Can a coffee company
save forests?
ARSHIYA BOSE
A few years after I completed my doctoral research on markets for biodiversity conservation, I started a private
limited company in an attempt to conserve forests in the Western Ghats.
While this may at first seem like a logical trajectory, the backstory is that my
research was critical of market based
ideas. Both narratives – the academic
inquiry into markets as well as the more
entrepreneurial journey – are forays in
an attempt to understand one of the
most complex, unpredictable and yet
relevant networks of our times.
The idea that markets can be used
to drive social and environmental
change is not new but clearly uncommon in the nature conservation space
in India. In the recent past, normative
benchmarks for social and environmental justice were scripted by governments, labour unions and religious
institutions. However, in the current
scenario of globalizing economies,
ideas and cultures, where social and
environmental issues can be transnational rather than national, norms about
24
SEMINAR 690 – February 2017
what is and is not acceptable are increasingly being vocalized by a new set of
actors – NGOs, businesses and publicprivate partnerships. These norms can
take the form of ‘naming and shaming’
bad practices or creating market based
incentives to follow good ones.
Outside the nature conservation
space, examples of market based tools
include certifications like the Fair
Trade label that attests to a particular
commodity being bought and sold via
equitable trading conditions. So as a
conscious consumer, I can purchase a
guilt-free or feel-good shirt because
the clothing label carries an additional
Fair Trade or Fair Wear or Direct Trade
label or has stitched on it some information about the factory’s working
conditions (e.g. ‘American Apparel is
sweatshop free’).1 Similarly, if I want
a more ethically crafted shampoo,
I might opt to buy a brand that is labelled
‘Cruelty Free’ or ‘Against Animal
Testing’.
1. http://www.americanapparel.net/aboutus/
verticalint/workers/
In fact, the US based B-Lab now
certifies businesses as B-Corporations
if they meet the highest standards of
social and environmental performance.
Their tagline is ‘using business as a
force for good’ and amongst the 1200+
certified B-Corporations, some of the
more well known companies include
Patagonia Inc (sells outdoor apparel
and tools), Alter Eco (sells Fair Trade
chocolate and quinoa), Roshan (Afghanistan’s largest telecom provider),
Natura (Brazil’s largest cosmetics
company), Etsy (an online marketplace connecting small creative businesses with buyers) and Ben and
Jerry’s (an ice cream company and
subsidiary of Unilever that promotes
responsible practices across its supply
chain). Some businesses operate by
carrying labels from third party certifications (e.g. Fair Trade) and others
have their own internal monitoring
systems (e.g. Starbucks has a C.A.F.E.
practices standard which it follows
whilst sourcing coffee beans).
I
n India, the proliferation of impact
oriented businesses has created an
active social entrepreneurship ecosystem. Spend five minutes on platforms
like Your Story or The Better India
and you will encounter numerous stories of entrepreneurs leaving behind
corporate careers to build technologies for communication, education,
financial inclusion, health care and
agricultural services for under-served
communities in India. A well known
example is that of Ramon Magsaysay
awardee, Harish Hande, who started
his for-profit business SELCO twenty
years ago with the purpose of making
solar power technology and smokeless
cook stoves available to over 2,00,000
homes across Karnataka. Of course,
many entrepreneurs also claim that
Bharti Airtel is amongst the largest
social enterprises in the country with 84
million of its 188 million subscribers
coming from areas with otherwise
poor mobile telephony (but debates on
what constitutes a social enterprise is
the subject of an altogether different
article).
T
he point here is that whatever shape
and form market based tools might
take, they operate on one key premise:
that there is a demand (often at a
premium price) for those particular
goods and services being traded. Yvon
Chouinard who founded Patagonia
surely started his company with the
strongly held belief that consumers
care and are therefore willing to pay a
premium for the additional investments that Patagonia would need to
make towards using recycled materials and switching to organic cotton,
not to mention bearing the higher costs
for obtaining Fair Trade certification.
As a conservation entrepreneur
and academic, I am confounded about
the nature and fate of market based
tools for conservation and, in particular,
need to ask two questions: (a) Do good
conservation decisions also make
good business decisions? (b) Is there
a market for biodiversity related goods
and services? My disclaimer is that my
love for the subject of geography and,
in turn, its love for place-based analysis allows me to explore these questions within a fairly narrow canvas of
what I know best – promoting sustainable coffee production through ecocertification labels!
In the nature conservation space,
labelling has been used to distinguish
a range of products in the timber and
agrifoods industry. For example, the
Forest Stewardship Council (FSC)
accredits timber harvested from forests managed according to FSC’s
environmental standards. Similarly,
the Marine Stewardship Council (MSC)
recognizes and rewards sustainable
fishing and provides ‘eco-labels’ on seafood that can be traced back through
its supply chain to fisheries that have
been certified by the council.
The coffee industry has been one
of the most active spaces for labelling.
Walk down the aisle of a supermarket
in North America and Europe and you
will encounter a diversity of coffee
packets, each imprinted with a label or
illustration symbolic of the production
story: resplendent tropical birds, faces
of farmers and geographic origins and
a certification stamp that says Fair
Trade, Organic, Bird-Friendly, UTZ
Certified or Rainforest Alliance. Incidentally, the closest one would get to
drinking certified coffee in India (other
than Organic certified coffee) is either
at a Costa Coffee outlet that serves
Rainforest Alliance certified coffee
or if one directly buys coffee beans
from a plantation that was Rainforest
Alliance or UTZ Certified.
C
ontrary to the apparent scarcity of
accessing certified coffee in India, a
fair number of coffee farms are actually Rainforest Alliance certified. My
own doctoral research covered over
150 farms in Kodagu district alone but
certification agencies claim more than
300 farms are certified across just the
two states of Karnataka and Kerala.
The Rainforest Alliance certification
constitutes a set of environmental and
social standards that are aimed at protecting biodiversity. The explicit push
is to incentivize producers through a
price premium to discard damaging
practices like spraying of toxic chemical pesticides, hunting of wildlife or
indiscriminate conversion of forest land
to plantation. Once a farm is audited
by an external agency and found to
qualify, its produce is eligible for a price
premium in the market. Buyers (mostly
exporters) typically purchase coffee
at a premium of between Rs 1-2 per
kilogram. These buyers can then also
label this coffee as Rainforest Alliance
certified, as in turn their buyers can and
SEMINAR 690 – February 2017
25
so the beans travel up along the value
chain.
However, at the farm level my
research threw up some counterintuitive findings. Researching the
environmental and social impacts of
Rainforest Alliance certification, the
question I asked was whether certified
farms operated differently as a result
of having taken on board the certification standards. Interestingly enough,
I found that certified farms were no
different from conventional farms and
this was true across a range of different environmental and social parameters. For example, both certified and
conventional farms typically had comparable use of chemical pesticides
(Rainforest Alliance only prohibits
chemicals banned by the EU), waste
management facilities, labour practices and working conditions. With
regards to biodiversity, I observed that
both certified and conventional farms
had the same abundance and composition of shade trees.2
H
ere I take a slight diversion to describe the importance of what I have
just referred to as shade trees. Coffee
is a plant that has a somewhat lukewarm relationship with other trees
that might coexist on a farm. The canopies of these trees shade the coffee
bush from excess sunlight, thereby
regulating the temperature and humidity, especially during prolonged periods of drought. At the same time, the
number of fruits formed per coffee
plant decreases when shade cover is
more than 48%,3 which means that
often the quickest way to ramp up coffee yield is to remove shade trees or
heavily modify the branches to reduce
the spread of their canopy. This is a
26
2. A. Bose, C. Garcia and B. Vira, ‘Does Ecocertification in Coffee Promote “Business as
Usual”? A Case Study from the Western
Ghats, India’, Ambio, 2016. Available online
at: DOI: 10.1007/s13280-016-0796-3
SEMINAR 690 – February 2017
trend observed in Indian coffee from
the 1970s.
A
study by the French Institute of
Pondicherry showed a significant loss
of tree cover in coffee producing districts like Kodagu between 1997 and
2007 owing to the removal of shade
trees from privately owned farms.4
Similar observations were made about
the impact of this transition from shade
to sun farming on biodiversity. Shaded
coffee plantations provide refuge for
plants, insects and other arthropods,
birds and mammals and, though fewer
research projects have studied them,
reptiles and amphibians. The role of
such shade coffee farms is especially
important in regions with increasing
fragmentation of forest like in much of
the Western Ghats.5 So thinning shade
trees from coffee farms impacts the
abundance and diversity of a range of
species (although we cannot be sure
about the time frame in which this
negative impact can be seen).
At the end of my PhD work, all
my observations about certification
were pointing to the conclusion that
except for a few minor modifications
(e.g. certified farms followed somewhat more systematic documentation
of farm management processes), ecocertification for coffee in Kodagu promoted business as usual. I also had
3. L. Soto-Pinto, I. Perfecto, J. CastilloHernandez and J. Caballero-Nieto, ‘Shade
Effect on Coffee Production at the Northern
Tzeltal Zone of the State of Chiapas, Mexico’,
Agriculture, Ecosystems and Environment
80(1-2), 2000, pp. 61-69.
4. C. Garcia, S. Bhagwat, J. Ghazoul, C.D.
Nath, K.M. Nanaya, C.G. Kushalappa,
Y. Raghuramulu, R. Nasi and P. Vaast,
‘Biodiversity Conservation in Agricultural
Landscapes: Challenges and Opportunities
of Coffee Agroforests in the Western Ghats,
India’, Conservation Biology 24(2), 2009,
pp. 479- 488.
5. I. Perfecto, R.A. Rice, R. Greenberg and
M.E. v.d. Voort, ‘Shade Coffee: a Disappearing Refuge for Biodiversity’, BioScience 46(8),
1996, pp. 598-608.
good reason to believe, through a
number of interviews with Rainforest
Alliance staff in the U.K., that the
environmental and social standards in
India were not about to change too dramatically anytime soon. Rainforest
Alliance was not keen to strengthen
their standards beyond the ‘lowest
common denominator’.
F
or example, there was little willingness to add-on mandatory criterion
that specified a minimum abundance
or diversity of shade trees or discourage chemical pesticides altogether.
From a social standpoint too, I encountered smallholder growers who lacked
market channels, access to production
costs and inputs and agronomic support. In the BR Hills, Karnataka
(where we currently source coffee
from), growers receive 20-30% less
than the market price on any particular day. This concerned me as a conservationist. It was clear that social and
environmental problems were aplenty
but the current model of certification
(indeed this market tool) did not do
enough.
The explanation of whether certifications are implicitly designed to
achieve little is relevant. The consequences of a certification standard
that fundamentally altered the structure and governance of global coffee
value chains in favour of a more equitable and environmentally sound practice would be mammoth-like. My
thesis explored this as well and what
I found left me quite jaded about global blueprint solutions and the role of
academic research in bringing about a
meaningful impact.
I started Black Baza Coffee Co.
with the aim of taking my learning from
eco-certification, deconstructing the
environmental and social standards
to make them more site specific and
create a more farmer friendly process.
Because certification does not always
guarantee a buyer, I quickly realized
that we would not only have to set and
monitor farming guidelines but also
be an active buyer of coffee. Today,
coffee growers who are willing to join
our programme sign an agreement to
maintain a certain abundance and
diversity of indigenous trees on their
farms. Our agreement also restricts
the use of chemical pesticides and
reduces chemical fertilizers to 1.5 kgs
per plant for the first year, with the
aim of transitioning to zero. In turn,
we guarantee a buy-back of coffee
at a 15% market premium and help
build capacity to improve the quality
of coffee.
E
ach packet of coffee sold under
our label can be traced right back to
the farm from which the beans were
harvested so that the coffee drinker
knows that the coffee comes from
Pallakere Estate in Kodagu or from
Achukkegowda’s half acre farm in
BR Hills. A number of our coffees are
also single-estate. We use only the
best quality grade beans from the farm,
especially since we garble beans ourselves (none of our beans are pest or
fungus infested). We can guarantee
our online customers that coffee will
be delivered to their doorstep within
three days of roasting.
We custom grind coffee beans
depending on whether our customers
brew coffee in a french press, aero
press, espresso machine, moka pot,
pour-over or a classic steel filter coffee set. Our quality check, roasting and
custom grinding sets us apart from
many coffee players in the regular
market and positions us as a specialty
coffee brand. Within two business
years, we have been able to work with
over 180 growers in the BR Hills and
Kodagu, manage approximately 200
acres (we are still under mapping)
under shade grown farming and retail
our coffee across the country. We have
also discussed raising funds through
impact investments and are being
incubated at IIM Bangalore’s entrepreneurship cell. However, the subject
of this article is not our achievements
and milestones but what this journey
into mainstream market tells us about
market based conservation, however
young our company might be.
T
he entrepreneurial journey, like the
academic journey (particularly in
Human Geography) has been nonlinear and puzzling with many contradictory truths. One of the most important questions (both business-wise and
philosophically) has been about what
we are selling. In a project like this, does
one sell coffee or biodiversity or a bit
of both? It is critical we answer this
soon because that will determine our
trajectory into what activities we invest
time and funds.
We currently label our coffees
‘100% Biodiversity-Friendly’ and all
of our different blends are tributes to
some iconic species from the Western
Ghats. For example, our pure Arabica
is called the ‘Wanderoo’ after the liontailed macaque. We have a Luna
Roast, Black Baza Roast, Otter, Ficus
and The Whistling Schoolboy Blends.
The packaging has a ton of information about our project – our vision for
shade-grown coffee, the farming philosophy, local history of the farm and
finally a table showing our impact
metrics: 180 farms, 200 acres, 2000
trees protected, 150 native tree species, 25 rare tree species and 988
people directly impacted. The question is, has sharing (or selling) our
story worked? My opinion is a resounding no.
Contrary to my impressions, a
recent Stanford based study found
that labels like Fair Trade could add a
competitive advantage to differentiate
the same products on a supermarket
shelf. Another study of coffee buyers
in Belgium found that people were
willing to pay as much as 27% more
for Fair Trade certified coffee but only
10% of the 808 respondents were willing to do so.6 Yet another study showed
that all other features being equal (price,
quality and packaging), consumers
are more likely to buy a certified product. It appears that how consumer
demand and markets respond to the
non-physical features of a product is a
grey area. Second, and more important
for our work, is that selling the biodiversity feature may be far more challenging than we had initially thought.
O
ur coffee has sold not only for its
symbolic but also the physical characteristics: roasting profile and freshness, flavour notes and diversity of
blends to suit varied customer preferences. The most frequent (almost
embarrassingly so) feedback from
customers is that we have too much
information on biodiversity and not
enough on the coffee flavour itself.
We organize numerous coffee events
in Bangalore city as a way to connect
consumers to growers and to do social
advocacy on ‘what goes into your cappuccino’ though an overwhelming
majority of questions from participants
are about different coffees (Costa
Rican Tarrazu, Jamaican Blue Mountain, Ethiopian Sidamo) and ways to
brew them.
In fact, the advice from every
marketing expert (and we have met
dozens) has been to let go of the feelgood biodiversity story; at most keep
it as a byline. Apparently few coffee
drinkers, discerning or otherwise, care
about the impact of coffee farming on
endemic and endangered wildlife of
the Western Ghats or that 200 years
of shade grown farming in India is
6. P. De Pelsmacker, L. Driesen and G. Rayp,
‘Do Consumers Care About Ethics? Willingness to Pay for Fair-Trade Coffee’, Journal
of Consumer Affairs 39, 2005, pp. 363-385.
SEMINAR 690 – February 2017
27
now being lost. We were told that we
could squeeze the smallholder angle to
some extent but even that would lose
its stickiness with consumers. There
appears to be no demand for biodiversity friendly coffee.
T
28
he implications of this are that if we
want to continue with conservation
work, our efforts have to be equally if
not more heavily invested in coffee,
marketing and technology. Our coffee
experience has to surpass that of any
other specialty coffee company –
biodiversity friendly or otherwise.
Would this strategy compromise
our conservation work? If the aim is
to be a good business, it would. We
would have to procure coffee from
only those plantations whose coffee
beans are pulped, dried and processed
with utmost precision in state-ofthe-art facilities (e.g. in drying racks
above the ground to prevent the slightest chance of excess moisture). We
would determine our price premiums
based on quality factors rather than the
number of shade trees. We might even
limit the number of farms and regions
we work in, proposing that fewer farms
with higher yields would make the most
business sense. In doing so, we would
most likely have to exclude smallholder
farms that are often located in forest
fringes or corridors between fragments. No doubt this would be both a
poor conservation strategy as well as
a socially exclusionary one.
On the farm side of this market, the question is whether financial
incentives work as catalysts of land
use change. While my research on
Rainforest Alliance showed that certification price premiums were not a
catalyst, I find that with Black Baza
Coffee Co. the picture is considerably
different. Our structure wherein we
guarantee a buy-back, develop trust
and goodwill, prove that we want to
associate with farms for the long-term,
SEMINAR 690 – February 2017
help with quality improvement, give
growers visibility through single-estate
labelling and, over and above this, also
provide a 15% price premium, seems
to be an agreeable partnership. In our
case, the market incentive for farmers
– in this case a price premium – albeit
important, is only one of a suite of different catalysts. If we did not present
the entire set of benefits, would a price
premium be adequate? I believe so but
some growers may prefer much higher
premiums (one grower proposed
25%), especially if the decreased coffee yields from high shade-cover turn
out to be significant. Re-loop these premiums into our hypothesis of demand
for biodiversity-friendly coffee and we
clearly face an uphill challenge.
T
his is what happens when geographer-conservationists step into the
real world; they attempt to solve far
too many problems all at one go – in
our case, the conservation-livelihoodfarming problem and the market.
Despite the odds, there is a solution(s)
here somewhere that will emerge once
we have tried various market permutations. In an interview, Yvon Chouinard
said, ‘We have very environmentally
aware customers, but I would guess
that maybe 10% care that our cotton is
grown organically in Turkey. Organic
farming is growing around 30% a year,
but that’s mostly because you can taste
the difference, and there’s an obvious
health value. There’s a selfish motive
for eating organic foods. But when
we’re telling customers to care about
how cotton is grown in Turkey, that’s
still a stretch for them.’7
So one case for optimism is to
rejoice that we are not alone; the second is, what a good friend and colleague once pointed out, that if we
can’t do conservation with coffee, then
most other crops don’t stand a chance.
7. http://insights.som.yale.edu/insights/doessustainability-matter-consumers
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