We often get asked how UTZ is funded. Are we a charitable foundation or funded by our members? Do farmers have to pay to join? Does UTZ make a profit from certification? Time to clarify the revenue model UTZ uses.
We asked Margriet Glazenborg, our Head of Product Management to explain: “In fact UTZ is a not-for-profit organization financed mostly by the program fees companies pay based on the volume of UTZ certified produce they purchase. We don’t aim to make a profit because we reinvest all our income to develop and expand our programs and achieve our mission of making sustainable farming the norm.”
Our main source of funding comes from the program fee, paid by companies who buy UTZ produce in the supply chain, such as traders and roasters. There is also a membership fee related to the cocoa and hazelnut programs. Together these fees cover the running costs of our two main programs, coffee and cocoa. We don’t charge our partners anything for using the UTZ label.
Farmers don’t pay any fee for joining the UTZ program. They do have to pay for their yearly certification audits and investments necessary to implement the UTZ standards, for which they can use the premium they receive for selling certified coffee, cocoa or tea. Often they are also supported by supply chain actors.
“There are no membership or program fees for farmers because we want to make membership as accessible as possible to enable more small farmers to adopt sustainable farming practices”, adds Margriet.
Buy more, pay more
Our fees are volume based, so the more UTZ certified produce a company buys, the more they pay. However, our fees are set to be as low as possible because we want more companies to engage in our programs and increase supply chain demand for UTZ coffee, tea and cocoa.
Margriet comments: “Volume based fees provide a sustainable financial model for UTZ. The more volume we sell, the more income we receive, so as we grow we have sufficient funds for our overheads and innovation needs.”
As well as the day-to-day running of our program we work on developing new programs, like hazelnuts and rice. And we invest in research and projects, designed to push new boundaries or tackle challenging issues, such as climate change.
Margriet Glazenborg: “To fund these activities we work with donor organizations and government funding bodies including the Dutch Postcode Lottery, and the Ford Foundation. Donor funding is important in enabling us to innovate and develop our programs. With the start of the five-year Sector Partnerships project in 2015, funded by the Dutch Ministry of Foreign Affairs the total donor funding currently accounts for about 25% of our total revenues.”
Want to know more?
You can find out more about how UTZ is run and our main sources of funding in our most recent Annual Report.