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  • QA 102
    Question:
    Does 'certification' by itself enhance a coffee's marketability (value, price, quality) ?
    Background:
    Does certifying coffees from the growers important on market in terms of quality and prices just because it is certified?
    Asked by:
    Grower - Tanzania
     
    Answer:

    Certification has long since become an almost indispensable marketing tool for many agricultural products, particularly perishables such as fruit and vegetables. Take for example the Flower label required on principle by many western retail chains for imported fruit and vegetables. However, these are products that are sold directly to the end-consumer, i.e. they are not transformed, and as such certification in fact ensures market access. This is so because labelling proves to the end-user that producers subscribe to good agricultural and management practices; protect the environment; practice safe pesticide use; and engage in resource protection generally. I.e. the product is both safe and environmentally friendly.

    For coffee the situation is rather different because coffee growers in the main provide green coffee to overseas roasters who in turn produce and retail the finished product. Therefore, in most instances the identity of the producing countries, let alone the individual producer, is not known to the end-user and as a result there is much less consumer awareness of the production process.

    In the coffee industry certification schemes also guarantee, through a certificate, that specific rules and regulations of voluntary standards are met. On-pack labels then make this known to the end-user on the producer's behalf and the end-user is expected to pay a premium to recompense the grower for this specific effort.

    Verification schemes also ensure that certain agreed criteria and practices are met, but do not use certificates or on-pack claims to market this to the end-user. They are typically a mainstream market tool, used to improve efficiency, sustainability and profitability for growers on the one hand, whilst enabling buyers to make more informed decisions on the produce they purchase and process. To note here that, currently, the mainstream market accounts for between 85 and 90% of all green coffee exported from producing countries.

    To answer your specific question…

    • The scope for premium prices, purely based on certification, is limited because of demand reasons. For many if not most end-users the intrinsic quality of a product is of more importance than is certified compliance with a code of conduct or standard. As a result the potential markets for certified coffees mostly are niche markets whereas supply is not necessarily always demand driven. Consequently some are limited in scope and may be subject to oversupply.
    • The scope for premium priced coffee, purely based on quality, is in theory unlimited because it has direct and universal appeal to many more end-users. The market for quality or specialty coffee is growing constantly, i.e. this market segment is demand driven.
    • Therefore, whilst most certification schemes will definitely add to a coffee's image and may in some instances enhance its value, we are of the view that in the longer term certification by itself cannot guarantee premium prices. But it can add to a coffee's marketability…
    • In this respect we also believe that, over time, it may be expected that buyers of mainstream coffee will increasingly insist on certain guarantees as regards the manner in which the coffee they buy is produced. Verification is the most likely tool for this, in many cases enhanced by certification for a particular type of niche market.

    For more on this please see QA 100 in the Q&A Archive.

    Posted 21 June 2006
     

    Related chapter(s):
    Related Q & A:
    QA 081, QA 085, QA 100.