RA originally prioritised forest conservation and now takes a holistic approach to developing standards with the goal of promoting sustainable processes on farms to contribute to the sustainable development of the coffee industry 2425. 26 The approach emphasises strengthening the environmental and social pillars of development which will then allow economic viability, as a more sustainable approach. SAN standards used by RA to certify farms and producer groups are frequently revised. The first agricultural project of RA was with the largest banana exporter in Costa Rica, Chiquita. The standards were designed in a way that was not structurally compatible with cooperatives. The size of the farm certified is a key difference between Fairtrade and RA, and to poverty reduction efforts in 2009. Fairtrade only certifies cooperatives whose members were small farm holders. During 2009 a standard for farmer *groups* or cooperatives was developing and it is frequently revised. There were two RA certified cooperatives in Costa Rica in 2009, the rest were certified plantations.

The certifications support producers to meet the required criteria of standards and in gaining market access. Locally based liaison officers provide training and guidance on certification and facilitate relationships with buyers. Equally, they seek to provide a program which allows an independent business to engage in socially responsible behaviour to principled and/or prioritised criteria. See figure 12.

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

### **Table 2:** Comparing RA and Fairtrade standards 2017.

**Table 2:** Continued

*Data source: Annual Reports from Trauben 2009; data sourced from Annual Reports from Fairtrade Foundation 2019; SAN 2019; RA 2019.*

Before 2009 each respective certification developed its own standards autonomously; by 2009 the standards of both Fairtrade and RA were drawn up in consultation with ISEAL, the International Social and Environmental Accreditation and Labelling. In 2016, SAN introduced the 2017 SAN standard against which they measure their potential for performance with the SAI Platforms FSA tool. This indicates that the standard covers 100% of essential issues, 80% of basic issues and 50% of advanced issues (SAN 2019). ISEAL has strived to monitor and advise the standards that are required of developing country producers. Fairtrade was one of four members responsible for the inception of ISEAL, and RA and Fairtrade were among the eight founding members. In 2008 ISEAL membership doubled to sixteen and they have worked toward a code of good practice in measuring the impact of social and environmental standards, standard setting and verification. ISEAL aims to strengthen sustainability standards for the benefit of people and the environment. Twenty-two certifications and labelling organisations make up membership which is only a small proportion of the 464 eco-labels for sustainability certified products.

The three key differences between 2009 standards that figure 13 highlights are the independence of standard setting bodies to labelling bodies; the standards specific to trade included in each certification; and the detail of International Labour Organisation (ILO) conventions in social standards. Across these differences Fairtrade is presented as having more independence in standard setting. Fairtrade involves itself in trade standards and includes ten ILO conventions in social standards where RA only "upholds a few" (Trauben 2009).

Our mission is to find a balance of sustainable production that is good for the environment, respects workers while also ensuring that consumers are aware of this importance so that they recognise the value. It is consumer and market activism.27

RA does not offer a minimum price or price premium, they considered themselves to be more holistic with equal importance given to the three arms of sustainable development: the economic, environmental, and the social. Reforestation has been one of the key areas for focus within the SAN standards. RA was, in 2009, considering the benefits of participation in the carbon credit market through a program called carbon coffee.

## **Approaches to verifying compliance**

Sustainable Farm Certification International monitors SAN standard compliance and determines if certification will be given based on the audit results. Audits are carried out by a country specific body and in Costa Rica, RA is that auditing body. The importance of having a third party to audit is recognised and a move toward this approach was indicated in 2009.28, 29 A response to critiques from Oxfam DE in 2015 when compliance for workers was not met, replicated an explanation that a new upgraded standard and certification process would be launched in September 2016 (RA 2016a). There is now a 2017 SAN standard however verification of implementation through audit is not yet proven as consistent for all certified farms. FLOCert GmbH is an independently governed subsidiary of Fairtrade, employed and paid for by the certified organisation to audit and verify compliance with standards on behalf of Fairtrade. FLOCert auditing is intended at the trader, producer organisation, and producer level.

## **Compliance requirements for use of label**

It is unethical and unacceptable to curtain socially irresponsible behaviour with a positive CSR message purely to maintain profit margins. Thus, it is

27 RA Standards and Policy Technical Coordinator, 6 May, 2009.

28 Standards and policy technical coordinator, 6 May, 2009.

29 Recognition was also reported in 2007 when doubts were expressed about the legitimacy of the *third-party* auditing process (Ventura 2007).

important to distinguish *having* or purchasing a certification and label from being compliant with a standard. While 100% compliance with the SAN standard is not necessary to hold RA certification; a commitment to working toward full compliance is necessary. Standards for monitoring traders, roasters and retailers were under development in 2008 and any actor selling RA certified products must register on a public website. In 2009, to sell coffee with the RA label required a minimum of 30% of the coffee be RA certified. Presentation of the percentage of certified coffee was required but not then monitored. There is now information via a qualifying statement or disclaimer text that explains, 'with 30% certified coffee now, we're working towards buying all our coffee from RA certified™ farms by 2020!' (RA 2016b).

Fairtrade holds a standard for traders and importers consistent with all principles of Fairtrade, applicable to all Fairtrade payers. For a roaster and/ or retailer to display the Fairtrade label specific to coffee they must use 100% certified coffee. A roaster or retailer is not liable to the certification body for breaches although in the case of Fairtrade, use of the certification is bound by standards specific to traders and if a valid contract is not honoured. "FLOCert will have grounds to sanction the operator" (FLOCert 2015). At the time of fieldwork, Fairtrade granted certification conditional to an ability to prove compliance through random audits. Where compliance was not evident a warning was issued. If the gap to compliance was large the cooperative would lose the certification.

Questions of jurisdiction, regulation and enforcement are prominent for CSR and certification approaches as all are an effort to improve social responsibility of corporations and companies directly and indirectly.

#### **Summary**

Certifications are a novel and distinct approach to internally developed and administered codes of conduct. They complement and can go beyond legislative attempts to encourage and regulate socially responsible corporate activity in source countries. The complexity of interests in a source country between foreign investment and economic value and respecting their citizens' rights and their environment can become a limiting factor. The intention of each certification differs, and this is reflected in organisational structure, approach, stated aims, the stakeholders involved and upon whom the certifications rely. Implementation of RA and location of operation demonstrates this difference; where Fairtrade developed from direct trade with small farmers and a social/ economic approach, RA began with a plantation and environmental focus. The certifications follow categories of sustainable development, environment, social and economic. Standards of each certification do differ by detail, reflective of different approaches to sustainable development and the eventual objective of poverty reduction and sustainability. For certified traders, the difference in standards is evident for labelling. In 2009, RA appeared less strict with a minimum of 30% of all packaged coffee required as RA certified and sourced to allow use of the label. Fairtrade on the other hand requires 100% of packaged and sold coffee to be Fairtrade certified to allow use of the label. Each certification 'regulates' producers to ensure compliance, traders on the other hand are not well regulated.

## CHAPTER 5

## **Overview of the contemporary Costa Rican coffee industry**

#### **Introduction**

The detailed colonial history of Costa Rica, chapter 1, provides a contextual background for the study country, easing understanding of the contemporary coffee industry of the country. The contemporary experience of farming coffee in Costa Rica is significantly influenced by historic trends explained in chapter 1 for contextual background, including significance in economic development through independence, managing foreign relations, the green revolution, and coffee farmers capacity for organising and ensuring representation. Coffee was a vehicle of economic advancement for Costa Rica during independence as it successfully linked Costa Rica to the world market. Despite economic advances allowed through expansion of coffee farming and trade, the colonial relationship that tied it, albeit loosely, to Spain did not dissipate. Instead it changed form to a reliance on the world coffee, and to a lesser degree other commodity, markets (Seligson 1977, 216).

INEC (2010) indicates a similar structure today in the coffee industry as existed in the 1930s. Of all farms, 62 per cent are between one and five hectares and 86% have fewer than twenty hectares. In terms of land extension, 57% of all land occupied by coffee comprises farms of twenty to one hundred hectares. It is one of the few countries in the region to have small farms represent the largest proportion of all farms but not hectares. The reach of coffee cultivation through the Costa Rican population is therefore significant. The historic legacy of the coffee industry influenced this distinct land distribution pattern of ownership post- independence based on small farm holdings compared to neighbouring countries. The land distribution pattern also allowed allocation of income and experience with coffee to touch more Costa Ricans than other

#### **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. 67–82. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.g. License: CC-BY 4.0

agricultural activities in the country at a political, economic, environmental and social or community level. The arabica only law and the harvest picked only by hand also distinguish Costa Rica from other countries and encouraged maintenance of small farms in the Central Valley. Robusta varieties could have more easily encouraged landholding conversion to plantations.

This chapter will provide more contemporary information about Costa Rica and the coffee industry of the country. Costa Rica is now a regional leader according to development indices, the country's approach to sustainability and poverty reduction has been influenced by intensive coffee farming trends and variable but well reputed conservation efforts during and after this intensive farming period. Common environmental and social challenges associated with farming coffee in Costa Rica are explained.

## **Costa Rica compared to regional indicators of development and happiness**

Costa Rica is something of an exception within the Central American region. It is considered one of the most developed according to Human Development Index (HDI) ratings in the region and has been rated the happiest country in the world according to the Happy Planet Index (HPI). It has made conservation efforts and reached sustainability targets in a way that leave the country well regarded at an international level. Externally imposed situations and responses to various situations through the countries' history, some strategic, and some not, have created the current day situation. Costa Rica's government has a longstanding commitment to social welfare and has achieved prosperous economic development compared to neighbouring countries of the region, as demonstrated in table 3.

The HPI seeks to re-direct how governments think about development and economics and is dependent on three variables, one of which is ecological footprint. While Guatemala, Honduras and Nicaragua had smaller ecological footprints, Costa Rica ranked number one. They are living healthy and high-quality lives with a minimal ecological footprint. The regional success is a contrast to pre-independent Costa Rica when it was 'one of the poorest of Spain's American colonies' (Edelman 1979, 1; Hall 1985, 72), an '*ultimus inter pares'* (last among equals) (Molina & Palmer 2008, 28).30

30 The Costa Rican 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).

*Data source: HDR 2017; INEC 2010; WorldBank 2017; HPI 2017.*

**Table 3:** Regional indicators.

## **Land distribution nurturing cultural and social significance**

The coffee industry is the largest agricultural industry dominated by small farmers and owned by Costa Ricans. Distributing the land into small lots for coffee fostered a sense of responsibility amongst the population and an understanding of and interaction with the land according to achieving a yield. Coffee allowed a commonality in the Costa Rican mentality and lifestyle and in daily habits and practices for many centuries, as the practice of farming coffee attributed to land distribution reached a significant proportion of the population. Oscar Arias Sanchez, elected as President in 1986 and re-elected in 2006 was closely linked to coffee through his parents and his business partner, the Peters family, the largest coffee processors in Costa Rica (Paige 1997, 3). As a cash crop it also provided shared exposure to the international market directly or indirectly.

While historically, socially, and culturally coffee is a strong industry, it is no longer what it used to be, having diminished in the last decade. The crisis of 2001 had a significant impact on coffee growing communities stimulating diversification of farming activities including subsistence farming, migration and a distrust of the coffee industry. Despite these issues, the cultivation of coffee remains an important cultural activity and, in true rural democratic fashion, the passion remains to maintain justice in the industry, and the voice of the rural community in politics and business.

## **Costa Rica: Coffee, sustainability and poverty reduction**

Sustainability for the coffee industry refers not only to environmental influence but also to societal including income for farmers and the country. Coffee farmers work all year for the annual harvest and are paid once a year which provides a different context for income considerations. From 1950 to the 1970s land clearing and high-density planting to maximise yield and economic growth was encouraged. The coffee industry was perceived to be so important for the development of the Costa Rican economy that the lands of the Central Valley and the newly settled coffee growing areas of the country were gradually taken over by coffee (Samper 2000 146–8; Naranjo 1997, 94–104; Winson 1989, 107– 110). Chapter 1 provides more detailed information. The Costa Rican coffee industry was most imbalanced during this time despite institutional conservation and sustainability effort prior to and during this time.

## **Conservation and sustainable development efforts during intensification**

While conservation efforts occurred during the green revolution and prior to, they did not supersede or adequately compensate the extent of land clearing and intensive farming techniques. Steinberg (2001) referred to Costa Rican conservation policy as leading in the region. From 1926 to 1940 the National Agricultural College was the centre of environmental concern in Costa Rica. Agronomists and the Agriculture Secretariat was later to be known as the Ministry of Agriculture and Industry but the gap between the agronomists' principal ideas and platforms, and the politician deciding on law and policy remained. Costa Rican conservationists participated in the Inter-American on the conservation of renewable resources in 1945. This conference intended to promote collaboration between Latin American countries and recommended that, "International credit institutions, such as the Export-Import Bank, should obtain the approval of ecologist and conservationists on specific proposals for resource development" (Mejia et al. 1948, 162–4 in Steinberg 2001, 55), referred to as "a milestone in the history of conservation and conservation education" (RHE 1948, 433 in Steinberg 2001). In 1950, the Ministry of Agriculture and Industry sponsored the first Natural Resources Conservation Week. The goal was to inspire a sense of responsibility that every Costa Rican citizen must live in harmony with nature, promoting conservation (Steinberg 2001, 53). Up until this time the influence of technically proficient experts on conservation was non-existent and after this date it moved to inconsistent. Agronomist Alvaro Rojas elected to the Legislative Assembly introduced the Soil and Water Conservation Law of 1953.

In 1963, executive decree number 10 created the national reserve of Cabo Blanco, after that year and by means of a presidential decree, a series of reserves and national parks were created. An undertone to the economic focus of Costa Rican policy and programs was, and is, an active conservation and environmental movement which ultimately increased environmental security in Costa Rica. Costa Rica's conservation and sustainable development efforts in the last twenty years and prior have added to its international reputation as a successful and sustainable developing country. In 1968, a bauxite processing plant was proposed by the American company, Alcoa. There were student protests and beyond as the idea of an American company controlling Costa Rican resources with little evident benefit to Costa Ricans was considered unacceptable. This was an issue of nationalism and politics but also of the environment. These were the first protests of their kind in Costa Rica. While the processing plant went ahead the leaders for conservation policy for the processing plant were Costa Rican. Steinberg (2001) considers these protests as driving attention to conservation and environmental concerns, sensitizing a generation to foreign interference in domestic affairs.

The severe economic crisis that hit the country between 1978–1982, significantly contributed to deforestation and loss in biodiversity. By 1983; forest cover had reduced at an alarming rate of 17–26% (Sanchez-Azofeifa 1996; Fundación Neotropica 1988; Banco Central de Costa Rica 2016). In 1978, the Mesoamerican Federation of Non-Governmental Conservation Associations was formed, and the head office was in Costa Rica within the office of the Costa Rican Association for the Conservation of Nature (ASCONA). Deforestation was the key environmental issue because of the green revolution, the efforts made were protective and pre-emptive to restrict areas in which green revolution could occurred. An economic crisis was perceived as a threat to conservation efforts however this did not slow Costa Rica (Evans 1999). Initially denied by Vice President Carlos Manuel Castillo, the Ministry of Environment was established autonomous to the office of the Ministry of Agriculture and Livestock (MAG) to avoid conflict of interest. By 1982, law number 6794, ratified the decrees promulgated since 1963 for environmental protection and conservation.

The ecotourism boom of 1985 saw record numbers visiting national parks, adding financial and educational value to conservation efforts. Oscar Arias Sanchez became president in 1986 and established the Ministry of Environment, broadening focus from conservation to biodiversity. The office of biodiversity was established in 1987 funded by the MacArthur Foundation. The office established networks of foreign and national ecologists and meetings that resulted in an agreed need to start recording species diversity and bio- geographical patterns through the National species survey. INBio, the National Biodiversity Institute*,* was established in 1989. INBio aimed to reduce foreign dependence through identifying natural products that may be of interest to the private sector. INBio also took a participatory approach to the survey, employing unskilled workers from rural areas and providing training for specimen identification. Many other advances were made in conservation area and environmental NGOs worked consistently to ensure enforcement of laws. The bank of knowledge that exists in Costa Rica regarding conservation, biology and agronomy is a result of both national and foreign influences. According to Luis Faurnier, a Costa Rican biologist: "Costa Rican ecological thought developed from the numerous observations about the country's natural history in the past century and early decades of this century by foreign and national naturalists" (Evans 1999, 16).

In the 1980s and 1990s, following a severe economic crisis that hit the country (1978–1982), efforts were also made to change Costa Rica's export profile without abandoning coffee production. As an exporter of non-traditional products, (Vargas 2003, 40) the agriculture of change favoured the production of pineapple, cardamom, flowers, squash, among other products (Honey 1994, 71). 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. In 1990, law number 7152, gave rise to the National Parks Service of the Ministry of Environment and Energy and with this institutionalized the network of Costa Rican national parks that had been operating since 1970. In 1994, José María Figueres became President and worked to increase awareness that Costa Rica is a sustainably developing country in the international political arena. Before the work of Broza and Ugalde, two Costa Rican biologists who transformed the national park program to ensure the establishment of parks, the previous technique of establishing National parks tended to involve planning and registration, the parks on paper approach. An active environmental non-government organisation movement (NGO), that is, as active as resources would allow, also assisted to hold Figueres accountable for international and domestic promises.

The gap between law and implementation that existed in the 1940s still exists as political issues with established environmental institutions like INBio and with the Figueres administration emerged (Steinberg 2005). The year 1996 saw a move past conservation efforts toward reforestation with the Forestry Law – N7575, which provides compensation through the Environmental Services Payment (PSA) for privately owned lands or forest plantation owners (WRI 2010). There are other private efforts toward reforestation with examples in Monteverde and San Gerardo de Rivas. To date, Costa Rica has 28 national parks and several biological and forest reserves.

The coffee industry in Costa Rica is private but the presence of state supervision and control through ICAFE regulates the industry (Ronchi 2002). Environmental and social laws regulate as they do for any other industry of the country. The cooperative movement strengthened the position of small farmers in Costa Rica through these times however insecurity and dependency existing since the early days of the coffee industry and manifesting from colonial times maintained. There are segmented efforts to improve biodiversity and encourage conservation within the Costa Rican coffee industry. Coocafe administers Café Forestal, MAG integrates such considerations into workshops for coffee farmers, and education institutes are accessible for extended advice. In 2012, a Nationally Appropriate Mitigation Actions (NAMAs) Steering Committee was established under the umbrella of the Agriculture and Livestock Ministry of Costa Rica. The NAMA seeks to deliver combinations of public and market incentives for adoption of measures aimed at increasing carbon dioxide sinks and reducing emissions of nitrous oxide and methane for the entire Costa Rican coffee sector. This seeks to address the coffee farm and the coffee mill (ICAFE 2013).

#### **Physical suitability of coffee farming locations**

The Central Valley was the original location of most coffee farms due to suitability of the land and climate. It was maintained as such due to the 1982 Arabica law. The green revolution through economic priority above environmental, and due to hybrid varieties, which were more tolerant to varying climatic conditions, resulted in coffee being grown in regions where it is not geographically nor climatically suitable. These factors can influence eventual long-term success of coffee farming in a region and make any effort to improve sustainability outcomes via coffee farming, difficult.

## **Coffee farming in Costa Rica (from the 2000s)**

The coffee census31 seeks to gain a detailed understanding of Costa Rican coffee growing regions. In 2007 it reported 76, 853 coffee farmers in Costa Rica. The measure is by household, and counts all members living in the house at the time of interview and those who live in said house for more than 6 months of the year. Seasonal migrant workers, the major constituents of labour during harvest, would not be included in the 24, 541 labourers on coffee farms (extracted from INEC 2006). There are 193, 205 hectares (1932 km² or 3% of Costa Rica) dedicated to farms that also hold coffee, and 98, 678 hectares (986 km² or 2% of Costa Rica) is dedicated to coffee trees (ICafe 2019; INEC 2006). In 2014, the agricultural census of Cosa Rica found there were 26, 527 farms covering 84, 133 ha. ICAFE estimated 93, 744 ha in 2012, 88% of these farms were less than 10ha. The coffee crisis of 2001 demonstrated the vulnerability of small coffee farmers particularly in the face of a volatile international market. See Figure 12. While quantity by export maintained, the price for exported coffee during 2001 dips dramatically.

The unit value of coffee was second highest of all exports (FAOstat 2019) and the importance of coffee farmer numbers across the country for the environment and future of Costa Rica is relevant. A culture of families helping each other and the farmers' affinity with the land they work because of ownership has contributed to a non-violent development of the Costa Rican coffee market, compared to neighbouring countries. This may have been influenced by, the *yeoman* theory, seeding a 'rural democracy' (Alfaro 1980).

By comparison, commercial agricultural farming on plantation size farms dominates agricultural exports by value (INEC 2011). The most productive agricultural crop was pineapple following a boom in the industry coinciding with World Bank Structural Adjustments Programs (SAP) of the mid-1980s. At this time, Del Monte planted and trialed the MD2 variety of pineapple, and from 1996 onwards this variety dominated the international market (Del Monte 2006). By 2015, bananas were the most significant agricultural industry by export. Medical (16%); Integrated circuits (6.7%); Orthopaedic appliances (4.4%) followed (MIT 2017; OEC 2015). The value and quantity of bananas and pineapples remain close to equal in the years leading to 2015. With pineapples demonstrating slightly higher value by quantity. See Figure 13.

In 2018, optical, technical and medical apparatus represented 24.57% of exports. Fruits and nuts represented 23%, miscellaneous food preparations represented 3.4%, coffee, tea and spices represented 3.3% (Workman 2019).

31 The Coffee Census *Censo Cafetalero* is conducted by the National Institute of Statistics and Censuses in Costa Rica, *El Instituto Nacional de Estadísticas y Censos* (INEC) at the request of the Institute of Coffee in Costa Rica, *El Instituto de Cafe* (ICAFE).

**Figure 12:** Costa Rican export of green coffee by quantity and value. *Data source: FAOStat 2019.*

**Figure 13:** Costa Rica: major agricultural exports.

*Data source: FAOStat 2019.*

**Figure 14:** International coffee production yield per hectare.

*Data source: FAOStat 2019; ICO 2019.*

**Table 4:** Export trade matrix, coffee, green.

*USDA Foreign Agriculture Service 2016***.**

In 2008 Costa Rica was the fifteenth largest producer of coffee globally. The first was Brazil, the second was Viet Nam (ICO 2010b). In yield per hectare terms Costa Rica has been one of the most productive countries in the world (FAOStat 2019), see figure 14.

The largest purchaser of Costa Rican coffee by quantity is the United States, representing approximately 50% of all exported coffee purchased. See table 4.

### **Coffee Industry structure**

When discussing the coffee industry in Costa Rica the structure can be recognised as a horizontally and vertically tiered, figure 15.

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.

A farmer might live on or off-farm, and labour might be carried out by family or externally sourced. Small farm holders are not usually involved in processing or exporting coffee in Costa Rica. There are then plantations and small farm holdings where the manager or farmer lives off-farm and the land is only for farming, not processing. Plantations tend to include a mill, *beneficio* on-site; will use labourers managed by the farm manager and in some cases will export directly. The small farmer cooperative does the processing and exporting. They will occasionally include farms managed directly by the cooperative and farmers, in terms of a standard cooperative structure of members.

The resulting industry structures have encouraged types of dependency past those created through international trade dynamics. Centralised processing

**Figure 15:** Four horizontal and vertical tiers of coffee industry structure.

operations are an example. In Costa Rica large plantations and processors are separated from small farmers. While relinquishing the farmer of responsibility, it simultaneously creates a dependence on processors to buy their beans. In theory, and in the context of existing international trading systems, organising into cooperatives allows an increase in bargaining power for small farmers who bring their yield to the cooperatives' *beneficio* to combine with all members' yield. The National Council for Cooperatives (CONACOOP) were created in 1973. INFOCOOP works to promote new cooperatives and capacitate existing cooperatives through technical assistance, finance and investigation. CONA-COOP works between government and the public to represent Costa Rican Cooperatives (INFOCOOP 2010). The predominance of small coffee farm holdings and a sense of solidarity and collectivism have in the past allowed a strong cooperative culture, *cooperativismo*. In 2009, there were fifteen coffee cooperatives in Costa Rica. Coopecerrozaul was one of the first to unite small coffee farmers to improve sales of their coffee harvest in 1961. Coocafe is an umbrella Consortium for nine of the coffee cooperatives in the country. This one consortium represented 2,200 producers of coffee, 4800 hectares and through associated member cooperatives accumulated indirect experience with Fairtrade for twenty years. Since 2009, studies approximate 22 coffee cooperatives are operating across the country (Snider et al. 2017), with an increased presence of private mills for individual farmers (Hofensitz 2017). Coocafe in 2019 is formed of seven cooperatives which have 2000 small farmer members. More than 30% of small farmer members are female (Coocafe 2019).

## **Lowering popularity of** *cooperativismo*

Between 2008 and 2015 *cooperativismo* within communities of Costa Rica was becoming less of a popular culture or identity. Dissatisfaction with administrative approaches, management and suggestions of corruption have left some members inclined to remain independent as a simpler and more peaceful option. Within one community the local cooperative, the members of which were in the majority coffee farmers, had closed.32 Within a different coffee farming community of Costa Rica, more coffee farmers were found with doubts about their local cooperative, stating dissatisfaction with organisational approach and corruption:

Era un miembro de la cooperativa, mis padres también, pero en los últimos años me parecía más fácil cultivar y vender mi café para mí misma. Es más sencillo y menos estresante. No hay tanta confianza en la cooperative.

32 Community member, personal communication, August 2014.

[I was a member of the cooperative and my parents were as well but in the last years it seemed easier to me to grow and sell my coffee for myself. It is simpler and less stressful. There is not so much trust in the cooperative anymore].33

The number of micro-mills on farm or in individual communities, increased since 2010 (Gunnerod & Hasse 2016; OECD 2017; Gyllensten 2017) which influences industry structure. Micro-mills as associations fit within the small farmer cooperative category without the administrative and democratic processes typically involved in cooperatives.

## **Farming coffee: complications and implications**

## *Disease and pest epidemics*

Insect infestations and pathogenic infections affect both robusta and arabica. It is estimated that 850 insects attack the plant (Le Pelley 1968, 1973). The most prevalent are coffee leaf miner, the coffee berry borer and coffee stem borers at an international level (Vega et al. 2006). Prevalence within each country differs slightly and species and varieties present distinctly. For example, coffee leaf rust rather than leaf miner is most prevalent in Costa Rica, and coffee berry borer and coffee stem borers are found in Costa Rica. Coffee berry borer causes three economic losses: reduced yield and quality of final product (Moore & Prior 1988); physical damage allows mature berries to become vulnerable to infection and further pest attack (Leefmans 1926); premature falling of the green berries. The consequences of most pest and disease outbreaks are similar in economic and environmental terms. Further information about pest and disease epidemics in coffee farms of Costa Rica is available from; Avelino et al. 2007; Waller et al. 2007; Avelino et al. 2011; Cerda et al. 2017.

#### *Environmental impact*

The impact of coffee production on biodiversity is disproportional to the area dedicated to farming (Donald 2004). Intensification is a common approach for maximising yield and therefore income for farmers with little regard for the influence on biodiversity that naturally exists in these landscapes and that contribute to global biodiversity. Full sun plantations have been found to leach nearly three times the amount of nitrates into surrounding environments than shade coffee systems (Babbar & Zak 1995). In addition to biodiversity outcomes, water management particularly at the stage of processing coffee berries,

33 Farm owner, personal communication, August 2019.

often occurring in the farming landscapes or close by, will influence potential for water contamination (Arce et al. 2009; Beyene et al. 2011, Vogt 2019c). This is in large part due to the berries that are washed off to reveal the bean for consumption. The berries are highly acidic due to intensity of fermentation which then carry significant pollutant loads to water ways with toxic implications for water.

#### *Environmental and health (in)security*

Environmental insecurity, including deforestation, soil erosion and water contamination from the processing of coffee and the prioritisation of coffee cultivation over other crops, as strongly associated with the development of the coffee industry has affected the health of the population (see chapter 12). Food shortages were the result of the 1978–1982 crisis for many Costa Rican coffee farmers and for the nation. Cardoso comments that the "subsistence crisis became frequent and foodstuffs which had been very cheap at the time of independence became very costly" (Cardoso 1986, 209).

#### *South-South Labour Migration: Destination Costa Rican coffee farms*

A desirable destination for migrants of surrounding countries looking for work, there is also an increasing reliance on migrant labour in several Costa Rican industries and "the construction industry, coffee and sugar to mention a few would very probably enter into crisis if they had to count only upon national personnel" (NotiCen 2006). The Costa Rican coffee industry is distinctive in the region for the fact that coffee is only picked by hand, not by machines. Nicaraguans and Indigenous Panamanians, the *Ngöbe- Buglé* (ITUC 2008, 2; INEC 2000; OECD 2009, 229) are most found working seasonally in the coffee industry. Mazza and Sohnen (2010) claim that social scientists have found 100,000 Nicaraguans working in agriculture at peak harvest. This highlights a gap in Census Data collected by INEC and presented in the Coffee Census of Costa Rica, which claimed that 24 541 people were working in the coffee industry and confirms that seasonal migrant workers are not well documented or included in Census data. The seasonal labour population is the most vulnerable group involved in the Costa Rican coffee industry and the mobile nature of these workers has made documentation difficult. According to the IOM, 12,000 migrate to Costa Rica to pick coffee cherries (2008). Despite efforts to document and regulate them through IOM programs supported by various Costa Rican government departments, these labourers are in the majority undocumented and under recorded in Costa Rica. This has implications for their access to culturally appropriate health care, education for their children and social security services, as well as access to real protection of workers' and human rights. The *Ngöbe-Buglé* fall in the category of highly mobile populations who travel and live between Panama and Costa Rica. The *Ngöbe-Buglé* population focus cultural appropriateness of international standards and norms. Schooling, housing and healthcare are all culturally specific and this population have their own ways, education is a challenge for the children of this population. Finca Sana was a new multi-stakeholder initiative of the IOM to work toward access to health care for the *Ngöbe-Buglé* population.

The movement of Nicaraguan seasonal workers into Costa Rica is considered more regulated now as a result of a project of the International Organisation for Migration (IOM) (State of a Nation Project 2001; IOM 2010; Martin 2011). Running from 2006 to 2009, the project was funded by the Spanish International Cooperation Agency for Development, *Agencia Española de Cooperación Internacional para el Desarrollo*, (AECID) and the Inter-American Development Bank component on remittances and Partners included the Ministry of Labour in Nicaragua, Ministry of Labour and Social Security, Costa Rica, Ministry of Foreign Affairs, Nicaragua, Ministry of Foreign Affairs, Costa Rica, Migration Offices in both countries, NGOs in both countries dealing with migrant population issues. The project sought to incorporate temporary migrants to the health care system (Lopez 2012).

Costa Rica had not ratified the Convention on the Protection of the Rights of all Migrant workers and Members of Their Families in 2009. It provides binding fundamental standards to address the treatment, welfare and human rights of documented and undocumented migrants, influencing a receiving country's security. In 2010, the new general law for migration; *ley general de migración y extranjería*, was introduced as a new immigration act. Previously Costa Rica acceded the 1951 convention for the status of refugees, ratified 1954 convention for the status of stateless persons, and acceded 1961 convention on the reduction of statelessness (UNHCR 2014). In 2011, Costa Rica adopted the Refugee Regulations to the Immigration Act, and in 2013, enacted the law against smuggling of migrants and the trafficking in persons by amending the Immigration Act. There are additional recommendations from the UNHCR to further improve the legal framework of the country (UNHCR 2014). Challenges presented by informal labour in the coffee sector of Costa Rica maintain.

#### **Summary**

This more contemporary history of Costa Rica and of the coffee industry of the country provides an overview of more timely information to consider as the following findings chapters are read.

Organised through considering fieldwork perspectives and opinions based on firsthand experiences of participants and the most relevant, commonly observed or controversial comments, the following chapters consider subtler advantages of sustainability certifications, the cost of sustainability certifications, the standards introduced, and how an increasing number of certifications influenced perspectives and experiences. Following on from these chapters, whether certifications are (1) intending to develop a reputation beyond their intentions, or intentionally developing a reputation beyond actual influence; and/or (2) reinforcing international trade power dynamics is considered. To summarise these findings, an overview of observed advantages and disadvantages is provided based on perspectives from within Costa Rica.

## **Perspectives from within Costa Rica**

Determining effectiveness of any sustainability effort often relies on second or third hand information due to the distance between coffee farmers, the international market and consumers. Even today, ten years after original research for this study was carried out, reliable evaluations of certifications and associated consequences are sparse and not comprehensive (Vogt 2019e; Vogt & Englund 2019; Trolliet et al. 2019). To begin to address this fact, recognising that base research for this book was carried out in 2009, and planned for in 2008, the methodology and methods selected intended to provide primary information collected through interviews and focus groups.

An opportunity for direct understanding of what sustainability certifications mean in producing communities and countries is facilitated through an exploration of these perceptions and opinions. Some of the more complicated aspects of the certification effort can then be considered from in-country experience and perception.

## CHAPTER 6

## **Methodology and Methods**

#### **Introduction**

To achieve a type of exploration of 'in-country' opinions and perspectives, fieldwork was conducted in coffee farming landscapes and with coffee farmers and cooperative representatives in Costa Rica. Poverty, as a theme within sustainability, was selected to guide interview questions given the expansive potential influence of sustainability certification efforts which address trade, agricultural practices and community level activities in different ways. It allows consideration of several topics and where fieldwork was extended, further research could have selected common topics identified as areas for more specific research. The information and findings presented, resulting from the methods and methodologies selected, are not easily quantified. They remain focused on interview findings and identification of common observations and comments as a basis for further assessment. The method selected is therefore more an activity of starting a conversation to determine how outcomes associated with certifications are perceived within a producer country rather than presenting definitive findings on whether certifications are positive or negative. As such all quotes and findings are qualified by the Costa Rica context, and are limited to the farmers, cooperatives and in some cases communities where the interviews were conducted. It is considered a strength of the research that ten communities were visited which represented approximately 75% of all coffee farming communities in Costa Rica at that time. The quotes presented are not intended for direct extrapolation or to ponder what they 'actually mean' for this study. They are instead presented as a direct and unfiltered representation of how sustainability certifications are understood.

**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. 85–98. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.h. License: CC-BY 4.0

#### **Rainforest Alliance (RA) and Fairtrade**

Sustainability certifications are often understood most in consuming countries as a logo or label representing sustainable trade for improved environmental and social justice outcomes. Available information was limited to slogans and marketing information. Upon meeting and discussing the details of Fairtrade with farmers from certified cooperatives in 2006 and seeing scholarly arguments against the minimum price approach of fairtrade, the actual detail involved appeared more complicated than a simple positive influence. Rather than engaging with the scholarly discourse straight away, exploring in-country experiences and perspectives appeared to me an interesting angle to consider how sustainability certifications were having influence and then if it was in fact positive.

The purpose of the study was therefore to provide an understanding of how certifications differ to address the geographic distance between consumers and producers which often results in reliance on marketing claims to determine sustainability.

At the time of developing this study, sustainability certifications for coffee, and for other commodities were a new movement. In Australia, organic certified products had been available for some years, and Fairtrade was introduced to the market in 2006. By 2008, RA certified products were beginning to enter the Australian market via larger corporate product lines. Internationally, RA and Fairtrade certified products were more accessible and available. The number of labels and certifications was starting to increase however the major players for certifying coffee were Organic, Fairtrade and RA, with Utz Kapeh having some influence. During fieldwork, information about 4C was provided to me as a new code of conduct which was expected to become popular, it was not however at that time used. Recognising that my understanding of the topic was coming from a consumer market perspective to develop to a producing country perspective understanding linked to the original perspective, the most prominent sustainability certification labels were of interest for a comparative study. RA and Fairtrade were receiving the most attention at that time and the difference between them other than the name and market entry approach were difficult to determine. One appeared more environmental, the other more about social justice, further differences were not obvious.

Starbucks C.A.F.E. Practices code of conduct was also operative and particularly in Costa Rica. It was however a company code of conduct rather than a sustainability certification which was starting to combine fairtrade certified coffee within its sourcing practice. Quotes that mention their code of conduct and approach to trade are however included for discursive comparisons related to the study, rather than as a focus for the discussion. Organic certifications were an omission in this study. While it is used in Costa Rica and encouraged through Fairtrade certified sourcing, the societal aspects covered by Fairtrade and RA led to their becoming the focal point for fieldwork discussions. Where organic certifications were brought up by participants, they are included as related comments rather than leading topics. The choice to consider two certifications only was an attempt to restrict possible topics for consideration, understanding that even one certification could provide adequate discussion points for such a study. The resulting discussion and quotes presented represent only a small proportion of all information collected.

## **Poverty as a guiding theme within sustainability for fieldwork considerations**

Multi-dimensional poverty is a serious problem in agricultural areas, particularly for small farm holders (IFAD 2010). Sustainable development and poverty reduction seek to improve outcomes internationally for the environment and society. This is considered particularly in need while trade interests are prioritised over the two above mentioned elements. CSR has emerged as a means of correcting the imbalance and negative influence that international trade has had on the environment and society including in rural areas. There are guidelines and concepts under which business should act toward improvements for society and environment. One of the key values of CSR for the corporation is positive brand association and a strengthened reputation. As CSR is determined by the Code of Conduct to which the corporation must adhere and effective implementation of the standards within, its reputation should only be as strong as the principles that lay the foundation for these claims, approach to, and effective implementation. An increase in certification types differentiated by standards and certification processes appears to positively associate with outcomes for environment and society in producing countries. How such certifications influence practice depends on comprehensive standards and effective implementation. In most cases certifications claim to be working toward sustainability and poverty reduction outcomes to differing degrees. How they differ and what influence they have on coffee farms and farmers in Costa Rica were the key questions driving research.

Sen proposes 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). Ideas of freedom, development and wellbeing are connected. Achieved well-being is dependent on the capability to function. A reciprocal relationship between income and a person's capability is described as a "connection going from capability improvement to greater earning power and not only the other way around" (Sen 1990, 90). The capabilities approach broadens definitions of poverty to allow 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). 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). The more theoretical considerations of Sen (1992), Sen and Dreze (1999, 152), Evans (2002, 55) and Comin (2001, 4) complemented by the World Banks' report on the poor (Kanbur et al. 2000, 7) informed questions for fieldwork and writing of this monograph.

### **Ethics**

Prior to commencing fieldwork, I received approval from the Human Research Ethics Committee (HREC) through my university, Flinders University of South Australia. All intended procedures, interview questions, communication methods were reported on in this document. I did find in country that there was a constant need to ensure participants did not feel a sense that their time had been or was being wasted. It was often mentioned that some post-graduate students had come past their communities, conducted interviews as part of their 'holiday' and then left with no mention or communication of their findings. While I was not conducting interviews to stimulate change in Costa Rica, instead improve understanding, I made sure to send a copy of my thesis to all participants via email once it was complete.

## **Methods**

Interviews "are an excellent method of gaining access to information about … opinions, and experiences" (Dunn 2010, 102). A question in an interview allows for an open response as opposed to a closed set of response options and "each informant can describe events or offer opinions in their own worlds" (Dunn 2010, 103). Underpinning this research approach is the consideration of conscientisation (Freire 1972) or a critical consciousness. Participating in the interviews not only assists the interviewer to collect an understanding of perspectives, opinions, stories and narratives that exist in Costa Rica within the coffee industry, it can provide the opportunity for participants to reflect. Sen (1990, 1992, 1999a) emphasises that informed and unregimented formation of our values requires openness of communication and arguments. The approach to research as face-to-face interviews and ethnographic methods is centred in Sen's fourth and fifth concept; that is voice and critical voice. In seeking to understand what coffee certifications 'mean' and how they influence coffee farmers and business owners in Costa Rica it is viewed as important that their voice be heard. This has set the foundation for this volume. The subjectivity of this approach is recognised, and common perspectives identified from interviews across the ten communities drive the critical points discussed.

### **Fieldwork**

Original fieldwork was carried out in 2009, when ten coffee communities were visited across Costa Rica. The cooperatives were selected based on association with Coocafe, see the interview and fieldwork schedule and information about each cooperative according to the 2009 situation in table 5 and 6, and original communication was developed through a manager and member of Cooperative

**Table 5:** Interview schedule 2009.

Continued

**Table 5:** Continued

**Table 5:** Continued

**Table 6:** Information about cooperatives visited in 2009.

Santa Elena. Additional communities were selected based on my own research and networks while in country, the cooperatives are listed in table 6 according to association with Coocafe to make this difference clear. Themes for interview questions are provided in appendix A.

## **Cooperatives included in fieldwork visits in 2009**

Coocafe, a consortium of cooperatives which has a two-tier structure and *Coope Ag*ri work with very small farm holders in Costa Rica. In 2009, Fairtrade certification was held by Coocafe member cooperatives and administered in part via Coocafe, and by *Coope Ag*ri. Since inception Coocafe was an umbrella consortium, in 2009 for nine coffee cooperatives in Costa Rica, with two arms for the development of education and funding for environmental and socioeconomic programs *Hijos de Campo* and *Café Forestal*. In 2019 seven coffee cooperatives are now members of the consortium, many are different to the original nine, and certifications have increased by number including Organic USDA, Organic Eco-Logica, Certificación Europea, Fairtrade and local standards including Indicación geográfica and Esencial Costa Rica. Amongst the nine cooperatives in 2009, Coopecerroazul was the first coffee cooperative established in Costa Rica and it was from this cooperative and the cooperative Santa Elena that Fairtrade certification was adopted. *Coope Ag*ri was founded in 1962 by 391 small farmers located in the Central Valley around Perez Zeledon. In 2019 it has over 8000 coffee farming members, through which over 700 temporary and permanent workers are employed.

A follow-up fieldtrip in 2014 allowed observation of changes since the original fieldwork in two communities, Santa Elena and Agua Buena. Figure 16 and 17 provide a visual representation of the location of the communities visited in 2009 and 2014.

### **Triangulation of fieldwork information**

The process of considering and organising all fieldwork interviews, observations and discussions involved continual reference to the original perspective that I came to the study with – how the consumer country perspective aligned with actual outcomes in producing communities. Sustainability and poverty reduction were anchors for this process. In addition, the premise or intention of each sustainability certification was maintained for consideration. The frustration, variable positive associations, the other sustainability efforts in country, the business or commercial context compared to environmental context, and the marketing versus actual implementation of standards were commonly communicated and included as prominent findings. My own personal

**Figure 16:** Ten coffee farming communities and three cooperative, certification or foundation bases visited in 2009.

*Data source: Vogt 2019d.*

reflections would often consider how sustainability between large land holding and small farms could be considered the same, or prioritised, and how several oversights in the process could allow products to be sold with a logo that represented contrary outcomes. During and after fieldwork it became clear that the study would not be about discussing a range of definite advantages, and instead about understanding the sustainability certification process in a balanced way and ensuring the in-country perspective was represented. While opportunity for serious critique was certainly available, the benefits were also obvious. I found it important to bring the fieldwork findings and considerations back to the intricate context within which they work, as intra market and extra business autonomous mechanisms for sustainability. The triangulation process involved: reviewing interviews, observation notes and discussion notes with the anchors

**Figure 17:** Two coffee farming communities visited in 2014. *Data source: Vogt 2019d.*34

I mention above in mind, to consider and explain the influence, by opinion or in fact, sustainability certifications were having.

## **Presenting common opinions, quotes and results**

Key topics emerging through the triangulation process have determined chapter titles and subheadings presented in the findings chapters, chapter 6–13. They are an opportunity to constructively critique for improvement. Beginning with the subtler advantages allows a reader to know that there are definite benefits, the following chapters and key topics within proceed to explore the more intricate opinions, perspectives and experiences and demonstrate where these efforts could improve. Identifying a problem, or advantages and disadvantages versus understanding and finding effective solutions are recognised

34 Information from follow-up fieldwork available from Vogt 2019d.

as distinct. The rationale behind fieldwork explains why such opinions and experiences with sustainability certifications are important to present without an exhaustive assessment or critique from an external person. Discussion and communication of identified issues and benefits preludes a broader discussion about alternatives and potential for improvement. In some cases, in-field quotes are complemented with secondary literature and information to support in-country critiques and opinions with peer reviewed literature. Presenting the opinion and experience from stakeholders within Costa Rica is however the intention of the methodology selected and is considered important with or without supporting peer reviewed literature.

## **Addressing subjectivity and representation of fieldwork presented in results**

The benefit of interviewing cooperative representatives was the opportunity to obtain opinions based on organisations that represented a significant proportion of all coffee farmers in each region. The downside to this approach was an inability to obtain individual opinions from all farmers in each community. As many interviews were seeking to understand how certifications were understood, speaking with cooperative managers, certification technical advisors and marketing managers was considered appropriate and valuable. Certainly, their opinion could be considered biased or subjective however the intention of the research was to shine a light on their opinion. At the time of fieldwork and even today most information available about what sustainability certifications are achieving in producing communities is limited, and somewhat reliant on marketing and trade-based forms of communication and information. All quotes and associated comments should therefore be understood in this way. There was not an intention to interrogate but there was an ability to further explore opinions. The stronger opinions presented are considered evidence of levels of dissatisfaction that could probably be better explored by the certifications themselves or understood as part of a greater legacy of international trade. Some fieldwork quotes taken from interviews with the RA office in Costa Rica are presented in the background section of the book, they are not considered opinions or perspective based, instead, they are voiced expressions of operational procedures by a representative of the RA certification

## **Quantified summary and assessment according to poverty reduction indicators**

To conclude the presentation of extensive fieldwork observations, opinions and findings presented in chapters 6 to 13, a quantitative summary is presented according to poverty reduction indicators. Poverty reduction according to the definition used by Sen (1992) as outcomes of development, well-being and opportunity for well-being, and freedom were considered as indicators. See table 7 for these definitions presented as indicators.

Identified issues from fieldwork were organised by theme and discussed as elements of accepted definitions of poverty reduction within sustainable development to facilitate understanding of alignment with the key intentions of certification efforts. To ensure a simple approach, orientation for each indicator is allowed as positive or negative, and the fact that each might be inter-related and influential to another is accepted. The quantitative summary is presented in the conclusion.

Not all points of discussion about how certifications work towards sustainability and poverty reduction easily intertwine or align with this approach to assessment. They therefore remain discursive. The discursive presentation of findings and results provides the necessary detail to understand how intricate these considerations can be, and how many perspectives there are to consider. The quantified aggregated summary of findings from quotes and discussion points provides an additional layer for understanding rather than being a focal point for findings.

**Table 7:** Poverty reduction indicators to summarise fieldwork.

*\* May depend on corresponding indicators and outcomes associated with an identified influence*

## **Qualifying how findings should be used and understood**

All discussion and findings are specific to the Costa Rican context, and not necessarily reflective of how certifications operate in the context of other countries. The discussion provides an understanding of in-country understanding perspectives, opinions and situations resulting from certification efforts within accepted definitions of sustainability and poverty reduction. The understanding is expected to be useful for background study and could perhaps provide guidance for researchers of this topic in the future. They are considered likely to become more prevalent and perhaps relevant to other countries.

## **Findings**

To develop fieldwork findings into presentable results a form of triangulation was used. The triangulation sought to identify common observations, opinions and perspectives across the coffee farming communities visited leading to chapter headings for this section. Information available in the background section complement and provide context for the following chapters.

In some cases, perspectives and opinions are supported by secondary literature and in other cases they are simply presented as a series of direct quotes which address a similar topic. To avoid misrepresentation or too much of an external assessment, all quotes are presented as they were given with limited ponderings of what each means. In some cases, they are used to contribute to existing discussions related to the influence of, and role taken by sustainability certifications and contextualised for Costa Rica. There was no intention to quantify information or force topics that might be considered more important from a scholarly perspective, or retrospectively relevant.

To quantify relevant topics against poverty reduction indicators a table is presented at the beginning of this section and in the conclusion section. It serves as an additional layer for understanding and should not distract from discursively presented opinions which are more difficult to quantify. Where an identified topic is relevant to poverty reduction indicators a note is included below the subheading explaining which indicator it is related to. To determine whether the association is positive or negative table 8 can be consulted.

## CHAPTER 7

## **The subtler advantages of 'sustainability' certifications**

#### **Introduction**

The idea of certifications as 'foreign' efforts in Costa Rica often encourages, or is combined with, negative and intrusive connotations. There are however advantages from certifications in the Costa Rican coffee industry. The advantages do not necessarily outweigh the disadvantages discussed. They are subtle yet valued by producer groups in Costa Rica and contribute innovatively to intentions for improved sustainability and poverty reduction through trade. The advantages include orientation in the international market, with a redistribution of national power dynamics; influence of standards on law; facilitating access to credit.

## **Orientation in the international market and redistributing national power dynamics**

(Included in quantified summary, table 8)

Access to international markets and facilitating successful operation within them is a commonly identified need. Fairtrade certified markets expand international networking and increase information available for coffee producer organisations. This in turn facilitated a redistribution of power through the Costa Rican coffee industry:

Antes de que fuera un exportador domestica que dominaba el Mercado y poca información llegaba a los productores, en general la comercialización de café en Costa Rica dependía de dos personas – y en FEDECOOP.

#### **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. 101–106. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.i. License: CC-BY 4.0

Eran como dioses y no había información para los productores. Ahora cualquiera puede vender café. Saben cómo funciona el mercado; Pueden vender por Internet. Puedo saber lo que está sucediendo en el mercado cada día, hora. Acceso a la información proporciona acceso al mercado.

[Before it was a domestic exporter who dominated the market and little information reached the producers, generally the commercialisation of coffee in Costa Rica depended on two people – and on FEDECOOP. They were like gods and there was no information for the producers. Now anyone can sell coffee. They know how the market functions; they can sell by internet. I can know what is happening on the market every day, hour. Access to information gives access to market]34. 35

Members of Coocafe have had similar and varying experiences and responses to changes in the coffee industry and in the Fairtrade system. What was consistent is the fact that certifications represent access to the market of various countries. RA 'opened the door' to Japan, North America, and Australia36, and Fairtrade is international.37 The previous Deputy Minister of Agriculture in Costa Rica, co-founder and president of *Fundación Hijos del Campo*, Children of the Field Foundation and *Fundación Café Forestal*, Café Forestal Foundation explained that the organisational structure required by Fairtrade improved direct relationships, secured contracts, facilitated political activism and allowed access to information about international markets that were previously difficult to access:

Fairtrade ofrece una visión, formamos parte de un grupo nacional e internacional; Mejora nuestra visión de lo que está pasando, lo que nos permite dialogar con el gobierno sobre lo que necesitan los productores de café de Coocafe. Para hacer cambios en la ley y la política es difícil como es identificar lo que necesita ser cambiado, el análisis es absolutamente necesario.

[Fairtrade provides a vision; we are part of a national and international group; it improves our vision of what is happening which allows us to dialogue with government about what coffee producers of Coocafe need. To make changes in law and politics is difficult as is identifying that which needs to be changed, analysis is absolutely necessary].38

In addition to the international network provided through Fairtrade, CoopeAgri identified Fairtrade principals that complement a cooperative structure:

35 Cooperative manager, 12 February, 2009.

36 Administrator of certification program, 25 February, 2009.

37 International marketing manager, 11 April, 2009.

38 Director *Hijos del Campo* and *Café Forestal*, 20 February, 2009.

Para mi Fairtrade llama mi atención porque tienen una red grande a través del mundo, y puedo hablar con la gente en el Reino Unido, los EE. UU., Australia y Alemania así que al menos con esta calidad de miembro puedo participar. Yo, como productor en Costa Rica por lo menos puedo hablar con el mercado.

[For me Fairtrade calls my attention because they have a large network throughout the world, and I can talk to people in the UK, US, Australia and Germany so at least with this membership I can participate. I, as a producer in Costa Rica can at least speak with the market].39

## **Law and certification standards: correlation, causality and influence**

Various mechanisms encourage and assure sustainable practice (Vogt 2019a), including law, or intra-market voluntary mechanisms. In Costa Rica how different mechanisms successfully assured more sustainable practices was of interest. In the opinion of some participants, Costa Rican law "tiene más peso que cualquier certificación" [holds more weight than any certification]40 as the repercussions for noncompliance are more serious involving jail time, and payments of civil compensation (Mauri 2002). When Fairtrade and SAN standards used by RA overlap with national law, they default to the law. Some certifications' standards and criteria were identified as more thorough than state law.41 There are differences between environmental and industrial relations legislation and requirements of certification standards for example.

Costa Rica has ratified all ILO conventions but has not ratified the UN Migrant Workers Convention42 designed to protect the rights of documented and undocumented migrants. This is relevant to the coffee industry in Costa Rica considering much of the labour force is classified as undocumented mobile migrant workers. The mobile nature of seasonal workers, particularly the *Ngöbe-Buglé* makes schooling for children an additional issue to be addressed. RA considers the SAN standard as complementary to industrial relations law

39 International Marketing Manager, 11 May, 2009.

40 Financial manager and assistant director of cooperative, 13 February, 2009.

41 Administrator of certification programs, 25 February 2009.

42 The UN Migrant worker convention is the first universal codification of the rights of migrant workers and members of their families, formally known as the International Convention on the Protection of the Rights of All Migrant Workers and Members of their Families. The convention was adopted by the UN General Assembly on the 18 December 1990. It took 13 years to obtain the support of twenty countries for it to become an international legal instrument, and therefore entered into force 13 years later, July 1, 2003.

and is applicable to all certified producers, "hay cosas que la ley no se puede hacer, no tenemos un enfoque tan blanco y negro que la ley tiene, estamos construyendo la capacidad de la gente" [there are things that the law cannot do, we do not have such a black and white approach that the law has, we are building the capacity of people].43 The manager of Doka Estate, a RA certified plantation explained that national industrial relations law pertaining to seasonal workers is not suitable for the actual patterns and circumstances of these workers:

El 95% de nuestros trabajadores estacionales son indocumentados de Nicaragua, no tienen documentos por lo que tenemos que registrar cuantos hay por casa, cuando llegan, cuando salen, si tienen un accidente. El problema es que están aquí un día y no el siguiente, por lo que el seguimiento de ellos es difícil y no hay contrato. El Ministerio de Trabajo exige que se integren en la seguridad social, pero para la seguridad social es necesario un plan mensual y, en realidad un plan diario es todo lo que podemos trabajar considerando sus patrones de movimiento. Para evitar esto, hemos desarrollado un plan, si se lesionan a sí mismos pueden ir al hospital y decir que trabajan en nuestra granja y no tienen ningún problema.

[95% of our seasonal workers are undocumented from Nicaragua, they do not have documents, so we must register how many there are per house44, when they arrive, when they leave, if they have an accident. The problem is that they are here one day and not the next, so keeping track of them is difficult and there is no contract. The Ministerio de Trabajo (Department of Industrial Relations), require that they be integrated into social security, but for social security a monthly plan is necessary and, a daily plan is all we can work with considering their patterns of movement. To work around this, we have developed a plan, if they injure themselves, they can go to the hospital and say that they work on our farm and they have no problem].45

SAN standards were identified as making a significant difference as they were more detailed than national environmental and labour legislation. The construction of warehouses to store agri-chemicals separately is required by SAN

43 Standards and policy technical coordinator, 6 April, 2009.

44 Seasonal workers are provided with housing (5m² minimum per person), potable water (and analysis to prove that it is), treatment of grey water for cleaning clothes, if there is no kitchen, wood for cooking, waste removal systems. They do not pay rent and are paid \$US1.67 per basket of coffee cherries or *cajuela*. They are also provided with childcare which is a requirement of Rainforest Alliance and is not a part of state law.

45 Administrator of certification program, 25 February, 2009.

and Fairtrade standards but were not required by law.46 The use of uniforms when handling chemicals, childcare provision to prevent child labour, standards for housing and facilities provided for workers were all required in SAN standards but not in state law. A comparison between farms certified by RA and those not, confirmed this47 where SAN standard requirements were expected to and did improve conditions for labourers. Compliance to SAN labour standards was however identified as an issue by Oxfam DE in 2015. The Fairtrade standard for hired labour (hired labour standard) is separate to the generic Fairtrade standard and was only approved in 2008. It had not yet been implemented in Costa Rica. The required standards were however more advanced than the SAN standard, see figure 13. Chapter 9 explains the hired labour standard in detail with advances past legal requirements, but also how the standard allows the possibility for excluding labourers.

Where chronologically the certification is ahead of the law there are examples of the law 'catching up'. For example, a RA certified coffee plantation was already recycling as required by SAN standards before waste management legislation of 2010 was passed. In May 2009, a RA employee confirmed that, "la ley no cubre el reciclado aun en Costa Rica" [the law does not cover recycling yet in Costa Rica].48 It was not until May 2010, that the Integrated Waste Management Bill (GIR) became law in a unanimous vote (Ben-Haddej et al. 2010–2011). The possibility that standards might influence, and progress national law is therefore considered a subtler advantage of certifications.

Eventual improvement in required environmental and hired labour practices for Costa Rican coffee farms rely on a legitimate and reliable auditing process, and effective standard development that allows for the difference in hiring approach between plantations and small farms. Further information about possible improvements are provided in chapter 9 and would only encourage opportunity for the law to 'catch up' improving how adequately sustainable legal requirements are.

#### **Access to credit**

(Included in quantified summary, table 8)

As an activity that includes an annual harvest and therefore income, access to credit is a relevant consideration for all coffee farmers in Costa Rica. Across every coffee farming community, it was observed that Fairtrade certified cooperatives more easily secured access to credit from local banks.

46 Administrator of certification program, 25 February 2009; Cooperative manager, 11 March, 2009.

47 Administrator of certification programs, 25 February 2009.

48 Standards and policy technical coordinator, 5 May, 2009.

#### **Summary**

(Orientation in international market and redistributing national power dynamics; access to credit included in quantified summary).

There are subtler advantages of Fairtrade and RA which assist producer groups to overcome self-identified challenges within the international coffee industry. The categories identified through fieldwork associate certifications with global efforts for improved sustainability and poverty reduction through trade, and occasionally as more advanced or progressive compared to legal requirements. While there is no direct correlation or contributing association between a certification standard and changes in state law; the identified distinction between requirements can allow certification standards to address local situations more appropriately than national law. While not yet a perfect process, the standards introduced by Fairtrade and RA can be considered complementary to sustainability principles, particularly where work toward the overall objective is appreciated as a staged or progressive approach. How different standards progress international and national legal requirements and complement implementation of existing legal requirements is suggested as a valuable consideration for future research. These subtler advantages of certifications run in parallel with misaligned intentions and outcomes.

Misalignments between intentions and outcomes vary by certification. Improving an understanding of how misaligned intentions to outcomes eventuate provides an opportunity for improvement. The following chapters explain these misalignments as existing or possible according to investment versus benefit; standard criteria; the number of certifications being demanded; over representing reputation compared to actual outcomes; and reinforcing international trade dynamics.

## CHAPTER 8

## **The cost of 'sustainability' certifications: intention versus outcome**

#### **Introduction**

The intra market location of certifications can remove focus from the intended aim due to a dominant business focus. The standards and codes of conduct to which the business complies must be highly principled and developed in consultation and consideration of local contexts to achieve intended benefit. Effective implementation and independent monitoring can assist to align intentions with outcomes where standards and codes of conduct are appropriately geared. Access to the market is fundamental for business success and survival49 but it comes at a price. Organisational development and international networks resulting from involvement with sustainability certifications and certified markets have been highly valued. The payment ahead of harvest, essentially pre-finance for farming activities, is commonly identified as a benefit of the Fairtrade system as discussed in the previous chapter. The Fairtrade minimum price and secure trading partners "cushioned" the impact of the 2001 coffee crisis. However, the Fairtrade minimum price and prices gained through RA certified markets for small producers, the Fairtrade price premium, and the cost of audit raise questions around how sustainability and poverty reduction intentions are and can be achieved.

#### **A minimum price**

The minimum price offered by Fairtrade intends to provide stability within a volatile international market situation. Within poverty reduction terms this is

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

49 Cooperative manager, 12 February, 2009.

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 107–113. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.j. License: CC-BY 4.0

a positive offering. It was suggested by interviewed cooperative representatives that the secure price offered by Fairtrade ensured survival through the coffee crisis of 2001.50 51 Member numbers decreased dramatically, as did coffee farming as entire farms were abandoned52 during this time. In 2009 while security through long term trading contracts and relationships, organisational capacity building and participation of producers in the Fairtrade system was variably observed, cooperative representatives claimed to be losing money through Fairtrade certified market channels. The Fairtrade minimum price did not cover the cost of production in Costa Rica despite the poverty reduction objective. While a FLAANZ and Oxfam report (2010) affirms the benefit of this approach from the perspective of a coffee producer from the Kilimanjaro Native Cooperative Union, "Pay us a fair price for our coffee, and we will make poverty history for ourselves," Costa Rican interviewees clarify, "Este ano Fairtrade hizo que el productor perdiera el dinero a través del mercado Fairtrade. El mercado convencional este ano es \$2.57 y Fairtrade \$1.87, causo una perdida" [this year Fairtrade made the producer lose money through the Fairtrade market. The conventional market this year is \$2.57 and Fairtrade \$1.87, it caused a loss]53, and this was confirmed by other interviewees:

Los clientes que tenemos hacen tener la certificación Fairtrade vale la pena, pero el premio y el precio no vale la pena. Si vendemos café a \$1.87 no es atractivo para mí, no cubre los costos. Costa Rica es diferente a otros países, el costo de producción es más alto, el transporte y la mano de obra es casi el doble que el de otros países.

[The clients that we have make having the Fairtrade certification worth it but the premium and price is not worth it. If I sell coffee at \$1.87 it is not attractive for me, it does not cover the costs. Costa Rica is different to other countries, the cost of production is higher, transport and labour is nearly double that of other countries].319

Para tener estas certificaciones es un poco caro para nosotros, hemos estimado que, para cumplir con todos estos criterios de las certificaciones, la inversión es de aproximadamente 27 centavos por quintal 60 de café, es una inversión, por lo que cubre muchas cosechas, pero si es una producción de 100 quintales por 3 hectáreas, hay que hacer mucho para hacerse confirme. Tienen que reconocer el trabajo que tenemos que hacer para lograr estos cambios. Cualquier certificación porque incluso si es una responsabilidad de hacer las cosas bien, si vendemos

50 Cooperative manager, 13 February, 2009.

51 Cooperative manager, 4 February, 2009.

52 Cooperative manager, 13 April, 2009.

53 Cooperative manager, 13 April, 2009.

café al precio Fairtrade, no es sostenible. Hay personas que pueden vivir con estos precios, pero en qué condiciones, pueden comer, pero no pueden pagar la escuela. Fairtrade garantiza un tipo de vida, pero no vendemos un 40% a través de Fairtrade. Cuando del precio del café es bajo vendiendo 25% comercio justo y 75% al mercado por \$1.11 es insuficiente. Fairtrade exige que invirtamos en salud, medio ambiente, etc. pero cuanto café estamos vendiendo a través de su mercado?

[To have these certifications is a bit expensive for us, we have estimated that to comply with all these criteria of the certifications, the investment is approximately 27 cents a quintal *60* of coffee, it is an investment, so that covers many harvests, but if it is a production of 100 quintales54 for 3 hectares, you have to do a lot to become compliant. They must recognise the work that we must do to make these changes, any certification, because even if it is a responsibility to do things well, if we sell coffee at the Fairtrade price, it is not sustainable.

There are people who can live with these prices, but under what conditions, they can eat but they cannot afford school–Fairtrade guarantees a type of life, but we do not sell all our coffee, we sell 40% through Fairtrade but when the conventional coffee price is low, 25% Fairtrade, market \$1.11 at 75% and this is insufficient. Fairtrade demands that we invest in health, environment etc., but how much coffee are we selling through their market].55

Ese es el problema que tenemos estoy hacienda un estudio comparativo de costos en Centroamérica, para demonstrar el problema que tenemos con los altos costos que el precio mínimo no cubre. Tenemos costos de producción más bajos en Costa Rica y tal vez en Centroamérica debido a la eficiencia, pero en la producción en la agricultura, no podemos manejar, trabajamos a mano, tenemos que pagar la seguridad social, etc. no podemos manejar esto.

[That is the problem that we have, I am doing a comparative study of costs in Central America, to demonstrate the problem we have with high costs that the minimum price does not cover. We have lower production costs in Costa Rica and maybe in Central America because of efficiency, but in production in farming, we cannot manage, we work by hand, we must pay social security etc.… we cannot manage this].56

54 60 Quintal = fanega = 46kg =1lb = 10 cajuelas.

55 Financial manager and assistant director of Cooperative, 13 February, 2009; Cooperative manager, 11 March, 2009.

56 International marketing manager, 11 May, 2009.

Selling a minimum percentage through Fairtrade certified markets caused Costa Rican farmers to lose money in 2009. Contracts with a fixed but superior price were signed in years when the conventional market price was on average lower. In the following years the cost of production maintained or increased, and the conventional market price increased. After carrying out research on sustainable production costs globally in coffee, Fairtrade increased the minimum price for certified coffee by an average of five cents per pound to \$US1.24 per pound for unwashed arabica, and \$US1.28 per pound for arabica coffee (FLO 2009a). This new minimum price intends to cover sustainable production costs for coffee producing organisations. It was again increased in 2011 to \$US1.35 per pound for unwashed arabica and \$US1.40 for washed arabica. It might not however consistently or effectively cover the cost of production in Costa Rica. The RA price, in comparison, depends on the buyer and is not fixed. RA certified farms received a superior price in RA certified markets while working holistically toward the three pillars of sustainability. The economic benefits of RA were clear for large plantations, the work involved to become certified was demanding but realistic. The superior price of 41–48 cents per pound above the standard market price balanced out the effort.57 Certification was financially beneficial, superior to the conventional market price for plantations but not for cooperatives, "RA desde el fondo no protege a usted y los tostadores que compran RA comprar 83 a través de los precios del gobierno a la tasa de Mercado abierto de \$1.73 y recibimos 97 centavos" [RA from the bottom it does not protect you and the roasters that buy RA buy 83 through government prices at the open market rate [of] \$1.73 and we receive 97 cents].58

#### **The Fairtrade premium**

(Included in quantified summary, see table 8)

The price paid for coffee in Costa Rica is regulated by ICAFE, "para un contrato abierto el precio pagado será el precio de Nueva York y un adicional de 36 centavos, el precio ICAFE" [for an open contract the price paid will be the NY price and an additional 36 cents, the ICAFE price]lix. Fairtrade provides a 28-cent premium for organic production and a 14-cent premium additional to the price paid for a pound of coffee. This premium is intended for the social and economic development of the cooperative or the community:

A lo largo de este ano la prima total recibida de Fairtrade por Coocafe fue de \$5560, en términos de becas, representa básicamente nada más que para otros programas, aunque es una pequeña cantidad que ayuda a los pequeños costos operativos de las cooperativas y contribuye a otras

57 Administrator of certification programs, 25 February, 2009.

58 Cooperative manager, 20 February, 2009.

actividades, pero la cantidad varia y desde hace dos años las ventas a través de Canals de comercio justo cayeron, ahora está empezando a aumentar.

[Over this year the total premium received from Fairtrade by Coocafe was \$5560 this, in terms of scholarships, it represents basically nothing but for other programs, although it is a very small amount it helps for small operational costs of cooperatives, and it contributes to other activities, but the amount varies and since two years ago the sales through Fairtrade channels fell, now it is starting to increase].59

El premio generalmente permitió algunas mejoras en la comunidad para un campo de futbol, salón comunitario, carreteras o reparaciones de carreteras en EL Dos, donde yo era el gerente. Aquí (en Atenas) el premio, como votado por nuestros miembros en 2008 es incorporado al precio final pagado al productor, por lo que la gente lo recibe directamente.

[The premium generally allowed some improvements in the community, for a football field, community hall, roads or road repairs in El Dos, where I used to be the manager. Here (in Atenas) the premium, as voted by our members in 2008 is incorporated into the final price paid to the producer, so the people receive it directly].60

The social premium intended for community projects is sometimes used as an additional payment to farmers almost as a coping mechanism against the insufficient price paid. However, even with the premium payment, costs were not covered. The premium was again increased in 2011 to 20cents.

#### **Auditing**

Certified producer groups and plantations spend time and money on the audit process. It was not always absolutely third party in 2009, and an extensive audit process was not identified for either of the certifications. One Fairtrade certified cooperative stated that only 5 of 50 farms were visited, 10%, and that they were selected randomly. The producer group paid to fly an auditor to the communities to complete the task and the cost of audit was a common cause for complaint, particularly where alternative systems operating in the country did not include this cost. The Community Agroecology Network (CAN) is an example:

En Fairtrade tenemos que invertir en un auditor, con CAN que nos dan asesoramiento técnico de forma gratuita. Con Fairtrade, los precios no

59 Committee member *Hijos del Campo*, 23 February 2009.

60 Cooperative manager, 12 February 2009.

son tan justos, por el momento Fairtrade no cubra el costo de producción para la cooperativa o las granjas. Tenemos un mercado fuera de Fairtrade que es \$2.08, esto es más que Fairtrade. Vendemos 75% al mercado Fairtrade.

[In Fairtrade we must invest in an auditor, with CAN they give us technical advice for free. With Fairtrade, the prices are not so fair, at the moment Fairtrade is not covering the cost of production for the cooperative or the farms. We have a market outside of Fairtrade which is \$2.08, this is more than Fairtrade. We sell 75% to the Fairtrade market].61

Tenemos que pagar dinero por la inspección, por la membresía, y por cada exportación que hacemos. Lo mismo sucede con Rainforest, con todas las certificaciones. Por ejemplo, con productos orgánicos, si usted tiene Maya-cert para venir e inspeccionar, usted paga por el transporte desde Guatemala.

[We must pay money for the inspection, for membership, and for every export that we do, the same thing happens with Rainforest, with all certifications. For example, with organic, if you have Maya-cert to come and inspect, you pay for transport from Guatemala].62

RA recognised in 2009 that the cost of monitoring, and of studies to confirm the existence and growth of specific trees required, was a barrier to more farmers benefiting and being part of their certified market. RA's idea to combine auditing that verifies stringent compliance with measuring carbon sequestered by trees planted, to earn carbon credits, was developing at this time. The monitoring costs would decrease and "credibility of the results would be high".63 One RA certified farm manager mentioned involvement in the program as a positive development.64

#### **Summary**

RA and Fairtrade certifications require investment and resources for implementation toward compliance which represents an additional cost to standard operations. The auditing process for each certification body is an associated cost for the certified producer group or plantation farm. The cost included transport costs for the auditor visit, preparation of paperwork and potential visits involved in an audit process.

61 Cooperative manager, 25 February 2009.

62 International marketing manager, 11 May, 2009.

63 Standards and policy technical coordinator, 6 May 2009.

64 Administrator of certification programs, 25 February 2009.

The benefit of the Fairtrade price was variable since the early 2000s, and despite an increase in the minimum price offered in 2011 the conventional market price for arabica coffee on average remained above the Fairtrade minimum price. It was therefore problematic when contractual agreements settled on a price equal to or just above the Fairtrade minimum price rather than ensuring that it is above the conventional market price and that it covered cost of production. Due to contractual arrangements with limited price flexibility, many cooperatives were feeling locked into making a loss through Fairtrade certified trade channels, and similarly for limited experiences with RA certified market. The subtler advantage of improved access to credit was almost, in this situation and circumstance, irrelevant or compensatory to the situation being imposed but remained valued. The Fairtrade premium provided an opportunity to compensate these loses when used to compensate farmer payments. By comparison, RA does not guarantee a minimum price but successfully obtained consistently higher prices than conventional market prices for plantations and covered the cost of certification. This was not the case for certified cooperatives.

On a purely financial basis, benefit versus the cost of Fairtrade was not balancing or benefiting all or most certified farmers or cooperatives in Costa Rica in 2009. Increases in the minimum price since 2009 did not indicate an improved ability to cover costs in 2019. Individual trade contracts confirm this more thoroughly. The superior price achieved through RA certified channels were exclusive to plantations and were not assured for cooperatives. For plantations, it covered expenses associated with becoming certified and this was not expected to change.

## CHAPTER 9

## **Standards for producers: variance in objective and approach**

#### **Introduction**

RA and Fairtrade clearly communicate distinct intentions and approaches to improving environmental, economic and social outcomes, and how they prioritise each pillar of sustainability. RA has historically certified plantations rather than producer groups and cooperatives, while Fairtrade maintains attention to coffee cooperatives only. Where they are similar is their approach to standard development, external to a farming community. Their standard criteria do reflect the difference between RA and Fairtrade, and the ISEAL Alliance provide foundational guidance as a standards monitoring body. Procedures for RA and Fairtrade standard setting are in line with the ISEAL Code of Good Practice on Standard Setting. Representatives of the certifications are also involved in ISEAL standard setting discussions.

## **Standard development: politics of change and a top down approach**

A top down versus consultative approach in standard setting is addressed by Giovannucci and Ponte (2005) who discuss the importance of including farmers in key decision-making processes in sustainability initiatives:

If developed country actors decide alone what is included in standards and how they are measured, the impact of sustainability initiatives is likely to remain limited. Although some sustainability certifications may yield substantial benefits for producers, power relations may remain essentially unaltered if producers are still on the receiving end

#### **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. 115–124. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.k. License: CC-BY 4.0

of key decision- making processes. In order for standards to work for developing country producers, the following four factors must be assured: (1) transparency and clarity of the standards and their requirements; (2) effective participation by developing country producers in key decisions over standard setting and monitoring procedures; (3) reasonable access; (4) just compensation for the efforts required of producers to meet and monitor elevated standards.

There are then specific differences to how Fairtrade and RA approach standard development beyond ISEAL guidance, and to reflect the philosophical difference between each certification approach.

#### *Standard development according to certification*

Standard detail can reflect intentions for or changes in practices in a more detailed way. They determine required and encouraged improvements and can be influenced by additional programs operating in the same area. For example, tree varieties planted for shade that are not specified by a standard, instead distributed by the local government. Fairtrade and RA operate separate departments for standard development and compliance monitoring for certification.

Fairtrade operates two independent branches FLOCERT GmbH and FLO eV and works on standard development through the Standards Unit and decision making through the Fairtrade standards committee level, a multi-stakeholder committee. Within the Fairtrade standard there are generic trade standards (Fairtrade International 2019a); product specific standards for small producer organisations (FLO 2009; Fairtrade International 2019b) and hired labour standards (Fairtrade International 2019c). The standards apply to all producers and traders. The Fairtrade standard has minimum and progressive criteria over a three-year period65 allowing scope for organisations that are not 100% compliant to work toward this goal. Fairtrade has prioritised small holding farms and farmers organised into groups, and an economic and social standard via a minimum price and price premium. Fairtrade also provides opportunity for producer groups alongside a range of other stakeholders to be involved in organisational processes and provides a discretionary advantage to producer compared to buyers in trade agreements.

RA on the other hand uses the SAN standard and are committee and board members. The premise of RA compared to Fairtrade is an intended *holistic*  approach with environmental and social sustainability leading to economic sustainability as explained in chapter 8, they began by certifying plantation size farms only. They have a standard for small producer groups, revised in 2009 however they still deal mainly with coffee plantations instead of small

65 Cooperative Manager 11 March 2009.

producer groups. The politics of the minimum price is not relevant for RA like it is Fairtrade.

RA credits ISEAL as a major influence on SAN standards for their certification together with national research institutes such as CATIE66 and technical groups:

The number of crops that we were certifying began to grow and we could not compile a guide for each crop, so in 2008 all these additional criteria for each item, they brought together. This is not only the decision of the network, there are groups of technicians in the background and what the market demands. Influencing our standards are lots of technical groups, what the market asks, ISEAL asks. So really it is influenced by what the whole world is doing, these are the rules... influence comes from ISEAL, which is influenced by what the market asks.67

The difference in approach of the two certifications influence how standards can be changed on a contextual case by case basis, and then as an official standard. The SAN committee, the standard setting body for RA certification, meet twice a year to discuss changes to standards or strategy. There are local interpretation guidelines for specific crops and countries updated in 2015. For coffee, these guidelines exist for Honduras, Brazil and El Salvador.

## *Producer involvement in standard setting*

Giovannucci and Ponte (2005) argue that producer participation is key to poverty reduction and sustainable livelihoods. A RA representative explains that, "no estamos 'en medio' de grandes corporaciones y productores "[we are not 'in the middle' of large corporations and producers].68 In comparison, the Fairtrade approach while not explicitly seeking to be in the middle does provide an opportunity for such situations indicating a detailed difference in philosophical understanding of sustainability and intentions between each certification. For Fairtrade certified farmers, financial negotiations and secure contracts present some of the greatest challenges. While discretionary preference is given to farmers instead of buyers, in some instances having Fairtrade support in these situations was mentioned as necessary.

Fairtrade works to empower producer groups through involvement in the Fairtrade system and must consult with these groups as well as with ISEAL. RA consults with SAN and ISEAL, but not directly with planation managers, or small producer groups. Involvement of farmers is only possible through the

66 For more information, view http://www.catie.ac.cr/magazin.asp

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

68 Standards and policy technical coordinator, 6 May, 2009.

SAN committee. With the idea that farmers will equally participate in Fairtrade debates and discussions, Fairtrade consistently seeks to include and consult. There is the opportunity for ISEAL to include farmers, or for Fairtrade to either represent their interests or include them in ISEAL discussions. However, from the farmers' perspective, interaction between producer groups and certifications does follow a "enfoque de arriba hacia abajo" [top down approach]69 and this idea was supported:

En cuanto al feedback entre el productor y el consumidor, veo más y esto en Fairtrade que Rainforest Alliance porque siento que en realidad con Rainforest hay tres criterios básicos ambientales, sociales y económicos, por lo que estos son los fundamentos para el productor. Para mí, el problema que veo con Rainforest es que es una Multinacional que está operando en los EE. UU. y que tiene un enorme valor en los EE. UU., Canadá y el Reino Unido, etc. Así que tienen una alianza y de esa manera tienen participación pero que esta distanciado.

[In terms of feedback between producer and consumer, I see more of this in Fairtrade than Rainforest Alliance because I feel that with Rainforest there are three basic criteria environmental, social and economic, so these are basics for the producer. To me, the problem I see with Rainforest is that it is a Multinational that is operating in the US and it has huge value in the US, Canada and the UK etc. So, they have an alliance, and, in that way, they have participation, but it is distanced].70

Examples of contextually inappropriate and ineffective standards from findings include water management standards; the fairtrade minimum price; labour standards; land title requirements; and independent monitoring.

### *Inappropriate Standards*

#### **Water management and RA**

(Included in quantified summary, see table 8)

SAN standards applied to small producer groups for RA certification were identified as out of context for small farmers in one region of Costa Rica, specifically related to *el ojo de agua*, the source of water.

Cuando los inspectores de la RA vinieron a auditor nuestras fincas sentimos que sus preguntas estaban un poco fuera del contexto histórico, cultural y social para el granjero, por ejemplo, en una pequeña comu-

69 International Marketing Manager, 11 May 2009.

70 Ibid.

nidad en San Luis, el inspector fue a finca y le pregunto, '¿proviene de un sistema público, de la comunidad? Si no, es una falta del estándar.' El campesino dice, 'Bueno primero tengo que dar la gracia por tener agua, si no tengo un sistema público el sistema no ha existido o en los últimos anos en esta área no ha sido necesario'. Aquí en esta área hasta ahora, hay una fuente de agua en cada finca, por lo que este requisito que determinaría el cumplimiento de las normas RA y por tanto la certificación no parece relevante para nuestra comunidad.

[When the RA inspectors came to audit our farms, we felt that their questions were a little out of historic, cultural and social context for the farmer, for example, in a small community in San Luis, the inspector went to a farm and asked 'The water that you consume, does it come from a public system, from the community? If not, it is a breach of our standard.' The farmer says, 'well I first have to give thanks that I have water, if I do not have a public system it is not because I do not want to, it is because the system has not existed or in the last years in this area it has not been necessary.' Here in this area until now, there is a source of water in every farm, so this requirement which would determine complying with RA standards and therefore achieving certification does not seem relevant to our community].71

#### **Fairtrade minimum price**

(Included in quantified summary, see table 8)

The minimum price may also be considered an inappropriate standard for the Costa Rican context. Costa Rica by law will only farm the arabica species, it achieves the highest international market prices compared to the other popular coffee species, robusta. The distinction between price influences how the Fairtrade minimum price compares to conventional market prices. The average international market price for coffee, which averages prices of arabica and robusta are closer to the price set by Fairtrade however they can remain above the minimum \$1.35. Where prices of arabica separately are compared, the difference is significant, and the Fairtrade minimum price does not appear reasonable. Within ICO pricing, Costa Rica sells within the 'other mild' category of arabica. The average price of this coffee in 2017 was \$1.44 (ICO 2017a); in Costa Rica, the average price paid to growers since 2011 has been above \$1.70 (ICO 2017b). The Fairtrade minimum price is a valuable standard when the conventional market price is below the standard rate. Where the minimum price is used in trade contracts and fixed for the length of the contract, the disadvantages become more obvious particularly when taking the information

71 Previous cooperative manager, coffee farmers and cooperative manager, 12 January, 2009.

regarding conventional market prices and cost of production into consideration. Ensuring the minimum price covers the cost of production according to each countries' requirements, alongside allowing stability and security in trade terms, would more adequately cover all aspects of poverty reduction. Ensuring a stability in income that allows costs to be covered is essential. One without the other is not considered a sufficient poverty reduction measure or achievement.

#### **Labour standards**

(Included in quantified summary, see table 8)

Labour standards are about more than wages as outlined by International Labour Organisation (ILO) conventions. The conventions include, minimum age (convention 1920); right of association (convention 1921); equality of treatment (convention1925); and various other standards (ILOLEX 2010; Lyutov 2010). The detail of each standard is important in terms of setting clear objectives for best practice. The comparative table demonstrates the difference between labour standards of the two certifications (Table 2).

Certifying larger plantations with a specific group of workers or employees is possibly a simpler process to understanding numbers of workers, as permanent across numerous small farm holdings.

The practice of and requirements for hiring labour for plantations is different from small farms with a definite formality for plantations. The common practice for Costa Rican producers of small farm holdings that *hire* seasonal workers, was informal. At times as simple as word of mouth or loyalty; some workers were considered family friends for small farmers. "Las mismas personas regresan cada ano, y les preguntamos si conocen a otras personas que podrían estar interesadas en venir a trabajar" [The same people come back every year, and we ask if they know other people who might be interested in coming to work].72 The relationship that developed over this time was explained:

Hemos tenido la misma familia y trabajamos en nuestra granja durante los últimos 5 o así anos, incluso estamos pensando en ir a Nicaragua para visitarlos ya que también son los granjeros de café que viajan aquí por algún dinero extra, similar a unas vacaciones de trabajo. También compartimos información sobre técnicas de cultivo de café.

[We have had the same family come and work on our farm for the past 5 or so years, we are even thinking about going to Nicaragua to visit them as they are also coffee farmers who travel here for some extra money, similar to a working holiday. We share information about techniques in coffee farming as well].73

72 Coffee farmers, Los Angeles de Páramo, 12 May, 2009.

73 Previous cooperative manager, coffee farmer and member of cooperative, 12 January, 2009.

Such a positive situation cannot be assumed in all cases. The labour standards can assist to ensure consistency, however an increase in cost for the farmer could result. This would include training of staff, upgrading qualifications and new organisational policies and procedures including Occupational Health and Safety (OHS), and sexual harassment grievance procedures (FLO 2009c). Infrastructural adjustments may also be necessary for housing of labourers and the provision of childcare which requires more investment. The RA standard might not be as detailed as Fairtrade in labour standards (Labour Rights 2009, figure 13) however the standards for RA are applicable to all employees working on a plantation, a point of difference from Fairtrade. In 2008, the Fairtrade standard for hired labour (hired labour standard) was newly introduced as a separate standard to the generic Fairtrade standard. Fairtrade standards define small producers as "those that are structurally dependent on permanent hired labour and that are managing their farm mainly with their own and family labour" (Fairtrade 2009a, 4). The definition of *worker* referring to all waged employees of the producer organisation and of its members.

The definition of worker includes "migrant, temporary, seasonal, subcontracted and permanent workers" (FLOCert 2009, 24) and they must be *unionisable*. Those that were consequently included in the standard are conditionally based on a group that can be unionised and make up a *significant* number of workers founded on national law. Within the updated hired labour standard a minimum of 25 permanent workers must be employed to use the standard. The definition of permanent worker was not fully elaborated on and scope for variance in definition certainly existed within each community and country. Issues for temporary seasonal labour employed by small farmers could also continue to arise as Fairtrade's hired labour standard did not effectively apply to all small holding coffee farmers. If farmers themselves were hiring 'a significant number' of workers as defined by national law and the standard itself, they are required to seek certification under the hired labour standard. Without a *significant* number of workers, all Fairtrade labour standards for coffee default to generic Fairtrade standards. With a significant number of workers, small farmers become certified external to their cooperative, raising issues of expense and process for a small farmer, and therefore feasibility.

These definitions indicate that the responsibilities of small holding coffee farmers to their employed labour will be governed by the Generic Fairtrade standards and not the specific hired labour standard unless the producer independently seeks this certification as necessary. Necessity, determined by a *significant* number of workers, becomes an issue as members of a cooperative are, as a group, employing many seasonal migrant workers. Due to the size of the farms each farmer may only employ one or two people, an insignificant number by Fairtrade standards. The hired labour standard can therefore easily be excluded from requirements for producer groups, and farmers of small holdings. Where they are applicable, the required investment is relevant.

When the Fairtrade price is locking farmers into a price that does not cover costs, it seems contradictory to expect that they adequately take care of their labourers within the same agreement. There are also some cultural considerations related to any international hired labour standard that require additional consideration (Vogt 2019b).

## **Formalising land title**

Property rights and land-titling have become a focus of conflict and debate in Costa Rica through reforestation efforts tied to Costa Rica's environmental policy. In 1996, the Forestry Law – N575 (WRI 2010) combining land-title with financially subsidised reforestation efforts was introduced, easing reforestation effort but only for owners with formal land title. Formalising land title was identified by a group of farmers in Costa Rica as an additional cost and issue74 as there was resistance to the formal registration of land with the state. These issues are relevant to coffee farmers of small holdings and examples how a popular poverty reduction approach might not necessarily achieve the stated aims. This observation highlights the need to understand local culture and equity from a local perspective and distinguishes between identifying a problem and requiring conditions to resolve it, versus developing local understanding and finding effective solutions within a similar process. How sustainability certifications and cooperatives require formalised land title through standards is therefore an additional consideration related to appropriateness, particularly according to culture and local context.

#### **Transparency and independent monitoring**

(Included in quantified summary, see table 8)

The certification bodies aim to assist producers with implementation of the standard criteria and the producer organisation is not financially penalised if standards are not complied with. Instead they will receive a warning or lose the certification depending on the offence and their previous record of offences, and realistic ability to become compliant. Fairtrade revises administrative processes at the business and *beneficio* level and then visits member farms. RA and FLOcert auditing bodies select farms at random when monitoring. "Fairtrade selecciona tres cooperativas de Coocafe y da aviso con tres días de antelación" [Fairtrade select three cooperatives of Coocafe and give three days' notice before they visit].75 "Visitan el 10% de las fincas miembro" [They visit 10% of

74 Coffee farmers, Los Angeles de Páramo, 15 May 2009.

75 Cooperative Manager, 11 March 2009.

member farms]76 . "Visitan las fincas por si mismos; No vamos con ellos" [they visit the farms by themselves; we do not go with them].77 RA follows a similar pattern for visits. RA viene una vez al año y pasa tres días, un día en cada granja y un día con papeles [RA comes once a year and spends three days, one day on each farm and one day with papers].78 Producers are also regulated by the Ministry of Agriculture and Livestock (MAG). "Regulan el certificador en Costa Rica y vienen una o dos veces al ano" [They regulate the certifier in Costa Rica, and they come once or twice a year].79 Fairtrade inspectors visit before harvest80, which would influence an ability to monitor conditions for seasonal labourers who come only for the harvest season.

#### **Summary**

(Approach by each certification; inappropriate standards for water management; Fairtrade minimum price; Labour standards; Transparency and independent monitoring included in quantified summary, see table 8)

Standards and effective implementation are considered central to the influence each certification will have in coffee farming practices and communities related to poverty reduction and sustainable development. Implementation of standards and ensuring adequate monitoring of implementation represent additional costs but are essential to ensure aligned outcomes. The influence of standards is determined by the sustainability philosophy used by each certification, criteria inclusion, how consultative standard development is, and effective implementation. RA and Fairtrade certifications maintain an international, centralised, and external to community standard development approach. While the intention to develop standards centrally but in consultation with stakeholders exists, in implementation this was not identified as consistent nor as an effective process. In addition, inappropriate standards required processes contrary to local physical geography contexts, leaving producers confused about the sustainability value of such certification processes.

Most hired labour for coffee farms in Costa Rica are migrant workers and the legitimacy of their visas and ability to work in country can vary. Fairtrade and RA developed hired labour standards to ensure that labourers, legal or illegal, are provided adequate conditions. The difference between hired labour for a small holding farm or a cooperative managing across all member farms, and a plantation is a significant difference. The Fairtrade standard for hired

76 Cooperative Manager, 20 February, 2009.

77 Cooperative Manager, 11 March 2009.

78 Administrator of certification programs, 25 February 2009.

79 Technical engineer and administrator of certification programs, 9 February 2009.

80 Cooperative manager, 12 February, 2009.

labour was introduced after labour standards were included in SAN standards therefore implementation of RA labour standards was comparatively more advanced. While the Fairtrade standard for hired labour is detailed, it is separate to the Fairtrade generic standard and only deemed relevant for farms that employ a 'significant' number of workers according to the Fairtrade standard, and then where 25 permanent workers are employed within the hired labour standard itself.

While RA tries to remove itself from power dynamics between farmers and buyers, Fairtrade works between and alongside producer groups and buyers, most are small holding farmers, and is truly engaged in the *social concept* of Fairtrade. Fairtrade prioritises social and economic justice for coffee farmers however financial negotiations and secure contracts are perhaps the most challenging to achieve. When buyers of Fairtrade certified coffee are MNCs they might source certified products for market presence, positive brand association and increasing brand equity (Raynolds 2007; Vogt 2019a, 2019b) while negotiating contracts against the best interests of producers. With such a range of interest groups involved, changing a standard to benefit farmers could become complicated and make the process, possibly the certified product, more expensive.

As in-community standard development, implementation and audit emerge (Vogt 2019b), RA and Fairtrade maintain the external to producer community approach for standard development, introduction and certification of compliance. Fairtrade maintains its resolve and commitment to stated aims and objectives that benefit farmers while continuing to balance with interests of roasters and buyers of certified coffee. Despite these power relations, Fairtrade has managed to change its standards in accordance with ISEAL, but still struggles to balance the producer voice in the process of change. There is therefore some complication when critiquing and changing the Fairtrade standards. This could be considered a problem in terms of encouraging poverty reduction through building capabilities for effective participation. RA seeks to revise and update standards on a regular basis, and comparatively the process is more removed from stakeholder involvement than Fairtrade.

## CHAPTER 1 0

## **Increasing the number of certifications and associated benefits or disadvantages**

#### **Introduction**

While Fairtrade appeared the only sustainability certification, alongside organic in 2006–2009 in Australia, the number of certifications operating in the Costa Rican coffee industry with sustainability intentions were significant. They included RA; Fairtrade; Organic for different countries; UTZ Kapeh; 4Cs, Starbucks C.A.F.E. Practices, ISO for processing. Every business interviewed in Costa Rica was certified by at least two or three certifiers or socially responsible programs for coffee. How realistic implementing an increasing number of certifications was for producer groups became a point for discussion. As did how the number of labels evidences a market orientated effort, rather than a producer community orientated sustainability effort.

#### **Top down demand**

Given a perceived benefit, and the increase in popularity of certified coffee markets, many cooperatives commented that compliance to more than one certification was often at the demand of existing clients. A top down demand approach motivated by the improved reputation offered by certified coffee, or an opportunity to meet intentions to improve CSR efforts appeared evident. "Ahora tenemos clientes que vienen y demandan café basado en la certificación" [We now have clients who come, and demand coffee based on certification]81, 82:

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

81 International Marketing Manager, 11 May 2009.

82 Ibid.

Vogt, M. 2019. *Variance in Approach Toward a 'Sustainable' Coffee Industry in Costa Rica: Perspectives from Within; Lessons and Insights.* Pp. 125–132. London: Ubiquity Press. DOI: https://doi.org/10.5334/bce.l. License: CC-BY 4.0

Nuestro cliente solicito que seamos certificados con RA. Fairtrade está en un proceso de cambio en el momento de ser más completo y detallado en la implementación sin embargo es el apoyo de los departamentos gubernamentales según los entrevistados que están ayudando a hacer cambios en el terreno para satisfacer las demandas de sus clientes.

[Our client requested that we become certified with RA. Fairtrade is in a process of change at the moment to be more thorough and detailed in implementation however it is support from government departments according to interviewees that are assisting in making changes on the ground to satisfy demands of their clients].83, 84

The financial manager and assistant director of Coopetarrazu explained in more detail:

Nos certificamos con Fairtrade porque en ese momento, el precio era bajo en café… y algunos compradores de café estaban buscando un café Tarrazu que fuera certificado Fairtrade y no existía así que decidimos certificarnos para ofrecer esta combinación al mercado. Entramos en C.A.F.E. Practices de Starbucks porque teníamos clientes demandando que cumpliéramos y luego teníamos otros clientes demandando café certificado RA, así que también trabajamos para ser certificados bajo el programa de RA.

[We became certified with Fairtrade because at that time, the price was low in coffee and some buyers of coffee were looking for a Tarrazu coffee that was Fairtrade certified and it did not exist, so we decided to become certified to offer this combination to the market. We entered C.A.F.E Practices of Starbucks because we had clients demanding that we comply and then we had other clients demanding RA certified coffee, so we also worked to become certified under the RA program].85