WCED, 1987).

Social and environmental responsibility are common themes in most certification schemes, below is a table outlining the main differences between the most recognised certification options:

 

Programme Features Issues
Fairtrade « To achieve certification, producers are required to meet specific labour, environmental and production standards.

« Certified producers are guaranteed to receive a Fairtrade minimum price for coffee which aims to cover the costs of production. This price is currently set at $1.40/lb.

« Additional Fairtrade Premiums ($0.20/lb) received by producer organisations are used to invest in business or community improvements.

« Concerns that the premiums were still not enough given the changing prices of coffee to cover production.

« Concerns that the premiums are not reaching the farmers.

« Only certain types of growers can qualify for certification (have to be a member of a cooperative).

« Quality of Fairtrade coffee is variable. There is no need for it to be specialty grade and it is usually associated with commercially produced coffee where it is used for CSR policies in MNC’s.

« The level of administration and record keeping is required is considered a burden, process is expensive.

Rainforest Alliance & Utz (now a combined certification scheme) « Takes into account the environmental impact of coffee farming and implements criteria in an attempt to minimise this.

« The social welfare of everyone working on the farm is also carefully monitored in line with International Labour Law – guarantees a minimum wage and age for farmworkers along with separate living quarters for men and women/first class protein in any meals provided etc.

« It must meet the standards of the Sustainable Agriculture Network (SAN).

« Doesn’t offer a minimum or guaranteed price to producers so doesn’t reduce precarity of farmers.

« Has been criticised for certifying products which contain low proportions of certified content.

Organic « Farmers must employ agricultural processes that do not use any synthetic inputs ensuring crops are grown to organic standards.

« Huge focus on the environment and ecosystem.

« Premium paid for organic certified coffees to the producer.

« High costs associated with becoming certified, ongoing inspections a huge cost for producers.

« Little focus on social approach.

« Leaves producers sometimes powerless when impacted by pests and disease.

 

You will see from the table that there are some instances that do not fit the producer’s requirements. For example if you are a smallholder farmer operating individually as opposed to being a part of a cooperative, you are not eligible for Fairtrade certification. The Fairtrade minimum price is also set at a level that does not meet the costs of production for many specialty grade coffees, this is therefore an irrelevant figure for specialty buyers. Much of the criteria included in the above certification schemes occasionally feels a little irrelevant for those working with specialty grade producers/buying from specialty coffee shops and roasteries due to the fact that the increased quality of what we are buying already far overtakes the price and premium paid for Fairtrade certified coffees.

Sadly, quality and ethics do not always go hand in hand. It is easy to assume that if the coffee is high grade, it demands care for the environment and for the people harvesting the coffee to preserve that quality. In many situations this is happening and many producers are working in a responsible manner when it comes to their environment and workforce – to be certain of this, schemes like Rainforest Alliance become particularly relevant especially when working with larger estates. This is due to the involvement of International Labour Law and the Sustainable Agricultural Network (SAN) in the auditing system which ensures there is a minimum age and wage in place, that there are sanitary and separate living quarters for men and women, that there is first class protein provided in meals and that there is a banned list of farming inputs and necessary additions to the coffee pulping process such as evaporation ponds that ensure no contaminated water is put back into the local ecosystem.

Really there is no one size fits all model and to work in a truly sustainable manner is to adapt our buying technique for different situations. We simply cannot work the way we do for a smallholder in Burundi like we do for an estate owner in Guatemala. Yes this makes it really difficult to communicate to the end consumer in a concise manner like a logo on our packaging but the answer is that coffee is not simple or concise and it is important we understand the realities of the industry so that we can help our customers to make the most informed consumer decisions.

Where do I drink coffee?

Truly ethical coffee takes into account not only where and how it has been produced and purchased but also where it is consumed in regards to the business practices of that company. We truly believe that if a business wishes to market the ethical merits of its coffee supply, it should apply the same care and attention to every element of its operation. This means; looking at where the food served is coming from and what are the environmental/social implications of its production, ensuring the staff working in the shop are treated with respect and paid fairly and above all, ensuring the business is governed in a manner in keeping with ethical principles – no tax avoidance, no paying your suppliers late (if you can help it), encouraging equality and diversity in the workplace etc.

We are living in a world where we can no longer pick and choose what we are ethical with.  There is no getting around the fact that businesses must be profitable in order to survive and occasionally we are all put in situations where other factors are prioritised – but we do truly believe that being sustainable in your business practices will guarantee profitability and longevity, futureproofing your activities as we all become more and more aware of the impact we are having on our planet.

Does my local coffee shop care about waste generated through the coffee industry and what is it doing to combat this?

A huge element of coffee consumption to consider is the wasteful nature of takeaway sales. Coffee is already a product with a fairly large carbon footprint due to the fact it is produced in the global South and consumed in the global North. There is nothing we can ever really do about that unless we are able to start growing coffee on a commercial scale in Europe…who knows what with climate change and all!

One area that we can and must start to improve is in the disposal of single use coffee cups and associated packaging. Sadly, the coffee industry produces an incredible amount of waste from the supply of coffee specifically – 2.5 billion single use cups and 500,000 tonnes of waste coffee grounds (Bio-bean 2016) each year in the UK alone. With 22,000 coffee shops in the UK in 2016, this is a really concerning situation that we can no longer ignore as this number continues to multiply.

This is a topic we have spoken much about in recent years following the ‘War on Waste’ programme which aired on the BBC in 2016 and the consideration of a ‘Latte Levy’ by the Government in January 2018. Since then, we have been involved with a group of likeminded individuals from Zero Waste Leeds, Turtle & Hare and Sustainable Food Cities to come up with some solutions to this issue. I am delighted to announce the establishment of ‘Good Ground’ which we introduced at this year’s launch of the Leeds Indie Food Festival which is an initiative designed to encourage the uptake of reuseable cups to decrease the reliance we have on single use packaging. It aims to do so by:

  • Introducing our own latte levy to be put in place by a number of independent businesses in the Leeds City Region – this will mean agreeing on a set price to be added on to the price of a takeaway coffee in a disposable cup which will be put towards either a local or environmental charity.
  • Producing a reuseable cup to be sold in outlets that are a part of Good Grounds making it clear to the consumer which businesses are participating in the scheme
  • Signing up the Vegware Composting Collective which unites local cafes, creating a network of bring-back points for consumers to access composting. Collectively, cafes can ensure their compostable cups, containers and cutlery are composted (https://www.vegware.com/composting-collective/info_86.html).

Cafés with a composting scheme for used Vegware can choose to join the Composting Collective. That means they:

  • Accept used Vegware that consumers bring in for composting, even if it was bought elsewhere.
  • Display the window sticker and in-café poster.
  • Encourage customers to visit other Composting Collective cafés – to return used Vegware, and buy another coffee!

Good Ground can be found on social media (Instagram & Twitter @wearegoodground) and will have a website to follow once we have secured some more funding to be able to get it off the ground. The hope is that this initiative will ultimately turn its hand to other issues such as food waste and energy use along with other types of single use packaging in response to consumer interest and demand. You will be able to see which cafes and outlets are participating and we hope to launch the Latte Levy towards the end of this year.

To conclude…

Ultimately, we all lead busy lives and sometimes it is just overwhelming to put this much consideration into every item you are purchasing – understandably we, as consumers, put our trust into the companies we purchase from to be accountable and responsible particularly with items that have a higher value and therefore associated production cost. Coffee has been and will continue to be a complex supply chain and arguably, as a product grown in different countries and cultures globally, is should not be as simple as having one logo to explain how it has been procured. We cannot use a standardised approach which means we are crucially reliant on importers and roasters who truly understand the complexities of the various mechanisms available.

As a consumer, it is also important to fully appreciate that sustainable practices must be taken into account from the start to the end of the supply chain – this means all of us have a responsibility to be accountable for how we are consuming our favourite products and how we are taking ownership for the environmental impact of our consumer behaviour. Going reuseable will be a reality we all have to face over the next few years so why not start now?! You probably have 4 or 5 cups in your cupboard from Christmases past, get them out! Keep one in your bag, one in your office, one at home and get into the habit of using them! It has worked with plastic carrier bags, we are all now shamed into carrying our items out of the store performing the greatest ever balancing act just to avoid the judgement of using more plastic.

Enough is enough, it is time to truly start looking after the families we are dependent on for our caffeine habit. It is not about being cool or ‘hip’, it is about caring for our fellow human beings who are currently suffering at the hands of a system that is outdated and irrelevant. We have to understand that to have coffee in the years to come, we have to pay more for it now and we have to ensure it is an attractive and profitable business to be in for those with the conditions required to grow it. Ask more questions, probe your supplier and review your own buying practices. We do so on a regular basis to ensure our approach is still working for everyone involved in the supply chain. It is an integral part of what we do and is ultimately why we set up a coffee roastery to challenge the traditional model and to bring what we deem to be ‘ethical coffee’ to the market.

This is a matter that means so much to us – if you have got this far then well done and please do get in touch with any comments or questions, we really would love to hear from you.