# **Variance In Approach Toward A 'Sustainable' Coffee Industry In Costa Rica**

Dr. Melissa Vogt considers the influence of Rainforest Alliance and

Fairtrade in coffee farming communities of Costa Rica from 2009-2019.

Sustainability certifications schemes are working amongst a range of

sustainability efforts, unique by their intra market location. The intentions

of each certification scheme must be clarified prior to evaluation and

their influence considered amongst contextually specific historic and

contemporary considerations, and alongside the range of sustainability

The advantages and disadvantages, opportunities for improvement

and how alternative mechanisms might improve upon or complement

sustainability certification schemes are explained. An epilogue considers

how prioritisation of coffee as a cash crop may align with sustainability. The

influence on biodiversity, community health and income, and the possible

implication of reduced coffee crop density for consumers, the market and

farming landscapes is considered. How sustainability standards might

better encourage more ambitious sustainability in farming landscapes is

*Variance In Approach Toward A 'Sustainable' Coffee Industry In Costa Rica*

**Melissa Vogt**

Dr Melissa Vogt researches sustainability certifications as a method for

adjusting international trade practices and mentality. She examines in-

country perspectives and seeks to bring attention to, and balance these

perspectives within international trade dynamics.

efforts.

for future consideration.

www.ubiquitypress.com

About the author

*Perspectives From Within: Lessons & Insights*

Melissa Vogt

# **Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights**

Melissa Vogt

# ]u[

ubiquity press London

Published by Ubiquity Press Ltd. Unit 322-323 Whitechapel Technology Centre 75 Whitechapel Road London E1 1DU www.ubiquitypress.com

Text © Melissa Vogt 2019

First published 2019

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DOI: https://doi.org/10.5334/bce

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Suggested citation:

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* London: Ubiquity Press. DOI: https://doi.org/10.5334/bce. License: CC-BY 4.0

> To read the free, open access version of this book online, visit https://doi.org/10.5334/bce or scan this QR code with your mobile device:

## **Author and contributor information**

Melissa Vogt, MA, MPH, completed her PhD early 2019 developing a concept for human natural environment interactions, ecological sensitivity within human realities (ESHR). She completed fieldwork in Costa Rica and Cuba and has worked in the Great Lakes Region of Africa. Her interest in sustainability certifications as a method for adjusting trade practices and mentality commenced in 2006.

#### **Competing interests**

The author(s) declare that they have no competing interests in publishing this title.

## **Acknowledgements**

The monograph is based on my MA dissertation completed in 2010 and acknowledgements for extensive fieldwork and during the writing of the dissertation are included in that work.

I would like to thank the people who agreed to fund the monograph, allowing me to allocate partially paid time to update and complete the writing, formatting and proof reading of the manuscript, and to address reviewer comments. Funding was sought through www.pozible.com.au in 2016 and ten people pledged funds to support the project.

Leonardo Astoria Sanchez provided research and writing support for the extended Costa Rica history chapter between September 2016 – February 2017. He worked with the Costa Rica history chapter from my dissertation. His input was considered valuable to ensure adequate scholarly representation from a Costa Rican historian. It was provided in Spanish and then translated to English. At the time, he was completing his masters dissertation and is now a professor of history at the University of Costa Rica. He was paid for his contribution to the book.

Thanks is also extended to the publishers for agreeing to support a manuscript based on what could be considered historic fieldwork, and accepting it as an academic contribution for learning about Costa Rica and the sustainability certification effort. Thanks are also extended to the peer reviewers, Anna Snider, Eva Kraus and Ana Afonso Gallegos, who provided constructive and valuable comments that led to improvements within the content of this publication. All errors remain my own.

## **Table of Contents**

## **List of Figures**

## **List of Tables**

## **Acronyms**

**Introduction: Aim and Scope**

I was to walk two hundred metres and turn right, to find the house with a blue façade and a family waiting for me. It was a small coffee farming community in the south of Costa Rica surrounded by mountains, forest and coffee, slightly run down; the community was similar in design to a town on the Caribbean Coast, Cahuita. Walking through their house, it seemed like most houses in Costa Rica until I looked straight through the back window to a tropical forest garden. I was given a personal tour of the large variety of trees, fruits and orchids growing through the one-hectare space that used to be a small coffee farm. Practicing some ornithology, I identified approximately nine species of birds that would visit every morning to eat the bananas grown in the garden. The diverse range of fruits included some kiwi fruits introduced by an international exchange student. It was a beautiful and peaceful location to stay for a couple of days. Breakfast was served with a cup of coffee and a knowing smile, some gallo pinto1 ,

#### **How to cite this book chapter:**

1 'Spotted roaster' is a traditional Costa Rican dish of rice, beans, coriander, red capsicum and lizano sauce.

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 3-5. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.a. License: CC-BY 4.0

eggs, a tortilla2 , plátano del horno3 , with some natilla4 on the side. Most of the food was served from the garden or traded with neighbours. The barter economy is alive and well in Costa Rican rural areas. The father of the family explained why he would never grow coffee again now focusing on cultivating organic lettuce amongst other activities.5 There was a coffee shop in town which locals rarely visit as they can make perfectly good coffee at home or, even better, agua dulce6 or refresco.7 In Costa Rica, all coffee exported is of first grade quality; the second grade is consumed in Costa Rica, it is 'better quality anyway'8 ('Ronaldo', Cooperative employee 13 April 2009). The atmosphere of a coffee shop cannot compare to the smell of fresh air, forests, and the sound of birds that enrich many regions of Costa Rica. It is from this side of the coffee trade that this book develops.

Using interviews, focus groups and observations in ten coffee farming communities in Costa Rica, the influence of sustainability certifications is considered. The methodology provides perspectives from within the country and a different and more detailed way of understanding the influence of sustainability certifications. The study aims to consider the role of Rainforest Alliance and Fairtrade in the Costa Rican coffee industry context to evaluate the advantages and disadvantages for farmers, cooperatives and communities and identify opportunities for improvement.

To encourage a better understanding of the regional and international context, the history of the region and of Costa Rica and associated coffee industries is presented in three historic periods.

The influence of trade in development is considered within a poverty reduction and sustainability frame; a summary of the international coffee industry; and an explanation of sustainability certifications are provided in the following sections: Introduction; Background; Methodology and methods: perspectives from within Costa Rica; Findings: Advantages and disadvantages of sustainability certification experience; Further developments and opportunity for improvement. The epilogue considers the meaning of sustainability according to stakeholder, and how aligned the coffee industry is

2 A small flat cake, similar in shape to a pancake made of corn flour and water.

3 Plantain baked in the oven.

4 Sour cream.

5 He made enough money from his organic lettuce, which was sold in a new organic section of the fruit and vegetable section at the local supermarket dedicated to the tourist and expatriate market.

6 Warm drink made from sugar cane and water.

7 Fresh fruit juice, with pulp filtered out.

8 The coffee berries/beans are graded by size and sorted at the mill.

with sustainability. Suggestions for adjustments in producing countries with cultural and social implication for producing communities and consumers are made to encourage a conceptual rather than a limited, and often subjectively determined sustainability.

**Background**

In the early mid 2000s I started volunteering with Oxfam campaigns and became involved in their shop and Fair trade products. At that time, Fairtrade products were mainly available overseas. Having completed a double degree in Management (Marketing) and Arts (International studies) I was intrigued by how to effectively integrate trade with sustainability and fairness, and how products could be certified or guaranteed as sustainable. Initially, my interest was primarily from a marketing point of view and how consumers could learn about topics and situations in producing countries through their daily consumption practices.

In 2006 Fairtrade certified products were introduced to the Australian market. I was, at that time, volunteering with the Fairtrade head office in Melbourne, Australia. Living between Adelaide and Melbourne I became involved in coordinating Fairtrade fortnights in Adelaide, a national marketing and promotion activity for newly introduced fairtrade certified products which were sold mainly in Oxfam shops and in Coles through Australia. During these promotional activities, Fairtrade organised for representatives of Fairtrade certified cooperatives to visit Australia and speak about their experiences with

#### **How to cite this book chapter:**

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 9-11. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.b. License: CC-BY 4.0

Fairtrade. I hosted cacao cooperative representatives from Ghana and a coffee cooperative representative from Costa Rica in consecutive years. Speaking with these representatives at length, their experiences as, not only representatives of cooperatives but as farmers led to an interest in what these logos were achieving in the producing country.

While I believed sustainable products needed to be available on the market and mainstreamed, it was also important that their influence in producing countries was aligning with marketing claims. At this time, and at a more political level, concerns about the fairtrade minimum price were expressed by various thinktanks which favoured liberal trade arrangements. They considered Fairtrade to be fixing prices which was not sustainable. There were therefore several discussions occurring about whether fairtrade was sustainable and what it was achieving.

I was interviewed around that time (2006.2007) about my opinions on fairtrade, and when I read it back, (see https://fairtradematters.wordpress.com/ interview-with-melissa-vogt), I still agree with most of what I said but there was still so much to consider.

In 2009, as part of a MA in International Development, I went to Costa Rica to consider how Fairtrade coffee was achieving stated intentions in a producing country. I would visit coffee farming communities according to their affiliation and membership with an umbrella cooperative, Coocafe while also allowing an opportunity to visit other coffee farming communities. It was the beginning of my exploration of sustainability certifications related to in-country contexts.

Leading to the fieldwork component of my study, I worked in Sydney with an organisation that sought to improve legal and actual protections for migrant workers who worked in Australia making clothes. At that time company codes of conduct, an independent label, legal frameworks and industry reviews were developing and occurring. The garment and coffee industry; and Australia and Costa Rica are extremely different contexts and no comparison was possible in this regard. What was beneficial from the experience in Sydney was an ability to consider how the various mechanisms were necessary and how each served specific and important roles to make an industry more socially just and therefore sustainable. Of course, what sustainable meant in the context of socially just was an additional consideration.

The monograph has therefore arisen from years of considering how to make trade more sustainable, with a starting focus on the coffee industry and international trade. Fieldwork from 2009 is complemented with secondary literature and follow-up fieldwork to consider not only findings from 2009, written into a dissertation in 2011, but also how these findings resonated years later. It was a conscious decision to not publish dissertation findings in 2011 despite it being recommended by an examiner. The findings were quite controversial related to the effectiveness of Fairtrade certification and the risk of damaging what was quite a promising introduction to improving consumer awareness about where, how and who the products they consume daily were produced, sourced and traded seemed too great. Had I come to the topic from an academic background only I may have felt differently. For marketing and consumption practice benefit, I was not sure that it was the appropriate measure, instead I chose to continue studying and considering the topic. There was also, at that time, concern about how subjective the findings were. Eventually I decided the findings were complicated to a point they might confuse opinions about the bigger picture benefit of sustainability certifications. While they were not demonstrating positive, and in fact, in Costa Rica Fairtrade demonstrated to be creating situations contrary to marketing claims, there were benefits that required further consideration before introducing an idea that they do not work.

Since my study in 2001 there has only been one other based in Costa Rica that has considered the number of cooperatives that I visited and interviewed. This study has been conducted through a larger research institute, CATIE which could influence the discussions and findings. My study was more organic and informal in design and approach, and there would therefore be a difference in how participants viewed me and how they would respond to my questions and our discussion.

While the method is not necessarily superior, in-depth interviews with few participants can successfully demonstrate common perspectives, opinions and thinking across a group of similar experience related to specific topics. Combining these studies with in-depth community studies could be an effective method for future considerations. It is useful to consider an entire industry, community or organisation of farmers alongside certifications, instead of considering certifications as the focal point of all in-field studies. To say in a different way, the context within which certifications operate is extremely relevant and important to consider. In-depth interviews and discussions allow considerations inclusive of but not only specific to certifications.

Opinions related to sustainability certifications have changed over time, the marketing and promotions in 2006 and 2007 no longer exist, and an idea of their being an absolute solution for sustainable trade has diminished, slightly. How certifications are viewed by smaller roasters is not exactly or consistently positive. There have however been replacement buyers of certified produce to ensure a continuing increase in sales of certified products.

With an improved understanding of how certified products benefit producing countries, and how it varies, and knowing that most certifications are working to improve their processes, and that institutions and organisations have been founded and are developing to support these improvements, presenting the findings from 2009 and complementing them with further considerations is considered good timing.

## CHAPTER 1

## **Historic account of Costa Rican development: the creation of an identity**

*With research and writing assistance from Leonardo Astorga Sanchez*

#### **Introduction**

A detailed history of Costa Rica provides a context for the monograph. How the Costa Rican experience differs to neighbouring countries is described to ensure an understanding of Costa Rica in the Central American region, and as compared to other coffee farming countries. Understanding the difference is important as extrapolating findings to other country's experience with certifications could be inappropriate. The first part of this chapter is based on the colonial experience (1540–1821); and the second part provides information about contemporary history.

#### **PART I: The Costa Rican colonial experience (1540–1821)**

The conquest and colonization of Costa Rica was carried out after the rest of Central America. Resources found in Costa Rica were initially below expectations and as such Costa Rica was given less importance and experienced minimal colonial administrative presence. It was well into the sixteenth century when the Spanish managed to establish permanently in the interior of Costa Rica (Quiros & Solorzano 2006). The pacification and subjugation of the country coincided with important changes in the way in which the Spanish Crown directed and controlled its colonies. Elizabeth Fonseca identifies three fundamental processes that came to differentiate the expeditions that were carried out in Costa Rica. After 1540, the Crown decided to impose effective control over the Central American territory (Fonseca 1994, 95). Despite a

#### **How to cite this book chapter:**

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 13–31. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.c. License: CC-BY 4.0

desire for control, it was very common that the authorities sent did not obey his orders, taking advantage of the remoteness of Costa Rica from Guatemalan colonial presence and control.

In the first instance, the *Audiencia de los Confines in El Reino de Guatemala*, a territory composed of Chiapas, Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica, was created with executive, legislative and judicial functions. The creation of this institution sought to suppress the great power held by the governors (conquerors or descendants of the first conquerors) and subject them to the authority of officials appointed by the Crown, charged with overseeing respect for laws, taxing and to render direct accounts to the king and the Council of the Indies in Spain (Fonseca 1994, 96).

Secondly, the reduction of the Indigenous ('first nation') in towns was carried out, for greater control and to avoid exploitation by the Spaniards. Each *pueblo de indios* would have its own authorities, grouped in a first nation Cabildo, who would regulate the work and the taxes given to the Spanish authorities and the *encomenderos* (Fonseca 1994, 97–8). Finally, and very important, the application of the *Leyes Nuevas* (1542), the proclamation of which were a direct consequence of the denunciations made by Friar Bartolomé de las Casas before King Charles I. Slavery as a form of labour exploitation was not eliminated, but the indigenous were exempt from it and subjected to another type of forced labour, favouring the trafficking and increase of Africans towards America. As early as the fifteenth century, the first Europeans who came to the African continent saw a lucrative business in the slave trade. For that purpose, a whole legal and ideological apparatus was established and supported in the idea of ownership of some individuals over others, and the use of coercion as the foundation of the relationship between masters and slaves (Caceres 2000, 13). The Europeans were also based on the phenotype of the Africans, like legitimising elements of their condition as slaves (Caceres 2000, 14).

The *Nuevas Leyes* not only denounced and condemned the excess of the Spaniards, they fixed the tax amount according to the characteristics of the region, the age and number of the first nations of each town (Solorzano 2008) paid by each community to its *encomendero* or managers. They also determined that the first nations were subjects and therefore protected by the Spanish Crown (Fonseca 1994, 100–6). The application of the *Nuevas Leyes*  was an important milestone and before this, the first nation population had experienced a strong demographic decline to be forced to work in the mines, as porters, or as happened in Nicoya, they were sent to Panama, Peru and other regions of South America (Bacci 2006, 22; Luis & Sibaja 1982, 32).

The *Audiencia of Guatemala de los Confines* commissioned Juan de Cavallón to conquer Costa Rica, due to the demographic decline of the native population and the depletion of gold deposits in the rest of the Reino, especially in Nicaragua. Cavallón oversaw laying the first bases for the colonization of the Costa Rican territory, establishing populations for whom the land was secured, and the castle of Garcimuñóz (1561) in the western sector of the Central Valley. It was the first stable settlement in Costa Rican soil. Juan Vázquez de Coronado, after being appointed mayor of Nueva Cartago and Costa Rica in 1562, pacified the eastern part of the Central Valley, moved the population of Garcimuñoz and founded Cartago by 1563 (Quiros & Solorzan, 2006, 197–8).

By 1570–1575, much of Costa Rica's territory was under virtual domain of the Spanish authorities, with an important exception being the Caribbean coast, specifically the Talamanca mountainous and forested region that served as a refuge and resistance to the first nations fleeing the Central Valley (Solorzano 2008, 52–3). During colonization, the encomienda laid the foundations for the economic development of society and allowed a group of Spaniards to settle permanently in the country. An encomienda was a group of first nation people or a town that remained under the care of a Spaniard, or Spaniards who in exchange for work and taxes gave them "protection and education" (Quiros 2001, 42–4). The *encomenderos* were the dominant social group in colonial Costa Rica, thanks to the control and monopolization of first nation labour through tribute. The process of economic development in Costa Rica was by the 1570s based on the exploitation of about 70,000 first nations grouped in *pueblos de indios* located in the Central Valley and on the Pacific coast (Solorzano 2008, 21). The economy pre-independence relied on the sporadic export of cacao, cattle migration, tobacco, leather and various other commodities, including the export of indigenous groups as labour from Nicoya and Nicaragua in the 16th Century (Molina & Palmer 2008, 20).

During the first decades of the seventeenth century, the economic and social model of the *encomienda* went into crisis due to disappearance of the majority of the first nation tributary population and a strong process of *mestizaje,*  one in ten individuals were *mestizos (*Molina 2003, 60). At the end of the seventeenth century a large part of the Spanish population was dedicated to production for self-consumption. The most impoverished and landless population sectors were in the majority Spanish and first nation, or black and mulatto. At the beginning of the eighteenth century the *mestizaje* provoked a strong demographic increase in the Costa Rican population (Molina 2003, 63–65). The trade of cattle, mules and other derived products, such as *sebo*, animal fat to make candles, an important product of commercial exchange (Fonseca et al. 2001, 309–15; Molina 2003, 79–80), were important activities with Nicaragua and Panama.

In the mid-seventeenth century another economic alternative emerged on the Caribbean coast in the Matina region, the cultivation and exploitation of cocoa. Eventually it was exported to Jamaica, Curacao, Portobelo and Cartagena (Molina 2003, 37). As early as 1670 a large group of plantation owners residing in Cartago who moved to their properties at the time of harvesting the fruit had consolidated (Madrigal 2007, 181–9). Parallel to the sowing and commercialization of the cocoa, contraband appeared mainly with the English and Dutch, the main buyers of the cocoa produced in Matina (Fonseca et al. 2001, 326–7). Along with the work of the first nations, the trade of cattle and mules with Nicaragua and Panama and cocoa, tobacco played an important role in the Costa Rican economy (Acuna 1978, 279–392) and between 1787 and 1792 it was an effective driver of the Costa Rican economy. The tobacco industry allowed the regular contracting of transport services for products to Leon, Nicaragua, strengthening the leather industry as *petacas*, bags in which the product was transported, were necessary. Guatemala granted Costa Rica a monopoly on the supply for the region (Molina 2003, 113), monetizing the economy. With the profits, those involved managed to develop a business of import and marketing of textiles, luxury goods and tools for the initial internal market of Costa Rica (Molina 2003, 90–2).

By 1800, 21 years before Costa Rica's independence, the country was exporting cocoa, livestock, tobacco, timber and subsistence products such as basic grains. Agricultural activity occurred in the *chacras*, very diverse productive units of small and medium size (Molina 2003, 23; Montero 2014, 294) which allowed the farmer9 to survive and whose surplus was commercialized. The Costa Rican peasantry was characterized by its heterogeneity; there was an impoverished sector with reduced access to land, a medium sector with more land and better conditions both in labour, tools, technologies and livestock possession, and well-off farmers, many of which were descendants of the conquerors and *encomenderos*, with extensive areas of land dedicated to the cattle ranch that combined subsistence agriculture with commercial. The well-off also owned warehouses where sugar cane was ground and milled (Montero 2014, 295; Molina 2005, 3). Commercial activity, used by many of the descendants of rich conquerors and peasants, using products such as tobacco, livestock and sugar cane for alcohol production allowed primary capital accumulation (Gudmundson 2010, 61–3). The accumulated capital was used in other activities, among them coffee, from 1820. The Costa Rican merchants were characterized by a constant accumulation of movable and immovable goods, they managed to control tobacconists through a monopoly of alcohol and tobacco

9 Farmer and producer are used interchangeably through the monograph. Producer is often referred to by Fairtrade, and Costa Rican cooperatives. They include farmers and processors organised into a cooperative, or can also refer only to farmers. RA refers most to plantations and farm managers. Farmers and producers are referred to more generally through the monograph, particularly in the history chapter.  Producer implies farming and/or processing but not roasting. In Costa Rica processing occurs at a community level *beneficio* or on a plantation.

sales, the purchase of public offices and the monopolization of money and control of merchandise export and import (Molina 2003, 126–39). Thus, as the social relations within Costa Rica were characterized by an important disparity, inequality was reflected in unequal exchange (Molina 2003, 161). The merchant appropriated the peasant surplus by giving him money or products with a value less than that of the crop sown. In Costa Rica, small and medium property was the norm, but they were not the only forms of land tenure. They coexisted with extensive cattle ranches and sugar plantations, located mainly in the region of Alajuela-San Ramón, the Valley of Reventazón and Turrialba (Montero 2014, 285).

Large land distributions of the sixteenth century, close to the Central Valley were dominated by cacao and tobacco but were not agriculturally intensified due to varying topography, poor infrastructure for transport and a limited pool of labour due to low first nation population rates, a financial inability to pay for labour, and a regulatory barrier to imported labour from Africa (Alfaro 1980; Hall 1985).

Between 1750 and 1821 the peasantry combined subsistence agriculture with the commercialization of agricultural surplus. With coffee it was increasingly common for peasants and their families to rent their labour force during harvest. Likewise, the demographic increase of the population made it difficult to equitably share the family inheritance. The more children, the more difficult it was to inherit a fair share of the land. When a farm was divided among numerous children. many of them received nothing, and so they had to choose between colonizing lands on the agricultural frontier or being employed as laborers on the farms and coffee plantations of the Central Valley. Alongside this commodification of peasant labour, coffee favoured privatization of land. The Government, including the municipalities (Montero 2014, 280), decreed a series of laws that promoted the privatization of communal lands, belonging to *pueblos de indios* and wastelands in order to promote coffee production and encourage peasants to grow. As the historian Mario Samper points out, the expansion of coffee was based on a strong accumulation of capital by the rich merchants and exporters. Unlike the rest of Central America, it was not based on an excessive exploitation of the peasantry. As an important sector it managed to preserve its property or obtained it at the agricultural frontier (Samper 1989, 114). Héctor Pérez acknowledges that in Costa Rica the coffee economic dynamics, in the absence of an important first nation population that was subjected to forced and servile labour (Perez 1981, 6–9), favoured the employment of wage labour, hired seasonally during harvest or permanent planting and tending of coffee plantations.

These factors all heavily influenced Costa Rica's export activities preindependence, which were minimal in comparison to neighbouring countries. Many of these limitations were compounded by the lack of colonial activity and support available.

## **PART II: History of independence in Costa Rica (1800–2000)**

## *The Central American political experience*

Notions charged with strong positivism favoured the creation of nations in the Central American region where citizenship and the right to vote were granted, following patterns of exclusion that affected women, first nations, illiterate and black. The first nations, where they were the majority, for example in El Salvador and Guatemala, as the main subordinate group, experienced unequal relations to the international market and their citizen duties. Their communities were stripped of property rights or subjected to forced labour on coffee plantations (Torres-Riva 2011, 63). Following the political and economic consolidation of the liberal elite, the oligarchy and parallel to coffee activity in Central America, it is possible to establish three different types of state, or liberal reform projects.

In summary, political experience in Central America was characterized by military dictatorship in El Salvador and Guatemala, liberal democracy in Costa Rica and traditional dictatorships in Honduras and Nicaragua. For each of these experiences the economic elite depended on the State and the law granting an abundant source of labour. Achieving demands and improvements to their standard of living and exercise of citizenship was according to the degree of violence and control mobilized and faced. In Costa Rica the degree of violence was minimal compared to neighbouring countries, and control was maintained.

### *The Costa Rican political experience*

In Costa Rica, liberal reformism (Mahoney 2001) was not based on a militarized state, nor propitiated a strong polarization of social class (Mahoney 2001, 241). The concentration of Costa Rican land was smaller in comparison with the rest of Central America. While in Guatemala and El Salvador, coffee production revolved around the hacienda, the large property, in Costa Rica, coffee was planted in small and medium-sized land. Despite the social stratification that came from the colony, small and medium property was the rule in Costa Rica. An elite linked to coffee activity was not therefore like the great Guatemalan proprietors who relied on forced first nation labour. Nor the Salvadoran expropriating first nation communal lands, making of these a peasant without semiproletarian land.

The army played a secondary and limited role in maintaining the country's social order. After independence (1821), a process began to consolidate a centralized, non-militarized state. This process was facilitated because Costa Rica escaped the conflicts faced by liberals and conservatives, although not completely. The low level of conflict involved in the Ochomogo War of 1823 and the War of the League in 1835 allowed a much faster modernization of the productive apparatus inherited from the colony and a link with the International Market (Edelman 2005, 84). The basic institutions of conservative power such as the Church, colonial authorities and the traditional elite as large landowners were weak. This was owing to Costa Rica's remoteness from centres of power, lack of precious metals and an important first nation component (Mahoney 2001, 241). Faced with this weakness, they were unable to oppose the liberal project, or share views on the need for modernization that sought Costa Rica's "order and progress."

Costa Rican governments, especially liberal ones, favoured and encouraged the privatization of communal lands and wastelands. The central government and the municipalities promoted the use and appropriation of land through small properties, rather than the development of large tracts of land (Mahoney 2001, 242). Privatization was without significant coercion. Decrees and laws on land tenure tended to favour those who could afford the legal procedures to present documentation that credited them as owners. A situation that was taken advantage of by the economic elite to gain the best land and consolidate itself against the medium and small peasant. Unlike Guatemala and El Salvador, where elites formed a united front opposed to peasants and their manifestations, in Costa Rica it was divided into family factions, like the Montealegre family (Stone 1982). These factions used mechanisms such as voting, to resolve conflicts resulting from the exercise and control of power (Mahoney 2001, 243).

During much of the nineteenth century the Costa Rican oligarchy used coups to seize power. Juan Rafael Mora Porras president of Costa Rica between 1849 and 1860 was deposed by a coup organized by the Montealegre family, Mora's main political rivals. While the army was instrumental in resolving elite political rivalries, it was not used to control the peasantry or to protect coffee activity in Costa Rica, militarization of the countryside was not necessary as was the case in Guatemala and El Salvador (Mahoney 2001, 244). Beginning in 1870, a year of the consolidation of the liberal republic in Costa Rica (Salazar 2003), a professionalization of the army began as an institution at the service of the State and not as an instrument at the service of the oligarchy. By becoming professionalized, the army became depoliticized, it had autonomy and ceased to be an extension of the ruling class.

The centralization of government administration and the professionalization of the army prevented Costa Rica from following militarism typical of the rest of Central America. The military was never a key player in coffee activity (Mahoney 2001, 245). By the middle of 1880, the national budget dedicated to defense was diminishing. The abolition of the army in 1948 was the result of a long process of decay and loss of protagonist military. In Costa Rica the armed forces were a marginal actor and cohesion was more important than coercion. The depoliticization of the armed forces left the oligarchy without the traditional mechanism to resolve their conflicts, because of that void, the vote and electoral competition were strengthened. Costa Rican elections should not be idealized, many of them characterized by fraud. As from 1889 the presidential succession was made based on electoral results. Political stability of the late nineteenth century reflected growth in institutionalization of elections as a mechanism for resolving conflict.

Even if one party lost the presidency they were ensured, by the number of votes, to obtain a position in the Legislative Assembly. The incentives to take power violently decreased in the first two decades of the twentieth century and as electoral guarantees were consolidated (Edelman 2005, 84). The institutionalization of suffrage within the Costa Rican political culture laid the foundation for its democratization. During the decades of 1920 and 1930, with the appearance of new social subjects including an urban proletariat, the workers of the banana enclave, the effort of the Costa Rican Communist Party/ Block of Workers and Peasants (1931) to represent these groups, the Costa Rican political elite sought to address their demands (Mahoney 2001, 246).

It was during the 1940s in order to gain support and institutionally channel the claims of the subordinate sectors, that an alliance was established between the government of Rafael Ángel Calderón Guardia and the communist party. This resulted in the enactment of social legislation elevated to constitutional rank in 1942 (Molina 2008). During the twentieth century, the popular sectors became an important political force, their support provided legitimacy to the government. Therefore, voting in Costa Rica became the instrument par excellence for the resolution of conflicts. Their disrespect and violation of the rules of electoral competition served as an excuse and justification for the Civil War of 1948. This was the most violent armed conflict in Costa Rican history. Rather than ensuring respect for the vote, confrontation aimed at new power groups led by José Figueres Ferrer and the *Ejército de Liberación Nacional,* which became one of the main political parties in Costa Rica's recent history, toward a new political and economic project.

Between 1950 and 1970 we witnessed the evolution and consolidation of a Costa Rican welfare state. This would be characterized by growing participation of the State in the economic and social policy and by a series of mechanisms, including voting, that were refined to meet the needs and respond to the demands of subordinate groups (Edelman 2005, 100). Through these mechanisms the State legitimized itself to the population as an entity capable of resolving conflicts. The channeling of the demands through the state apparatus was made through a giant network of institutions that consolidated State presence throughout the Costa Rican territory (Edelman 2005, 111). The State managed to permeate practically all aspects of the lives of its citizens, through a social safety net and the universalization of medical insurance. By 1978, 86 percent of the population was covered, and high levels of life quality were assured. In education, the State guaranteed quality education from primary to university, and in labour the Government and its institutions were the main employers of Costa Ricans (Edelman 2005, 108). At that time, the rest of Central America viewed the State as a threat to the population by the implementation of State Terrorism, violence and social exclusion. In Costa Rica, the State represented the interests of the population, it was inclusive, and benefits were shared by the wealthy elite, the middle class and the poor.

A series of new policies were implemented during the 1980s and 1990s and to date, in response to the economic crisis of 1978 and 1982. The most visible features have been an increase in the levels of inequality, the reduction and reorientation of the size and functions of the State according to the logic of the market, and the liberalization of the economy that has benefited the private banking sectors, the exporters of non-traditional agriculture and foreign investors (Edelman 2005, 136–7). Thus, Costa Rican democratic tradition and peaceful resolution of conflicts should be understood as a longlasting process. A process of perfecting a system of electoral competition that could manage a population more than take power in their hands through an armed revolution. The electoral system was thus refined and profiled as the main instrument for resolving conflicts. The State was a legitimate entity with the capacity to solve problems, provide solutions and maintain peaceful coexistence for the social fabric.

#### *Land tenure in Costa Rica and a rural democracy*

For Lowell Gudmundson, pre-coffee Costa Rica was characterized by a series of hamlets and settlements with a nucleated pattern of dwellings, removed from the idea of dispersed and isolated populations (Gudmundson 2010, 43). Alongside, the variety of properties ranging from small subsistence agriculture to the extensive exploitation of crops and products more oriented to export reflect the different experiences of land tenure in Costa Rica. Where there were expropriations of land, processes of appropriation of ejidos and communal lands and combination of estates and plots also occurred (Gudmundson 2010, 11–23). It was a different experience to small peasants', poor and isolated in their plot of land, dedicated only to subsistence agriculture depicted by harmonious and peaceful relationships, and later to the planting of coffee, from which emerged the 'rural democracy' referred by Carlos Monge Alfaro in 1937. He claimed that in Costa Rica in the eighteenth century, lack of trade and widespread poverty prevented social differentiation, small peasants being the centre of economic life (Molina 2008, 65). Conflict that arose from the exploitation of large capital represented by large landowners (Molina 2008, 74) in neighbouring countries was avoided through the correct performance of the public function. The administration of the Government according to scientific parameters recovered harmonious relations in the field.

Costa Rica although not economically dynamic compared to El Salvador and Guatemala had commercial activity, economic differentiation and social mobility between the towns and cities, where most of the population resided for the eighteenth century (Edelman 2005, 83–84). As Marc Edelman points out, Costa Rica was not characterized by peaceful relations between its inhabitants, nor by a rural landscape dotted with homogeneously poor, dispersed and subsistence farming households. It did however experience less violent conflict compared to other countries in the colony. So, what some consider an idealization that responded to a political and ideological project that Alfaro was part, from a utopian past, an ideal future led by a specialized technocracy was hoped for.

The idea of 'rural democracy' was also used by small farmers to define themselves and their farms, as the origin of democracy in Costa Rica, and thereby gave strength and legitimacy to their demands and struggles in moments of conflict and crisis. Even political parties such as *Liberación Nacional*, after the 1950s, defined part of their political ideology according to that ideal of 'rural democracy', the recovery of the Costa Rican peasant past.

#### *Costa Rica and Coffee*

The influence of coffee on Central American political development was significant and favoured the tendency to concentrate power in the hands of an elite oligarchy, supported by a repressive apparatus army, and a bureaucratization of the government apparatus (Torres-Riva 2011, 62). Through coffee, liberal minded governments promoted and exploited their success via specific projects based on the idea of order and progress. By comparison, in Costa Rica, coffee is considered to have broken a trend of poverty and agrarian reform contributing to an egalitarian approach. The distribution of land not only influenced patterns of conflict as argued by Williams but also the eventual and accidental cultural and social significance of farming coffee through the country. Alongside the 'rural democracy' idea, Marc Edelman's proposes that Costa Ricans possess a feeling of common destiny, linking peasants with elite groups (Edelman 2005, 86) and that coffee was the product that best represented that feeling. Coffee is understood as generating wealth and prosperity for all, as the essence of being 'Costa Rican'. Together with this sense of common destiny Costa Rican political culture also supported, as Iván Molina explains, an inclusive citizenry which was facilitated by a mestizo relatively homogenous population that shared the same worldview (Molina 2003, 163). The inclusive citizenship contrasted with ethnic differences, violent labour mobilizations, great extremes of wealth and poverty (Edelman 2005, 86), and colonial legacies which have been the cause and consequence of the problems confronting countries such as Guatemala, El Salvador, Honduras, and Nicaragua.

Williams (in Pendergast 1999) argues that the way coffee land was divided and labour available in the late nineteenth century not only influenced the shape of Central American governments but also set patterns related particularly to conflict that continue to this day. Central American patterns of conflict were mistakenly perceived to be episodes of the Cold War when:

They were in fact deeply rooted in the social and economic structures of the region. These structures in turn were shaped by a single commodity that has dominated these small export economies from the nineteenth century to the present – coffee. (Paige 1997, 3)

Between 1800 and 1840, Costa Rica experienced a series of economic booms before the consolidation of coffee as the vehicle of economic advance. Coffee successfully linked Costa Rica to the World Market. Mining, in the mountains of Aguacate between 1821 and 1843 also allowed the economy to monetize, in 1828 the mint was created. Limited technology and the demand for increased capital resources slowed down any boost to the internal market (Molina 2005, 13). The *Palo de Brasil*, a luxury wood produced and extracted in the Guanacaste region, was another important activity that had its moments of splendor between 1827 and 1835, before being exploited without control, causing its disappearance (Molina 2005, 14). These activities allowed the accumulation of resources that were later used in the sowing, production and commercialization of coffee.

Between 1821 and 1914 there was a boom through consolidation of an agriexport model, supported by one or two crops linking the country to the international market and the ups and downs resulting from strengthening dependence. The development of Costa Rican agrarian capitalism went through three key periods after independence (Montero 2014, 282). From 1821 to 1850: a transition to the new economic and social system was based on activities developed as a colonial legacy. Between 1850 and 1890: the consolidation of this system with coffee as a main economic activity; and finally, 1890 and 1914: system diversification.

#### *Social stratum associated with the Costa Rican coffee industry*

Coffee production in Costa Rica from 1820 caused a series of important changes, not only economic but also social and political. Since 1840 coffee was the main export product of the country. The economic and social structure of coffee production was characterized in the Central Valley by the primacy of small and medium sized properties. Harvest fell into the hands of small and medium farmers, processing and marketing for the farmers and large coffee growing land holdings, *hacendados*, was carried out by the oligarchy. The elite coffee oligarchy was not dedicated to growing coffee on their properties but to the *beneficiado*, financing and marketing of the product. In this context, the division of labour established a relationship of exploitation between producer and *beneficiador* and in turn they exploited an important sector of peasants with access to no or little land who worked temporarily or permanently on the coffee farms. This generated a strong social stratification within Costa Rican society, away from the idea of a poor and homogeneous peasantry the 'rural democracy' suggested.

The societal stratum can be understood within categories (1a) British and/ or foreign capital, (1b) agro-export bourgeoisie merchants and wealthy *hacendados;* (2) small and medium coffee farmers; and (3) labourers and peons. A hierarchical power dynamic between the societal stratum did not however maintain, see 1900–1936 with the second stratum ensuring equity. The 'rural democracy' was supported in that instance despite the social stratum.

The agro-export bourgeoisie merchants and wealthy *hacendados* controlled the *beneficiado*, financing and marketing of coffee (Gudmundson 2010, 93–100). They established contacts with British capital, the first market par excellence of Costa Rican coffee and were part of the first societal stratum. The British capital paid for coffee in advance which, in turn, financed the small and medium-sized producers, who in exchange for the money lent committed to deliver their crop to the merchant. The merchant subsequently controlled the *beneficiado* business. This advanced financing is known as *habilitation* (Molina 2003, 258–9), in exchange for money, merchandise and agricultural inputs the coffee producer undertook to cancel with its harvest the commitment acquired. Again, there was an unequal exchange between the coffee producer and the *Beneficiador*/Merchant*,* and this inequality was also reflected in the relationship between the agri-exporting bourgeoisie and British capital that financed and established the terms of purchase and sale of coffee, as well as supplies of manufactured and other import products.

After 1850, the formation of companies of British capital with Costa Rican *beneficiadores* became more common, facilitating greater access to money to finance the small and medium farmers. One of the most prolific foreign companies related to the coffee business was William Le Lacheur and Son (Leon 2002, 230), and at the national level the companies Tinoco and Cía, J. Knohr and Hno, Joy and von Schroter and Le Quellec Tournon & Inc. (Leon 2002, 228).

In the second instance, small and medium farmers of coffee, were peasants with access to land, but not money and credit, nor possessors of a profit. This second societal stratum was subject to the *beneficiadores* and was the contractor of waged labour, and impoverished farmers, and empowered small farmers to capture labourers. This type of coffee producer dominated the landscape of the Central Valley (Montero 2014, 286), taking care of the transport of the product by means of carts to the port of Puntarenas and small-scale commerce. Finally, in the lower strata, the laborers and peons, were peasants who often had lost their farm because they could not fulfill their obligations to the exporter (indebted), and they had no choice but to offer their labour force.

In the middle of the nineteenth century, in Europe a country like Holland had consumption per capita between 3 and 4 kg/year which grew to 8 kgs by 1880 (Leon 2002, 87). The English market was, throughout the nineteenth and early twentieth centuries, the main purchaser of Costa Rican coffee. During that long period the percentage of coffee shipped very rarely fell below 50 percent (Leon 2002, 87). Credit and transport were essential to the coffee industry and many Costa Rican coffee farmers had limited financial resources. English purchasers became at times the sole source of credit for coffee farmers and processors and a financial dependence on London import houses developed through loans for future harvests (Leon 2002, 106). The second market was the United States which, by 1900, consumed 340000 tons of coffee. Even between 1850 and 1900 growth in demand came to match Holland, Germany, Belgium, France and Austria-Hungary, adding to the number of countries demanding coffee (Leon 2002, 87). Economic development in Costa Rica due to the expanding coffee industry was significant and stimulated infrastructural development as a necessity, including the postal service, paving of streets in San José and Cartago, the National Theatre, the University of Santo Tomas, and the reconstruction of Cartago after an earthquake.

Along with the growth of coffee cultivation and trade were 'coffee tickets' as a form of small currency. These tickets were illegal but were used with the secret permission of the government, influenced by political connections of the large coffee farm owners (Museos Banco Central de Costa Rica 2019). Import taxes contributed to national wealth and created a stronger market for merchants. The issue of credit was a prime focus for establishing and maintaining the coffee trees prior to the first harvest of coffee, four years after planting. The relationship established with the British market facilitated contacts with commercial firms and traders in Europe for coffee marketing and provision of credit. As coffee was exported, the returning ships would complementarily be full of different products to sell in the country.

#### *Expansion of coffee farming (1886–1948)*

Demand for coffee depended on the international context of the time. During the American Civil War, 1860–1865, a rise in prices resulted whereas the European depression and crisis of 1873–1896 depressed the general prices (Leon 2002, 91). In 1886, different varieties of *Coffea Arabica* (arabica) travelled from West Africa through Jamaica to Costa Rica and were trialed when growers struggled with the *Typica* variety of arabica. In 1908, *Coffea Canephora*  (robusta) was experimented with in the Caribbean lowlands and Northern plains. This would expand the spread of coffee even further through the country into the lowlands; however, once the issue of low quality was highlighted and prices were lowered, the variety was destroyed. The only coffee varietal that was seen to guarantee high quality coffee was *Typica*, which can only grow at high altitudes. Between 1914 and 1948, coffee without losing importance, remaining an economic and cultural reference point for Costa Rica gave way to other products that came to complement the agricultural export model. This included bananas, harvested on the Caribbean coast of the country since the end of the 19th century and on some of the southern Pacific coast. During this period, the crisis of 1929 and the depression of 1930 the First and Second World War affected the demand for coffee, causing a constant fluctuation in prices. Pre-World War Two coffee exports from Costa Rica went to Europe and the United States. When the European market closed during World War Two, the US was the only destination for coffee exports in Latin America and this bestowed them a significant amount of power.

The twentieth century witnessed the expansion of coffee outside the Central Valley. By 1935 coffee was grown from the West in San Ramón to the East in Turrialba. There were also coffee plantations in Tilarán, high parts of Nicoya, the valley of Sarapiquí and San Carlos, the area of Los Santos, Tarrazú and Dota, and the valley of the General and San Vito. Outside the Central Valley coffee cultivation was combined with other activities such as the production of sugar cane, cocoa, bananas and livestock (Botey 2005,4–12). In the 1940s, *Bourbon* coffees were classified to be at the same quality level as *Typica* with a tendency for higher yield production and the Costa Rican coffee board planted large seedbeds. Once ready for transport the variety was distributed widely. Shortly afterward in Villa Sarchi, an area in the Central Valley, a mutation of *Bourbon* with a dwarfing gene was found.

This dwarf variety, which facilitated the picking of the cherries at harvest, was named *Villa Sarchi,* a type of *Caturra* and more commercial seedbeds were established. Smaller and more productive, *Villa Sarchi* was suitable for high-density cultivation with little or no shade and large amounts of fertiliser and uniform pruning were necessary. After 1948, modernizing projects for economic and productive diversification were led in Costa Rica mostly by the *Partido Liberación Nacional*, which after triumphing in the Civil War that year prompted a political process that sought the development of new social groups, different from the traditional coffee exporters. The modernization policies were based on the developmentalist theses promoted by the Economic Commission for Latin America (ECLAC). This proposed the need for industrial development (Vargas 2003, 1213).

### *Softening dependency and insecurity for small and medium coffee farmers (1900–1936)*

Exploitation and dependence did cause disputes over the fixing of coffee prices (Acuna 1986, 114). Between 1900 and 1936 conflict was common due to the absence of mechanisms to fix the price, by the decision of the *beneficiadores*. As early as 1930, the goal for coffee farmers was to achieve a solution to the problem of prices, demanding that the State establish mechanisms of fixation and control through regulatory legislation. It was during these conflicts, during the first decades of the twentieth century, that small and medium farmers used the thesis of 'rural democracy' to present itself as the essence of *being Costa Rican*. As Victor H. Acuña points out, there was a clear difference between farmers and the *beneficiadores*, presenting them as a group or trust that monopolized and exploited the peasantry leading to impoverishment and ruin of the Costa Rican economy (Acuna 1987, 150–2). Within the discourse of coffee farmers, which Carlos Monge Alfaro would support, values such as equity, distributive justice and harmony were ideal, and the fate of Costa Rican democracy was associated with the fate and survival of the coffee grower. Thus, establishing that coffee farmers were the foundation of Costa Rican society. With this social imaginary and faced with a situation of inequality, the farmers defined themselves as exploited.

One of the organizational strategies of coffee farmers was to associate themselves in cooperatives as practiced since 1902, to finance the crops so to no longer depend on the credit provided by the *beneficiadores;* and to acquire a profit centre for the *beneficiado* and break with the dependence of exporters (Acuna 1986, 116). It would not be until the creation of the Coffee Institute (1933) and a greater intervention and control of the State that levels of discontent diminished (Botey 2005, 83).

In the 1930s, Paige (1997) considered two central elements of small farm holder ideologies in Costa Rica. One was the firm conviction that small coffee farmers were the bulwark of Costa Rican democracy and therefore the nation. A clash between small farmers and *beneficiadores* in 1933 reflected dissatisfaction but was not as revolutionary as experienced by neighbouring countries such as El Salvador. It was instead a social movement against the elite with moderate tactics and goals from the small farmers (Paige 1997). The conflict was resolved democratically and in favour of small and medium sized coffee farmers (Pendergast 1999).

The success of small farmers in regulating the price paid by the *beneficio*  owners could be understood as a demonstration of strength of the middle class in Costa Rica, a 'rural democracy' at work. It proved to be a turning point in regulation of the coffee industry in Costa Rica. Rodrigo Facio, a well-known Costa Rican intellectual, stated:

In a country such as ours, social justice can only be achieved by the double path of social legislation that guarantees juridical to the less-fortunate classes their right to live, and by economic organisation which guarantees, materially, in terms of an augmented and diversified production, that the lower classes will be able to effectively exercise that right. (Facio 1948 cited in Mitchell & Pentzer 2008, 101)

An ideological parallel and understanding between acceptance of position between small farmers and large processors, and democracy through negotiations with a responsive government are both attributed to the resolution of these conflicts without violence. Additionally, the introduction of state intervention and price regulations also forced processors to pay a decent price for the berries (Pendergast 2001, 150).

#### *Increasing intensive coffee farming and mono-export (1950–1970)*

The signing of the ICA and the freeze on America's import price for coffee in the 1950s stimulated a global movement toward intense cultivation of high yielding hybrid arabica varieties through the Green Revolution. Coffee production was intensively and extensively strengthened, seed sowing spread throughout the Central Valley which had optimum topographic and climatic conditions.

Subsistence agriculture and livestock was subsequently displaced; the primacy of coffee was indisputable. Coffee favoured mono export (Molina 2005, 33–6), dependence on a single product and this in turn favoured the agricultural exporting bourgeoisie which was consolidated as the main political and economic class of the country, the so-called coffee oligarchy. Although coffee became the central axis of capital accumulation this also left the country in a position of vulnerability to price fluctuations, during an international coffee crisis, poor pay and expensive access to the international market was a common problem (Botey 2005, 52).

To support intensive coffee production and export, the state, as the main agent of change, promoted an industrial model of import substitution, producing consumer goods that were previously imported light goods such as footwear, canned food, personal hygiene products. It aimed at supplying demand for a growing domestic market, which was strengthened by the emergence of the middle class (Vargas 2003, 22–3). Along with this industrial development and supported by a nationalized bank, coffee activity received strong support. The former Coffee Defense Institute became the Coffee Office and handled the management of coffee credit and encouraged the creation of Cooperatives (Rovira 2000, 52).

Costa Rica continued to expand coffee production by settling new land into the 1950s. After this time, coffee farming began to intensify production within already settled coffee lands (Samper 2000, 146–48; Naranjo 1997, 94–104). During the first administration of José Figueres Ferrer (1953–1958) increasing coffee productivity relied on fertilizers, application of new cultivation techniques and the implementation of better coffee varieties (Rovira 2000, 67). *Villa Sarchi*, *Caturra* and *Catuaí,* a hybrid of *Mundo Novo*, a hybrid of *Typica* and *Bourbon* (Mitchell & Pentzer 2008, 102)*,* began to dominate Costa Rican coffee farms (Samper 2000, 146–48; Naranjo 1997, 94–104). The government subsidised transition to the hybrid tree as well as subsidising fertiliser and herbicide purchase, which was necessary for maintenance (Mitchell & Pentzer 2008, 103). This was the beginning of the green revolution. Although appearing as perfect economic sense, in 1952 a Costa Rican agronomist stated:

Coffee production in Costa Rica is in a state of complete exploitation. There is no technology. The agriculturalists are not concerned with conservation. They cultivate coffee like a mine, taking out and never returning anything to the land. (in Winson 1989, 107–10)

From 1950 to 1970, there was a 170 per cent increase in the average yield per hectare of coffee (Mitchell & Pentzer 2008, 102). In the 1960s, there was a strong fight at the international level to maintain high prices and at the national level to continue modernizing production with the use of fertilizers. This gave support to the small and medium farmers through state credit programs. By 1970, Costa Rica was the third most productive coffee exporter in the world and the most productive in Latin America (Winson 1989, 107–10). This was an astounding statistic considering the size of the country. Costa Rica experienced the highest rates of deforestation and population growth in the world (Rosero-Bixby & Palloni 1998, 2). From 1970, the United States Agency for International Development (USAID) directed \$AUD 111.20 million, "much of it funneled through a Costa Rica- based program called the Programa de Mejoramiento del Café (PROMECAFE)" (Rice & Ward 1996), to the Central American region to industrialise the coffee industry. Mono-cropping increased and so too did dependency on the international market. The increase in price however was not to last.

Waters were contaminated from an increase and mass use of fertilisers and herbicides, and the health of farmers and their children using the fertiliser and herbicides was compromised (Mitchell & Pentzer 2008, 103). The benefits and downfalls of the green revolution became evident; not only did the country become more dependent on one crop that relied on the international market, but farmers had to source the fertilisers and herbicides necessary to maintain the hybrid variety from international companies. From 1976 to 1985, Costa Rica's public debt rose more than six-fold from \$889.60 million to \$5.28 billion (Carriere 1991, 186). This has been detrimental to livelihoods and the environment at varying scales across the country. A cycle of poverty in coffee farming regions emerged as the fluctuant nature of the coffee market became evident.

#### *Resolving the influence of intensive farming and economic crisis (1970–2000)*

In the 1980s and 90s, following a severe economic crisis between 1978 and 1982, efforts to change Costa Rica's export profile without abandoning coffee production were witnessed. As an exporter of non-traditional products (Vargas 2003, 40), agriculture of change favoured the production of pineapple, cardamom, flowers, squash, among other products (Honey 1994, 171). In 1982, it was forbidden to farm *Robusta* by law in Costa Rica, from that year arabica is the only coffee species grown across the country which reduced expansion of intensive sun grown Robusta farming across the country. In addition, tourism began to shape as a lucrative economic activity, going hand in hand with the protectionist measures of the various governments to protect part of the country's natural resources. Despite these efforts, the centralised power dynamic increased and entrenched the dependency that coffee farmers had on international markets and consumers.

Many new coffee cooperatives were established from the early 1960s and 1970s. The National Council for Cooperatives (CONACOOP) were created in 1973 and works between government and the public to represent Costa Rican Cooperatives. INFOCOOP works to promote new cooperatives and capacitate existing cooperatives through technical assistance, finance and investigation.

Through these public mechanisms the cooperative movement and support in Costa Rica strengthened. Cooperatives in the Costa Rican coffee industry were increasing in number between 1970 and 2000, particularly as land distribution patterns maintained and the coffee price demonstrated particularly volatile in the 1970s and 1990s which can often reinforce reliance on a cooperative rather than selling direct to the market.

#### **Summary**

The current day coffee industry in Costa Rica is different to other coffee producing countries. Continuing dependence on colonial powers through trade relations was offered to Costa Rica as much as other countries of the region post-independence. Costa Rica, the government and their citizens, including farmers did however manage independence in a different way. The sheer population of coffee farmers in Costa Rica due to small farm holding presence, distinct from the number of labourers, certainly offered opportunity for a united movement against a hierarchy of beneficios and foreign traders in one of the more significant agricultural exports of the country.

Providing a detailed history of Costa Rica is an important basis for this monograph. How Costa Rica has developed as a country and how it has handled the coffee industry and coffee farmers demonstrates similarities and difference with other coffee farming countries, and with neighbouring countries. It has been considered the country of peace in the region. While experiencing conflict through the centuries the experience has not been as severe or complicated as those experienced by other countries in the region. These differences and similarities emphasise how findings presented in chapter 5–13 should be understood within a country context only.

The following background chapters provide an overview of considerations related to how trade influences development, and of the international coffee industry as a precursor to introducing and explaining sustainability certifications for the coffee industry. Bringing understanding from these chapters together with the findings chapters, chapter 6–13, contributes to and strengthens understanding specific to the Costa Rican context. A contemporary history of Costa Rica related to coffee is provided in chapter 6 which combines fieldwork quotes and findings with secondary literature.

## CHAPTER 2

## **Trade's influence in development**

#### **Introduction**

The geographically distanced approach of Multinational Corporations (MNCs)10 and Transnational Corporations (TNCs)11 only increases trade's negative influence on the environment, individuals and society with little ability to regulate or ensure accountability (Vogt 2019a). The dominant paradigm of a time and ideas of acceptable outcomes, and/or an ability to fulfill trade priority above other development indicators are also influential. Development indicators have come to be understood in different ways, with attention previously going to Gross Domestic Product (GDP) then shifting to address and recognise human development indicators, such as the Human Development Index (HDI), used since 1990 by the UNDP and developed by Manhbub al Haq. In addition, sustainability indicators, such as the Millennium Development Goals (UN Millennium Project 2005) and the Sustainable Development Goals (UN 2018) (MDGs and SDGs) which include environmental indicators and outcomes, are more recently used. Often, sustainability and human development definitions influence how development indicators are included and considered as positive. This chapter discusses how paradigms and praxis cycles influence how outcomes are understood as positive; and how poverty reduction and sustainability became an integrated consideration for development. The definitions of poverty reduction and sustainability have changed over time and as such they are explained in more detail.

11 Transnational Corporations operate substantial facilities and do business in more than one country without a home country of operations.

#### **How to cite this book chapter:**

10 Multinational Corporations are worldwide enterprises which own or control production of goods or services in more than one country (as well as) home country operations.

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 33–38. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.d. License: CC-BY 4.0

## **Paradigm and praxis cycles counterbalancing created imbalance**

The influence of corporate, non-governmental or governmental action limits or works within the scope of categorised ideas of progress and development, with inevitable influence on the culture in country (Vogt 2019b). The cultural influence of varying approaches on the 'subject' community, that is the community that is to be developed, rely on implementation of these ideas. Watts (2005) explores the idea that development itself is inevitably a manipulation of culture, in a search for things that 'work.' There is, within this idea, the underlying assumption that what exists now in 'subject' communities does not work. A cultural shift resulting from any development process is then inevitable; it is only a question of the 'direction' and whether local culture will also be influential. A corporate prerogative to shape culture to complement profit driven strategies and activities can result without consideration of benefit for local population or culture, for example.

The influence of corporate investment and activity has been noticed in Costa Rica. In 1953, the President of Costa Rica, Jose Figueres Ferrer stated:

The notion of business as private is an illusion. In practice, we accept every kind of social regulation, from the moment at which a company is founded and organised passing then to control of quality and characteristics of their products, until the moment at which the benefits are distributed. All life in society implies the renunciation of certain liberties in exchange for certain guarantees. (Martz 1959)

Since that time, Figueres recognised the inevitable influence that foreign business can have on the Costa Rican people and how it can shape social conditions of the country. The comment foreshadowed developments in the 1980s when structural adjustment programs (SAPs) allowed a foreign owned fruit industry to develop in Costa Rica (Amanor 2013). The development of the Costa Rican coffee industry examples how an industry and resulting practice can transform culture.

Indeed, the expansion of coffee farming landscapes across the world represent an accumulated cultural shift, as practices, routines and mentalities align and change by industry or national priority.

## *Development as poverty reduction understanding and approach*

Approximately three quarters of the world's poor live in rural areas and most are dependent in some way on agriculture (Castaneda et al. 2016). A focus on agriculture is necessary for reducing poverty as a basis of economic livelihoods for the poorest people (IFAD 2006, 4). The Millennium Development Goals (MDG) sought to increase and unify effort to reduce poverty (UN Millennium Project 2005). The first of these goals was to halve the proportion of hungry and extremely poor people by 2015 (UN 2019). Mchumo (2017) stated at an official pre-UNCTAD XII meetings that:

We believe that it is impossible to eliminate poverty and hunger, [to] achieve sustainable development and attain the targets of the MDGs without addressing the commodity *problematique* and improve the conditions and prospects of commodity producers. (Mchumo 2007)

The approach to eliminating poverty and hunger to achieve sustainable development is important. Also important is how poverty is defined and understood. Ludi and Bird (2007, 2) argue that a monetary approach to measuring poverty is the most commonly used by government and international institutions. Decades ago, Townsend (1980) considered the multi-dimensionality of poverty, moving beyond income to relative societal position. Sen contributed a broader understanding of poverty considerations beyond income and economic indicators with his theory of poverty as a deprivation of basic capabilities (Sen 1999). This was influenced by and influenced many situations including but not limited to low income.

Poverty can be sensibly identified in terms of capability deprivation; the approach concentrates on deprivations that are intrinsically important, unlike low income which is only instrumentally significant (1999, 87). Sen recognised that there is a reciprocal relationship between income and a person's capability, describing it as a "connection going from capability improvement to greater earning power and not only the other way around" (Sen 1990, 90). The capabilities approach expands the evaluation of poverty to consider not only "opulence, utilities, primary goods or rights but functionings (doings and beings) – [as] a measure that encompasses these other units of evaluation" (Comin 2001, 4). He proposed that we evaluate development in terms of "the expansion of the capabilities of people to lead the kinds of lives they value – and have reason to value" (Evans 2002, 55). This connects with ideas of freedom, development and wellbeing, complementing Townsend's (Evans 2002, 55) societal position theory. Sen (1992) discusses the links between capabilities and functionings where functionings determine the nature of a person's being. A person's capability to achieve the functionings they choose will determine that "person's freedom – the real opportunities – to have well-being" (Sen 1992, 40). Achieved well-being is dependent on the capability to function. It is argued that there is a link between well-being, democracy and freedom stating that in a freedom-orientated approach the participatory freedoms cannot but be central to public policy analysis (Sen 1999, 110). Hence, he stresses the importance of social choice in democracy that involves "a thick, sense of messy and continuous involvement of the citizenry" (Evans 2002, 55) which goes beyond electing leadership in government.

The World Bank's approach to development shifted as of 2000/2001 to a focus on poverty reduction. It began to consider the multi-dimensionality of poverty inclusive of and beyond economics. Despite a deeper understanding of poverty, the international approach of the time was shaped by market deregulation and a focus on economic development exemplified by the 'De Soto' (2000) approach.12 Hints of De Soto's approach to development could be found in IFAD's report on supporting small land holders in agriculture to reduce poverty (IFAD 2013; Ravallion 2016). Dr Lorenzo Cotula, a senior researcher at the International Institute for Environment and Development (IIED) wrote:

Agricultural investment can bring benefits to developing nations, but large land deals carry big risks as local people may lose access to the land and resources, they have used for generations. The more promising investments are those that involve supporting local smallholders, rather than large plantations. (IFAD 2010)

The World Bank's exploration and report on what poverty meant for the poor (Kanbur et al. 2000, 7) supported the multi-dimensionality of poverty, demonstrating tones of Sen's capability approach.

Poverty, according to the World Development Report 2000/01 is related to material well-being lacking to the point of physical deprivation. It is also a psychological experience related to a lack of empowerment and exclusion from decision-making which leaves the poor vulnerable and exploited. A lack of social and community relations, infrastructure such as water, roads, health and assets are perceived to be directly related to vulnerability and risk. These poverty indicators complement Sen's considerations of poverty in the realm of capability and functioning, leading to freedom by the elimination of oppression, improved community relations and access to education and health and social security provisions. Poverty is subjective and personal according to gender and the country or region where it is experienced. Increasing the 'sustainability' of coffee is central to efforts to reduce poverty and protect the environment. This is usually assumed achievable within a market-based economic development approach. Evans (2002, 59) suggests that ideas of development as freedom be

12 Hernando de Soto, Chief Executive Officer of one of the largest European engineering firms and governor of Peru's Central Reserve Bank is also the President and founder of the Institute of Liberty and Democracy (ILD). This institute takes practical implementation measures to bring the poor into the economic mainstream.

extended further than initially introduced. Evaluators must correspondingly focus more closely on how to prevent market-based power inequalities from undermining development as freedom (Sen 1999).

## **'Sustainability': meaning and efficacy**

The most common definition of sustainable development is based on an idea of Our Common Future:

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs. (WCED 1983, written into a report in 1987)

In this context, coffee grown and traded in a 'sustainable' way seems a contradiction. Peak oil and global targets to reduce carbon emissions are only contributed to through the international trade of coffee. It is suggested that how sustainability is understood and used will influence how outcomes are understood and subsequently the strength and effectiveness of the sustainability discussed. In an international trade context greenwashing is commonly referred to where sustainability is the claimed intention or activity but does not align with actual outcomes or activities.

Sustainable development concepts and goals are considered to have moved from a concern of pollution control and availability of natural resources to a more balanced position that puts human development at the centre (Quentel et al. 2009)**.** Sustainability within international trade seeks to manage myriad interests where commercial production can dominate. Where broad definitions and multiple goals guide negotiation, the interests of trade can outweigh those of the environment and society**.** The 2030 Agenda for Sustainable Development outline areas of critical importance for humanity and the planet understood as people, planet, prosperity, peace and partnership (UN 2015) based on the SDGs**.** The SDGs allow for seventeen goals and 169 targets. Negotiating with trade interests and existing structures may limit ambitious outcomes for society and the environment where definitions of sustainability are not specific enough. Within the SDG goals and targets, while detail is provided, interpretations can allow a range of activities within sustainability intentions. Where interpretations are misaligned, contradictory practices to purpose emerge.

### **Summary**

As understandings of acceptability in approach and outcomes within international trade continually change, including how different interests are prioritised, the contribution of paradigms and praxis cycles are important for and influential to producing countries. Underlying this importance is how such definitions are understood and the detail they allow to truly address the intention of a concept. Poverty reduction and sustainability are two leading paradigms or concepts that seek to counter the imbalance caused through international and local trade practices. Sustainability certifications are one of the complementary institutional efforts developed for the sustainability paradigm and complement poverty reduction intentions. For the context of this monograph, the following background sections explain the international coffee industry and sustainability certifications for the coffee industry.

## CHAPTER 3

## **The international coffee industry**

#### **Introduction**

Coffee is one of the most popular and legal psychoactive drugs in the world. It stimulates the central nervous system and metabolism. It is commonly believed that coffee is the second most valuable exported legal commodity on earth (to oil) (Pendergast 1999; Avery 2006; National Geographic 1999). Further investigation reveals that coffee is the second most valuable commodity exported by developing countries, the first is oil (Pendergast 2009). The international coffee industry was worth \$20 billion (ICO 2017) in 2017. When compared to oil, income from coffee is directly and more evenly distributed in producing countries according to the number of people involved, and the dominant farm size. There are approximately 125 million people directly reliant on coffee for income (O'Brien & Kinniard 2003, 237; Leonard et al. 201213). Considering the number of undocumented and under recorded transitory and seasonal migrant populations that work during the coffee harvest, this would be an underestimated figure. Amongst farmers, most hold 10 hectares or less of coffee (Gresser & Tickell 2002). A farmer's experience in the coffee industry will be influenced by the size of the farm, established networks for sale and distribution, and access to credit to name a few. It is important to recognise the difference between a small coffee farm and a larger centrally owned and managed plantation. The difference is not only by number of people involved in managing the farm but also by the explicit and implicit roles and responsibilities; capabilities and capacity for risk taking. There is also difference between a small farm and a producer group of small farmers.

#### **How to cite this book chapter:**

13 125 million is still quoted by the Fairtrade Foundation with no reference.

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 39–53. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.e. License: CC-BY 4.0

As coffee is often farmed for commercial purposes, the international industry has a significant influence on farming practices and, therefore, on how humans interact with the landscape. As a historic legacy of the colonial bean, coffee has been farmed intensively as a cash crop across many countries to satisfy national government requirements for foreign currency through export (Chirwa et al. 2007; Kennedy & King 2014; Montero 2014; Lekane 2017). National agricultural policy and planning is expected to be geared towards, and continually influenced by international market and industry trends. The price of coffee is a central consideration and can be an indication of success for producing landscapes, linked to the global supply and demand of the commodity as it ebbs and flows (Lewin et al. 2004; Osorio 2004). Coffee farming is also however a source of insecurity, both financial and non-financial, in producing landscapes. The international market and trade activity can ultimately influence outcomes in coffee farming landscapes and vice versa through supply and demand and have flow-on effects that translate to other coffee farming landscapes.

## **Brief history of coffee**

No one has managed to confirm where the word or name 'coffee' originated or where it was discovered (*Black Coffee*, 2005; Abattouy et al. 2014). The word 'coffee' is a derivation of an Arabic word '*qahwa',* which means 'wine' (Weinberg & Bealer 2001: xiv) and coffee itself was often referred to in Europe as the 'wine of Islam'. One origin story introduces 'kaldi' (Weinberg & Bealer 2001), an Ethiopian goat herder who recognised a change in the behaviour of his goats, they danced, after eating fruit from a wild bush in the sixth or seventh century. The story of dancing goats intersects with written records of the Sufi using coffee for meditation and concentration in the monasteries of southern Arabia. The Sufi are considered the first to have brewed the bean into a drink; however, there are many stories of its discovery (Weinberg & Bealer 2001). In search of *marqaha*14*,* coffee was sought after through the Middle East before its charm extended and spread to Europe. Coffee has been a revolutionary bean with an exotic, long and beautiful history. Eaten green by goats in Ethiopia, taken green and ground by the whirling Sufis and roasted by the Persians, coffee populated the ports of Yemen's Mocha and then Mecca, spreading cultivation from the Middle East and Africa to Asia and Sumatra since approximately the sixth century. Coffee arrived in the Americas in the seventeenth century, and then reached Hawaii. This only increased cultivation through much of the colonised world and consumption of the beverage in the colonising world. Pendergast (1999, 3–20) explains how consumption often stimulated social change by allowing uncommon public interactions between genders and often encouraged political discussion. It overpowered and endured legal bans throughout

14 An Arabic term for the euphoria that coffee produces when consumed.

the Arab world in the 1500s as a response to political discussions emerging from coffee houses (Pendergast 1999, 6) and has been trafficked across the globe in imaginative ways. Coffee's arrival in Brazil depended on the exchange of a bouquet of flowers between a Governor's wife and a Portuguese Brazilian Official and mediator, hidden in the bouquet were coffee beans. A legacy of controversy and conflict through the history of coffee provides an interesting contrast to the social and unifying elements of the bean in cultivation and in consumption. A red herring amongst us.

## **Botanic background of coffee**

The two species of coffee most grown in the world are, *Coffea Arabica*  (*C. Arabica*) (arabica) and *Coffea Canephora (C. Canephora)* variety *Robusta*  (robusta). On a smaller scale, *Coffea liberica* (*C. liberica,* 'liberica') is also grown for the market.

**Figure 1:** Classification of coffee: species and varieties.

There is no one origin of coffee; instead there are multiple origins, divided by species and varieties, natural mutations and natural intra- and interspecific hybrids. The arabica plant was first classified in 1753 by Carl von Linné, a Swedish botanist (Charrier & Berthaud 1985). The varieties listed in Figure 1 are the most significant as commercial progenies and the most genetically and culturally significant, *Coffea arabica var. typica* (typica) and the natural mutation, *Coffea arabica var. bourbon* (bourbon). Bourbon is also considered a natural mutation of typica by some. Robusta is the most commercially grown and traded of the canephora species. *C. canephora var. nganda* (nganda), is not often grown or traded. There are approximately 60–120 species within the *Coffea* genus and over 25 varieties within the arabica family. Wild arabica and robusta varieties are often only found in their native environments, and different species and varieties are introduced to countries and regions of countries variably and for different reasons, normally influenced by an interest in the economic opportunity provided by the cash crop.

The commercial varieties listed in figure 1 represent sources of natural and laboratory-based inter- and intra-specific hybrids, natural mutations, with liberica, *C. anthonyi and C. eugenoides* as progenitors or gene donors for arabica. The majority of arabica mutations or hybrids will ascend from typica or the natural mutation of typica, bourbon. From here, numerous sub-varieties and hybrids have developed naturally or been purposely bred for their productive and resistant qualities. Within the *Arabica* species there are 25 varieties. Thus, the resulting varieties that are grown around the world vary for numerous historic and commercial reasons, they require different conditions for farming and there are physical and climatic characteristics that are more suitable for specific contexts.

Arabica requires different conditions dependent on elevation and climate, and typically grows across a narrower altitude range than robusta, requiring higher altitudes and it is known for high cup quality. While autogamous or selfpollinating, benefits from pollinators are noted as significant for tree health, fruit set and, occasionally, yield (Raw & Free 1977; Vergara & Badano 2009). The tree can reach up to five metres in height but is normally kept to two to three metres for harvest. It is an evergreen bush with dark green leaves that are shiny on top and matt green underneath. The grupes, the botanical name for the coffee berries, are slightly larger than robusta grupes and more oblong in shape. Arabica also varies by stages of flowering and berry ripening on the tree dependent on location. In lowlands experiencing constant rainfall every year, the order of the ripening of grupes and blooming of flowers is consecutive, whereas in semi-dry higher areas, the fruit and the grupe will be found on the tree at the same time (Mazzafera et al. 2010). Such characteristics provide arguments for and against shade-grown coffee particularly related to pest and disease management (Karungi et al. 2015; Pumarino et al. 2015; Jaramillo et al. 2013; Wrigley 1988; Gliessman 2007). Arabica is vulnerable to changes in climate and apart from some wild and natural hybrid varieties, geisha and hybrid of Timor, is highly susceptible to the international coffee leaf rust disease15, one of various diseases16 that have a significant effect on coffee farming internationally (Avelino et al. 2004, 2015)**.**

In contrast, Robusta holds a different botanical profile to arabica. It is a more durable plant; it demonstrates resistance to coffee leaf rust and is suitable for an efficient and guaranteed coffee harvest and has a higher caffeine content. It grows taller, to seven metres, has an umbrella shape attributed to the topweighted long branches and is allogamous, meaning that it requires crosspollination. Robusta has slender branches, leaves that are dark green and narrower, flowers tinged red and berries that are purple when unripe and oblong when ripe (Nesbitt 2005).

It is amenable to growing at higher altitudes but is typically considered suitable for low-altitude cultivation below 800 metres and more suitable for withstanding temperatures up to 36 degrees higher than arabica. The caffeine content of the arabica beans, approximately 1% (Mazzafera et al. 2010) is estimated 1.2% lower than that of robusta, which is approximately 2.7% (Nesbitt 2005). Robusta generally sells at a lower price than arabica, which holds a higher market value and as such, is more commonly farmed representing 60% of all coffee traded internationally (ICO 2014). Robusta, while not unequal to the taste attributes of arabica, has therefore achieved a significant economic position due to distinct rapid growth, early and fruitful yield and disease resistance making it a valued species within the genera.

#### **The Bean Belt: who wears the pants?**

The geographic divide in the coffee industry bridges another parallel between coffee and oil and is representative of a dependent dynamic within the coffee industry. Most coffee grown in the world is located between the Tropics of Cancer and Capricorn, in the coffee belt. Shown in Figure 2.

The psychological, biological, financial and cultural dependence in consumer countries versus the financial, cultural and livelihood reliance on coffee within the coffee belt indicates a reciprocal dependence within the coffee trade. Dependency is a classification of poverty (World Bank 2000/2001, 28), yet interdependence is considered an aspect of sustainable development (Adams & Ghaly 2006). By dependence it seems the producers in *the belt* are more reliant on the periphery, *the pants (or skirt),* as farmers are almost entirely reliant on

15 CLR attacks the leaves of the coffee plant, causing the coffee cherries to fall earlier, which then affects harvest and yield.

16 Pests and diseases that affect coffee cultivation internationally and within the two countries are discussed in later chapters.

**Figure 2:** The bean belt. *Data source: Adapted from National Geographic Coffee 1999.*

**Figure 3:** Periphery of coffee belt: Coffee consumption by country17 (60kg bags/ year).

*Data source: ICO 2018.*

17 This is distinct to consumption per capita, which provides information about quantity consumed per person. This difference is significant, with many Scandinavian countries consuming the most per capita: Finland, 12.2 kg/capita; Sweden, 10.1 kg/capita; Norway, 6.68kg/capita; Iceland 8.43 kg/capita and Switzerland, 7.65 kg/capita (ICO 2018). In comparison, the USA, which imports the most at a global level, consumes 4.5 kg/capita. Consumption per country is provided here as a more general overview to compare where coffee is produced to where the majority is imported.

purchase by international companies. It is therefore in the relationship between farmers and consumers or roasters that efforts toward sustainable development and poverty reduction could be effectively aimed to transition from dependence to recognised interdependence. Data extracted from the International Coffee Organisation (ICO) illustrates the *periphery* of the coffee belt, the consumers, or importers of coffee. See Figure 3.

When these two diagrams are compared, it becomes apparent that for coffee to fulfill its destiny and be consumed, in turn providing income for producers in *the belt,* it must travel. Transport, infrastructure and oil are all necessary belt straps. This relationship as dependent or interdependent seems to be an appropriate area of focus to improve imbalance. The price paid for coffee increases and decreases frequently and constantly in producing countries. In consuming countries, the price maintains (Hallam 2003, 8) with occasional increases reflected in the cost of a coffee bought at a café. Seventy per cent of the world's coffee is grown on farms of fewer than 25 acres with most of these ranging between 2.5 and 12.5 acres. Small coffee farmers are amongst the poorest people in the world and the relationship between poverty and coffee becomes more contrary when considering the value of the international coffee industry, \$125.1 billion in 2009 (Pendergast 2009). In an industry that represents such significant revenue at an international level, the suppliers and labourers of the industry are still considered poor and vulnerable. The distance that the coffee green and ready for roasting, *el café de oro* must travel is significant in terms of oil costs and logistics. With 25 million farmers reliant on coffee harvest for income, trends in the market and in farming techniques have a significantly global and interconnected reach. Berry (2004) in Garcia supplies the following diagram of the coffee sourcing chain which demonstrates the various and alternative channels. See Figure 4.

The additional line (orange) directly connects roasters with farmers, commonly referred to as Direct Trade. Various approaches to trade channels can influence the income of coffee farmers and processors. Figure 5 provides an idea of how the sourcing chain can differ based on country and industry context.

Figure 4: Basic In-country coffee sourcing chain

**Figure 4:** Basic In-country coffee sourcing chain.

Standard trade arrangements

Direct trade: farmer, or cooperative/association direct to consumer market (local or export) within three scenarios — roasted on farm; roasted in country off-site; roasted in another country. Will include varying government involvement.

Figure 5: Example of variance in country specific sourcing chain

Potential roasting location

**Figure 5:** Example of variance in country specific sourcing chains.

The divide in profits through the supply chain particularly between roasters, retailers, processors and farmers is alarming where farmers bear the highest cost and risk in the coffee supply chain (Garcia & Lemos 2006, 15). From all profits of the coffee supply chain, growers are estimated to receive 10%, exporters 10%, shippers and roasters 55% and retailers 25% (Ransom 1997, 41) with possibility for variance dependent on the sourcing chain.

The power of demand remains with very few in the international coffee industry., see table 1. In 1998 Neumann and Volcafe dominated the international

**Table 1.** Major traders in coffee industry.

*Data source: ITC 2011.*

market of green coffee trade by holding 29% (Ponte 2004). In 2012 Neumann, Ecom, Volcafe, and Louis Dreyfus were the lead traders of coffee (Terazono 2013). Lead traders with a secured supply of beans, off takers differs slightly; with Kraft and Nestle representing 11% each of world exports. Nestle and Kraft purchased 1/4 of the world's traded coffee; and the top five coffee traders, represented 40% of all traded coffee (ITC 2011).

International traders, of whom there are few (Ponte 2004; ITC 2011; Terazano 2013), and then buyers 'wear the pants' within trade dynamics. However, the belt, the farmers and in-country processes, keep them up. Interdependence between international traders and farmers is evident.

## **Collapse of the International Coffee Agreement**

Making a stand against what was considered a 'coffee paradox' (Daviron & Ponte 2005), Uribe, the New York Representative of Colombia's National

18 Amajaro has since been acquired by Ecom.

Federation of Coffee Growers and the Chairman of the Pan-American coffee bureau sought to enlighten the US people. Including major coffee stakeholders, importers, marketers, baristas and end consumers of the actual value of coffee for farmers. Encouraging thought past what consumers pay for a cup of coffee and realising that only 38% of the \$2.78 billion spent on coffee by US consumers went back to Latin American producing countries. He stated:

We in Latin America have a task before us which is staggering to the imagination illiteracy to be eliminated, disease to be wiped out, good health to be restored, a sound program of nutrition to be worked out for millions of people. The key to all of this is an equitable price for coffee. (Uribe 1949 cited in Pendergast 2001, 194)

Colombia, Brazil and mainly the USA organised the International Coffee Agreement (ICA) to create a new quota system and raise coffee prices, a part of which involved the Colombian National Federation of Coffee Growers (Bentley & Baker 2000, 3–4). From 1958–1989, the coffee industry was regulated through the ICA. The ICO was established in 1963 alongside the first ICA in 1962. The agreement sought to regulate the price of coffee with a quota system which would prevent any member country from supplying the international market over their assigned quota. The ICA also allowed funds to promote the coffee industry, then operating under successive agreements. The move toward trade liberalisation and a preference for a free market political economy approach of the 1980s resulted in a global movement away from multilateral regulatory agreements and regulation of MNC activities in developing countries. By 1989 the US had withdrawn support for the ICA and resigned from the ICO. As a result, the ICA collapsed (ICO 2016) and the ICO price for coffee slumped. Following and reinforcing a free market approach the World Trade Organisation (WTO) was established in 1995 with the General Agreement on Tariffs and Trade (GATT). The agenda of the WTO was and is to liberalise international trade in goods and services through the removal of tariffs and subsidies. This includes restricting government regulation and promoting TNC investment in essential services such as water, health, education and the reinforcement of intellectual property rights.

GATT paused the quota system of the ICA as it sought to promote a neoliberal model of development through deregulation of international markets. Such an approach would reduce the state's ability to intervene in market activities. The collapse of this regulatory system resulted in disagreements amongst exporting countries, a boom in supplies due to new production techniques and liquidation of public stocks of coffee maintained by producing countries. An astounding rise in production of *Robusta* coffee from Viet Nam which went from being an insignificant coffee grower to the second largest producer in the world, was a contributor to increased supply.

#### *Market Saturation*

The collapse of the ICA in 1989 and removal of quotas as part of a global deregulation of international markets resulted in market saturation of *Robusta*  coffee from Viet Nam and Brazil and significant fluctuations in global prices (Akiyama & Varangis 1990; Osorio 2004). Eventually a slump in the price of coffee resulted (Figures 7, 8 & 10). For example, in 1983, Viet Nam exported 44,000 bags of coffee, by 1990, this amount had increased to 1 million bags and in 2001, had jumped to 14 million bags (Luong 2003). At the same time, Brazil had increased its production and export quantity and the resulting saturation of the market with robusta rather than arabica drove the international price of coffee down further, below 50 cents per pound (Figure 8), leading to the 'coffee crisis' in 2001 (Osorio 2002; Igami 2015). In the same year, the first collapse of the Doha 'Development' Round occurred (Baldwin 2007), the subsequent four collapses were an additional strong indication of resistance to the proposed method for deregulation of international agricultural markets.

Resistance came from some of the countries whose concerns the agenda claimed to be meeting; Brazil, China and India refused to agree to the conditions offered (Bailey & Ranald 2006) creating an unpredictable environment for international trade, particularly between developing and developed countries. Figures 6 and 7 present coffee prices across 1969–2015 and 2009–2018, respectively, with cross-over in representation between 2009 and 2015. While

**Figure 6:** Coffee export price per pound (1969–2015). *Data source: Macrotrends 2018.*

**Figure 7:** Coffee export price per pound (2009–2018). *Data source: NASDAQ 2018.*

the price fluctuations appear similar across both figures, the price in Figure 6 does not drop below \$1/pound. The low price highlighted in 2014 indicates this notable difference between the two figures.

The 2001 'coffee crisis' was one of the most significant occurrences in the coffee industry within 40 years. When considered alongside comparative maximum prices during the 1969–2009 period (nearly \$3.50/pound)—and during the 2009–2018 period (nearly \$3/pound)—the difference in minimum and maximum price is most significant between 1969 and 2009. In 2017 prices were just above 160 US cents/lb (IE Coffee futures 2019). How production and the price paid to the grower compared between Costa Rica, Brasil and Viet Nam are presented in figure 8 and 9.

The international price of coffee has again dropped in 2019, due to surplus supply, despite ongoing ideas that the supply of coffee is under threat due to climate change. The 2019 January price went from 101.56US cents/ lb after a low of 99.16 US cents/lb (ICO 2019). It again decreased to 94 US cents/lb (ICE Coffee futures 2019). ICO (2019) state that 94 cents/lb (75 cents/lb for robusta) was the lowest since October 2006, on par with 2008 prices, figure 9.

**Figure 8:** International coffee production during two coffee crises between (1990–2003).

*Data source: ICO 2013.*

*Data source: ICO statistics 2008.*

19 The above stated prices are composite indicators of the daily price of coffee exports.

### **The contrast of a coffee crisis**

A low coffee price reveals the vulnerability of coffee farming landscapes' income to global supply trends. All quiet on the Western Front (Remarque 1929), while out of context, can encapsulate an international coffee crisis where the divide between the economically developed and emerging world creates an underlying dynamic for the coffee industry. The prices on the world market are only an indication of what a grower is paid for his or her coffee harvest per pound however fluctuations in this price determines incomes of Costa Rican farmers, a distinct cost of production by country is also influential. Figure 9 demonstrate how the price decrease differed by country. In Costa Rica it was less extreme compared to the standard price offered. The influence in Costa Rican coffee farming communities was however significant.

The retail price, what is paid at a café or for roasted coffee whole or ground, and retail sales are differentiated from sales of the café de oro (green bean). They are not an indication of the money flowing to coffee farmers or cooperatives. When the price of coffee dropped to 70 cents per pound in 2002, the lowest in real terms for 100 years (Osorio 2004, 1), it went unnoticed in the developed world where the prices for roasted and retailed coffee remained steady or *quiet* (Hallam 2003, 8)*.*

We believe that the soundest way of strengthening, from the outset, the economy of the Latin American countries, consists of paying a fair price for our products. During World War II the coffee market was fixed by the Office of Price Administration at a level that turned out to be one half of the market price when controls were released. This meant that coffee producing countries contributed to the war effort during the three or four years, fifty percent of the gross value of their main crop. We do not complain but we think that North American people should know about these things, especially since they are so frequently told of the inequities imposed upon them by the expense of their foreign aid programs. The healthiest source of income for any nation, as for any man, is the fair compensation for its own efforts. (Figueres cited in Martz 1959, 243–4)

It is important that consuming countries understand the significance of a fair remuneration for one's efforts in a producing country as it can facilitate an understanding of how their purchase preferences might influence the situation. For coffee farmers in the developing world, the slump in the global market price had serious implications such as forced migration through a necessary abandoning of farms and communities. Maintenance costs became higher than the sale price of green coffee. The perceived land value of coffee farms depreciated as perceived associated risk increased. Small and medium-sized traders could not compete with larger traders, the market at this level became more concentrated (Ponte 2001, 16).

#### **Summary**

An understanding of the international coffee industry clarifies trade's influence in development. The geographic and socio-economic divides conducive to negative influence have been identified by producing countries. While supply influence market prices, the international coffee industry can have significant influence on producing country landscapes. The international coffee industry is, like many commodity markets, volatile and risky for farmers. While this volatility exists within the belt, *the pants (or skirt)* – the consumers – remain up, supplied and *quiet*. How the sourcing chain171819 20 includes various stakeholders can influence distribution of economic benefit and may also influence poverty reduction and sustainability outcomes. The value of the industry and potential profit can influence prioritised farming and production approaches, and therefore, landscape outcomes.

20 Sourcing rather than supply chain is used to better demonstrate the influence of a purchaser choice versus the quantity of coffee farmed. It is however recognised that where coffee supply reduces by uncontrollable circumstances this might better be described as a supply chain.

## CHAPTER 4

## **Sustainability Certifications**

#### **Introduction**

Sustainability certifications seek to encourage socially, and environmentally sustainable practices guided by exclusive standards and processes for implementation. They are uni or multi-stakeholder organisations, that work intra market and extra business to certify sourcing of natural resources that are major commodities, and more recently less conventionally traded. They can provide external advice and support for procurement and trade guidance for a business, through networks of certified businesses, or certify the business practice. While some certifications have been operating for nearly thirty years, they are still orientating themselves toward 'consistently positive' influence (Vogt 2019c, 2019e). Over the last decade they have been used more by multinational companies, originally only used by small businesses.

This chapter will provide a brief overview of sustainability certifications, and more detailed secondary information about two certifications, Rainforest Alliance (RA) and Fairtrade International (Fairtrade). Some quotes from fieldwork collected from an employee of RA are included in this section to provide direct information.

#### **Sustainability certifications**

As trade can influence development, certifications are considered capable of influencing the culture of a country (Watts 2005) by requiring compliance to a standard and therefore behaviour change. Each certification abides by a prerogative or ideological approach distinct from others, as such, the idea of what will result according to improved social and environmental outcomes is directed by the preference of each certification. The standards that form the foundation of voluntary certification are developed at an international level in most situations, and certainly at the beginning of the sustainability certification effort.

#### **How to cite this book chapter:**

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 55–66. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.f. License: CC-BY 4.0

Leclair (2002) questioned the longevity of sustainable alternative trade systems. Where relying on attitudes and behaviours of consumers he foresaw only a niche market stabilising. Since that time, the number of certifications globally has only increased, and what is required has also shifted influencing legitimacy and overall efforts of certifications amongst other legal, extra-market and internal to business efforts. Grainne de Burca (2005, 10–11) brings attention to the state like responsibility and role these certifications have and suggests that:

An increasing number of transnational entities and networks are carrying out the kinds of governing functions which have normally or previously been carried out by states, [and as such] questions of authority and legitimacy – the source of any obligation to obey [arise].

The most common regulation approach for sustainability certifications is compulsory voluntary verification. Audits and other procedural techniques are used by certifications to more easily monitor and verify compliance. The order of being certified versus being compliant, and the standards required are areas of additional concern, with green washing (Dahl 2010) a common term for such situations, often observed. As the number of labels increases, with 464 eco-labels identified (Ecolabel Index 2018), and industry cross over within individual certification effort, and industries that can be certified by several different certifications. there is an increasing need to understand standard requirements and effective regulation.

## **Sustainability certifications and coffee**

Coffee was one of the first commodities to be 'sustainably' certified. Alternative trade organisations for coffee emerged from the late 1980s to address ensuing poverty, environmental degradation and the increased demand for the lower grade coffee variety robusta. Fair trade, for example, originally aimed to allow small coffee farmers of arabica varieties direct access to markets with the intention of recognising and rewarding the use of organic practices. As more certifications for coffee emerged, it became clear that sustainable farming and trade approaches were guided by certification prerogatives or ideologies. For many consumers, sustainable coffee certifications represent an ethical purchase and a better choice compared to the standard products available. An understanding of what these certifications really mean is normally as detailed as information provided on the packaging for the consumer (Leclair 2002). The certifications allow the consumer to verify and identify products that are 'sustainable', and more are becoming available to verify ethical practices.

Of all sustainable green coffee sales as a proportion of global green coffee exports, 92% is conventional coffee; 6% sustainable coffee (multi stakeholder initiatives); and 2% sustainable coffee (private initiatives). UTZ certified, RA, Organic, Fairtrade and 4C are included as multi-stakeholder initiatives. Private sustainable initiatives within these categories are clearly not defined but might be considered as corporate or internal to business codes of conduct (Pierrot et al. 2010; Fairtrade 2009; UTZ certified 2009). Average annual growth in sustainable coffee sales has been 153% for 4C association; 30% for Fairtradexix; 19% for IFOAM (organic); 30% Utz Certified; 64% RA; 40% Total (excluding private sector initiatives). Five-year growth 278% for Fairtrade 142% for IFOAM; 187% for RA, and 433% in total (Giovanucci et al. 2010; Fairtrade Foundation 2019; RA/SAN 2019; UTZ certified 2009; 4C Association 2009).

Whether a niche or something more, there is an undeniable expansion of the coffee industry's demand for CSR programs including sustainability certifications. The growing popularity of sustainable coffee certifications in both consumer and producer countries could be a central reason.

## **History of Rainforest Alliance (RA) and Fairtrade coffee sustainability certifications**

In 2007/8, sustainability certifications for coffee, and for other commodities were a new movement. In Australia, RA certified coffee was barely available, and Fairtrade had only been introduced to the market in 2006. Internationally, RA and Fairtrade certified products were more accessible and available. The number of labels and certifications was starting to increase, the major players for certifying coffee were Organic, Fairtrade and RA, with Utz Kapeh having some market presence outside Australia. 4Cs was a new sustainability program for coffee only just introduced to Costa Rica in 2009. Fair trade can be traced back to alternative trade organisations in America and Europe in the 1940s with the goal of relieving refugee and poor communities through direct trade of their handicrafts (WFTO 2019). The direct approach brought higher returns to producers and their handicrafts would be sold to higher socio-economic groups.

Coffee certifications date back to the late 1960s with organic coffee and in the early 1970s with Max Havelaar a fictional character from the book titled "Max Havelaar; the Coffee Auctions of a Dutch Trading Company" (Multatuli 1982) first published in 1860. The *anti-colonial* book's central character is a Dutch public servant, appointed assistant resident of an agency in West Java. An idealist, Havelaar attempted to work to prevent injustice and abuse of power in the Dutch East Indies. This book was successful in Holland, reaching multitude of readers and being effective in changing policy related to Dutch colonies. The label Max Havelaar was launched in 1988 and has developed to be known as the Fairtrade label. The initiative sought to improve payment to small farmers in disadvantaged regions. It started with a community of coffee farmers in Oaxaca, Mexico by arranging direct export to the international market where the coffee would be roasted and then sold, shortening the trade chain significantly.

Intentions were distinct to organic or sustainable farming factors as it focused more on trade and worker condition imbalances. In fact, this was one of the first intra-market sustainability mechanisms to counter the advantage taken by business of complicated trade routes (Meenu 2008; Vedel & Ellegard 2013). The label that is now known as Fairtrade was established in 1997 as Fairtrade Labelling International (Fairtrade International – Fairtrade) (WFTO 2019). The initial focus of RA in 1986 was prevention of rapid deforestation. The first RA office, a conservation media centre was set up in San José, Costa Rica in 1989. SmartWood, the first certification program, sought to improve forest management. Since that time, RA expanded standards through the Sustainable Agriculture Network (SAN) to cover numerous crops cultivated all over the world. There is now one set of SAN standards applicable for all agricultural crops.21

## **Costa Rica and sustainably certified coffee**

Coinciding with the 1989 collapse of the International Coffee Agreement (ICA), Fair trade was introduced in Costa Rica. It was the second standard introduced to Costa Rica, the first was Organic certification in 1982. Coocafe R.L. ('Coocafe') (Consorcio de Cooperativas de Caficultores de Guanacaste y Montes de Oro) adopted the Fair-trading partners of both Coopecerroazul and Coope Santa Elena upon establishment in 1989. The strength of presence of certifications and the dominance of a few companies in the international coffee industry, where minimal effective consultation is carried out with producer groups, indicates a contribution to the *double loss* of farmers and processors where "whatever preferences might emerge out of their own experiences and worldviews are unlikely to be reflected in global messages indicating what goods, services, and practices are valuable" (Evans 2002, 58). The role of certifications internationally and nationally is multi-dimensional. To access a country's market, producer groups and farm managers must meet specific criteria which aim to benefit the farmer, the community and the environment. RA established first in Costa Rica and the standard for coffee developed in 1995, intended for plantation size farms.

### **Organisational structure of certifications**

SAN standards set the foundation for RA certification.22 They seek to promote the interest of workers, communities and the environment. As the secretary of

21 Standards and Policy Technical Coordinator, 6 May, 2009.

22 For more information, view http://www.rainforest-alliance.org/about.cfm

**Figure 10:** Rainforest Alliance organisational structure.

the network RA distributes the standards, coordinates the international technical committee, the directors and the strategic direction of the network. See figure 10. SAN did not therefore have much separation from RA (Ventura 2007).

Fairtrade23 is the only certification scheme that sets out to tackle poverty and empower producers in developing countries. Through marketing slogans, it claims to be: "a partnership between the consumer and producer. A better deal for producers in the developing world"; and "Fairtrade helps producers take control of their lives." The Fairtrade standards and approach dictate interest

23 For more information view www.fairtrade.net and www.flocert.net.

**Figure 11:** Fairtrade International organisational structure.

*Data source: FLO*24 *Annual Report 2005, available from Fairtrade Foundation 2019*25*.*

and approach to the lobbying message. Fairtrade alongside WFTO Network of European World Shops (NEWS) and European Fair Trade Association (EFTA) monitors European and International trade and development policies. It ensures a constant dialogue between the Fairtrade movement and political decision makers funded by the Fair-trade movement, see figure 11 for organisational structure.

## **Basic differences between Fairtrade and RA premise and standards**

Interpretations of sustainability definitions also provide opportunity for misaligned and contradictory practices to purpose. The standards that guide

24 Fairtrade Labelling Organisation – now Fairtrade International. – referred to in the text as Fairtrade.

25 Please consult the Fairtrade International website for possible updates to the organisational structure, available in footnote 24.

international trade efforts toward a sustainable development are considered significantly influential. The level of detail required for such efforts may be skimmed over unless standards are well developed. High quality standards do not however directly translate to effective implementation or to certifications as the best approach (Vos et al. 2019; Vogelpohl & Verbandt 2019; Vogt & Englund 2019).

The core difference between RA and Fairtrade is the foundational and prioritised objectives which influence approach and preferred business structure. Fairtrade certification emerged from an economic justice platform seeking to reduce poverty for small farmers by offering a set of social standards and prioritising a minimum price and secured option of pre-harvest finance and long-term contracts. It also aims to provide socially orientated projects or organisational capacity building for cooperative structures through provision of a premium. Through involvement in the certification system it claims to facilitate international relationships between producer organisations and roasters or retailers of coffee. These measures aim to reduce risk to volatile international market prices, build capabilities of producers and provide opportunities for international networking within the industry (Raynolds 2003; Ronchi 2002). Fairtrade pays an additional premium for organic production.