Organizational Updates

What Shared Responsibility Means for the Coffee Sector 

Filed Under: Certification  |  Tagged: ,

At the Rainforest Alliance, we have worked for years to increase yields and incomes, improve social practices and embed environmental sustainability requirements in our certification programs. Yet, a gap remains between the status of certified farms and what we consider truly sustainable production. Progress towards this goal is made more difficult by systemic poverty and lack of resources available to producers. To address this and accelerate impact, producers must have the means to invest in their business. 

We believe that creating truly sustainable global supply chains requires a shared responsibility approach so that the costs and benefits of certification are more evenly distributed between farmers and buyers along the supply chain. 

To achieve this, we are implementing two requirements for companies as part of our 2020 Sustainable Agricultural Standard (2020 SAS) Certification Program: The Sustainability Differential and Sustainability Investments.  

  • The Sustainability Differential (SD) is a mandatory additional cash payment made to certified producers over and above the market price of the commodity.  
  • Sustainability Investments (SI) are mandatory cash or in-kind investments from buyers of Rainforest Alliance Certified products to certified producers for the specific purpose of helping them meet the Farm Requirements of the Sustainable Agriculture Standard.  

With these requirements, we are encouraging companies to acknowledge the value of sustainability by investing in and rewarding more sustainable production. For these requirements to be effective, they need to be adapted to meet the needs and operating realities of the coffee sector.  

You can read more about these requirements in our SD/SI guidance specific to the coffee sector and chapter 3 of the 2020 Sustainable Agricultural Standard.  

What to expect 

Paying a premium for certified supply is already a common practice in the coffee sector. A  premium was always mandatory for UTZ Certified coffee, and common practice for 2017 Rainforest Alliance Certified coffee.  

However, within the 2020 SAS Certification Program, we will move from a premium approach to an SD/SI approach, which will include the following: 

  • Farm CHs and first buyers* will negotiate the amount of SD and SI to be paid and indicate those amounts on all contracts and in the traceability platform, clearly distinguishing between the SD and the SI. There is no minimum for SD or SI. 
  • Farm CHs will establish an Investment Plan based on their risk assessment, internal inspections, self-assessments, and management capacity. A template for the investment plan is provided. 
  • Farm CHs will receive SI (both in-kind and cash) from their first buyers and spend against their Investment Plan. Farm CHs will report on categories of investment spend in the certification platform annually. 
  • Farm CHs will receive SD from their first buyers. Group Farm CHs are required to transfer the full SD amount to member producers in cash, on a pro-rata basis. 
  • Downstream Supply Chain CHs will have visibility on the SD and SI paid by first buyers, and eventually, the categories of spend 

During the first two years of Shared Responsibility, we will focus on monitoring the implementation of the Sustainability Differential and Sustainability Investment through our assurance and traceability systems. Later, we may adjust our approach as a result of learning from the roll-out of shared responsibility. 

Timelines 

SD and SI are applicable for coffee volumes sold under the new Rainforest Alliance Certification program as of July 1, 2021. 

The use of the Investment plan template (Annex 16) will be mandatory for Farm CHs as of January 1, 2022. 

For more information on the timelines for transitioning to the new Rainforest Alliance Certification program please check this page and Annex S14.   

Requirement overview  

Below is an overview of the requirements related to coffee. Full requirements and guidance can be found in the following documents: 

Requirement

Coffee

Timeline 

For volumes sold under the 2020 Standard starting July 1, 2021 

General 

Fixed or minimum SD/SI prescribed by the Rainforest Alliance 

SD/SI amount is negotiable between first buyer and farm CH. 

3.2.3 

Buyer responsible for payment of SD

first buyer* 

3.2.4 

Contractual agreements exist between farm certificate holder (CH) and buyer to guide SD payment terms 

first buyer* 

3.2.5 

Maximum payment timeframe 

12 months. 

3.2.6 

Reporting of SD payment 

first buyer* 

3.2.7 

Minimum SD amount 

No minimum SD. 

3.3.4 

Buyer responsible for payment of SI 

first buyer* 

3.3.5 

Reporting of SI payment 

first buyer* 

3.3.1  
 (farm CHs) 

SI plan for farm CHs 

The use of Annex S16 to create the investment plan will become mandatory for farm CHs as of January 1, 2022. 

 * First buyer defined as “The certificate holder legally owning the certified product after the initial farm certificate holder” 

FAQs

For general questions about our shared responsibility approach, and additional FAQs, please refer to our explainer on shared responsibility. 

Why is there no minimum SD or SI in coffee?

While developing the sector specific guidance, extensive consultation and supply chain analysis was done. As a result of this analysis, we decided the most effective way of achieving our goal of shared responsibility through the coffee supply chain is to focus on moving from the existing practice of premium payments to the payment of Sustainability Differential and Sustainability Investment. We also believe that the new level of transparency will provide insight and motivation for commitments to shared responsibility. We will monitor the implementation through our assurance and traceability systems and in subsequent years, we may adjust our approach as a result of learning from the roll-out of shared responsibility. 

How will Rainforest Alliance monitor the impact of the Sustainability Differential and Sustainability Investment payments? 

We will receive feedback on the implementation through our assurance and traceability systems, in addition to direct stakeholder consultation. We have set up a monitoring, evaluation and learning program to measure the impact and improve subsequent iterations of our Shared Responsibility requirements.  

How will SD and SI payments benefit smallholders and farm workers?

In the case of smallholders organized in groups, group management is required to transfer the full SD amount to member producers in cash, on a pro-rata basis, taxes and transaction costs can be deducted. In addition, group management will invest their SI in categories that support members, for example, agronomy training, the distribution of certain equipment such as personal protection equipment, among others. 

For workers, the farm management is required to invest their SI in ways that directly benefit workers. Farm management must consult a representation of workers on the prioritization of these investments. The Investment Plan categories applicable for worker benefits are: wages, working conditions, health and safety, and housing.  

How will the Rainforest Alliance report the SD and SI to the supply chain?

The SD and SI will be negotiated, fixed, and reported separately on a per sale basis and will be attached to a specific traded volume between one Farm CH and one first buyer. To report the SD/SI, the Farm CH enters the SD and SI amount agreed for each transaction (USD/MT) into the Rainforest Alliance Traceability Platform. This amount will be confirmed by the first buyer and will be visible for all supply chain actors of that supply chain. Farm CHs will have multiple first buyers and will report the agreed SD/SI for each contract separately in the Rainforest Alliance Certification Platform, and the amounts may vary by sale.

Can in-kind contributions be made towards the SI?

Yes, however they must directly support an activity in the Farm CH’s Investment Plan and be clearly distinguished as in-kind contributions, versus cash contributions. They will be reported separately on the Rainforest Alliance Certification Platform.

How will RA guarantee the payment of SD gets to producers?

Implementation of the requirements will be verified during the annual external audit. For group members, during the audit of the farm CH, auditors will verify whether group members have received the SD by asking for receipt at both the management and group member level, and by conducting interviews. The different pieces of information will be triangulated to validate that the correct amount of SD has reached the group members.

How will RA monitor the Investment Plan and guarantee the payment of SI goes toward the agreed activities?

The Investment Plan will be developed by the farm CH and executed by the management of the CH. It will include a list of prioritized investments for improved performance of the organization, its group members, and/or its workers to meet certification requirements more completely and more efficiently. During the external audit of the farm CH, auditors will verify that the SI plan is relevant to their context, and whether SI has been used for expenses that were part of the Investment Plan.  

How do I include SD and SI on volumes under existing contracts for certified coffee?

Existing contracts will be honored. Premiums already negotiated and agreed upon can therefore be split up between SD and SI, in order to report in the Rainforest Alliance Certification Platform, within the agreed monetary value. 

Any new contract established after July 1, 2021 should explicitly include SD and SI for coffee certified under the 2020 SAS according to Standard requirements 3.2.4 and 3.3.4, and be negotiated accordingly. 

SD and SI requirements for contracting are only applicable to the First Buyer and Farm Certificate Holder. 

SD/SI Coffee Webinar  

Training module: Sustainability Differential 

Training module: Sustainability Investments 

Training module: Investment template 

Coffee Sector Guidance 

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