By Chithira Rajeevan

Small farmers in the Global South are the main producers of coffee. The sector is mired by its farmers’ poverty, insecurity, and indebtedness. The global community has taken various approaches to tackle these challenges, from voluntary certifications to disclosure-based and due diligence legislation. While these are significant steps forward, the effectiveness of any measure would depend on ensuring multi-stakeholder participation in the formulation and implementation stages. Taking a participatory approach towards due diligence would provide a more comprehensive and nuanced understanding of the adverse conditions faced by the producers and workers in the coffee sector.

Despite forming a significant portion of global production, smallholder farmers have little negotiating power in supply chains dominated by large roasters and traders. According to Fairtrade, five traders controlled half of the green coffee traded in 2019, while the top 10 roasters roasted more than a third of the world’s coffee. The inability of small farmers to earn a decent standard of living from coffee production is one of the salient issues in the sector, along with the human rights violations reported in the supply chain.

Consumers are increasingly willing to pay a premium for sustainable coffee. However, the market share of such options remains limited. Among the identified barriers are an information asymmetry between consumers and producers, the dominance of established consumption routines, and a lack of transparency and trust among consumers about these initiatives. Voluntary Sustainability Standards, such as Rainforest Alliance and Fairtrade, promote better conditions in coffee production. They use third-party audits and technologies, such as satellite images, to monitor and enforce compliance, but the effectiveness and impact of these certification systems remain contested.

Human Rights Risks in the Coffee Sector

The precarious conditions of farmers put them at risk of exploitative conditions. Day labourers often engage in harvesting, which is at a high risk of human rights violations, including child labour, forced labour, and poor occupational safety. As per the US Bureau of International Labour Affairs (ILAB), coffee is suspected of being produced using child labour or forced labour in over 15 countries, including Brazil, Colombia, and Vietnam. In Brazil, labour inspectors rescued over 300 victims of slave labour on 20 coffee farms in 2021 alone. These workers were exposed to human trafficking and worked under slave-like conditions. Independent audits in Vietnam found cases of child labour on coffee farms. There are also reports of plantation owners docking workers’ pay for the equipment needed to harvest the coffee.

Over the years, several initiatives have been put in effort to tackle these labour rights issues, though with mixed results. For example, many coffee brands rely on certifications to ensure sustainability standards in their supply chains. While it is broadly agreed that voluntary certifications have generated benefits for coffee farmers and shifted public opinion about what practices are acceptable in agricultural production, they are no universal remedy to economic, social, and environmental sustainability concerns, as researched by Profundo in 2020. Impact measurement, as well as independent unannounced on-site audits,  are crucial elements for judging the credibility of initiatives aiming to solve the pertinent sustainability issues in the coffee sector

Verifying compliance with the certification requirements is one of the main concerns in relying solely on such systems. Social audits and certification processes are often characterised by conflicts of interest and loopholes that make them poor tools for a comprehensive understanding of human rights concerns.

Due Diligence Legislation

The EU Deforestation-Free Products Regulation (EUDR), approved in May 2023, would ensure that products and commodities entering the EU market are deforestation-free. Companies involved in exporting or importing these products to or from the EU market must ensure that they do not contribute to deforestation or human rights abuses. The companies must undertake a risk assessment to establish whether there is a risk that a product or commodity is non-compliant. This risk assessment should also address concerns about the country of production and origin, such as violations of international human rights, armed conflicts, and sanctions. The risk classification of countries may also include an assessment of the existence, compliance with, or effective enforcement of laws protecting human rights, the rights of indigenous peoples, local communities and other customary tenure rights holders.

The regulation also requires companies to trace the commodities back to the plot of land along with geolocation data of where they were produced. Plot-level traceability of coffee could pose significant challenges, especially since smallholder farmers dominate the sector. It would be crucial to partner and engage with producer country governments and local NGOs to ensure the full potential of EUDR. These partnerships could entail financial or technical support to help coffee farmers comply with the new requirements. Collaboration on data and interoperability of traceability systems can also be effective in minimising the associated costs. Despite the responsibility of compliance falling on traders, roasters, and retailers, there is considerable risk that the cost of meeting these standards and the administrative burden could be shifted to smallholder farmers. This is where voluntary sustainability standards – and many of them are also certification schemes – have a role to play. The VSS can help create value for the final consumer via clear labelling and a system of logos and claims, as well as contribute to a fairer distribution of market premium upstream the supply chain, and primarily to the smallholders.

Form-filling activity

In June 2023, members of the European Parliament approved the Corporate Sustainability Due Diligence Directive (CSDDD). This directive intends to foster responsible corporate behaviour across the value chain. Companies would be required to avoid adverse impacts of their operations on human rights and the environment, which would apply to their operations, subsidiaries, and supply chains. Some key discussion points for the upcoming EU trilogue negotiations would include the risk of rightsholders being left out of the consultation processes, as was researched by Profundo in 2023.

The European Parliament has improved upon the Commission’s proposal by recognising the right to a living income alongside the right to a living wage. Farmers typically reduce hired labour costs, including wages, benefits, and accommodation cuts, when faced with pressures that affect their profit margins. The pressures faced by coffee farmers, making a meagre income themselves, could lead to labour risks such as unpaid overtime, cuts to benefits, reduced wages, and reliance on labour brokers. Coffee traders should commit towards providing a living income through fair pricing and payment of living wages to the workers. Companies should be encouraged to engage and collaborate with their suppliers to ensure that the due diligence system is not reduced to a form-filling activity. This also ensures that the relationship with suppliers is more long-term, which generally enhances trust and confidence between buyer and supplier.   

Challenges Faced

Benchmarking countries based on their respective risk levels is a nuanced exercise. Various risk assessment services, international frameworks such as the EUDR, and government agencies such as the U.S. Bureau of International Labour Affairs undertake such categorisations. These categorisations are then used to create public awareness about environmental or social issues (ILAB List) or as part of the due diligence process (EUDR).

The differences in institutional capacity across producer countries can lead to distortions in how they are categorised as low-risk or high-risk. In countries with greater transparency and more robust civil society organisations and press, information on labour rights violations is more likely to be publicly disclosed. This could lead to such countries being given a disproportionately higher risk score. For instance, ILAB classifies coffee from Brazil as goods that may be produced by forced labour. This classification could partly be driven by more robust labour inspections and should not be interpreted as Brazil being a higher-risk country than others such as Ethiopia or Uganda. Countries without robust systems for the identification of violations could go relatively unnoticed. Thus, basing risk assessments solely on media scans or published reports could lead to misinterpretation and inaccurate evaluations.

Taking a more participatory approach towards risk and impact assessments could provide a more comprehensive and nuanced understanding of different sectors and regions' environmental and social concerns. Tools such as the Human Rights Impact Assessments (HRIA) can be leveraged through consistent engagement with rightsholders and stakeholders to create a participatory system to identify, assess, and address adverse effects. HRIAs are an involved process requiring background research and fieldwork, heavily dependent on participation from rightsholders and other stakeholders. Such a tool would also address the concerns about solely relying on publications and media scans for risk assessments. 

Way forward

The proposed EU due diligence legislation is a good step towards ensuring corporate responsibility and cementing the role of environmental concerns and human rights in business operations and corporate governance. Mandatory sustainability due diligence regulations are essential to align coffee production, trade, and consumption with environmental protection and ethical considerations.  

Coffee companies should support their suppliers and provide capacity building to better identify, address, and prevent labour rights violations at the farm level. Fostering healthy relationships between the producers and other actors in the supply chain would avoid knee-jerk disengagement, which could have adverse human rights or environmental consequences. Collaborative efforts between the key stakeholders, such as suppliers, producer organisations, government entities, trade unions, and civil society organisations (local and international), can help address the challenges in implementing an effective human rights due diligence system.    

This expert view is written by Chithira Rajeevan, researcher at Profundo. For further information, please contact Chithira Rajeevan c.rajeevan@profundo.nl

 (Photo: Rodrigo Flores on Unsplash)