Updated on June 4, 2019
If a farmer passes an audit on the UTZ standards, he can sell his crops as UTZ certified. This means the first buyer pays a premium on top of the market price, and the cocoa, coffee or tea will be traced all the way through the rest of the supply chain. However, not all of the cocoa, coffee, and tea produced under the UTZ standards is in fact sold as UTZ certified; the supply is higher than the demand from the market. Why don’t farmers sell all of their crops as UTZ certified? There are several factors to take into account.
Many farmers are certified under more than one certification program – for example, both UTZ and Organic, or UTZ and Rainforest Alliance. This often makes sense for farmers as there is some overlap between the requirements of different programs, so it’s not too much extra work to gain an extra certification.
As a result they get more options for where to sell their crops. For example, one year they might be offered a better price from a buyer who wants to buy UTZ certified coffee, and the following year they might get a better price from someone who wants Rainforest Alliance certified coffee.
They can usually only sell it as one or the other, even though it complies with the standards of both. This goes part of the way towards explaining why not all of the coffee, tea and cocoa produced as UTZ certified is in fact sold as UTZ certified.
The taste of a cup of coffee is influenced by everything from the type of plant and the harvesting practices to the chemistry of the soil, the weather, and the altitude at which it was grown. This means there is a huge variety of different qualities and origins available on the market, with some far more in demand than others.
This is another important factor to take into account when looking at the ratio between supply and demand for certified coffee. Roasters and traders can be very specific about what type of coffee they need to create a specific taste.
Thanks to our online traceability systems, we know exactly how much UTZ certified coffee, tea and cocoa is sold to the first buyer in the supply chain. However, our data on the total volume produced by the farmers is slightly less reliable, as it is based on an estimate calculated by farmers and sent to UTZ once a year. We offer guidance to farmers on how to calculate this estimate, but it can still be challenging. Farmers must make the estimate for the whole year, often before the main harvest period. The previous year’s total yield can be used as a basis, but a change in weather conditions or farming practices could make a big difference.
This means the production volume figures must be seen as approximate, and we believe that in fact they tend to be slightly high overall. This gives the impression that the gap between supply and demand is larger than it is in reality.
Applying the UTZ certification standard is not always easy for farmers, so we know it is important to them that they are able to sell their crop as certified and receive the premium on top of the market price.
However, applying the standard also brings its own rewards, even if they do not sell their crop as certified. Good agricultural practices lead to better yields and a higher income, and effective farm management makes the business more viable in the long run. On top of that, social protections lead to a happy, healthy and ultimately more effective workforce, while protecting natural resources leads to direct benefits for the environment.
As well as enabling as many farmers as possible to join the UTZ program we know it’s very important that we constantly work to increase demand for UTZ certified products in the market. In fact, 2018 saw sales of UTZ certified coffee grow by 42%. We’ve seen more and more companies make 100% sustainable sourcing commitments that will continue to drive demand in the years to come, resulting in more farmers being able to sell their certified products.