FINANCING PLAN (IN US$): - Global Environment Facility
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UNDP Project Document Rainforest Alliance United Nations Development Programme Global Environment Facility “Biodiversity Conservation in Coffee: transforming productive practices in the coffee sector by increasing market demand for certified sustainable coffee” (PIMS 3083) Coffee is the second-largest traded commodity in the world after oil and employs 25 million people in the developing world. Coffee landscapes are very important for the world’s biodiversity. This project will result in conservation of biologically rich coffee areas though an increase in market demand for coffee produced under biodiversity-friendly, sustainable production practices. The project will work in Brazil, Colombia, El Salvador, Guatemala, Honduras and Peru and thereby deliver impacts in the Brazilian Atlantic Forest, Brazilian Cerrado, Mesoamerica, and in the Tropical Andes biomes. By increasing market demand for certified coffee from all origins, the project will also produce impact in other countries where certified sustainable coffee is produced. Providing market incentives through certification, the project will achieve transformation of the coffee sector, and ensure that it becomes a valuable complement to conservation efforts in protected areas. Results will include the direct conservation of 1,500,000 hectares of coffee, up from currently 93,000, with positive biodiversity impacts across coffee landscapes, representing approximately 10-15 million hectares. The project will foster an increase in the volume of sustainable coffee sold from 30,000 to 500,000 metric tons, with at least 100,000 of these metric tons coming from smallholders. The number of coffee companies (roasters) supporting biodiversity conservation by selling sustainable coffee will increase to more than 300. The project will work closely with governments in producer and consumer countries to make them partners in creating market-based solutions to conservation and development problems in coffee. 1 Table of Contents Acronyms ...................................................................................................................................................... 5 Coffee Terminology ...................................................................................................................................... 7 SECTION I: ELABORATION OF THE NARRATIVE ........................................................................ 8 Part I: Situation Analysis ....................................................................................................................... 8 Context and Global Significance ..................................................................................................... 8 Coffee Production and Biodiversity .......................................................................................... 8 Box 1: Coffee in Threatened Ecosystems .......................................................................... 9 Coffee and Biodiversity in Project Countries .......................................................................... 10 Atlantic Forest................................................................................................................... 11 Cerrado.............................................................................................................................. 12 Mesoamerica ..................................................................................................................... 13 Tropical Andes .................................................................................................................. 15 Table A: Project Coffee Regions ..................................................................................... 16 Threats, Root Causes and Barrier Analysis ................................................................................... 17 Threats and Root Causes to Biodiversity-Friendly Coffee Production ................................... 17 Conversion of Coffee Farms to Other Uses ...................................................................... 17 Conversion to Monoculture .............................................................................................. 18 Threats from Poor Farm Land-Use Practices and Local Resource Use ............................ 18 Opportunities for Sustainable Production ............................................................................... 19 Box 2: Certified Coffee Schemes and Movements .......................................................... 21 Table B: Comparison of Three Major Certification Schemes ......................................... 23 RAC Coffee: The On-Farm Benefits....................................................................................... 24 Table C: Biodiversity Related Improvements on a Certified Farm ................................. 26 Biodiversity Conservation and Environmental Protection................................................ 26 Social Benefits .................................................................................................................. 27 Economic Sustainability ................................................................................................... 27 RAC Coffee: The Market Potential ......................................................................................... 28 Barriers for Expansion of Sustainable Production .................................................................. 29 Barrier 1: Limited Demand ............................................................................................... 29 Root Causes for Barrier 1 ................................................................................................. 29 Barrier 2: Limited Consumer Interest .............................................................................. 31 Root Causes for Barrier 2 ................................................................................................. 31 Barrier 3: Capacity Constraints ........................................................................................ 32 Root Causes for Barrier 3 ................................................................................................. 32 Barrier 4: Weak Economic Sustainability on Farms ........................................................ 33 Root Causes for Barrier 4 ................................................................................................. 33 Barrier 5: Unfavorable Policies ....................................................................................... 35 Root Causes for Barrier 5 ................................................................................................. 35 Barrier 6: Information and Knowledge not Systematic ................................................... 35 Root Causes for Barrier 6 ................................................................................................. 36 Institutional, Sectoral and Policy Context...................................................................................... 36 Global Level ............................................................................................................................ 37 Regional Level ........................................................................................................................ 38 National Level ......................................................................................................................... 38 Community Level .................................................................................................................... 38 Stakeholder Analysis ..................................................................................................................... 39 2 Baseline Analysis ........................................................................................................................... 40 Part II: Strategy ................................................................................................................................... 44 Project Rationale ............................................................................................................................ 44 Design Principles and Strategic Considerations ...................................................................... 45 Policy Conformity ................................................................................................................... 45 Project Goal, Objective, Outcomes and Outputs/Activities ........................................................... 47 Project Outcomes, Outputs and Activities............................................................................... 48 Outcome 1: Increased Demand ......................................................................................... 48 Outcome 2: Increased Consumer Interest ........................................................................ 51 Outcome 3: Increased Capacity to Certify ....................................................................... 53 Outcome 4: Increased Economic Sustainability .............................................................. 56 Outcome 5: Increased Capacity to Engage Policymakers ............................................... 60 Outcome 6: Increased Learning and Adaptive Management ........................................... 62 Project Indicators, Risks and Assumptions .................................................................................... 65 Cost Effectiveness.......................................................................................................................... 66 Table D: Growth in Production and Sales During Project ............................................... 68 Alternatives Considered .......................................................................................................... 68 Expected Global, National and Local Benefits ....................................................................... 70 Country Ownership: Country Eligibility and Country Drivenness ........................................ 71 Sustainability ........................................................................................................................... 73 Replicability ............................................................................................................................ 75 Part III: Management Arrangements ................................................................................................... 76 Implementation and Execution Arrangements ............................................................................... 76 Consultation, Coordination and Collaboration between IA’s and EA’s ........................................ 83 Part IV: Monitoring and Evaluation Plan and Budget ......................................................................... 84 Table E: Indicative Monitoring & Evaluation Workplan and Budget .......................................... 90 Table F: Key Impact Indicators and Targets ................................................................................. 91 Part V: Legal Context .......................................................................................................................... 91 SECTION II: STRATEGIC RESULTS FRAMEWORK AND GEF INCREMENT ....................... 92 Part I: Incremental Cost Analysis ........................................................................................................ 92 Project Background ........................................................................................................................ 92 Incremental Cost Assessment ........................................................................................................ 92 Baseline ................................................................................................................................... 93 Alternative ............................................................................................................................... 94 Cofinancing ............................................................................................................................. 94 Leveraged Financing ............................................................................................................... 95 Systems Boundary ................................................................................................................... 96 Table G: Incremental Cost Matrix.......................................................................................... 97 Part II: Logical Framework Analysis ................................................................................................ 101 Table H: Project Logical Framework and Objectively Verifiable Impact Indicators ................. 101 Table I: Indicative Main/Strategic Activities .............................................................................. 107 SECTION III: TOTAL BUDGET AND WORKPLAN ........................................................114 Budget Considerations ................................................................................................................. 114 Cofinancing and Leverage Potential ............................................................................................ 115 Total Budget and Workplan ......................................................................................................... 117 SECTION IV: ADDITIONAL INFORMATION ..................................................................123 Part I: Other Agreements ................................................................................................................... 123 Part II: Project Structure .................................................................................................................... 123 Part III: Terms of Reference .............................................................................................................. 125 Terms of Reference for Project Management .............................................................................. 125 Terms of Reference for Specialized Project Staff ........................................................................ 131 3 Major Consultancy Subcontracts ................................................................................................. 143 Part IV: Stakeholder Involvement Plan ............................................................................................. 143 Table J: Summary of Stakeholders and Potential Involvement in Project Implementation........ 144 Annexes (See Additional Documents) Part V: Part VI: Part VII: Part VIII: Part VIII-A Part IX: Part X: Part XI: Part XII: Part XIII: Part XIV: Part XV: Part XVI: Barriers and Root Causes Chart ............................................................................... 152 Coffee Industry and Sustainability ........................................................................... 153 Coffee Sector and Rainforest Alliance Marketing ................................................... 157 Coffee Certification Program ................................................................................... 161 Coffee Certification Program – Growth Potential and Targets ................................ 165 On Farm Benefits and Changes ................................................................................ 166 Criteria for Selection of Project Coffee Regions ...................................................... 169 Global Biodiversity Value of Project Coffee Regions ............................................. 171 Adaptive Management ............................................................................................. 188 Monitoring System ................................................................................................... 192 Bibliography ............................................................................................................. 204 Maps ......................................................................................................................... 205 Tracking Tool for GEF Biodiversity Focal Area Priority Two “Mainstreaming Biodiversity in Production Landscapes and Sectors.” .................. 206 Part XVII: Response to Reviews ................................................................................................ 220 a) Response to Convention Secretariat Comments ...................................................................... 220 b) Response to STAP Review ...................................................................................................... 220 c) Response to GEF Secretariat’s Comments .............................................................................. 222 d) Response to GEF Council Members’ Comments .................................................................... 223 Part XVIII: Capacity Assessment of Rainforest Alliance as Executing Agency......................... 235 Part XIX: Project Cooperation Agreement between Rainforest Alliance and UNDP .............. 240 Part XX: Signature Page .......................................................................................................... 249 4 Acronyms BD BMPs CABEI CAMBio CATIE CBD CCAD CCCC CIMS CIRAD CoC CMP CQI CSAG CSPA CSR ECOM ExA FAO FIIT FLO FOB FOS FSC FT GEF GTZ IA ICO ICS IDB IEM IFOAM IISD ISEAL IUCN IICA MBC MDGs NAFTA NBSAPs PCR PCU PMG Biodiversity Best Management Practices Central American Bank for Economic Integration Central American Markets for Biodiversity The Tropical Agronomic Centre for Research and Education Convention on Biological Diversity Central American Commission on Environment and Development Common Code for the Coffee Community Center of Intelligence on Sustainable Markets French Agricultural Research Centre for International Development Chain of Custody Conservation Measures Partnership Coffee Quality Institute Coffee Sector Advisory Group Certified Sustainable Products Alliance Corporate Social Responsibility ECOM Agroindustrial Corporation Ltd. Executing Agency Food and Agriculture Organization Fundación Interamericana de Investigación Tropical Fairtrade Labeling Organization International Free-on-board Foundations of Success Forest Stewardship Council Fairtrade Global Environment Facility German Technical Cooperation Agency Implementing Agency International Coffee Organization Internal Control System Interamerican Development Bank Integrated Ecosystems Management International Federation of Organic Agriculture Movements International Institute of Sustainable Development International Social and Environmental Labelling Alliance World Conservation Union Interamerican Institute for Cooperation on Agriculture Mesoamerican Biological Corridor Millenium Development Goals North American Free Trade Agreement National Biodiversity Strategy and Action Plans Project Coffee Region Project Coordination Unit Project Management Group 5 PSC PDF-B PPPs RAC SAI SAN SCAA SMME SME SCAA TA TM TREES UNCTAD UNDP UNEP USAID WTO WWF Project Steering Committee Project Development Facility - B Public-Private Partnerships Rainforest Alliance Certified Sustainable Agriculture Initiative Sustainable Agriculture Network Specialty Coffee Association of America Small, Micro and Medium Enterprises Small and Medium Enterprises Specialty Coffee Association of America Technical Assistance Task Manager Rainforest Alliance’s forestry program United Nations Conference on Trade and Development United Nations Development Programme United Nations Environment Program US Agency for International Development World Trade Organization World Wildlife Fund 6 Coffee Terminology Audit: The process whereby an auditor or audit team visits an operation and evaluates its compliance with a set of standards. Bags: In general, one coffee “bag” has 60 kilograms. In Central America, Mexico and Peru they have 69 kg bags and in Colombia and Bolivia bags of 70 hg. Large bags usually are used in consumer countries and usually are 1,000 kg. or less. In this way a roaster can blend several 60 kg bags into 1 large bag and do batch roasting. “Bulk bags”: when a container has a one huge bag inside and the coffee is loaded into that container as bulk. Certification: The process in which an independent, third party organization confirms that a client, such as a farm, group of farms or operation, complies with a fixed set of standards. Chain-of-Custody / Traceability: Chain of Custody (CoC) is the tracking of products throughout their processing and distribution. It is analogous to “traceability”, and is often used in quality control systems to identify where problems occur in processing facilities or services. Through Chain-of-Custody audits it is ensured that the certified coffee sold to consumers is the same as the coffee which was produced on the certified farm Cupping: A term used by coffee professionals to describe the activity of sipping brewed coffees to assess their qualities. Economic traceability: The existence of transparency of how a price premium is divided among all the links in the supply chain. Origin: Country or region from which a coffee originates. There are about 50 countries in the world that produce coffee Point-of-sale: A business or place where a product or service can be purchased. For coffee, point-of-sale is typically supermarkets, convenience stores, or restaurants (see retailer) Prices: In New York, washed Arabica beans are traded from 18 countries (Central America, Mexico, Kenya, Tanzania, Uganda, Papua New Guinea, Colombia, Peru, Venezuela, Burundi, India, Rwanda, Dominican Republic and Ecuador). The coffees out of these countries can be tendered against The New York Board of Trade. Samples of the tendered coffees are evaluated and certified by the Board, based upon color, screen size, green coffee odor, grade, roast uniformity and cup profiles. Since coffee is not a homogenous product (flavor and quality differ) it attracts a different price, hence the differentials. However coffee is traditionally treated as a homogeneous commodity and priced against the level established in one of the main terminal or future markets. Consequently the coffee is traded using a price differential. For example “GUATEMALAN SHB EP at NYC SEPTEMBER PLUS 17 US dollar cents PER LBS.” In this way the final coffee price fluctuates with the terminal market. Quintal: A unit of 46 Kg: in some countries the term is used to indicate annual coffee production. Retailer: A person or business that sells goods or merchandise to consumers (see point-of-sale). Roaster: A company that heats green coffee to a temperature sufficient to produce physical and chemical changes in the bean. Roasting creates the flavor compounds of brewed coffee. Sourcing: The act of purchasing goods (such as coffee) or materials from a supplier. Trader: (1) A merchant involved in cash commodities; (2) a professional speculator who trades for his own account. 7 SECTION I : Elaboration of the Narrative PART I: Situation Analysis Context and global significance COFFEE PRODUCTION AND BIODIVERSITY 1. Coffee is the world’s second largest globally traded commodity, and the coffee industry generates annual retail sales of $70 billion1 and provides a livelihood for 25 million families worldwide. Virtually all coffee is grown within 13 of the world’s biodiversity hotspots. According to FAO, coffee production occupies slightly more than 10 million hectares globally, all of it grown in conjunction with or in place of tropical forests, except for large coffee areas in the highly biodiverse Cerrado in Brazil. 2. The coffee plant, Coffea arabica, evolved in the rainforests of Eastern Africa as a thin understory tree. Even today, wild coffee is harvested from the few remaining old-growth forests in Ethiopia. For centuries, coffee was grown under a canopy of native trees or as part of a “forest garden” with a multiplicity of plants. A forest garden coffee farms may have up to 300 useful plant species; plants used for food, medicines, construction materials, decoration, trade, and religious ceremonies. 3. As coffee was introduced into the Neotropics, it was mostly planted in forested areas as an agroforestry production system under an existing canopy. Coffee growth gradually replaced much of the oldgrowth humid and wet premontane forest in middle elevations (400-1600 meters above sea level), and shade coffee plantations often held the last remnants of these impressive forests. Shade was often provided to the coffee plants by old-growth majestic tree species now scarce or locally threatened. 4. The value of coffee farms to biodiversity has been known by naturalists, especially birdwatchers, for decades. In 1932, ornithologist Ludlow Griscom reported in the American Museum of Natural History bulletin that growers left strata of the native forest to shade their plants and that “in such growth, the avifauna was little, if any, different from its original condition.” Shade-grown coffee is still the most biodiversity friendly crop in the middle elevations of the tropics, equaled only by traditional cocoa farms, but cocoa is grown at lower altitudes. In total, coffee production in Central and South America accounts for more than half of the world’s coffee production, and covers a total of 5.8 million hectares. Of this, approximately 2 million hectares is estimated to be shade-coffee production. 5. As logging, cattle grazing, and more intensive agricultural production gradually ate up most of the original forests, many shade-coffee plantations have remained virtually intact for many decades and, together with relatively few natural protected areas, now represent sanctuaries of habitat containing important parts of original ecosystems. It is well recognized that remaining protected areas are too fragmented and too small to ensure survival of ecosystems and species, which is why conservation efforts 1 Retail value, ICO August 2002. 8 are attempting to link remaining areas through connection of productive lands with biodiversity-friendly production methods. In this regard, sustainable coffee plantations now offer valuable contributions to conservation efforts in some of the most biologically diverse and most threatened ecosystems. 6. The conservation community has gradually recognized the importance of sustainable coffee production as coffee cultivation’s role in conserving biodiversity has been increasingly studied by the scientific community. As a part of the design phase of this project, a comprehensive literature review was undertaken of the benefits to globally-important biodiversity provided by sustainable coffee plantations in the Neotropics. The review – carried out by biologist Oliver Komar of the Conservation Science Program at SalvaNATURA in El Salvador2 - has been submitted for publication in a peer-reviewed journal. The review article summarizes the findings of almost 100 studies, and though some scientists point out that coffee production is an altered landscape, a substantial body of scientific literature points to high values for important biodiversity (including threatened, endemic, and migratory species) from sustainable coffee production. 7. According to different sources reviewed,3 the main Coffee in Threatened Ecosystems global benefits of sustainable shade-coffee production can be Coffee grows in the middle elevations, especially between 500 and summarized as: (a) Sustainable 1,500 meters above sea level, in the lower montane or premontane coffee production maintains a forest, above the lowland rainforest and below the cloudforest. This complex ecosystem with diverse lifezone is almost entirely deforested throughout the Neotropics – resources. Studies have found except for the remaining forested coffee farms. that shade-coffee farms often In his book “Where Have All the Birds Gone,” eminent tropical harbor large numbers of tree ecologist John Terborgh writes: “Virtually throughout the tropics, the species, sometimes over 100 on belt between 500 and 1,500 or 2,000 meters is under siege. It is almost a single farm. Trees support entirely gone on the Pacific slope of Central America and is currently large numbers of epiphytes, undergoing rapid development on the less desirable pluvial slopes of the birds, and insects, making Caribbean drainage. The central Andes of Colombia are entirely shaded farms substantially more deforested within these elevations, and what areas remain in the western biodiverse than full-sun coffee and eastern Andes are going fast. The pace of change has been a little plantations. (b) Sustainable slower in Ecuador and Peru, but the lapse of another generation will coffee production provides serve to close the gap. …. The zone of high (bird) migrant density between 500 and 1,500 meters is currently being deforested at a greater habitat for restricted-range rate than any other environment we have considered. This is true in endemic species. There are not every mountainous country from Guatemala to Argentina. We appear to many conclusive studies be heading for an emergency here.” available but, reportedly, a high percentage of endemic birds can be observed on shaded coffee plantations and it is assumed that these plantations play a positive role in their dispersal and gene flow between forest fragments. (c) Habitat for migratory species. A series of studies have concluded that many North American migratory bird species abundantly inhabit Central American shade-coffee plantations during the winter season, or use them as stopovers on their way to and from South America. Often, the density of migratory birds (individuals per hectare) in coffee areas rivals that of natural forests, and sometimes even surpasses it. (d) Habitat for endangered species. There are some examples of sustainable coffee farms having populations of globally threatened or endangered species, but these species are often rare (difficult to observe) and the value of coffee for them is not well SalvaNATURA is one of the most experienced local conservation NGO’s with specialty in biodiversity conservation in coffee landscapes 3 The PDF B commissioned a review of almost 100 scientific articles about biodiversity in sustainable coffee production. Please refer to Annex XIV for a complete list of references 2 9 documented in existing literature. Nonetheless, species like Black-eyed Tree Frog (critically endangered) and Cerulean Warbler (vulnerable) can be quite common in some Neotropical plantations. (e) Landscape and biological corridor functions. Although little studied, ecological theory and a few studies support the hypothesis that forest plantations can facilitate movement of local wildlife populations within a landscape. Plantations serve as movement corridors for seasonal migration, dispersal events, facilitation of geneflow, and maintenance of meta-populations of forest animals in the landscape. Even exceedingly rare movements – one individual per generation, too rare for systematic observations – are sufficient to maintain genetic diversity. (f) Environmental and social benefits of sustainable coffee provide indirect biodiversity benefits. It is suggested that shade-coffee production provides a series of environmental and social benefits, which positively influence biodiversity. These include reduced pollution from wastes, reduced agrochemical use, reduced firewood collection and hunting, along with social improvements on sustainable coffee farms, such as improved education and awareness. All these factors help reduce direct pressures on wildlife and habitat. 8. Albeit an important habitat, coffee is not a panacea for biodiversity conservation. Coffee landscapes remain altered production landscapes, and while many species can survive in coffee habitat, some cannot. Coffee habitat cannot replace protection of remaining natural areas, and should be considered a complement to other conservation efforts. Though the value of coffee habitat for biodiversity protection should not be underestimated, it should also not be considered a substitute for effective protection of globally important ecosystems. When discussing habitat value, coffee landscapes should not be compared to remaining untouched areas, even if coffee plantations could rival natural areas in numbers of certain species. Coffee habitat should be compared to its potential alternative use, either alternative agricultural crops or non-agriculture use. It is through that comparison that the biodiversity value becomes clear. 9. Sustainable coffee production does not only benefit wildlife by reducing threats and protecting habitats. It also brings tangible benefits for local populations in terms of sustained income generation, improved health, and education. Development benefits are recognized by coffee producing countries and in most of these, sustainable coffee remains a high priority, both for the importance of securing export earnings, as well as to maintain jobs and livelihood of hundreds of thousands of rural dwellers and maintain the fabric of rural communities. 10. Central America alone is home of 700,000 small coffee producers, and coffee production in Peru is almost entirely done by small-holders organized into cooperatives. More than 80% of coffee farms worldwide are less than ten hectares in size and in the hands of smallholders. The combined potential of ensuring an improved livelihood for these local producers and the protection of globally important biodiversity has led to several industry and donor-led initiatives, including GEF projects. These initiatives which promote biodiversity-friendly production while providing increased benefits for producers, through efficiency gains on-farm and/or by increased benefits in the market place. The central assertion of the present project proposal is that any conservation strategy in coffee-rich tropical landscapes must take into consideration the ecological role of coffee and take advantage of the great potential inherent in promoting and maintaining sustainable coffee production. COFFEE AND BIODIVERSITY IN PROJECT COUNTRIES 11. This project focuses on the six coffee producing countries in Latin America that are among the world’s largest coffee producing countries, and therefore key suppliers to the world’s coffee industry. These six Latin American countries also harbor some of the world’s most diverse ecosystems. That combination makes them ideal as countries for this project, which aims to conserve globally important 10 biodiversity in coffee habitat. The countries are: Brazil, Colombia, El Salvador, Guatemala, Honduras, and Peru. 12. Coffee production in these countries occurs in 4 biomes which are among the world’s most threatened hotspots, namely the Brazilian Atlantic Forest, Brazilian Cerrado, Mesoamerica, and Tropical Andes. While transformation from natural habitat to coffee production has mostly occurred decades, or even centuries ago, coffee has traditionally been produced in low-impact agro-ecosystems. As the surrounding natural habitat has disappeared, coffee production areas have maintained some characteristics of the original ecosystem and, together with the remaining protected areas, represent the best remaining habitat where biological diversity has survived relatively intact. Therefore, conservation of natural habitat features within coffee plantations is a top priority. 13. During the PDF B phase, different coffee regions were analyzed to determine their biodiversity conservation value, such as the richness of the local ecosystem and the value of coffee habitat for protected areas within or nearby the coffee regions. It was also determined to what extent the areas had potential for conservation of natural habitat through certification of farms that apply biodiversity-friendly and sustainable productive practices, and if the project would have a high likelihood of success in the particular area. A total of eight regions were chosen in the six countries, all of whose coffee is in high demand on international coffee markets. These areas will be the focus of the project intervention, but certification will also continue to occur outside these areas. Fairly large areas were chosen so as to produce significant conservation impacts within larger landscapes. Within these areas, coffee is a main activity, but not the only one. The selected regions are multiple land use areas. The eight Project Coffee Regions cover a total area of 312,310 km2, or almost the size of Germany. For a more complete account of the selection process and criteria, please refer to Annex X. 14. The following section provides a brief overview of the biodiversity hotspots that will benefit from this project intervention,4 as well as the selected Project Coffee Regions. Atlantic Forest 15. The Brazilian Mata Atlântica, or Atlantic Forest, stretching along the Atlantic coast of Brazil, is one of the highly diverse and endemic regions on Earth. Only about 8% of the original natural forest remains of an area which originally covered more than 1.2 million km². 16. Its high endemism is due to its isolation from other tropical forests by the savannas and woodlands of the Cerrado. Of the Atlantic Forest’s 20,000 plant species, 8,000 are endemic, and more than half of the region’s tree species are unique to the area. Several valuable timber species are very rare, including Brazil-wood (Caesalpinia echinata) and Brazilian rosewood (Dalbergia nigra). 930 bird species have been recorded, as well as 260 mammal species of which 70 are endemic. Amphibian biodiversity is also high with 450 species, of which more than half are endemic. 17. Whereas earlier threats included sugar production and coffee production, it is now under continued pressure from expansion of urban areas around Rio de Janeiro, Sao Paulo and Belo Horizonte. Southeastern Brazil is not only home to approximately 70% of the country’s population of 176 million Unless otherwise noted, the information is cited from Conservation International’s hotspot website: www.biodiversityhotspots.org. Also the hotspots maps have been borrowed from the CI website. 4 11 people, it is also a principal industrial center contributing to the pressures on the remaining tracts of natural forest. 18. Because of the serious degradation, the Atlantic Forest region is a highly fragmented landscape. As the remaining natural areas are too small to sustain populations of species, conservation efforts are concentrating on linking remaining fragments through biological corridors. These conservation corridors will link remaining natural areas through reforestation efforts and a matrix of biodiversity-friendly land use. For this, biodiversity-friendly coffee production, where farms engage in on-farm conservation efforts, is a key element. 19. The Project Coffee Region selected for this project lies within the state of Espírito Santo, and covers an area of 7,366,000 hectares. According to Brazilian Center of Technological Development of the Coffee (CETCAF), more than 0.5 million hectares of coffee is grown within this principal coffee region, which overlaps with the conservation area of the ‘Central corridor of Atlantic Forest.’ For a map showing coffee production and the selected Project Coffee Regions, please refer to Annex XV. Inside the Project Coffee region is the Caparaó National Park, and the Pedra Azul State Park of Espirito Santo, which will benefit from protection of the surrounding coffee landscape. Cerrado 20. The Brazilian Cerrado covers 21% of the national territory, or about 2 million km2. This is the most extensive woodland-Savanna in South America, and also the only hotspot that consists largely of savanna, though it also contains some dry forest. The region receives a rainfall of between 1,100 and 1,600 millimeters per year, which falls during the 6-7 months rainy season. The dry season is characterized by frequent droughts and plant species have adapted to drought as well as fire which is a natural characteristic of the area. 21. Large mammal species, such as the giant anteater, giant armadillo, jaguar, and the maned wolf can be found here. The Cerrado is one of the most diverse savanna areas anywhere and has a high degree of endemism. It has 10,000 plant species, of which 4,400 are endemic; bird diversity is considerable with 600 recorded species; there are 200 mammal species of which 15 are endemic; and reptile species amount to nearly 200 species. Additionally, almost 200 species of amphibians have been recorded, of which 25 are endemic. While more research is needed, preliminary findings suggest that a fourth of the 40,000 Neotropical butterfly and moth species can be found here, and nearly a third of the 400 Neotropical termites. 22. Accounting for 35% of Brazil’s agricultural crop production, this unique area is under substantial threat of an expanding agricultural frontier. Soy and corn are the main crops, but cattle ranching is also big with almost 40 million cattle produced per year. Because of the importance of agricultural production to the country’s economy, conservation efforts have been modest. It is paramount that increased emphasis on conservation considers the productive sector, and that producers transform their practices to make it compatible with the survival of the region’s ecosystems. 12 23. As the natural habitat of the Cerrado is not forest, coffee production takes place under full sun, but sustainable coffee production takes into consideration the characteristics of the natural habitat, and sets aside natural conservation areas on farms. 24. The selected Project Coffee Region is located in the southern part of the Minas Gerais state, and northern part of the São Paulo state, covering Cerrado, but also parts of Atlantic Forest. Total area of the Project Coffee Region is 11,265,000 hectares, of which coffee production covers slightly more than one million hectares. Important protected areas inside the Project Coffee Region are Serra da Canastra Park, Serra da Mantiqueira Protection Area, and Rebes Duas Bocas Biological Reserve. 25. The coffee growing areas selected for this project in the Cerrado, as well as the Atlantic Forest, described above, are two of the principal coffee growing regions of Brazil, and therefore the world. Brazil produces some 25% of the world’s coffee, so biodiversity protection within coffee production in these unique hotspots is of the highest importance. Mesoamerica 26. Stretching from Central Mexico to the Panama Canal, the Mesoamerican forests cover territories in eight countries. The hotspot entirely covers Guatemala, Belize, Honduras, El Salvador, Nicaragua and Costa Rica. Its major ecosystems include dry forests, lowland moist forest and montane forests, coastal swamps, and mangroves. 27. Mesoamerica’s spectacular diversity is due to its location between the North American and South American continents. Three million years ago, the Central American isthmus rose from the sea and connected these two vast land masses, and the region became a corridor of transition and interaction between species from the north and south. Due to the mountains forming natural barriers, there are important differences between the ecosystems of the Pacific and Atlantic coasts. Some of the most well-known species endemic to Mesoamerica are the resplendent quetzal (Pharomachrus mocinno), the black howler monkey (Alouatta pigra), and the Central American spider monkey (Ateles geoffroyi). Several other large mammals are important conservation symbols of the Central American forests, including the Baird’s tapir (Tapirus bairdii) and the jaguar (Panthera onca). 28. Mesoamerica contains approximately 17,000 plant species, of which almost 3,000 are endemic to the region. The forests of the region harbor close to 1,120 bird species, of which more than 200 are endemic; some 440 species of mammals, of which 65 are endemic. There are more than 180 species of rodents alone. There is also a very high rate of reptile diversity and endemism with a total of more than 690 species, of which 35% are endemic. Amphibian diversity and endemism are outstanding with more than 550 species, with 350 unique to the region, which is nearly identical to the more than 500 freshwater fish species found, of which 350 are endemic. 29. Historically, logging and agricultural encroachment have eliminated huge parts of the Mesoamerican forests. Current high population growth rates and very high population density have ensured a continued pressure on remaining areas, which experience some of the largest annual deforestation rates in the world (estimated at 1.4% p.a. during the years between 1980 and 1990). It is estimated that 80% of the natural forests have disappeared. 13 30. About 13% of the region is under some kind of protective status, but much of this is low protection status or paper parks. Over the last decade, conservation efforts have centered on the integrated conservation effort of the Mesoamerican Biological Corridor (MBC), which has been heavily supported by the GEF. Through collaboration between eight countries, the MBC aimed to link remaining natural and protected areas with a series of corridors through plantation forests, biodiversity-friendly agroforestry systems, and private reserves. The regions’ coffee producing areas form a key element of the corridor concept. In most of the countries, coffee is still produced under shade and many farms harbor an impressive number of species and boast majestic old-growth shade cover, some of which represent well over a hundred tree species per farm. In several countries, the proposed MBC areas are defined so they clearly overlap with remaining shade-coffee production. A map is provided in Annex XV which illustrates how the selected Project Coffee Regions in Guatemala, Honduras, and El Salvador overlap with the Mesoamerican Biological Corridor, as well as important parks and conservation areas. 31. The project selected four coffee regions in three countries, which will help conserve the biodiversity associated with mid-elevation forests and Central America’s coffee park. 32. In El Salvador, the Central and Western coffee growing regions were chosen as one Project Coffee Region, covering 308,000 hectares, and with an estimated coffee coverage of 130,000 hectares. The region harbors some of the few significant national parks in El Salvador, such as Los Volcanes National Park and El Imposible National Park, one of the most important remaining tracts of the area’s threatened mid-elevation tropical dry forest, and home to many rare species including the mountain lion (puma concolor). The Coffee Project Region will serve to connect El Imposible with Los Volcanes, as well as other smaller protected areas. Protection of biodiversity in coffee landscapes with this Project Coffee Region will also help protect the Barra de Santiago, an important estuary that receives freshwater from the El Imposible National Park and surrounding coffee areas. An additional reason to select this coffee region is that an early WB/GEF MSP aimed at protecting biodiversity in shade coffee production was executed in the area around El Imposible. In many ways, certification experience is very advanced in the area, and this project will build on lessons learned. 33. In Guatemala, two areas were chosen for their unique biodiversity. The Northwestern coffee region covering the departments of Huehuetenango and Quiche, is a relatively isolated area with many small, indigenous producers, most of whom speak their own local languages and dialects. The coffee produced here is in particular high demand in international coffee markets. The total area of this Project Coffee region is 1,597,000 hectares. Important protected areas that are benefiting from coffee conservation as buffer zone and biological corridors are Visis Caba Biosphere Reserve, and Sierra de los Cuchumatanes Special Protection Area. 34. The other Guatemalan area chosen as a Project Coffee Region is within the department of Sololá. The region is fairly small and covers only 242,000 hectares, but the coffee region includes several protected areas. In particular, Lake Atitlán Multiple Use Area, the Volcán Fuego, Volcanes Santo Tomás y Zunil and Volcán Lacandón, all classified as “zona de veda definida.” 35. In Honduras, the Project Coffee Region is the Meseta Central area, covering 2,066,000 hectares, of which 93,000 hectares are used for coffee. The area will help protect and connect the following protected areas: Montecillos Biological Reserve, Montaña Santa Bárbara National Park, Cerro Azul de Meambar National Park, and Cusuco National Park. 14 Tropical Andes 36. This is the most diverse region in the world, harboring approximately one sixth of all plant life on less that one percent of the Earth’s land area. The biome covers an area of 1,542,644 km², and stretches from western Venezuela along the tropical part of the Andes, to northern Chile and Argentina, and includes large portions of Colombia, Ecuador, Peru and Bolivia. 37. The region is home to endemic species such as the yellow-eared parrot, yellow-tailed woolly monkey and spectacled bear. 38. The hotspot holds numerous records of species diversity and endemism, as the following figures will show. An estimated 30-35,000 species of vascular plants (more than 10% of the world’s species) can be found here, more than any other region in the world, and plant endemism in unsurpassed with more than half – perhaps substantially more – of its species unique to the region. The Tropical Andes has the largest number of amphibian species in the world, with a total of 980 registered, of which 670 are endemic and 450 are considered threatened by IUCN. 39. More than 1,700 bird species can be found in the hotspot, of which 600 species are endemic, another world record. The number of mammal species nearly reaches 570, with 75 endemic and nearly 70 threatened. More than 600 reptile species can be found, and 270 are endemic. 40. A quarter of this incredibly rich and diverse region’s habitat is still intact, but pressures on remaining areas are high and include mining, timber extraction, cattle grazing, oil exploration, opium poppy cultivation and expansion of large cities. 41. In the Tropical Andes the project proposes two large coffee areas as Project Coffee Regions. 42. In Colombia, it focuses on the department of Santander, an area which contains the Guantiva-La Rusia-Iguaque Conservation Corridor. The Project Coffee Region covers some 2,999,000 hectares close to the border of Venezuela, of which the core conservation corridor covers slightly more than a million hectares. The area contains the following important protected areas: Serranía de los Yariguies Nacional Park, the Flora y Fauna de Guanenta Alto Rio Fonce Sanctuary, and the Flora y Fauna de Iguaque Sanctuary 43. In Peru, the northern coffee region was chosen. Stretching close to the border with Ecuador, the area covers a total of 5,388,000 hectares of which coffee production areas cover 138,000 hectares. Several protected areas are within this zone, the largest ones being the Alto Mayo Protected Forest, Cordillera de Colan Reserve Zone, and Tabaconas-Namballe National Sanctuary, which among other rare species harbors the spectacled bear (Tremarctos ornatos) and the ‘pinchaque’ tapir (Tapirus pinch). This Project Coffee Region not only contains protected areas of major conservation value, but it also helps to connect large parks and conservation areas adjacent to the Project Coffee Region, such as the Santiago Comaina Reserve Zone along the border with Ecuador, the Cordillera Azul and the Rio Abiseo National Parks. 44. In the following table is a summary of the Project Coffee Regions, along with the hotspots they are within, and their geographical coverage. Maps of the project countries’ coffee areas and the Project Coffee Regions are available in Annex XV. 15 Table A: Project Coffee Regions Project Coffee Regions Country Region Hotspot/ Biome Brazil Southern Minas Gerais State/Northern São Paulo State Cerrado and Atlantic Forest State of Espírito Santo Atlantic Forest Brazil Area Size (ha) 11,265,000 7,366,000 Colombia Guantiva-La Rusia-Iguaque Conservation Corredor Tropical Andes 2,999,000 El Salvador Western and Central Coffee Regions Mesoamerica 308,000 Guatemala Guatemala Northwestern region (Huehuetenango, Quiche) Mesoamerica Lake Atitlán (Sololá) Mesoamerica 1,597,000 242,000 Honduras Meseta Central Region Mesoamerica 2,066,000 Peru Northern Region Tropical Andes 5,388,000 16 Main parks and corridors in or close to PCR Serra da Canastra Park Serra da Mantiqueira Protection Area Rebes Duas Bocas Biological Reserve Parque Nacional do Caparaó Parque Estadual da Pedra Azul no Espirito Santo Central corridor of Atlantic Forest Parque Nacional Natural: Serranía de los Yariguies Santuario de Flora y Fauna de Guanenta Alto Rio Fonce Santuario de Flora y Fauna de Iguaque Guantiva-La Rusia-Iguaque Conservation Corridor El Imposible National Park Los Volcanes National Park “Complejo” San Marcelino (includes Las Lajas forest) “Complejo” Barra de Santiago Visis Caba Biosphere Reserve Sierra de los Cuchumatanes Special Protection Area Atitlán Multiple Use Area Volcán Fuego, “Zona de veda definida” Santo Tomás y Zunil “Zona de veda definida” Lacandón“Zona de veda definida” Montecillos Biological Reserve Montaña Santa Bárbara National Park Cerro Azul de Meambar National Park Cusuco National Park Protected Areas with the PCR Alto Mayo Protected Forest Cordillera de Colan Reserve Zone Tabaconas-Namballe National Sanctuar Adjacent Protected Areas Santiago Comaina Reserve Zone Cordillera Azul National Park Rio Abiseo National Park Total area: 31,231,000 Threats, root causes and barriers analysis THREATS AND ROOT CAUSES TO BIODIVERSITY-FRIENDLY COFFEE PRODUCTION 45. While maintaining and increasing Latin America’s coffee shade is a high priority for biodiversity protection outside protected areas, the biodiversity-friendly coffee parks are currently under considerable threat, which could reduce or eliminate their value as habitat for wildlife and key species of fauna. 46. There are three main factors which directly threaten biodiversity-rich coffee plantations. First, the transformation of shade-coffee farms into other land use. Second, “technification” or conversion to intensive full-sun coffee production. The third major threat is increasing pressure from people living within or outside coffee farms, typically in the form of hunting, extraction of plants, collection of firewood, forest fires, and pollution. In the following, each main threat is analyzed along with its driving forces. a) Conversion of coffee farms to other land uses 47. Like many commodity markets, the coffee market follows a boom to bust cycle. Coffee plants take several years to mature and changes in coffee supply resulting from new plantings lag behind price signals by several years, allowing planting to continue long after sufficient potential production has surpassed world demand. As supply increases, the market experiences a drop in prices. A surge in production following the dismantling in 1989 of the International Coffee Agreement’s quota system, along with increased production in Brazil, and the entry of Vietnam as a leading producer, were some of the reasons behind the recent coffee crisis. Also, the technification of farms in Latin America contributed to the oversupply of coffee on international markets. 48. The oversupply resulted in a sharp drop in coffee prices. The composite indicator price of coffee in 2003 was just slightly more than 50 cents, significantly below production costs in the majority of producer countries. The crisis caused a significant decline in production in much of Latin America, especially in Central America, which affected local and national economies still heavily dependent on coffee exports and the hard currency they bring. 49. Blackman, et. al.5 compared LANDSAT images of the Oaxaca, Mexico, coffee producing areas from the recent pre-crisis (before 1993) and crisis (1993-2001) periods. They found a net loss in forest cover as the crisis worsened. Interviews with small farmers indicated a downward spiral in coffee farm maintenance that led to plantation abandonment. While one would think this would increase biodiversity (no pruning or application of pesticides), the farms were often cleared in patches for subsistence agriculture, and the timber sold. Similar trends have been observed in other Latin American countries, such as conversion to cattle ranching in Colombia, and to sugar cane in El Salvador. 5 Blackman, A., H. Albers, B. Avalos-Sartorio and L. Crooks. Deforestation and shade-coffee in Oaxaca, Mexico: key research findings. (Draft) Resources for the Future. 2004 17 50. Price movements during the first half of 2005 revealed a recovery in exporting countries following the long period of decline. Even with prices rising again, the coffee sector is not safe. Structural problems remain, and most coffee farms are vulnerable to the volatility of the international coffee market. Most market observers expect prices to decline again. To withstand future coffee crises, farmers must increase the economic sustainability of their farms, by increasing efficiency and quality in coffee production, which can then yield higher prices in international markets. 51. Even if farms increase economic sustainability, pressures to convert farms to other land use will continue. As urbanization spreads into rural regions, the value of coffee production land increases, and it may be more economically attractive to convert the farm to housing development or other land use. b) Conversion of traditional agroforest coffee farms to intensive industrial monocultures 52. As part of rural development projects, banks and government and development agencies have often encouraged coffee growers to exchange their shade coffee systems for technified plantations. These systems involve the complete removal of the natural forest canopy in order to better control disease, and to increase production through the use of less hardy, less shade-tolerant coffee varieties. The full-sun system, however, requires more inputs – more pruning, chemical fertilizers, and regular applications of herbicides – as coffee is planted at a higher density, and has a shorter productive lifespan. 53. Full-sun, technified coffee plantations contain far less biodiversity than traditional systems. For example, one study showed that beetle diversity dropped from 126 species to 29 as farms were technified. Ant diversity declined from 30 to 8 species. Biologist Ivette Perfecto found 259 species of ants, wasps and beetles in one tree in a shaded Costa Rican coffee farm. She found 30 species of ants in one tree. (The entire British Isles have about 50 species of ants.) Many of these insects prey upon coffee pests. In El Salvador, a country with only 5% of its native forest remaining, a Rainforest Alliance certified (RAC) coffee cooperative was found to host 103 tree species. Most sun-coffee farms have between zero and three tree species. 54. Technified systems have other impacts on biodiversity and ecosystems that are less well documented. Weed competition must be kept to a minimum by applying herbicides. This reduces ground cover and the incorporation of organic matter into soils, making soils more susceptible to erosion, chemical runoff, and reduced fertility rates. The latter starts a vicious circle of more synthetic fertilizer use because the nutrient absorption capacity of soils has declined with decreased organic matter. Shade species, however, contribute to soil protection and fertilization, which is particularly critical when coffee prices drop and producers can no longer afford to buy fertilizers. 55. A decision to clear-cut a shade coffee farm in favor of intensive full-sun production or other land use, is often taken without full understanding of available alternatives. While markets increasingly start to reward farm sustainability in the form of premiums and other benefits in return for sustainable production, many farmers are not aware of this opportunity or how to achieve related benefits. 56. However, it is also true that markets – at least until fairly recently – have not rewarded, or given incentives to sustainability in coffee production. For much of the mainstream market, this still remains true. For many farmers, it has made more economic sense to transfer costs of environmental externalities to the surrounding environment and communities. c) Threats from poor farm land-use practices and local resource use 57. There are also a series of direct threats to biodiversity that exist even on shaded coffee farms. Unsustainable practices on the farm itself pose threats to biodiversity on the farm, as well as to the people 18 on it and in the surrounding communities. Common threats include poor waste management systems for solid and liquid waste, which often end up either in the local river or as contamination scattered around the coffee farm. It should be noted that waste water from coffee production is highly toxic, so untreated discharge into the environment is a clear case of transfer of environmental costs to local environments and communities. 58. Poor pest management systems can also lead to toxic contamination of local environments and water bodies. Likewise, poor land use practices lead to soil erosion and chemical run-off, also resulting in contamination of local rivers and streams. 59. Root causes are often ignorance or unawareness with regard to best management practices or because farmers have no incentive to implement more rigorous, environmentally friendly management practices. 60. Threats from local populations are fairly similar to the common threats experienced in other natural resource-rich areas. The threats include hunting for wildlife; extraction of different plant species for consumption, sale, or medicinal use; firewood collection; forest fires, often resulting from poorly managed slash-and-burn agricultural techniques; and pollution from liquid and solid wastes. 61. Poverty in local populations is an important root cause behind the pressures. As wages are low and as many people in rural communities fail to participate fully in a formal economy, many supplement their income with a collection of different products from the forested areas. 62. Indiscriminate use of resources as well as thoughtless abuse – such as in the case of fire use and pollution with wastes – often happens because locals are not cognizant of the value of an intact ecosystem. Overuse and abuse of local ecosystems not only harm the owners of local coffee farms, but they also harm local communities because of the reduced quality of environmental services they receive as a reward of having an intact ecosystem, such as access to clean water. OPPORTUNITIES FOR SUSTAINABLE PRODUCTION 63. As serious as the threats against biodiversity-friendly shade coffee production may seem, luckily there are proven sustainable and viable alternatives, both with regard to the problem of conversion as well as management of other threats against biodiversity. 64. First, it is very important to point out that most owners of shade-coffee plantations usually want to maintain their farms intact, including shade trees. Coffee farmers are traditionalist people who take great pride in their trade. Often farms have been in their families’ possession for generations and coffee farming is a way of life which brings both self respect as well as prestige in the community. Old-growth shade-coffee farms are truly amazing places, as any visitor can testify to, and their owners care for and maintain them, much in the same way that one can see on ancient vineyards. Simple cost-benefit reasoning is not sufficient to explain coffee farmers’ behavior. 65. It may be that other land uses make it more economically rewarding to terminate shade-coffee production, but many farmers will only make that change as a last resort, in the absence of any alternative. This is probably the reason shade-coffee farms still survive, even when producing on slim profit margins or – in bad times – a loss. But in times of crisis, if there are no alternatives, conversions of shade-coffee farms will continue to occur. 66. Governments in producer countries and donor institutions can provide help to farmers in building their economic sustainability and ensure environmental benefits. This can be done through rural 19 development programs, private sector business development programs, as well as specialized programs that provide credits under favorable conditions, technical assistance for coffee quality development etcetera. Such programs are in place in the majority of the project countries, and are typically planned by a government agency or one of the national coffee associations with donor financing. 67. Governments can also try to strengthen the resilience of coffee farmers through the provision of a favorable policy environment which reward farmers for maintaining valuable coffee habitat that bring tangible environmental services, as well as jobs, to the surrounding communities. 68. Too often, however, governments do not succeed in creating the necessary policy environment. Even ambitious initiatives, such as the Mesoamerican Biological Corridor, which for years has worked to improve policy environments in favor of conservation, has arguably had limited impact for coffee producers on the ground. 69. Rural development programs and other technical assistance programs, however large, tend not to reach sufficient amounts of farmers. Moreover, many of these programs struggle to guarantee sustainable results after project interventions end. They are often very expensive and put huge burdens on the budgets of government authorities. 70. This project proposal aims to catalyze a vast, and largely untapped potential for improving the sustainability of coffee farms, namely to capitalize on market forces to promote sustainability within the coffee industry. The coffee industry – dealing in the largest crop commodity market in the world – is an almost infinitely powerful source. Coffee represents a retail value of USD 70 billion per year, and the potential of transforming the coffee industry to internalize conservation and sustainability measures, can potentially dwarf any donor or government financed investments in coffee sustainability. Price premiums and other benefits are already paid for sustainable production in the market place, and little by little mainstream coffee markets start to recognize that sustainable coffee production should be rewarded. 71. Over the last 10-15 years, the coffee industry has been pioneer in piloting sustainability measures, and the very large actors, as well as countless smaller ones, are quickly moving towards sustainability. It is very likely that all the major actors in the coffee world will have some sort of sustainability standards and policies before the end of this proposed project intervention. For an account of the sustainability trends in the coffee industry, please refer to Annex VI. 72. For the coffee industry, there are several possible ways of promoting sustainability, almost all of them linked to some kind of standards and a corresponding certification scheme, which will verify that producers and coffee companies live up to the standards. Current amounts of certified coffee from different certification systems probably amount to less than 5% of global production per year, but experts predict substantial growth. 73. Several organizations were formed with the aim to promote coffee sustainability through certification. The fair-trade certification movement champions a fixed price to guarantee farmers a better price for their coffee, but until recently hasn’t been concerned with environmental issues. The organic movement centers on abandoning agrochemicals, but fails to address social issues. The certification system Utz Kapeh has very little focus on biodiversity. Meanwhile, the coffee industry itself is trying to define common minimum sustainability standards, such as within the Common Code for the Coffee Community. A discussion of biodiversity benefits of different certification systems can be found in the Table B. 20 Certified Coffee Schemes and Movements There are several certification programs for coffee. The oldest and best known is organic, which aims to eliminate synthetic chemicals and improve soil health. There are hundreds of organic organizations organized under the umbrella of the International Federation of Organic Agriculture Movements (IFOAM), based in Germany. There are Certified Organic coffee farms in nearly every producing country, producing a combined total of about 35,000 tons. Max Havelaar, in the Netherlands, launched the first fairtrade consumer guarantee label in 1986 on coffee sourced from Mexico. Fairtrade aims to assist disadvantaged producers in developing countries. Today, there are 18 organizations in the Fairtrade Labeling Organization International (FLO). Fairtrade is an alternative marketing program that connects producers and consumers in a more equitable and direct way, working primarily with small farmers who are organized into cooperatives. In 2004, there were 360 Fairtrade Certified producer groups in 40 producer countries selling to hundreds of Fairtrade registered importers, licensees and retailers in 18 countries. Since the organic movement has only recently begun to consider social issues, and fairtrade does not certify farms with hired labor, the farmers, biologists, rural development specialists and other stakeholders that developed the Sustainable Agriculture Network (SAN) standards (the international NGO Rainforest Alliance serves as Secretariat of the SAN) wanted a program that would benefit the millions of seasonal and permanent workers who depend on coffee. This network of NGOs developed the first standard that encompassed all three pillars of sustainability – economic, ethical and environmental – in an integrated way that also includes protections and benefits for workers, wildlife, ecosystems and local communities. The standards use a “Rainforest Alliance Certified” seal on the product and the standards can be applied to farms of any size or management structure, so long as it meets the rigorous and comprehensive standards. While the NGO certification groups (organic, fair-trade and more recently Rainforest Alliance) long held the field, private-sector verification initiatives are growing quickly. The European Retailers Association adopted the SAN concept of sustainability standards, creating the EurepGap code, which was first applied to fresh fruits and vegetables. A Dutch supermarket and EurepGap supporter -- AHOLD – sponsored the development of Utz Kapeh, an assurance mark that specialized in coffee. The European and German coffee associations and GTZ are sponsoring the development of the Common Code for the Coffee Community (CCCC), a “baseline standard” that aims to provide a level of risk management for the coffee industry by ensuring that the worst environmental and labor practices are gradually eliminated from the sector. Finally, there are a number of company codes that are similar to the SAN standards but without the expert, third-party verification element, including the Starbucks program CAFÉ Practices and the “Sustainability Index” of the Neumann Kaffee Gruppe. 74. The so-called “third-party” certification schemes are a powerful tool for change. As opposed to internal industry standards, third-party certification means that compliance of sustainability standards is verified independently through audits. While procedures vary from one system to the other, Rainforest Alliance Certification (RAC) implies an annual audit on all farms. Only if the audit shows that the producer meets the standards of the particular certification system, the producer has a right to use the certification system’s seal. The seal is a guarantee of compliance which can follow the coffee through the supply chain and eventually be put on the final product at the retail outlet. That the coffee which reaches the consumer is actually the same as the coffee which was produced under sustainable conditions on a certified farm is verified through chain-of-custody audits of companies that trade the product. 75. Third-party certification systems give coffee producers and companies a credibility which they would not have if they merely used their own standards and then claimed to follow them. This credibility and the 21 seal which backs it up can be used to leverage benefits in the market place. That companies are able to say that credible organizations guarantee that their product was produced under strict environmental and social standards translates into a value in the market place. The certification system therefore provides market incentives to comply with the standards. The market incentives can mobilize huge shifts in investments within the private sector. When preferences for products shift from products produced under non-sustainable conditions, to products produced under rigorous biodiversity conservation and social sustainability standards, the private sector can mobilize unrivaled levels of funding to catalyze on-theground change. 76. As will be explained thoroughly in later sections of this proposal, the expected leveraged change in private-sector investment in favor of sustainability resulting from this project intervention amounts to more than USD 4.5 billion, of which roughly USD 500 million represents farmers’ own investments on their coffee farms to transform their productive practices to meet the standards. 77. The Rainforest Alliance, an international NGO based in New York and Costa Rica and founded in 1986, has emerged as a key player in the world of certification, currently certifying through a network of local NGOs, called the Sustainable Agriculture Network (SAN) almost 1 percent of global coffee producing area but sustaining growth rates of more than 100% per year over the last 3 years, and experiencing a continued strong increase in demand for certification from producers and coffee companies. The certification system is known as one of the most rigorous and complete sustainability standards in the coffee world, and one with demonstrated benefits for biodiversity.6 The ample benefits of the certification system – for biodiversity and the environment, for farmers, and for farm workers – are explained below in the following section. 78. As different certification systems with different standards and philosophies try to promote sustainability each in their way, there are important considerations which must be made in determining how to achieve the most impact for biodiversity. One is the degree to which the standards lead to conservation and sustainability benefits on farm. The other is the degree to which the coffee industry is likely to adopt the standards and mainstream them broadly within the sector. The two are trade-offs to a certain extent. The weaker the standards, the easier it will be for the industry to comply with them, but they will also bring about less change. Extremely rigorous standards, or standards which are not compatible with the mechanics of the coffee industry, can bring about great changes on coffee farm if they’re followed, but will be doomed to remain as isolated, niche initiatives for small segments of the coffee companies and coffee consumers. 79. Industry standards such as the CCCC and the certification system Utz Kapeh promote entry-level, baseline standards, which are better than no standards, but will not bring about thorough change in the coffee sector, much less provide substantial benefits for biodiversity. At the other end of the spectrum are certification systems as Bird Friendly which bring substantial benefits for biodiversity but stand little chance of becoming widely adopted in the coffee industry. Certified organic also brings benefits for biodiversity, though perhaps focus is more on elimination of agrochemicals than other aspects of biodiversity-friendly production, such as canopy cover or soil protection measures. In addition, the system fails in addressing social issues in its standards. This might be the reason that Organic seems to have stagnated recently on international markets. The main certification systems emphasize different aspects of sustainability and use different philosophies to promote it. Fairtrade attempts to curb market forces by setting fixed prices, while most other schemes aim to capitalize on market forces by providing incentives for on-farm changes. Some schemes promote mostly social aspects of sustainability and others mostly 6 Several studies have confirmed the biodiversity value of shaded coffee farms that produce according to the sustainability standards. This project will establish a rigorous impact monitoring system to improve availability of systematic and credible data on impacts. 22 environmental aspects. Some schemes put primary emphasis on food safety and traceability issues. Rainforest Alliance Certified emphasizes all three pillars of sustainability: social, environmental, and economic. Some schemes appeal to an exclusive “sustainability-aware” group of consumers who is willing to pay a substantial sustainability premium for certified coffee, and other schemes are aimed at mainstream consumers on highly competitive coffee markets. For an introduction to the main coffee sustainability standards of system, please refer to Chemonics’ “Beyond the Bean: Redefining Coffee Quality,” which can be found on http://marketstandards.chemonics.net. The coffee world is extremely complex, and there is not on “fit-all” solution to sustainability problems in coffee production. Different certification schemes address different problems, appeal to different consumer groups, and fit the situations of different farms and producers. They should be regarded as complementary and not as being in competition with each other. This proposal does not support multiple certifications as a solution to most farmers, as this is likely to drive up costs of production. Rather each farmer should choose the certification scheme that best helps him improve sustainability on his farm. However, acknowledging that multiple certifications are already a reality for some producers, this project will help create synergies between existing certification programs by harmonization of audit procedures and standards, where possible. 80. In Table B below is a comparison between the three major certification schemes with environment profile, emphasizing the standards that determine benefits for biodiversity. Table B – Comparison of Three Major Certification Schemes Requirements for Certification 1. 2. Tree Cover Pesticide Reduction 3. Water conservation 4. Habitat regeneration Utz Kapeh Native tree shade species desired, but without any specification; deforestation of primary and secondary forest is forbidden Is not requiring pesticide reduction specifically, though asking for proper registers ( + ) 5 m protection zone of water bodies without pesticide application; waste water treatment ( - ) Does not Organic RAC ( - ) No requirements ( + ) 10 different native tree species; two vegetation strata; minimum of 40% shade; conservation of riparian forests and other forest patches ( + ) Most chemical/ synthetic pesticides forbidden ( + ) Integrated Pest Management practices are a must; registers of pesticide use must show reduction over years; a program is required to eliminate class I and II pesticides ( - ) No direct requirements ( - ) No requirements 23 ( + ) 10 to 50 m protection zone of water bodies without pesticide application required; waste water treatment, water analysis (pesticide residues) and solid waste management required ( + ) Farm areas that are not suitable for coffee Positive impacts for biodiversity in RAC coffee farms High shade tree diversity and higher wild plant biomass promotes higher insect abundance and diversity, as well as mammal, (migratory and resident) bird, reptile and amphibian species richness and abundance. Less fungicides and herbicides result in a cleaner aquatic environment and healthier soil fauna; fewer insecticides lead to less invertebrate mortality and bioaccumulation; the agroecosystem is more stable and the foodnet presents higher complexity. Less or absent fungicides and fertilizers in water lead to a healthier aquatic environment with more diverse macroinvertebrate and amphibian communities; waterfowl, snakes and mammals benefit from higher food abundance. More complex landscapes are created; forest cover increases; Requirements for Certification Utz Kapeh Organic RAC specify actions to enhance the environment for the benefit of flora and fauna 5. Wildlife Education ( + ) Hunting and commercial collection forbidden ( - ) No requirements (slope, risk of erosion, poor soils) should be reforested with native tree species; disturbed riparian forests must be recovered ( + ) Environmental education program required; Hunting and cage-birding prohibited; no wildlife in captivity; extraction of epiphytes and vascular wild plants forbidden Positive impacts for biodiversity in RAC coffee farms proximity between forest patches is higher; edge effect diminishes; mainly insect and insectivorous migratory and resident bird communities are benefited. Bromeliads, orchids, passerine birds, toucans, parrots, monkeys and other vertebrates can reproduce successfully again to maintain or improve healthy populations without being affected by human disturbance. RAC COFFEE: The On-Farm Benefits 81. The RAC coffee contains the right mix of rigorous standards and market compatibility, covering the three pillars of sustainability: environmental/biodiversity, social/ethical, and economic. While standards are universally recognized as high, the system fits the needs of the international coffee community. Companies that are struggling with sustainability issues have embraced the system and demand is increasing substantially. Consequently, over 93,000 hectares of coffee farms in biodiversity-rich areas of Latin America have currently been protected through this system. 82. While fully recognizing the merits of other certification programs, RAC has been chosen as intervention strategy for this project for its effective impact on biodiversity guaranteed by its rigorous standards, as well as the benefits in brings to the farmer in terms of his improved ability to weather a future coffee crisis. It is an eminent tool to address the threats against shaded coffee farms, analyzed above. It will also bring social benefit for farm workers, which are key stakeholders in implementing sustainability measures on farms. As the standards prohibit felling of forest habitats for coffee production or other purposes, the certification system will also help curb encroachment in remaining natural areas. No certification is done of coffee planted as a result of encroachment in natural areas. When the system promotes “increased certified production” it refers to existing farms implementing sustainability measures on their farms and getting certified. 83. In the following is explained the main on-farm benefits that are brought about by the certification system. The standards of the certification system have ten principles: Social and environmental management system. Ecosystem conservation. Wildlife protection. Water conservation. Fair treatment and good working conditions for employees. Occupational health and safety. Community relations. Integrated crop management. Soil management and conservation. 24 Integrated waste management. 84. The certification system is implemented by a network of independent, nonprofit, conservation organizations that promotes the social and environmental sustainability of agricultural activities through the development of standards, and by certifying farms that meet those standards. Network members provide certification services to the producers and agricultural companies in their countries, and contribute knowledge and experience to the development of the standards. The network uses the Rainforest Alliance Certified™ seal, which is awarded to those farms that meet certification requirements. 85. The standards specify criteria for best management practices and social and environmental performance for farms. The scope of the standards covers agronomic practices and integrated crop management; social, labor, and community relations; environmental management, and occupational health and safety. 86. The certification system is designed to drive continual improvement of social and environmental best management practices on farms. All farms are audited by teams of third-party auditors. The length and cost of the audit depend on many factors, among them farm size, the complexity of cropping or production systems, the existence of processing or packing facilities on the farm, and the number of farm workers. 87. All certified farms must undergo annual audits to evaluate compliance with the standards and to verify that previous non-compliance issues have been or are in the process of being rectified. Annual audits tend to focus more on previous non-compliance issues, but not at the expense of evaluating overall farm performance against the standards. Farms that do not demonstrate compliance or clear progress on improvements will be assigned corrective actions and will need to undergo a verification audit. The program can suspend or cancel the certification of any farm that does not demonstrate progress on corrective actions. 88. In short: the objective of a farm audit is to confirm the execution of best management practices according to their definition in the standards. Incidents of non-compliance are evaluated to determine whether they are an isolated incident or the result of the lack of a systematic approach to implementing best management practices. 89. A more thorough explanation of the certification system can be found in Annex VIII. 90. Table C below summarizes some of the biodiversity-related improvements that typically occur on a farm when it becomes certified. For more complete information on the wide range of social and environmental changes that occur, see Annex IX. 25 Table C: Biodiversity Related Improvements on a Certified Farm Farm Aspects Common Problems Certified Farms Tree Cover (only for select crops like coffee and cocoa) No shade trees or only scattered shade of a few tree species. Often exotic species of little value to wildlife are used. At least 10 native species and 70 shade trees per hectare in two strata. Canopy cover is 40%. Forest Conservation Completely deforested or with little natural forest. Existing forest unprotected. Forests protected. Degraded and non-agricultural areas reforested Wildlife Protection Hunting or extraction of flora and flora common. All natural ecosystems and their flora and fauna must be protected. Soil Resources No soil conservation measures, heavy reliance on chemical fertilizers and herbicides Soil and fertility conservation program and measures implemented. Abundant use of vegetative ground cover and natural fertilizers Excessive water use. Streams and rivers contaminated with processing and domestic wastewaters and garbage. Riverbanks and watersheds deforested Water use is measured and conservation measures implemented. All wastewaters treated before release to environment. Riverbanks reforested, watersheds protected. Water Resources Benefits Increased environmental services: water yields, carbon sequestration, recreation opportunities and biodiversity. Increased flora and flora for better natural pest control. Appropriate land uses: best lands for agriculture mean better yields and lower costs. Increased natural fertility, decreased fertilization costs. Reduced herbicide use. Reduced water consumption and need for wastewater treatment. Increased water yields from farm for internal consumption and use by neighbors Biodiversity conservation and environmental protection 91. In terms of biodiversity conservation, the on-farm benefits of this shift in investment is a farm which maintains its canopy cover in habitats that were originally forested, or – in other areas, such as the Brazilian Cerrado – sets aside large conservation areas to compensate for full-sun coffee growth. Tracts of forest on farms are protected and managed. Deforested farms can comply with certification requirements by reforesting according to the standards. 92. Pressures from outside population and farm workers on natural resources are eliminated through control, environmental education and awareness-raising. This includes a stop for hunting and extraction of plants and animals from forested farms. 93. Farms are expected to have a basic inventory over the biodiversity which can be found on their farm, and a good understanding of the value of species with particular conservation value. 94. Instead of indiscriminate fertilizer and agrochemical use, farmers must implement integrated pest management measures, including out-phasing of dangerous pesticides, application of organic fertilizer and strictly controlled use and storage of all agrochemicals. Farms implement rigorous soil protection measures including contour planting and abundance of vegetation ground cover, and vegetation cover in riparian habitats. The result is a drastic reduction of agrochemical run-off and sedimentation in local rivers and streams benefiting local aquatic biodiversity. 26 95. Farms also implement solid and liquid wastewater treatment. All wastewater is treated before it is released to the environment. Both wastewater treatment as well as soil conservation measures and pesticide use means providing environmental services to downstream water users. Social benefits 96. In terms of social benefits, farmers start with paying at least minimum wages (which all to often is a significant improvement compared to non-certified farms) and observing other workers rights as specified in ILO conventions and legal stipulations in the particular country. 97. Occupational health and safety programs on farms reduce accidents, including intoxication from agrochemical use. Health care services and health and hygiene education is provided to workers and their families. 98. Worker housing, sanitary installations, cooking facilities and laundry areas are drastically improved. 99. Child labor is prohibited, and employment of young workers (15-17 years old) is carefully controlled. Young workers must not be involved in any dangerous tasks, and must not interfere with school. All children must attend school. Economic sustainability 100. Certification is truly a powerful tool for changes on coffee farms. Because farmers aim for benefits in the market place they will voluntarily invest large amounts of their own funds in transforming productive practices so they promote sustainability and conservation of biodiversity. Coffee companies will reward this behavior by paying premiums for certified coffee, or by providing other benefits, such as preferential treatment, and long-term contracts. The coffee companies hope that consumers, in turn, will reward them by giving preference to their coffee. This system of market-based incentives has the potential to leverage a thorough shift in investment patterns in the coffee sector, and enormous investments in sustainability. A discussion of the power of leveraging such shifts in investments are provided in the discussions below concerning project strategy, cost efficiency, and Incremental Cost Assessment. 101. During the project’s PDF B phase a study was conducted of the premiums typically paid to farmers in return for their efforts to implement environmental and social sustainability measures. The study concluded that farmers were paid an average of USD 12 cents per pound of coffee, or a premium of slightly more than 10%. While the use of the seal does not require the buyers to pay a price premium, it is certainly one of the benefits enjoyed by the farmers, which helps increase economic sustainability and therefore a factor which substantially reduces the threats of conversion of coffee farms in times of crisis. 102. However, farmers also enjoy typical benefits in terms of increased access to markets, and better terms of trade. Farmers report that they find a greater variety of potential buyers, and even if the buyers not always pay a premium, they are often able to offer other valuable benefit which makes the effort to get certified worthwhile. 103. Some of the most important benefits for certified farmers lie not in market benefits, but in efficiency gains and long-term savings on the production side. As farms prepare for certification, they typically engage in a substantial revision of all aspects of production, including registration of a wide variety of aspects of production, including improved accounting systems. Studies of on-farm costs and benefits related to certification, which were conducted during the PDF B phase, showed that farmers made a variety of investments on their farms that were not only to protect biodiversity, or improve social conditions on their farms, but also helped improve the farms as productive units. This is an important point, because although it is not a specific requirement of the standards that the farmer becomes more efficient, that is what often seems to happen as a consequence of certification. That farmers become better 27 farmers by getting certified is an important element of increasing the sustainability of their coffee farms. The issues implied in determining exactly the mechanics of costs and benefits from certification are very complex and will be studied and documented further during the execution of the full project. RAC COFFEE: the market potential 104. Transformation of productive practices on coffee farms and protection of valuable habitat in coffee landscapes is of high priority in the conservation community. But for certification to be effective as a conservation tool, markets must demand and reward coffee production under biodiversity-friendly conditions, such as on RAC coffee farms. While the percentage of the world’s coffee production certified according to the standards is still less than one percent, major coffee companies are in the midst of an ambitious attempt to increase the presence of certified coffee in the market place. These efforts are accompanied by efforts to market other RAC products, such as bananas.7 105. The last months of 2005 are a critical turning point in the availability of RAC products, with two global market leaders launching campaigns in several countries. Kraft is introducing certified coffee brands in the United Kingdom (Kenco), France (Jacques Vabre), Sweden and Denmark (Gevalia), the United States (Yuban), and Australia (Jacob’s). Chiquita will put millions of bananas bearing the seal on store shelves in Austria, Belgium, Denmark, Finland, Germany, the Netherlands, Norway, Sweden and Switzerland. In addition to these product launches, certified products are already on the shelves in the US, Canada, Australia, UK, Switzerland, Germany, France, Italy, Belgium, the Netherlands, Japan, Mexico, Costa Rica, and Brazil. 106. Certified products are currently available in approximately 20,000 retail outlets across the globe and this figure is likely to increase sharply as new products become available on new markets. 107. New partnerships have been established with mainstream and key niche players, and these have been important to the growth of the certification program. Partnerships with Kraft, Procter & Gamble, Caribou Coffee, Gloria Jean’s, UCC in Japan, and others have permitted the certification program to sustain growth rates of more than 100% per year for several years. Talks are underway with major coffee buyers, such as Dunkin’ Donuts, McDonald’s, and Starbucks, with the aim of concretizing their involvement in the certification program. 108. These companies are increasingly interested in the concept of sustainability and view the certification program as a central tool to achieve it. The fact that major multinational coffee companies actively seek partnerships with the program indicates the huge potential of a coffee industry-driven conservation and sustainability effort in producer countries. However, many companies still buy only a fraction of their total purchases as certified. 109. The certification program must grow dramatically to remain relevant. There is a risk that the emerging market interest will disappear if the program fails to become a market changing certification system, fulfilling its potential to transform the coffee sector. The encouraging support from major coffee companies clearly is based on the program’s potential, but this potential must be realized. 110. A description of some of the partnerships between the certification program and prominent coffee companies can be found in Annex VII. 7 Chiquita Bananas entire production, or about 15% of the world’s banana supply is RAC. 28 BARRIERS FOR EXPANSION OF SUSTAINABLE PRODUCTION 111. The huge opportunities for expansion of the certification system are good news for conservation efforts in threatened hotspots. But it is a challenge to fulfill the expectations and meet increases in demand and supply. A series of barriers must be overcome before growth can be ensured. Failure to overcome the barriers could mean that the program will remain a relatively niche certification system, without having really massive impact. It is also possible that the certification system could collapse if producers and coffee companies fail to see their high hopes and expectations fulfilled, and therefore seek other alternatives to sustainability. This, of course, would mostly hurt producer countries and their efforts to enlist consumers and companies in the north as allies in their efforts to protect their spectacular biodiversity. 112. The PDF B has analyzed the barriers to scaling up certified coffee production and sales, and have found the following main barriers: Barrier 1: Limited demand for certified coffee on international coffee markets Barrier 2: Limited consumer interest in certified coffee Barrier 3: Capacity constraints in scaling up certification activities Barrier 4: Weak economic sustainability on certified coffee farms Barrier 5: Unfavorable policies limit production or trade of biodiversity-friendly coffee Barrier 6: Information and knowledge is not systematically generated to inform decision-making and adaptive management in certification system 113. Each barrier exists because of a series of root causes. The project proposal aims to remove the barriers by addressing their root causes. For a graphic model showing the relationships between objective, barriers and root causes, please refer to Annex V. Barrier 1: Limited demand for certified coffee on international coffee markets 114. The demand for certified coffee is still nascent in spite of the interest and support from leading coffee companies throughout the supply-chain. While demand has been growing fast (Kraft, for example, doubled its purchase of certified coffee in the last year, and the increase in seal-bearing coffee products that can now be found in over 20,000 outlets, is up from just a few hundred two years ago), and while industry-leading coffee companies have supported RAC coffee, the volume of certified coffee currently sold on international coffee markets only amounts to a fairly insignificant share of this massive business. While demand will continue to grow, the question is if it will grow fast enough to maintain the interest of actors in the market place. 115. Presently, production of RAC coffee from the 10 countries where certification activities exist (México, El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Peru, Brazil), amounts to 42,000 tons per year. Of this, an estimated 30,000 tons per year are sold with the RAC seal. Growing demand is needed to ensure that all certified coffee reaches a market that recognizes the value of the certification. Currently there is substantial interest on the part of the market in schemes that assure sustainability of coffee production. The project must take advantage of this current opportunity through swift, aggressive action or risk losing the market to industry based verification programs. Root causes for Barrier 1 116. There are several reasons why many coffee companies have not yet fully embraced biodiversityfriendly coffee. Though the RAC seal has become close to universally recognized by companies in the 29 industry, there are many companies who do not know enough about what the certification is, and what the sustainability standards are about. The term ‘sustainability’ can mean different things to different people, and there are many organizations and certification systems which claim sustainability, even though their definitions of sustainability are much less rigorous than the sustainability standards of RAC coffee. Lack of awareness even exists in many companies which have started to commit to certified coffee. Often the sustainability issue is pushed by informed and visionary employees – sustainability champions – at the management levels in a company, but the sustainability idea has not spread broadly throughout the organization. At times, some companies have made a formal decision to commit to buying certified coffee, but the employees who do the actual purchasing are either not sufficiently aware, or do not have a real incentive to choose a certified product over another. 117. While the idea of sustainability in coffee production might sound attractive, all companies, most of which face fierce competition in the marketplace, are looking for a business case to venture into the world of sustainability. Some companies do not think the certification seal on their product will add value to their brand because consumers are not yet fully aware of what the seal represents, nor do they actively demand certified coffee. It is often not fully understood that buying certified coffee can provide a whole series of other benefits to the company, beyond simple use of a seal. Some of the other business benefits of certification are: Product traceability. Buying certified coffee gives the company knowledge of the origin of their product and adds transparency to business processes. Traceability is quickly becoming a key parameter of competitiveness in the coffee sector Risk management. Buying certified coffee gives companies a guarantee that their product was produced in accordance with rigorous sustainability standards guaranteeing environmental and social benefits in production. Risk reduction linked to public image. Companies have a stronger position vis-à-vis consumer groups, media, and activist NGOs in consumer countries and can effectively reduce the risk to their image by curbing negative attention to their sustainability track records. Sourcing certified coffee can be a part of a broader company Corporate Social Responsibility policy. A formal CSR policy can help the companies beyond simple image management. For example, job satisfaction and performance can grow if employees can identify with and feel proud of the product they are working with. Improved supply-chain relationships. Increased knowledge of the origins of purchased coffee can help forge stronger relationships among companies throughout the supply-chain, including more stable, transparent and fair contracting relationships, benefiting all parties. 118. Rainforest Alliance is making a major effort to inform companies and their employees about the nature and benefits of certification, but the organization needs to expand growth opportunities of the coffee certification program. 119. Some companies respond more positively towards certification if they can see that its credibility is confirmed by others. To date, the program has built credibility with a number of international groups specializing in sustainable development and environmental conservation, but these groups have, for the most part, not yet publicly or actively endorsed the certification system as an effective tool for biodiversity conservation and sustainable development. Once the impacts of coffee certification are better documented (please refer to Barrier 6 below) promotional partnerships will be more easily developed. 30 Rainforest Alliance has been successful in this approach in other areas. For example, Greenpeace U.K. currently has a goal of encouraging use of Forestry Stewardship Council certified wood products. Rainforest Alliance has partnered with Greenpeace to promote SmartWood – Rainforest Alliance’s FSCaccredited forestry certification program – and FSC certification in the U.K. 120. In the media, newsworthy sustainability stories are often not told. However, the certification program has received some very positive media coverage. Lack of staff and other resources has prevented the certification program from achieving more media placement about impacts. 121. In spite of the difficulties mentioned, many companies are already fully convinced of the advantage of buying certified coffee. Even if these companies are fully convinced of and knowledgeable about sustainability standards and their benefits, many companies find it difficult to identify the coffee they need. Coffee roasters blend coffees from different origins and with different characteristics to achieve just the right product in terms of flavor, acidity, and other characteristics. Therefore, most coffee companies buy coffee from a variety of different origins. Given that certified coffee is still a niche product in coffee production, it is difficult at times for the company to find the certified coffee they want, even if there happens to be a surplus production of it. This is a problem of low integration of the coffee supply chain for certified coffee. This is seen as a temporary problem which will disappear as increased amounts of certified coffee reaches the markets. Barrier 2: Limited consumer interest in certified coffee 122. No precise measures exist for consumer interest in certified coffee, but based on feedback from partner coffee companies, consumer interest is present and growing in markets such as in the United States. In Japan, consumer interest is just beginning to emerge, but is growing rapidly. In many European markets there is still a very limited availability of certified coffee. In spite of the growing consumer interest, there is no question that the main driver behind the growth in the certification activities so far has been the companies involved along the supply chain. Companies’ awareness of sustainability problems in the coffee sector has been drastically increasing over the last decade. The companies have found that certification is a helpful way to address sustainability issues, and they have pushed certified coffee with the consumers. But for the coffee certification program to substantially expand and move from niche product to mainstream, consumers need to create a pull for certified coffee by requesting it in the supermarket and other retail outlets. Root causes for Barrier 2 123. Root causes for this barrier include low seal recognition by consumers. Consumer seal recognition varies according to the exposure the consumers have had to certified products. In markets where consumers have not been exposed to the RAC seal, awareness is low. Consumer awareness levels are also influenced by media coverage, as explained above, as well as point-of-sale visibility. Presence of the product itself is not necessarily enough to raise visibility and awareness of certification. The certification program has had significant successes with high-visibility campaigns in collaboration with major companies. For example, Kraft is launching seal-bearing products, with corresponding marketing campaigns, in the US, UK, Sweden, Switzerland, France and Japan. Chiquita has promoted their commitment to RAC banana certification on supermarket carts in supermarkets throughout the US, and is now applying the seal next to the well-known Chiquita mark on bananas sold in Sweden and Switzerland. (See photos showing examples of these marketing efforts in Annex VII.) To substantially increase consumer awareness, this project needs to increase the work with companies to address low visibility of sealed products at point-of-sale. 31 124. The more than 20,000 sales outlets which carry certified products is a major success for the program, but in many important markets certified products are simply not available, or available only at a few outlets. Even if activities succeed in building consumer awareness and interest, low distribution of sealed products will prevent consumers from buying them. 125. An important sub-group of consumers are large institutions, which buy substantial amounts of coffee for internal consumption. Among these institutional consumers are major companies, universities, and government agencies. These consumers can be important for the certified coffee program not only because of the coffee they buy themselves, or because they can help raise awareness among millions of employees or students, but also because of the signal value it has when important institutions publicly commit to sustainability through their purchasing policies. There are good examples from work in the forest industry, where companies like JP Morgan, Citigroup, and Johnson & Johnson have committed to sourcing Forest Stewardship Council (FSC) certified paper. Citigroup is also now serving RAC coffee in their offices. Companies can take sustainability policies even further, as banks like JP Morgan and HSBC have done when they redefined their lending policies for the forest sector by requiring loan-seekers to be FSC certified. Currently few companies have sustainable purchasing or business policies. Changing this can have an impact for certified coffee. Barrier 3: Capacity constraints in scaling up certification activities 126. As demand for certified coffee rapidly expands in international coffee markets, auditors who certify the farmers, and producers who are implementing changes, must both be ready to respond. This is not just a question of promoting the program and certifying numerous farms. Production levels of certified coffee must carefully be managed so the increasing demand can be satisfied, but also not to create too much supply. Oversupply of certified coffee will reduce the chance for farmers to get premium prices for their coffee, and may create false expectations about market opportunities. Nonetheless, the certification program will have to manage growth in certification and certify more farms in response to demand. Root causes for Barrier 3 127. A root cause of constrained capacity in scaling up certification activities is that farmers do not have the information or tools necessary to implement social and environmental best management practices that comply with the certification standards. The certification standards prescribe general requirements that the farmer has to fulfill, but do not describe how to fulfill them in detail. For example, the standards prescribe protection zones between production areas and waterways, but do not indicate how to establish and maintain these zones. Likewise, the standards prescribe waste management plans, but farmers must determine the best ways to manage their wastes given the framework of their available resources, types of waste generated, and access to technology and services. 128. While the 2005 version of the standards includes indicators to help guide compliance, these are by no means complete. Nor are they exclusive. Innovative farmers and advisors can comply with a particular requirement in many different ways, and the standards must not limit farmers in finding the solution that works best on their farms. The certification system’s staff and auditors can provide more formal guidance on best management practices that would greatly improve the efficiency and effectiveness of farmers’ compliance efforts, and increase the number of farms that successfully obtain and maintain certification. 129. The certification program has not been active in disseminating information and providing technical assistance on farm practices for certification for two reasons. First, demand for certified coffee 32 has not been large enough to absorb the increased certified production that would have resulted from aggressive promotion and assistance efforts. This obstacle has been largely overcome by rapid growth in market demand. Second, efforts instead focused on certification auditing. The program has trained agronomy extensionists, internal auditors for cooperatives and large farms, national coffee institution staff, and other related professionals in how to implement the standards, evaluate farms and elaborate farm improvement plans to comply with the standards. The certification system now requires more focused and detailed guidance, which could and should be offered to farmers, processors and other actors on the supply chain, as well as consultants and professionals linked to traditional extension agencies, to facilitate the implementation of the standards. 130. In addition, experience has shown that farmers quickly respond to perceived market opportunities, and there is no question that many farmers will react to expanding market demand for certified coffee. The certification program must increase services – auditing, administration, and information transfer – in order to meet growth in demand for certification. This implies important changes for the non-profit organizations that implement the certification program, as they will need to manage growth in certification activities in a cost-efficient and self-sustaining manner. 131. The cost of certification can be prohibitive, particularly for small producers. The cost of audits is based on costs of fielding an audit team and writing the audit report. As there are minimum requirements for any audit, the cost per hectare or area unit is much higher for a small farm than for a much larger farm. A new system has been launched for the certification of groups of small farmers on a pilot basis. The group certification system allows a number of organized farmers, such as cooperatives, to certify as a group by establishing and managing an Internal Control System (ICS), through which a group administrator assumes the responsibility for verifying that the farms included in the group comply with certification standards. Auditors then evaluate the functioning of the ICS through an audit of the administrator and a sample of member farms. 132. The group certification system is by no means complete, but it has been field tested and feedback has been received from auditors and certified groups. This information will be used to improve the group certification standards, and to develop the guidance and technical assistance tools and processes to facilitate compliance with the standards, and subsequent certification. Barrier 4: Weak economic sustainability on certified coffee farms 133. Certification itself requires coffee farmers to systematize and document many aspects of production and for many farmers the certification process is not only a journey towards sustainability, it is also a process where technical and administrative farm practices are improved. Therefore, a certified farm is often more organized than the average non-certified coffee farm. Having achieved the environmental and social sustainability necessary for certification, the certified producer, just as would any other farmer, faces challenges in achieving economic sustainability. Even with a certification certificate in hand, many farmers do not understand the psychology of foreign markets and cannot easily take advantage of their certified crop’s distinctive status. They do not have market information or the basic business skills and experience to promote their product. They may lack information on improving product quality, consistency or volume; or lack the ability to negotiate a premium price. In a time of unstable coffee markets, a biodiversity conservation strategy which aims to promote biodiversity-friendly coffee production must consider the barrier of weak economic sustainability on the certified farms. Root causes for Barrier 4 33 134. In finding ways to increase sustainability on farms, producers constantly invent more effective, including cost-effective, ways to improve productive practices. These innovative management practices are important tools for improving the economic sustainability of farms, because they simply make the farms better productive entities. To improve the sustainability of all certified farmers, it is important that these innovative management practices are widely adopted, but currently farmers tend to not share their management practices with each other. Typically this is because many farmers consider their innovative practices competitive advantages which should not be shared with their peers, but it is also because there is no formalized system to identify, capture and share best management practices among farmers (RAC farmers, in this case). 135. Just like some companies find it hard it identify the coffee they need, many farmers have difficulty accessing markets for certified coffee by establishing a connection with interested buyers. As in other business sectors, the producer’s success depends not only on the quality of his product, but also on his talent and effort to market it and create business relationships. In the case of certified coffee, the low integration of the supply-chain at times prevents farmers from getting access to buyers. 136. Getting certified usually implies a series of investments on a coffee farm, and once the farm is certified it continues to require investments. Many farmers need external credit to realize the necessary changes to get certified, and also need credit, such as export credits, in order to access certain markets. While lack of access to financing is undoubtedly keeping interested farmers from getting certified, the PDF B activities have found that financing does not seem to be a limitation in getting enough farmers certified to cover demand. As the group certification system will make it cheaper to get certified for large segments of smallholders, lack of financing will not be a limitation for growth in certification. However, credit can certainly be a limitation for long-term economic sustainability on the farm. The certification program is committed to increase sustainability on certified coffee farms, including economic sustainability in a time of volatile coffee markets. Studies during the PDF B have shown that larger producers are often able to access credit through established banking channels, and that it is mostly small producers who find it difficult to access finance for farm improvements and trade. This is not because there are no available credit options, but typically small farmers do not know about them or do not now how to access the credit. 137. RAC coffee means that farm practices are in accordance with environmental and social sustainability standards. While circumstantial evidence exists that certified farms produce better coffee (perhaps because the farmer devotes increased attention to all farm practices and learn to eliminate practices which can harm the coffee in the production process), certification does not necessarily mean that the coffee is of a particularly high quality. Some certified farms produce a coffee quality which is too low to achieve a price premium in the coffee market. This is both because geographic conditions may not support high-quality coffee production (for example at low altitudes), and because processing practices fail to produce the best possible coffee. PDF B studies have confirmed that certified farmers regularly get paid a price premium for their coffee, and even though the benefits of certification are not only linked to price premiums, the possibility of earning a price premium is also a driver for the farmer to get certified, and important for the farmer to increase economic sustainability on the farm. 138. A major factor affecting economic sustainability on coffee farms is the farmers’ ability to obtain fair terms of trade. This can include price premiums, but also the transparency and terms of the contracts and the degree of information which the buyer provides. Most farmers are not experts on the complicated and sophisticated international coffee markets, and too often the farmers are not able to negotiate fair terms of trade because of inequitable power relationships with traders and because of opaque conditions surrounding the negotiations. But farmers are not aware of the possibilities of alternative and more equitable trade relationships. 34 139. A final root cause behind weak economic farm sustainability is the under-developed producers’ business, marketing, and sales skills. Every farm, regardless of its size, is a business, and no coffee farmer wants to lose money. The implementation of social and environmental best management practices leads to savings on the farm and long-term economic sustainability. But this is only part of the equation. Farmers need to learn how to be better business managers. This begins with learning how to record and analyze information about their spending and income, how to reduce costs through efficient farm management practices, how to evaluate the on-farm investments, and how to increase the productivity of their workers through improved relations. Beyond these basics, farmers need to better understand the intricacies of client relationships, and how to meet clients’, including international clients’, quality and delivery requirements. Barrier 5: Unfavorable policies limit production or trade of biodiversity-friendly coffee 140. This project aims to use market forces and market actors to promote sustainability and the protection of biological diversity in coffee landscapes, as an alternative and complementary approach to governments’ centrally planned conservation efforts. But through policy, regulation and taxation, governments also regulate conditions of trade, and thereby either provide incentives or disincentives to sustainable coffee production, trade, and sales, both in producer countries as well as in consumer countries. Therefore, a barrier to overcome is government policies, regulation and incentive mechanisms that put biodiversity-friendly coffee production at a disadvantage. Indeed, as all governments have an interest in protection of globally important biodiversity and sustainability of coffee producers in developing countries, governments should actively provide incentives and promote sustainable certified coffee production, trade, and sales, to secure maximum growth. Root causes for Barrier 5 141. Too often, policy-defining entities in producer and consumer countries either promote policies that create disincentives or barriers to sustainable coffee production and trade, or they fail to create positive incentives for coffee sustainability. Failure to put in place policies and other instruments which secure fair conditions for sustainable products can be a serious problem for RAC coffee, as well as for other NGO-led certification efforts. For example, some policymakers could be tempted to define what the term “sustainability” should mean in a particular country, but they may do so without possessing sufficient knowledge of the particular sector involved, the impacts their policies will have at the producer level, or the participatory and transparent mechanism to define and refine the standards of sustainability based on constant and careful impact assessment. 142. There are several reasons for these types of policy failures. Policymakers are influenced by representatives from other certification systems with less rigorous sustainability standards, and by industry representatives who may not advocate any sustainability standards at all. Policymakers and industry leaders are also often unaware of the sustainability standards and their benefits for the environment, workers and farmers. While some NGOs implementing the certification system have been active in their countries to influence policy, generally the sustainability standards are not effectively promoted at policy levels and policy threats are not monitored and responded to. Barrier 6: Information and knowledge is not systematically generated to inform decision-making and adaptive management in certification system 143. The sustainability standards have been defined in extensive participatory processes, which included producers, companies, communities, conservation groups, experts, and other stakeholders. The 35 sustainability standards represent a substantial body of knowledge which has been gathered from these stakeholders, then practically applied in coffee certification for more than a decade. Despite this rigorous process – or perhaps because of it – the certification program relies on a number of assumptions about causal relationships between changed practices on coffee farms, and their environmental and social impacts. While it is true that there is a substantial amount of circumstantial evidence regarding the impact of the coffee certification program, more systematic collection of information is necessary to inform decision-making and adaptive management of this program. The shortage of reliable information about impacts is a barrier for growth of the certification system. Root causes for Barrier 6 144. Each year all certified coffee farms are audited by a team of experts. The auditors conduct a rigorous review of productive practices and administrative procedures on the farm, and make sure they live up to the sustainability standards. The standards are defined so that when followed they should lead to social and environmental sustainability. The standards are defined in such a way that when followed they should lead to social and environmental sustainability. In the quest for impact, the audits are an undisputable and remarkable strength. Whereas other conservation and development strategies attempt to work with stakeholders to train, give incentives, educate, and organize them to change behavior, the certification program systematically and rigorously checks if changes have been made and standards have been met. If not, a farmer will have to commit to improvements or leave the program altogether. Because farmers want to be in the certification program and voluntarily commit to adhere to the standards, there is an almost universal understanding of the needs to implement changes, and an almost full guarantee that the desired standards are being met. 145. While the certification system can almost guarantee that changes in behavior have occurred, the system does not have a system that monitors that changes in behavior actually succeed in reducing threats to biodiversity and by how much, or that the desired reduction of threats actually leads to benefits for biodiversity in coffee habitats. At the social level, improvements are easier to observe directly, but also in this area, information about impacts is not systematically collected. There is of course a lot of circumstantial evidence and ad-hoc, site-specific information available which shows that certification is having an impact, but little systematic information on the benefits of certification is generated. With little information available, there is no systematic adaptive management processes for the certification program. 146. The certification standards were originally defined in a multi-stakeholder process, but in terms of on-going adjustments of standards there is currently no system that guarantees stakeholders a representation. Certification program staff are aware of this problem and are interested in strengthening the participatory element in continued standard-setting. 147. Knowledge about conservation and social impacts are of course not only generated from within the certification program. Other organizations are generating valuable lessons learned about what works and what does not work in conservation and development. Knowledge and best practices are not systematically exchanged between the certification program and other conservation organizations, so presumably each organization is “re-inventing the wheel” and repeating the mistakes of others. Institutional, sectoral and policy context 148. Since coffee is grown in 70 countries, has been traded and consumed around the world for two centuries, and is a pillar in many national and rural economies, it is not surprising that the institutional 36 and policy environment is extensive and complex. The trade channel itself can be seen as a simple, hourglass model, with 25 million producers at the top, funneling down through a handful of traders and less than ten main roasters, and then bulging out again to thousands of retail outlets and uncounted millions of consumers at the wide base. 149. Nearly all coffee is traded in its raw, unroasted form called “green” coffee. While producing countries tax the farmers, most importing countries welcome coffee imports tariff free. Since roasters in consuming countries must blend beans from many sources, there are few preferential bilateral trade agreements between producing and consuming countries. Coffee supply chains require flexibility at both ends, and the power in these chains is concentrated at the roaster/retailer link. This is one of the reasons why this project is structured to respond to supply chain demands rather than focus on one or more coffee markets or origins. Global level 150. At the most macro level coffee is a subject of much discussion at the World Trade Organization and is part of the Doha Development Agenda. The US and European Union consider coffee at the highest levels, but note that the US only rejoined the International Coffee Organization this year. (Coffee is grown in one US state – Hawaii – and nowhere in the EU.) 151. The EU is developing policy on commodities that may affect coffee and promotes initiatives such as “Everything but Arms,” which is supposed to improve market access for the least developed countries. Coffee issues have been raised in a number of Parliamentary Questions and at least one European Parliament Resolution. 152. The EU and US development agencies have extensive programs to support coffee farmers and their rural communities and to conserve the natural resources and ecosystems on which these farmers and communities depend. 153. UN agencies such as UNDP, UNEP, UNCTAD and FAO all have coffee programs. The multilateral donors deserve special recognition for their dedication to addressing the problems in coffee production. The Inter-American Development Bank, USAID and the World Bank held a conference in April 2002 in Guatemala and a follow up in December 2004 in Nicaragua where most of the projects, programs and policy interventions on trial throughout the region were evaluated. This project’s executing agencies were key participants in both meetings and are involved in many of the projects. 154. The GEF has sponsored coffee projects in El Salvador and Mexico, where this project’s executing agencies were involved in the design and execution. 155. The International Coffee Organization (ICO) is a global, UN-affiliated, intergovernmental body, created in 1962, and representing coffee exporting and importing countries. Until 1989, the ICO used export quotas as a market control mechanism in a failed attempt to regulate supply and keep prices above 120 cents per pound. After the collapse of this system, the ICO has continued as a platform for discussion of world coffee issues and as a sponsor of drives to increase quality and consumption. 156. There are a number of international research and teaching organizations that have coffee programs, including the French CIRAD, the Latin American CATIE, and the Interamerican Institute for Cooperation on Agriculture (IICA). There are dozens of NGOs and agencies exploring the coffee trade issues, such as IISD, The Economic Commission for Latin America and the Caribbean, the World Economic Forum, the Centro Internacional de Politica Economica para el Desarrollo Sostenible and the Fundacion Futuro Latinoamericano. 37 157. Other international bodies or projects with an interest in coffee include: the Common Fund for Commodities, the World Bank risk reduction management project, the Sustainable Commodity Initiative of UNCTAD/IISD and of course the NGO-led conservation and certification programs. Regional level 158. Most of the international parties and programs mentioned just above are especially active in Latin America and often focused on the target countries of this proposal, because these are leading producers, learning laboratories and innovators. In addition, there are several regional programs centered on coffee or affecting coffee. 159. A regional body of special importance is the Comision Centroamericano de Ambiente y Desarrollo, the CCAD, comprised of the Central American ministers of the environment with close ties to the ministers of agriculture. This unique coalition brings together the governments, NGOs, industry and other actors to plan collaborative ways to conserve shared resources. Since coffee is so important to the economies and environments of all the member countries, it is a subject of intense interest. 160. Other regional projects that affect coffee are the IDB sponsored Plan Puebla Panama, and an effort to create a regional coffee-farm tourism trail. National level 161. Producing countries have national coffee boards, quasi governmental/industry associations, technical assistance and extension bodies, export promotion agencies and other entities that influence coffee policy and practices. The best known and perhaps most successful of these bodies is the Colombian Coffee Federation, which is the largest NGO in the country, a builder of roads and schools (before the recent price crisis) and a major coffee exporter. 162. State governments also often have counter-productive trade restrictions. In addition, they have lost their former rank as leaders in research and extension – with the notable exceptions of Brazil and Vietnam, the number one and two producers, where bounding coffee technology and efficiency development allowed these two countries to avoid the press of the price crisis. 163. In a document presented in February 2005, the European Coffee Federation summed up the state of coffee affairs in producing countries this way: “Liberalisation (in itself necessary to remove inefficient and stifling marketing boards and other institutions) has overshot, affecting essential services like research and extension. These will need to be rebuilt in close cooperation with the coffee sector to assist farmers to optimise their production and improve the quality produced.”8 Community level 164. Coffee growing communities, many of them indigenous, have their own policies and programs. The network of local NGOs that will be executing this project and have been implementing the certification program are comprised of local specialists with deep roots in the communities who are able to navigate these policies, strictures and customs. For example, before beginning a project with indigenous coffee producers in Huehuetenango, Guatemala, the local NGO, FIIT, (a network member that implements the certification program) met with tribal leaders for more than a year to build trust and understanding. 8 “A Positive Future for Coffee,” presented in Amsterdam, February 2005 as part of the ECF’s “Agenda for Action.” 38 Stakeholder analysis 165. This project intends to work with the coffee sector as a whole, from farmer to consumer, by selecting prime producing countries and supply chains. International Stakeholders 166. At the macro and international level, this project’s executing agencies are already participants and/or partners in the following entities or programs: International Coffee Organization (invited advisor) UNCTAD (partner in the Sustainable Coffee Initiative) International Institute for Sustainable Development and its Sustainable Coffee Initiative (steering committee) Common Code for the Coffee Community (steering committee) Sustainable Agriculture Initiative (advisor) EurepGap (member of technical committee) International Social and Environmental Accreditation and Labeling Alliance – ISEAL (full member, chairman of the board) IUCN Business and Biodiversity Programme (advisors, the executive director of SalvaNATURA is the elected, regional, IUCN representative) Centro de Inteligencia de Mercados Sostenibles – CIMS (founding board member) Committee on Standards Assessment – COSA (founding member along with CIMS, IISD and CIRAD) Specialty Coffee Association of America (member of sustainable coffee committee) Commission for Environmental Cooperation (advisor, field project partner) Centre de Cooperation Internationale en Recherche Agronomique pour le Developpement – CIRAD (collaboration on agroforestry project) Centro Agronomico Tropical de Investigacion y Enseñanza – CATIE (partners in coffee mapping and carbon/cocoa project) International NGOs 167. Among the international NGOs active in sustainable coffee, this project has already established partnerships with: World Wildlife Fund, National Audubon Society, Conservation International, The Nature Conservancy, IUCN, BirdLife and the Royal Society for the Protection of Birds. 168. In addition, the Rainforest Alliance is closely tied to the national and international certification bodies of the organic and fairtrade movements as well as the Forest Stewardship Council. Multilateral Donors 169. Among the multilateral donors active in sustainable coffee, this project’s executing agencies have partnerships with: Interamerican Development Bank (Sustainable Tourism Program, coffee projects in the field) World Bank UNDP (PDF B coffee) UNEP (Sustainable Tourism Program) USAID (Certified Sustainable Products Alliance, Regional Coffee Quality Program) HIVOS (coffee certification module development) 39 In addition, the local NGOs involved in the network that implements the certification program have managed projects with funding from the Swedish, Spanish, Norwegian, Canadian, US and Dutch governments. Coffee Roasters, Manufacturers and Distributors 170. The certification system works actively with a wide range of coffee companies. Like the traders, these companies buy certified coffee, promote biodiversity-friendly coffee to consumers, support sustainable coffee projects at the farm level, lobby for policies that favor the production and trade of biodiversity-friendly coffee, underwrite certifications, are co-collaborators in initiatives such as the CCCC, and serve as advisors. 171. This project will enter into specific partnerships with several large and small coffee companies, including: Kraft Foods, Caribou, UCC Ueshima, Java City, Boyds, Lavazza, Proctor & Gamble, Drie Mollen, Diedrichs/Gloria Jean's, Colyrut, Family Mart, Simon Wakefield, Starbucks, Royal Cup. Coffee Traders 172. The certification system has active partnerships with all the main coffee traders, including Neumann Kaffee Gruppe, Volcafe, ECOM- Atlantic, EFICO, Expocafe and the Colombia Coffee Federation. These merchants buy certified coffee, help promote certified coffee to roasters and retailers, support sustainable coffee projects at the farm level, underwrite certifications, are co-collaborators in initiatives such as the CCCC, and – as the ultimate insiders – serve as trusted advisors. Production Level Stakeholders 173. The national NGOs that are the local executing agencies for this project include: 174. there. Instituto de Manejo e Certifcaco Florestal y Agricola – IMAFLORA (Brazil) Fundación Interamericana de Investigación Tropical – FIIT (Guatemala) SalvaNATURA (El Salvador) Instituto para la Cooperación y Autodesarrollo – ICADE (Honduras) Fundación Natura (Colombia) There is no NGO partner in Peru, but the project will help identify a permanent network member 175. One of the hallmarks of the certification program is that its implementors are local NGOs that engage farmers closely and continuously. Unlike some certification programs that are only quick, annual audits, the NGOs have local representatives who are there year-round to help farmers. The NGO network members meet frequently with the national coffee associations, the relevant government agencies, farmer cooperative associations, and individual farmers. 176. The program involves thousands of coffee farmers, and they are very much the grassroots partners in this proposal. Baseline analysis 177. Sustainability has been a hot topic in the coffee sector for more than a decade, and awareness has increased particularly as a result of the recent severe coffee crisis. Many companies have experimented with measures that might improve sustainability, and the coffee industry is discussing industry standards. 40 Several NGO-led certification organizations are promoting coffee sustainability each in their way and according to their definition of sustainability. Donor agencies have been involved and continue to show a strong interest in sustainable agriculture, including coffee. In the following section, ongoing activities by a variety of actors are stated to give an understanding of the baseline of activities that currently are in place to address the barriers to sustainability in the coffee sector. 178. The baseline activities are not by themselves enough to guarantee sufficient impact to thoroughly mainstream sustainability within the coffee sector. But these ongoing activities are an invaluable base which will support the delivery of this project’s objectives. 179. The activities are as follows: Barrier 1: Limited demand for certified coffee on international coffee markets 180. Most larger and many small companies are engaged in promoting sustainable coffee on international markets, as well as internally in their organizations. Many companies have retained specialized staff to promote sustainability issues in company operations. Some companies have established their own sustainability standards and others are buying Fairtrade, Organic, Utz Kapeh or Rainforest Alliance certified coffee. While these programs will not all bring benefits to biodiversity, companies commitment to sustainability issues is encouraging and will be a key factor for the success of this project. 181. The coffee industry as such is also promoting sustainability issues. The Common Code for the Coffee Community is a joint initiative of coffee producers, trade & industry, as well as civil society groups aiming to develop a global code of conduct for the coffee industry. The Common Code is supported by the European Coffee Federation and the GTZ. 182. The Rainforest Alliance certification system currently works to increase demand for certified coffee through its three-person NY based marketing team. The main focus of work has revolved around creating relationships with companies through individual meetings, and attending and presenting at conferences and tradeshows. Barrier 2: Limited consumer interest in certified coffee 183. Many coffee companies are investing large sums in promoting certified sustainable coffee on international markets. For companies who invest in promoting coffee with the RAC seal, visual examples of company promotion materials can be accessed through the following link http://www.rainforestalliance.org/gef/cert_promo_campaigns.pdf 184. The companies that currently sell RAC coffee use a variety of techniques to promote sustainable coffee with consumers. The largest companies, such as Kraft, are launching products in new markets with media and stakeholder outreach events. Smaller companies create their own promotional materials for point of sale in stores or coffee shops, with input from the certification program’s marketing staff on the use of the certified seal. There are only limited materials available to companies to help them promote their certified product at the retail level. 185. Successful, yet limited media outreach to promote the certification concept in the United States and select European countries has occurred. The lack of specific outreach to the general public through the media has led to misunderstanding and confusion between RAC and other certification programs such as fairtrade. 41 Barrier 3: Capacity constraints in scaling up certification activities 186. Several companies and organizations have been working actively to increase certification of biodiversity-friendly coffee farms. In the coffee sector, for instance, coffee roaster Lavazza and coffee trader Volcafe have collaborated with cooperatives to drastically improve their management practices and enable them to certify. Other coffee companies have done similar activities. 187. The GEF itself has invested in coffee sustainability before, such as the World Bank implemented shade coffee project in El Salvador. This project builds on key lessons learned from that project. 188. Within RAC, a range of specific activities have been undertaken to expand certification. An auditor training curriculum has been developed and both basic and advanced auditor training workshops have taken place, as well as “train the trainer” workshops for the NGO network partners to enable them to train local auditors. “Extensionist,” or “internal auditor” training workshops are provided to local technical assistance providers and technical staff from cooperatives or larger companies. These workshops provide a basic technical orientation to the certification standards. The certification program is currently working to improve internal systems to enable future accreditation under the ISO 65 standards for certification bodies. Barrier 4: Weak economic sustainability on certified coffee farms 189. There have been a wide range of efforts to improve the economic sustainability of coffee farmers. Few of these, however, have specifically been aimed at certified farmers. 190. Within the RAC program, a Supply Chain Coordinator was retained in 2005 to help improve market linkages between interested buyers and appropriate supply, and to help educate farmers about how to access markets for certified products. 191. On promotion of general sustainability on coffee farms, a long series of organizations and companies are involved. Not least national coffee associations in producer countries are active in promoting sustainability in the coffee sector. A good example is the Colombian Coffee Federation, which helps coffee producers implement best management practices on their farms. 192. On coffee quality: The Interamerican Development Bank is supporting several pilot projects in Central America with the objective of improving producer ability to produce high quality coffee. 193. Chemonics, funded by USAID, is working with producers in Central America to improve harvesting and milling techniques and to increase market access for quality coffee. 194. The Coffee Quality Institute (CQI) developed and manages the Q-auction, an online auctioning of quality coffee that delivers 75% of revenues back to producers, and 2% to a national fund for community development. Q-coffee meets specified standards of high quality determined by CQI. RAC coffees have performed well in recent Q-auctions. Another CQI program is the Coffee Corps. Coffee Corps recruits highly qualified professionals from within the coffee industry who are willing to volunteer their time and expertise to assist coffee producers and cooperatives to meet quality grades and standards. CQI works in both Central and South America. 195. On financing: Ecologic Finance, with USAID and private sector funds, is providing access to trade financing for farmers who implement sustainable coffee growing practices. In 2003 and 2004, EcoLogic Finance made available 5.7 million in trade credit to over 24 different coffee farmer organizations in Mexico, Guatemala, Nicaragua, Costa Rica and Peru. 42 196. Another financing programs that have been providing financing to producers is Conservation International’s Verde Ventures, a fund capitalized by the International Finance Corporation, the Overseas Private Investment Corporation and Starbucks Coffee Company. The fund invests in businesses that are strategically important to biodiversity conservation in hotspots, high-biodiversity wilderness areas and key marine regions. Barrier 5: Unfavorable policies limit production or trade of biodiversity-friendly coffee 197. The GEF and GTZ have supported the ambitious initiative of the Mesoamerican Biological Corridor which aims to increase collaboration of the eight countries in Mesoamerica, from Mexico to Panama. The MBC has promoted sustainability in agriculture production through collaboration within the Central American Council for Environment and Development, the CCAD. 198. Several NGO partners implementing the RAC certification program in their countries engage regularly with local policy makers. 199. On an international level, the Rainforest Alliance serves as board chairman for the ISEAL Alliance, which actively monitors and engages in international policy discussions. The ISEAL Alliance produces a quarterly “policy watch” for members that outlines current policy threats and opportunities 200. Some of the larger companies involved in sustainable coffee, such as Kraft Foods, also monitor policy developments, particularly in Europe. Barrier 6: Information and knowledge is not systematically generated to inform decision-making and adaptive management in certification system 201. A significant amount of study has been done on the impact of sustainable coffee on biodiversity. Almost 300 studies were summarized as a part of this project’s PDF B phase. The studies represent a significant amount of baseline activity, but they do not focus in a targeted way on certification programs and their standards and impacts, so they are difficult to use as a base for adaptive management. 202. Some of this project’s executing partners have been involved in scientific activity to generate information and knowledge on certification. FIIT in Guatemala was one of the first organizations to establish criteria for sustainable production. Also SalvaNATURA of El Salvador has a science program that proactively seeks to improve the information base for decision making. 203. A number of other institutions are interested in studying the benefits of sustainable coffee. Smithsonian Migratory Bird Center has studied the benefits of shade coffee for a decade. Several of the new coffee industry initiatives, such as the CCCC and the Sustainable Agriculture Initiative, are interested in better understanding the impacts of sustainable projection. 204. Under the baseline scenario investments in promoting sustainable coffee production and sales are present, even significant in certain areas, yet too limited and disperse to have a thorough impact on sustainability in the coffee sector. Current investment levels will not result in a transformation of the sector through mainstreaming of sustainability practices. Many production-level interventions to promote sustainable and biodiversity-friendly production fail because farmers do not receive incentives in the market place to continue efforts. Under the baseline scenario, markets will only to a very limited degree reward sustainability and biodiversity protection in coffee production. Existing coffee certification schemes with standards that promote biodiversity conservation stand little chance of becoming widely adopted in the coffee industry. Without mainstreaming of sustainability principles and biodiversity 43 concerns within the coffee industry, valuable coffee habitat will continue to be lost, and coffee production will fail to live up to its potential as the most important crop in the tropics for conservation of valuable biodiversity in threatened hotspots. PART II: Strategy Project Rationale 205. Traditional coffee farms, in harmony with original ecosystems, are excellent habitat and harbor a large amount of species. The sustainable shade coffee production model is under threat from conversion to other crops or other land use, or to intensive and mechanized, full-sun grown coffee – all alternatives which thoroughly reduce their value as habitat for biodiversity. DESIGN PRINCIPLES AND STRATEGIC CONSIDERATIONS 206. The following project intervention strategy has been defined based on a series of strategic considerations. The following section summarizes the key principles of the project design: Avoid transformation of coffee farms to other uses with less value as biodiversity habitat, and reduce other threats to biodiversity on coffee farms. This will be achieved by providing farmers with an alternative to conversion to other crops and land use, to conversion to intensive, mechanized coffee monoculture, and to continued overexploitation of biodiversity and habitat on coffee farms. The alternative is to become certified by transforming productive practices and implementing sustainability measures on coffee farms, and thereby reap a series of benefits in production as well as in the marketplace. Use of a strong market approach to conservation in a productive landscape. A driving force behind the certification idea and the present project proposal is that private-sector actors, who operate in a market place, must have incentives to engage in conservation activities. Conservation and sustainability must be compatible with doing good business. By aligning conservation interests with private, market-driven forces, this project will catalyze enormous shifts in private investments from non-sustainable products to coffee produced under sustainable production methods in habitats with very high biodiversity value. The value of this leveraged change in investment will amount to USD 3.723 billion within the lifetime of the project. For a full discussion, please refer to Section III (budget). The project will not in any way subsidize the operations of private companies or in any way provide exclusive services that will give some companies a competitive advantage over others. Rather, the advantages for coffee companies in engaging in RAC certification and sustainability are equal for all companies. The project will help remove barriers to market expansion, which will be in the interest of all coffee companies, producers, workers, and the global environment. The project will extend itself to as many companies as possible, to be inclusive and to expand the market demand for RAC coffee. Market incentives to drive continued certification activities. Earlier efforts to use certification as a conservation tool have failed because there were insufficient markets for certified products. If farmers do not see market benefits as a reward for their efforts to transform farm practices, they will have no incentive to get certified, or will often leave the certification program if they are 44 already certified. Therefore, certification as a conservation tool must adopt as a main strategy the expansion of markets for biodiversity-friendly products. The project will use a partnership strategy to involve both companies and producers in sustainability and biodiversity protection, through their dedication to produce, buy and sell RAC coffee. Producers invest large amounts of money on their farms to implement sustainability and biodiversity conservation measures so that they can qualify for certification. The amount of producer on-farm investments leveraged by the project intervention amounts to 494 million. Likewise, private companies, from small coffee shops to the largest multinational food conglomerates invest in promoting the certification system with consumers, and often pay a premium for certified coffee. As consumers increasingly demand biodiversity-friendly coffee, developing world producers will get rewarded for their efforts to conserve biodiversity, equivalent to payment for environmental services. The price premiums paid to farmers as a result of this project intervention will amount to USD 363 million (See Section III) The project has selected large coffee landscapes as Project Coffee Regions. Almost all coffee is produced in globally important hotspots, but the Project Coffee Regions have been selected because they are particularly biodiversity-rich, because the coffee from that region is in high demand, and because the certification program there has a high chance of success. Because the project has a strong market-oriented focus, and not a centrally planned focus, the regions are large and include some of the world’s principal coffee landscapes. The project is focusing and will capitalize on an existing and well-functioning tool – Rainforest Alliance’s certification program – with installed capacity, more than a decade of experience in coffee habitat conservation, and with a network of respected partner organizations in producer countries. While scaling up the certification system to the stated targets is a challenge, the certification system as a tool for changes of productive practices on farms is solid and thoroughly tested. The project will help refine the certification tool to maximize impact, but it will not require an experimental approach to conservation. Through annual audits, compliance with the rigorous sustainability standards is guaranteed, or the farmer will have to leave the program. Whereas typical biodiversity conservation projects try to engage locals in conservation efforts, often with mixed success, the certification tool can promise that each hectare certified is a hectare which lives up to the standards. Policy Conformity 207. The project represents an important contribution to the goals and objectives of the Convention on Biological Diversity. It furthers an important interest expressed repeatedly by the Conference of the Parties to increase the involvement and responsibility of the private sector in achieving the overall goals of the Convention. This project is particularly contributing to the Convention objective of sustainable use of biological diversity. The proposal has been formulated in close harmony with the Addis Ababa Principles and Guidelines for the Sustainable use of Biodiversity, both with regard to the underlying conditions and practical principles for sustainable use, as adopted in decision VII/12 at the Conference of the Parties. 208. The project is in harmony with key principles of Article 10 (on Sustainable Use) of the Convention. In particular: 45 Adopt measures relating to the use of biological resources to avoid or minimize adverse impacts on biological diversity; Protect and encourage customary use of biological resources in accordance with traditional cultural practices that are compatible with conservation or sustainable use requirements; Support local populations to develop and implement remedial action in degraded areas where biological diversity has been reduced; and Encourage cooperation between its governmental authorities and its private sector in developing methods for sustainable use of biological resources. 209. The project is also an important contribution to the Convention efforts to eliminate perverse incentives and guarantee positive incentives for the conservation and sustainable use of biological resources, as defined in decision VII/18. A certification system is a market-driven incentive system which is a compliment to the Convention’s focus on good governance and incentive-enhancing public policies. It is foreseen that this project might provide valuable case studies for consideration of future meetings of the Conference of the Parties. 210. Finally, the project supports the aims of the Convention’s Strategic Plan and its 2010 Biodiversity Target decided at the seventh Conference of the Parties. In particular the project would help further the work in the following focal areas: 211. Reducing the rate of loss of the components of biodiversity, including: (i) biomes, habitats and ecosystems; (ii) species and populations; and (iii) genetic diversity; Promoting sustainable use of biodiversity; Addressing the major threats to biodiversity, including those arising from invasive alien species, climate change, pollution, and habitat change; Maintaining ecosystem integrity, and the provision of goods and services provided by biodiversity in ecosystems, in support of human well-being; The project relates to GEF priorities as follows: 212. The proposed project is consistent with the Operational Program for Forest Ecosystems (OP#3) and the Operational Program for Mountain Ecosystems (OP#4) in the GEF Biodiversity Focal Area. 213. For OP#3, this project’s focus on coffee landscapes within tropical forests is consistent with the ecosystem approach of the GEF. This project supports the belief that forests play a critical role in biodiversity conservation and hold the majority of biodiversity within them, with ramifications well beyond their boundaries in the form of ecosystem services and livelihoods for millions of people. The combination of biodiversity, production and socio-economic goals is again consistent with the GEF approach, and focus on coffee production in forests in areas at risk is also supportive of the GEF objectives. This project’s focus on growers in the middle elevations, or the lower montane or premontane forest, above the lowland rainforest and below the cloudforest, is consistent with the focus of the GEF in OP#4. The coffee farms the project will work with represent some of the only remaining forested areas in these elevations. 214. In addition, the proposed project is consistent with Strategic Priority 2 of the Biodiversity Focal Area: “Mainstreaming Biodiversity in Production Landscapes and Sectors.” The central aim of this project is to catalyze change in the coffee sector to internalize biodiversity concerns and practices. This will be achieved through certification of sustainable practices, whereby markets will reward producers’ efforts to protect biodiversity. By doing this, it will achieve mainstreaming of conservation concerns into productive coffee landscapes. 46 215. The project will measure the following indicators to support the GEF Business Plan: Promoting best management practices and certification to coffee farmers. The incorporation of biodiversity conservation into farm management (through the implementation of sustainability standards). Project Goal, Objective, Outcomes and Outputs/Activities 216. Increasing the market demand for certified coffee on international coffee markets is the single most important challenge to expanding certification activities in producer countries and thereby expanding coffee production area under sustainable management. There is a direct link between growth in market demand and the global benefits which can be generated through sustainable coffee production. 217. This project intervention strategy is therefore founded on the need to build market incentives for farmers. These incentives will come from a dramatic expansion in market demand for biodiversityfriendly coffee. The demand side component of this project strategy will work to expand market demand for biodiversity-friendly coffee. The supply side component will help prepare producers in project countries to respond to the growth in demand 218. This project will support the promotion of biodiversity-friendly coffee in international coffee markets, and will generate biodiversity benefits by transforming productive practices on certified farms in biodiversity-rich coffee landscapes wherever RAC coffee is produced. The project will particularly promote growth in sustainable production in Brazil, Colombia, Guatemala, Honduras, El Salvador and Peru. The project will work closely with coffee producers in these countries to promote certification of coffee farms in particularly biodiversity-rich coffee landscapes as a strategy to maximize biodiversity conservation benefits in the coffee landscape, and to respond to a growing market demand on coffee markets. 219. It will partner with coffee companies throughout the supply chain, who already source biodiversity-friendly coffee, to deepen their commitment to sustainability in coffee production and help them promote certified coffee in the market place; and it will help increase the number of coffee companies which actively engage in the certification program by incorporating biodiversity-friendly coffee in their coffee brands. 220. It will dialogue with governments, trade agencies and coffee organizations in producer and consumer countries to promote biodiversity-friendly coffee production, trade, and sales, through improvement of policy and regulation to create incentives for sustainable production, or by removal of policy and incentive barriers. 221. Finally, it will collaborate with other development and conservation NGOs, and other institutions which possess relevant knowledge, to improve certification practices and increase learning of how to achieve maximum biodiversity impact in coffee landscapes. 222. The GEF will finance barrier removal to allow mainstreaming of sustainability principles within the coffee sector, and expansion of the certification system which guarantees that coffee farmers, coffee companies, and coffee consumers voluntarily and perpetually invest in sustainability, for the benefit of the global environment, as well as themselves. 47 223. The project is highly innovative because it strengthens a direct linkage between market forces on one hand, and conservation interests on the other. By expanding the certification model, the project forges a powerful, direct relationship between consumer interest and market demand for certified coffee on the world coffee market – the largest commodity crop market in the world – and conservation benefits in biodiversity-rich coffee landscapes. To do that, the GEF will support both scale-up of certified production to meet demand, as well as market-enhancing investments in consumer countries, in collaboration with some of the world’s most powerful and innovative companies. 224. The project Goal is therefore defined as follows: Goal: Increased conservation of globally important biodiversity in coffee landscapes by transformation of the coffee market in support of sustainable productive practices on coffee farms 225. The project Objective is defined as: Objective: Demand and sales of certified coffee increases from niche to mainstream products allowing a significant growth in farms adopting biodiversity-friendly, sustainable productive practices and showing on-farm BD benefits PROJECT OUTCOMES, OUTPUTS, AND ACTIVITIES 226. The objective will be achieved through six project outcomes, each designed so it will remove a central barrier for expansion of the certification system. 227. The six outcomes are as follows: Outcome One: Outcome Two: Outcome Three: Outcome Four: Outcome Five: Outcome Six: Demand for biodiversity-friendly coffee on international coffee markets has increased Consumer interest to purchase certified coffee has increased National capacities to certify all sizes of coffee farms in biologically rich production landscapes has increased Economic sustainability of certified coffee farms has increased Increased capacity to engage policy makers in coffee-producing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy initiatives/threats to sustainable coffee. Increased learning and adaptive management 228. In the following each outcome is described, as well as the outputs and main activities which will achieve it: Outcome 1: Demand for biodiversity-friendly coffee on international coffee markets has increased (GEF contribution: USD 3,804,925; Co-financing: USD 9,627,252) 48 229. Earlier GEF financed experiences have shown that certification as a conservation tool will fail unless there is a market for the farm products9. Farmers can be convinced of the benefits of certification on their farms, but will expect a return on their investment, and most will reject the program if they do not see benefits in the marketplace. The project will substantially increase demand for certified coffee, increasing annual volume sold from the baseline of 30,000 metric tons to 500,000 metric tons, or 10% of the total global export market. The project also aims to certify 10% of global production (the global export market represents approximate three-quarters of global production). Not all RAC coffee will eventually be sold with the seal on global export markets. A large proportion of the RAC coffee that will not be sold with the RAC seal is likely to be sold under other sustainability seals, such as Organic or Starbuck’s C.A.F.E. Practices, because some RAC certified producers also hold other seals. In addition to tons of RAC coffee sold, certified coffee will be sold in 200,000 to 300,000 retail outlets, increasing from a baseline of 20,000 outlets. For a discussion on growth potential and –targets, please see Annex VIII-A. 230. Increased demand for certified coffee is mainly determined by companies through the supply chain. While consumer interest is certainly important (see below), it is the coffee industry itself which has championed the certification scheme, and promoted it with consumers. To a large extent, coffee companies can influence what consumers buy, and coffee companies’ commitment to sustainability is absolutely essential in mainstreaming the certified coffee program. For implementation, this project will partner with a range of coffee companies. These partners are expected to increase from an initial core set of twelve over the course of the project. Partners will not just buy certified coffee, but will actively engage in project activities, thereby helping to further the desired project outcomes. Sample partner activities include conducting joint consumer campaigns around the certification message, receiving training for sales, management and/or pr staff on the certification program, conducting buyers or other staff tours to producing countries, helping producers in their supply chain achieve certification, and committing to purchase certain levels of certified coffee. The project will not in any way subsidize coffee companies. The advantages that a company can get from engaging in sustainable sourcing are open for all companies to access. 231. The situation analysis pointed out a series of root causes behind the still limited demand in the coffee sector. The outcome has been designed to address these root causes and overcome the barrier of limited demand for certified coffee: 232. To achieve Outcome 1, the following outputs have been identified: Output 1.1 Existing markets and market segments expanded 233. Many coffee companies who are engaging in sustainable coffee need assistance in marketing the sustainability aspect to their clients and consumers. Rainforest Alliance has had considerable success with helping some coffee companies sell certified coffee on international markets, and the companies are highly appreciative of the assistance. A major factor behind the growth of the coffee certification program must be attributed to the value-added which the certification program’s marketing team creates for its partner companies. The assistance has been in terms of shaping of the sustainability message, message training for corporate staff, developing special materials, providing stories from the farms, and presenting partnerships in consequential meetings or events. But capacity constraints prevent support of a rapidly growing program. The project will address this problem by building additional capacity to support companies in their marketing efforts, such as at launching events, as well as the development of a series of standard and adaptable sales tools which the companies can use to shape their sustainability message and support their marketing efforts. The sales tools will be targeted to different types of companies, such 9 Kibale Forest Wild Coffee Project, Uganda (World Bank/GEF); and Promotion of Biodiversity Conservation within Coffee Landscapes, El Salvador (World Bank/GEF) 49 as importers, roasters, and retailers, and they will available to registered companies on our business-tobusiness web portal in a number of different languages. The project will guarantee the sustainability of the marketing support program efforts by gradually making it self-sustaining through cost-recovery from companies that use the service. 234. Many companies that are already convinced of the benefits of sourcing certified coffee still buy limited amounts of coffee, or have potential capacity to buy much larger amounts. Commitment to certification is a gradual process, where companies learn along the way, become increasingly familiar with sustainability concepts, gather experiences from marketing sustainable products, and build ever stronger relationships with other companies in the supply chain that trade certified coffee, or directly with certified producers. 235. The project will help these companies by creating additional value for companies to become further involved and deepen commitment to sustainability. Ultimately this will lead them to buy more certified coffee. The project will help create joint events with companies, whereby the company can raise its sustainability profile. This can be joint press conferences and other media work, co-branding activities, where the certification system and the company jointly promote the certified seal and the company’s certified product, and product launch events. Output 1.2 Efficient information management enables scaling up number of certified coffee buyers 236. A growing certification program must be accompanied by adequate information management systems to keep track of partner companies and communications, and track sales and certified products. The project will design these systems with a view to serve large numbers of clients efficiently, as well as to operate and maintain the systems. While the bulk of project investment will go towards designing the initial systems and training staff in their operations, there will also be continuous development of information management systems as new technologies become available. 237. The project will support the design and set-up of a sales tracking and product traceability database, business-to-business web portal (see output 1.1), client relationship management software, and consumer web portal including interactive maps. It will also support seal management systems and guidance tools. Finally, the project will elaborate bi-annually updated marketing plans to incorporate newest trends into strategic planning frameworks. Output 1.3 New markets and new companies sell certified coffee. 238. Although the coffee certification program has become fairly well-known in the coffee industry over the recent years, many companies still do not know enough about the program and what the sustainability standards entail. The program has had considerable success over the last years with promoting coffee certification with new companies. The promotion has been to engage new coffee companies in certification, and increase certification presence on new markets and in new market sectors (such as coffee shops and in the restaurant sector). A continued growth of the certification program will require a continued and targeted promotional effort to promote the program within the coffee industry. 239. The project will promote the program with new companies, on new markets and in new sectors by elaborating information tools that explain the certification program and its benefits to companies, which will be made available on a new business-to-business web portal, an on-line resource for companies interested in learning of the certification program and coffee sustainability. The project will also help expose the certification program at coffee conferences and trade shows and provide specially 50 trained staff to reach out to new companies. Media outreach to specialized industry publications will ensure better familiarity with the certification program throughout the coffee industry. 240. By the end of the project, the bulk of the coffee sector will be familiar with the certification program and the sustainability principles behind it, so promotional activities can be reduced to a more modest level. Output 1.4 Coffee companies made aware of full range of benefits from engaging with certification 241. A particular communications effort must be made to inform coffee companies of the broad range of benefits related to buying biodiversity-friendly coffee. Some companies that are well familiar with the certification seal see the business value only in terms of potential seal use on their product. But the business case for certified coffee is much stronger than that. It includes product traceability benefits, which provides the company with information regarding the origins of their product and adds transparency to the business processes, as well as risk management benefits by guaranteeing the standards under which the product was produced. It helps manage the company’s public image with consumers and media, and can be a part of a broader company CSR policy. Not least, it can improve supply-chain relationships leading to more stable, transparent and fair relationships in trade. 242. The project will help gather the information required for supporting the arguments, and help inform companies of the full range of benefits of buying certified coffee as a means to engaging new companies and deepen companies’ involvement in the program. Output 1.5 Company employees embrace biodiversity-friendly coffee 243. The project will work with companies to increase employees’ awareness, motivation and loyalty towards certification in order to broaden and strengthen coffee companies’ commitment to sustainability. Companies’ success in achieving their stated goals of buying and selling certified coffee will depend on their employees’ ability to make it happen. If buyers in coffee companies are not convinced of the attractiveness of certified coffee they are unlikely to make the extra effort to find it in the market, or even pay a premium for it, and if salespeople do not know what makes this certified coffee special, they will not be as effective in selling it to the next link in the supply chain. 244. The project will develop coffee company employee training programs and materials, and provide staff training for companies at different points in the supply chain. It will also establish incentiveenhancing measures, such as a coffee farm visitation program where employees can win or get awarded trips to a certified coffee farm. Coffee companies will pay their employees’ travel expenses, but the project would arrange the farm visits. Employees who get a chance to see what sustainability means in practice will become the companies’ foremost internal sustainability spokespeople and promoters. Outcome 2: Consumer interest to purchase certified coffee has increased (GEF contribution: USD 1,274,086; Co-financing: USD 10,142,106) 245. Coffee companies have increasingly become aware of the need to address sustainability problems in the coffee sector, and have largely been driving the promotion of the coffee certification program. But coffee companies are by nature extremely attentive to consumer interest. There are many examples of even large companies that have been pushed to engage in sustainability issues by activist consumer groups. Increased consumer interest is a key strategy for this project to expand the certification program. 51 While initially companies may choose to carry certified products to fill a need for a socially responsible product, over time they may choose a different solution to that need if consumers do not express interest in the seal through their purchases. 246. Consumer awareness is difficult and expensive to measure. Project partner Kraft Foods has offered to assist the project in measuring consumer awareness as part of its own efforts to measure the success of its certified brands. The project has a consumer awareness target of 20% of coffee drinkers in key markets. 247. The outputs under this outcome will bring about an increased consumer interest for certified coffee, which will give incentives for coffee companies to increase their engagement in certified coffee. Output 2.1 Roasters and retailers increase promotion of certified coffee to consumers 248. An important part of increasing consumer interest for certified coffee is to increase the consumer’s awareness of the seal and what it stands for. Companies that are closest to the consumer – roasters and retailers – share the certification program’s interest in educating the consumer so she will appreciate the efforts put into producing the certified products, and the benefits that they bring to the environment and workers in development countries. 249. The project will help companies increase the visibility of certified coffee at point-of-sale, by making sure the seal is prominently displayed and materials are available for the consumer which explain the special characteristics of sustainable production to consumers. These materials will be elaborated with assistance from the project (see output 1.3) and be available to the companies through an on-line store, or through individualized marketing support. Visibility of certified coffee will also be increased through instore tastings, which gives an opportunity to explain to the costumer what the seal represents, and through contests and giveaways (“win a trip to the rainforest and a certified coffee farm”) the consumer will better understand the linkage between the product which they are about to buy and sustainability issues in the products’ origin. As the certification program grows, the certification program’s marketing departments will elaborate consumer loyalty programs which will promote more ways to increase consumer awareness and build loyalty to the program. Output 2.2 Media in key markets writes stories about the benefits of biodiversity-friendly agriculture and certification. 250. Media is critical to increase the focus on sustainability and awareness of consumers, but too often sustainability issues do not make the news. Rainforest Alliance has considerable experience in how to get the sustainability message through to the media and get media exposure for the benefits of biodiversityfriendly production (for example, recent articles have appeared in mainstream media such as the Wall Street Journal and the Financial Times), and the project will help achieve increased media coverage for sustainable coffee. The project will arrange media tours to make journalists understand the linkage between third world problems and the enormous power of the environmentally and ethically aware consumer, and develop support materials (newsletters, public service announcements, website articles, farm profiles and fact sheets) for journalists and other media people to use in their work. The project will establish solid media outreach activities in new markets, and in multiple languages. 251. The project will help expand media outreach by developing solid media contacts and relationships in new markets, and will write and send out press releases, hold press conferences and media events in consuming countries. It will also work to increase use of new media and internet related work over time, such as streaming video from certified farms into coffee shops, coffee blogs, viral marketing, video press conferencing and an increasingly interactive website. 52 252. In a time with fast changing media world, the project will help the certification program to stay at the forefront and use the new opportunities to increase consumer awareness of sustainability and conservation values of buying certified products. It is becoming increasingly confusing to be a consumer in a modern world, and it is paramount to reach consumers with the message that – as far as biodiversityfriendly products are concerned – the choice is easy. Output 2.3 Key stakeholders support biodiversity-friendly agriculture. 253. Both to reassure consumers, as well as coffee companies of the merits of the certification program, the project will build partnerships with environmental, development, and other civil society groups that are respected public opinion leaders. These groups will bring recognition to the certification program as a strategy for environmental and biodiversity protection, and for social and economic sustainability in third world producer countries. The role of the partner organization is to actively promote certification as a sustainability tool and explain it to the broader public. Some of the organizations have the ability to reach large audiences with their messages. The organizations will help defend the certification program and participating companies against unfair attacks from anti-globalist groups in consumer countries, which per se are against all forms of transnational company activity. The endorsement of these prominent opinion leaders of biodiversity-friendly coffee production will help convince coffee companies of the benefits of buying RAC coffee, as well as increase consumer interest in certified products. A particular set of activities will relate to the strengthening of the relationships with other certification organizations. The project will facilitate dialogue between certification schemes through regular meetings to identify possibilities for synergies and avoid overlaps, for example in harmonization of standards and audit procedures. Also, through relationship building activities the project will further a joint approach between certification schemes, coffee industry platforms, and donor organizations with regard to the provision of technical assistance to farmers. Output 2.4 Large institutional consumers (such as Fortune 500 companies, large universities, government institutions) have sustainable procurement policies and source certified coffee, FSC paper and other sustainable products 254. The Rainforest Alliance has had considerable initial success with promoting sustainable procurement policies with large institutional consumers. These institutions fill the needs of tens of thousands of coffee drinkers, paper product consumers, and packaging users; and they procure building materials and wood furniture for their office buildings and campuses. The potential of securing the commitment of these institutions to sustainable procurement policies is not only that they buy large amounts of coffee, paper, and certified wood products, but also that they signal to their employees and students that their institutions actively support sustainability. Indeed, the signal value goes beyond this – it is a strong statement to the world when well-known and respected institutions actively and publicly commit to sustainability. 255. The project will expand activities to convince institutional consumers of the benefits of implementing sustainable procurement policies, including the use of ‘SmartSource’ – the Rainforest Alliance program which helps buyers identify products from particular producers to meet their sourcing needs. Particular for universities, the project will elaborate a student toolkit to support student campaigns for sustainable university sourcing policies. The efforts will be done in collaboration with, and cofinanced by, the Rainforest Alliance ‘TREES’ program, and will initially target North American and European institutional consumers and later expand to Japan. 53 Outcome 3: National capacities to certify all sizes of coffee farms in biologically rich production landscapes has increased (GEF contribution: USD 3,141,352; Cofinancing: USD 14,504,346) 256. A serious challenge to the certification program is to balance production of certified coffee with the growing demand. Farmers are quick to react to a perceived market potential and seek certification because they expect a benefit in the marketplace. A farmer invests substantial sums in implementing sustainability measures on his farm to qualify for certification, and disappointment with the program quickly manifests if the farmer fails to enjoy expected benefits. Therefore, the certification program must be careful to increase activities in response to growing demand. The project will work in each project country to certify growing amounts of coffee, including building capacity of producers to understand certification standards and requirements, building capacity for technical assistance (extension) services, and increasing certification audits. 257. Special emphasis will be placed on certifying farmers in groups, thereby making the process less expensive for each individual farmer. This is particularly attractive for small farmers, who are organized in associations or cooperatives. By certifying in groups, the project will help achieve a higher percentage of smaller farms certified as a percentage of total farms certified. In Brazil, the project will focus exclusively on helping small producers to certify. Output 3.1 Producers implement changes required to get certified. 258. As demand for certified coffee grows on international coffee markets, farmers’ interest in certification will increase in all origins. To satisfy the growing demand, the project will promote the certification system with producers in the selected Project Coffee Regions to achieve a higher coverage of certified farms. As the Project Coffee Regions have been chosen for their high biodiversity value and because the coffees from the regions are in high demand on international coffee markets, increased certification will produce global benefits for biodiversity. 259. Many interested farmers have insufficient knowledge of the sustainability criteria and what these criteria mean in terms of changes on the farms. The project will provide local farmers will have better access to information about the sustainability standards and about the changes which farmers need to undertake on their farms to qualify for certification. This include guidance on how the farm can maximize biodiversity benefits, for instance with regard to ideal native species of shade trees, species to use for riparian habitat protection etcetera. The project will provide farmers with information about the broad range of benefits which can be expected in return for the investment it will take to reach certification. 260. Through a series of workshops and information meetings in local coffee communities within the Project Coffee Regions, the project will engage farmers potentially interested in certification. The project will produce brochures and toolkits on CD-ROM and DVD showing what certification means in practice on coffee farms, as well as a series of other useful information for the farmer interested in certification and sustainability. Output 3.2 Biodiversity threats are reduced due to changes implemented by producers involved in program 261. The project will conduct an initial strategic planning workshop in each country to determine biodiversity conservation needs in coffee landscapes and key landscape level threats to biodiversity in the Project Coffee Regions, and identify the ways to best address these threats through planned project training activities and other project interventions. Training workshops mentioned in output 3.1 will include these specific threat reduction elements. Through the project adaptive management system each 54 country will examine the changing needs through an annual strategic planning process, and adapt training activities based on this feedback. 262. This output is specifically designed to maximize the biodiversity impact of the certification tool, as well as of the project activities in the Project Coffee Regions. Output 3.3 Capacity has been built to manage growth in certification 263. The organizations that implement the certification program are innovative and respected NGOs in their countries, and very experienced in conservation and environment issues. The NGOs are also highly experienced in certification of a variety of different crops, including coffee, and have been an important force behind the program’s success thus far. As the market for certified products grows, the NGOs must perform certification and audit activities in an increasingly efficient and cost-effective manner. Managing growth is a challenge in any organization, but particularly non-profit organizations meet considerable challenges in developing certification activities in a businesslike manner. 264. During the PDF B, the NGO partners from the participating countries have engaged in the first steps of a business planning process, to assess their response to anticipated substantial growth in certification activities. This business planning process will be taken further during the first years of the full-size project. Strengths and weaknesses of each partner will be identified and the project will prepare the organizations for a much larger, lean and efficient certification program. In Peru, where there is not yet an NGO partner, the project will help install local capacity to certify coffee. 265. Long-term development of the network of NGOs is a critical element for expansion of the certification system, and in the longer run this will imply a revision of the financial structure of the system, which is currently based on audit fees. The project will help the network assess alternative financial structures and set in place a system which will best enable continued growth and cost-effective operation, and long-term financial sustainability of the certification system. Output 3.4 Local capacity created for technical extension service in implementation of standards 266. As farmers decide to seize market opportunities for certified coffee they need to implement a series of changes on their farms. But the path to sustainability is often difficult and the standards do not prescribe specific ways to achieve it. Particularly dedicated and innovative farmers have experimented and found their own ways to implement sustainability practices on their farms in order to qualify for certification. As the demand for certification increases, however, it will be necessary to build local capacity so that producers who are interested in getting certified can access qualified technical assistance and extension services to help implement changes on their farm. 267. The NGOs that implement the certification system have so far almost exclusively focused on certification and auditing services. Technical assistance services to farmers have largely been avoided, not least because of fear of conflict of interest between the advisory role and the auditor role. The project will help build capacity to provide technical assistance to farmers in ways which eliminates conflicts of interest as prescribed by the ISO 65 standards which guides the work of certification organizations. The increased capacity will make it easier for producers to access qualified help to implement changes. 268. In project countries agronomic technical assistance is often provided by government agricultural agencies, or by technical departments of national coffee institutions. The project will work wherever possible to establish partnerships with local institutions, and train staff to be able to provide guidance on 55 sustainability practices. It is possible that some of these local institutions will be subcontracted to execute particular project activities with farmer groups. 269. In addition to the formal institutions, most countries have private agronomists who provide technical assistance to farmers, and cover a broad variety of issues. The project will identify these independent agronomists, to train them in providing extension services to farmers on sustainable practices so that these can become certified. 270. The project will also build farmer’s capacity to implement sustainable management practices through open workshops and training activities. 271. The project will organize annual train-the-trainers workshops to continually increase the knowledge of the best farm practices leading to sustainability. This includes capacity to provide biodiversity advice to farmers to maximize their possibility of producing conservation impact. These project activities have the important added benefit that the sustainability practices will become more commonly known and accepted, even with farmers who are not certified. Output 3.5 A group certification system developed and applied 272. The majority of the world’s coffee producers are smallholders. Small producers are still underrepresented in the certification program because it is too expensive for small farmers to certify individually (it is proportionately more expensive to audit a smaller farm). There exists initial capacity to certify small (and in principle also larger) producers in groups. Group certification is less expensive for the individual producer, because audit costs are shared. Group certification requires that the group of farmers implement an Internal Control System, which allows the group to control the practices of the individual members of the group. During group audit, focus is on the well function of the ICS, as well as on a randomly selected sample of individual farms. 273. Whereas there have been preliminary experiences with group certification, further development of the system is necessary. The project will help further develop the system, including the development of training programs for farmer groups, such as cooperatives, in how to implement ICS. It will also help train auditors in group certification and help to promote group certification with groups with high potential of becoming certified. 274. While habitat protection and global biodiversity benefits can be produced on large coffee farms as well as on small farms, the program’s sustainability philosophy insists that also smallholders can and should benefit from the advantages of certification, and that any coffee sustainability program should address sustainability problems among small farmers where poverty and subsistence farming is widespread. The activities under this output will guarantee that more small farmers get certified and that the overall percentage of small producers to large ones will increase. Outcome 4: Economic sustainability of certified coffee farms has increased (GEF contribution: USD 1,898,735; Co-financing: USD 71,539,735) 275. This outcome will respond to a series of factors which – while not barriers to certification and to satisfying demand for certified coffee – are vital to increasing economic sustainability of already certified farms. To get certified, a producer must implement environmental and social sustainability measures on his farm. While this usually has some costs, there are benefits related to certification which will improve economic sustainability. Nevertheless, a series of factors which are not themselves part of the certification scheme can put the farmers’ economic sustainability in jeopardy, particularly in times of a highly volatile 56 coffee market and continued risk of a new coffee crisis. The certification system promotes the three pillars of sustainability: environmental, social, and economic, and to the extent that economic sustainability must be improved, the project will help facilitate measures which can enhance it. The project intervention will focus particularly on strengthening the economic sustainability of smallholders and low-income farms, in order to improve livelihoods and avoid conversion to other land use. In Brazil, project activities with farmers will entirely be aimed at small producers 276. Many of these thematic areas could merit a project itself, and several could even deserve a project in each of the project countries. This project’s capacity to address all economic sustainability issues is limited. However, the project can maximize its impact through specific targeted efforts, and through partnerships with other institutions. Output 4.1 Best Management Practices collected and promoted among certified farmers 277. The certification standards require the farmer to implement environmentally friendly production practices on their farms, but they do not require specific practices, nor tell the farmer how he should go about the improvements. As long as a farmer achieves the prescribed standards, the farmer is free to experiment with new and innovative methods of achieving the results. Whereas all farmers live up to the certification standards, some farmers find particularly innovative, cheap, efficient, or effective ways to improve farm practices. These practices not only make certification easier, but can also improve economic sustainability on the farms. 278. The creative innovations developed by the pool of certified farmers currently do not get collected and in many cases are protected by farmers who consider them competitive advantages over fellow farmers. It is possible to give farmers incentives to share their best management practices with their peers. The project will provide opportunities for farmers to share their best practices. Exchange programs will help further innovative developments and collection of BMPs while simultaneously helping the farmers become even better. The project will collect BMPs, award the best new practices, and develop specialized publications and manuals which acknowledge the efforts of individual farmers. While sharing of the practices will help the collective body of certified farmers, it will also help contributing farmers in the market place by documenting the farmers’ prominent status to buyers, a very important farm-level marketing tool. The project will establish farmer-to-farmer BMP training programs, as well as formalized BMP training courses. Output 4.2 Access to markets for certified products improved for certified farmers 279. The certification system itself is an important way for the farmer to achieve access to new markets, by offering a certification seal in addition to the coffee’s other characteristics. But as with all farmers, the certified farmer will need to bring himself to the attention of buyers who might pay good prices for his coffee. As the market for certified coffee is still relatively small, it can be a challenge to the certified farmers to connect precisely with the buyers who are interested in the specific type of certified coffee that they offer. 280. A number of project interventions can guarantee better market access for the producer, and help him optimize the return on the investment he made to implement sustainability measures on his farm. The project will offer the farmer the opportunity to list his product with its characteristics on a traceability database to make it easier for potential buyers to find it. It will also arrange local cupping events where producers and buyers meet to test the quality of certified coffees. National and international cupping events have already been piloted with great success, and the events have improved the farmers’ ability to promote his product to attractive buyers. Finally, the project will help producers by helping educate them in how to present their product samples in the best possible way to make them attractive to buyers. 57 281. In different parts of the world consumer preferences vary, and most coffee roasters blend different types of coffee from different origins and with different characteristics to obtain exactly the desired blends for particular markets. It can be a challenge for a coffee company to identify the desired coffee for their blends, and particularly so if the company is demanding certified coffee. The project will help improve integration of the supply chain for certified coffee to better enable coffee companies to find the coffee quality and types they need. This will be done through web-based sales tracking and product traceability tool where producers will list their available products. Linkages between producers and coffee companies will also be strengthened through cupping events and at special meetings during trade shows, including the annual supply chain meeting and sustainable coffee breakfast at the SCAA conference. These activities are crucial for the efforts to match supply with demand throughout the supply chain. Beyond certification itself, one of the most important roles of Rainforest Alliance is to facilitate contacts for actors in the market. The value-added of helping companies satisfy their needs for certified coffee and connect producers with companies that want to reward sustainability cannot be overstated, and the project’s support in this regard is indispensable for increasing certification activities on the ground and thereby generating global environmental benefits. Output 4.3 Farmers’ access to financing (particularly for small producers) has been improved through partnerships with financing institutions and programs 282. Generally speaking, financing has not been a barrier for expanding the supply of certified coffee. While financing needs have been a hindrance for small farmers to certify, the group certification program (see output 3.4) is aimed particularly at making low-cost certification available to this segment of farmers. It is beyond doubt, however, that coffee farmers like other actors in the private sector need credit to optimize operations, and to increase economic sustainability and better withstand fluctuations on the international coffee markets. Studies during the PDF B have shown that most larger producers already have access to established financing channels, but many small farmers have difficulty in identifying or accessing credit aimed at their particular situation. This is not because credit opportunities do not exist. A number of credit providers are already operating in all the project countries, some of these run by donorassisted micro-credit programs, other by commercial banks or development banks, and others again by national government SME development programs. 283. The NGOs implementing the certification program are not financing experts, nor do they have intention of becoming intimately involved in financing issues, but to the extent where farmer sustainability can be improved by improving access to already established financing options, this will be promoted. The project will help establish formalized relationships with established financing institutions and programs and guide farmers on what to do and where to go if they need financial assistance. A close working relationship will be established with the newly approved UNDP/GEF project “CAMBio”, with the Central American Bank of Economic Integration, CABEI, which covers three of the this project’s countries. The project will also seek to establish partnership with funding mechanisms such as EcoLogic and Conservation International’s Verde Ventures Output 4.4 Coffee quality improvement techniques promoted with producers 284. Certification is a value-added to coffee sold in the market place. There is circumstantial evidence which suggests that by certifying production, the typical farmer is able to improve the quality of his coffee, simply by improving management techniques on farm, and get more organized, something which typically follows from certification. It could also be generally true that more dynamic and ambitious farmers seek certification as a way to improve their production, and because they are better farmers they also produce better coffee. It is certainly a fact that the first independent, international coffee cupping 58 events have rated RAC coffees as being of a very high quality. But certification itself is not a guarantee of quality. Coffee quality depends – among other things – of biophysical and geographic factors, and of processing methods. While environmental sustainability is good for biodiversity even if the coffee quality is bad, a mediocre coffee will most often fail in fetching good prices in the market place, which again will result in poor economic sustainability on the farm. Therefore it is important that the farmers produce the best coffee they can under the physical circumstances they are in. 285. The project will help determine how coffee quality-enhancing farm practices can be included in the sustainability standards. While not certifying quality of the coffee itself, quality-enhancing practices will increase the chance that all certified coffee will get the best prices it can possibly get on the market. Certified coffee will gain increased prestige, be more sought after, be sold faster, and generate higher prices, all to the benefit of the producer, as well as for the certification system. 286. While quality-enhancing farm practices could be made a part of the sustainability standards, the NGOs implementing certification do not specialize in training farmers in quality improvement. In each country, there are coffee quality institutes and agencies which provide consulting expertise to farmers in how to improve coffee quality. Instead of duplicating efforts, the project will help establish alliances between specialized coffee quality experts and certified farmers and make sure certified farmers have access to adequate training, be it free of charge as a part of donor-financed development projects or through paid consultancy services to the farmer. The project will also search for complementary efforts to increase farmers’ knowledge of means and ways to improve the quality of their coffee, including publishing or otherwise making available self-help manuals and DVDs with instructions the farmers can apply on their farms. 287. The NGOs will continue to put increased emphasis on coffee quality, and the project will support this effort by financing cupping events that highlight the good quality of certified coffees, as well as encourage the coffee farmers to continually improve coffee quality. This is a very important strategy for improving both the economic sustainability of coffee farms, as well as to expand the market for certified coffee. Output 4.5 Sustainable terms of trade promoted throughout the supply chain 288. Many focus on a price premium as a tangible benefit of sustainability, but it is far from the only benefit, and in many ways it is problematic to regard the price premium as farmers’ main sustainability benefit. Certified coffees which include a substantial price premium – though aggressively promoted in the market place over the last fifteen years – have only succeeded in generating a small niche market, and it stands little chance of receiving broader acceptance in the coffee industry. The coffee certification program aims at a broad penetration of the international coffee market, and believes it is paramount that sustainability issues become widespread throughout the coffee industry, instead of limited to products exclusively for a “sustainability elite” consumer. 289. Studies during the PDF B have shown that though price premiums for RAC coffee vary a great deal, the seal typically generates a 10% price premium in the market place. But over time, as certified coffee becomes more common, the price premium could very well be reduced. While the program will continue to recommend that coffee companies reward sustainability in coffee production by paying a premium, there are many other factors in the trading situation that can bring increased economic sustainability to the farmer. These can be preferential contracts, long-term contracts, shared-risk relationships, transparency and market information, contractually linked financing schemes, revenue sharing schemes between buyers and sellers, among others. 59 290. Many farmers are not fully aware of the option they have when they negotiate with buyers. The farmer typically does not have insight into technical contract issues, or information about the sophisticated coffee markets, which influences his opportunities in the trading situation. The information disadvantage farmers have at the moment of trade often prevents them from negotiating the mentioned sustainable terms of trade. The project will work to identify current best-practices in sustainable terms of trade, and help make sure that a series of recommended practices be applied throughout the supply chain. The project will help elaborate guidelines for farmers and coffee companies of how they can ensure sustainability in the trading relationship. Informing farmers about their options, and recommending sustainable terms of trade to all actors through the supply chain can greatly enhance the adoption of the measures, even if the program does not make them obligatory or otherwise interfere in the trading relationships. Output 4.6 Good business, marketing and sales practices promoted with producers 291. The final element of the project’s strategy to enhance economic sustainability of certified coffee farms is to ensure that the farmers become the best businessmen they can be. A farmer can produce superior coffee quality, boast of impeccable environmental and social sustainability, but fail to be economically sustainable because he fails to control expenses, keep his books, or other fundamental business practices. This problem is of course not unique to coffee farmers, but applies to a great deal of SMMEs, and virtually all developing countries have experienced government- and donor-financed programs to ensure a better economic sustainability of their SMMEs. 292. It is not the project’s strategy to replicate the work of these competent institutions and programs. As under the outputs related to financing and quality improvement, the project will pursue a partnership strategy with specialized SMME development programs and institutions. In Central America, the project will collaborate with CABEI and its GEF-supported CAMBio program, which has significant capacity to support SMME-strengthening. In all project countries, the project will identify and ensure collaboration with such institutions and programs to make sure services and training programs are available for the certified farmers. Outcome 5: Increased capacity to engage policy makers in coffee-producing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy initiatives/threats to sustainable coffee (GEF contribution: USD 539,621; Co-financing: USD 4,038,142) 293. This project is an important complement to government’s centrally planned conservation and sustainability programs because it enlists powerful private sector interests and investments in support of sustainable coffee, arguably the single developing country crop with biggest potential for biodiversity conservation benefits. The extent to which these market forces are able to contribute to governments’ conservation efforts depend to a large extent on legislature and policy frameworks which regulate production, trade and sales of coffee. Both in producer and consumer countries, it is important that legislation and policy environment actively support sustainable coffee, or at least not put it at a disadvantage. 294. Most producer countries have stated policies for sustainability and many include shade coffee in their biodiversity strategies and action plans. As an example, the Mesoamerican Biological Corridor to a large extent follows coffee landscapes. Yet regulatory framework and fiscal policies often do not actively promote sustainability in production. Because farmers have to invest substantial sums on their farms to protect common environmental goods, this puts the certified farmers at a disadvantage, compared with farmers who externalizes environmental costs to their environment. In consumer countries, the main 60 threat is governments’ attempts to define, limit and/or control independent sustainability certification programs. 295. The project will actively involve governments in producer and consumer countries in the work to create market-based solutions to sustainability challenges in the coffee sector. Governments will be involved in project activities and appraised of project progress. A continuous dialogue will be kept with key government institutions so they will be able to provide inputs into the project process, but also so they can internalize products and lessons learned generated by the project, and disseminate it more broadly within government institutions. While this project promotes a market-based instrument, it is paramount that governments support the efforts, coordinate efforts in national coffee sector plans and strategies, as well as promote market-based approaches to sustainability in coffee. In this regard, local NGOs play a key role as local execution agencies in project countries. Their local presence will considerably strengthen the project’s possibility of engaging local governments in dialogue. 296. The project will monitor policy trends which can influence the certification program, and better enable them to participate in policy dialogue with governments and other policy-formulating entities. It will also enable them to effectively respond to policy threats and opportunities to place the certification program in the best possible policy environment. The outcome will be achieved through the following outputs: Output 5.1 Policies implemented and policy threats mitigated in producing countries 297. Several NGO partners in the network have been deeply involved in local policy dialogue over many years, and tangible results in favor of sustainability in coffee production have been modest. 298. While this project is not in a position to promise that given policies will change, it will develop tools and information to advocate policy change. This will include comparative overviews of policies and recommendations of international best-practices in sustainability enhancing policies – including fiscal policies. It will also include compilation of information regarding impacts of sustainable coffee to improve the basis of policy-makers’ decisions. These inputs will be thoroughly discussed with government officials to increase the chance of influencing the policy formulation process. 299. National Coordinators will create local “policy working groups,” incorporating relevant public, private and research institutions to explore opportunities for effecting change. Output 5.2 Fiscal incentives implemented by project country governments 300. Governments in producing countries must encourage sustainable coffee production by providing fiscal incentives to producers that implement sustainable practices. Government support for organic producers in some countries has provided a boost to organic production and producers should enjoy similar incentives to certify with the RAC system. The project will conduct a baseline study of existing fiscal incentives, and then promote appropriate policies to local governments. Output 5.3 Policies implemented and policy threats mitigated in consuming countries 301. The international regulatory environment around independent, third party standard setting and labeling is rapidly changing. Individual European governments, the EU, and agencies such as the FAO regularly discuss policies which can potentially negatively impact independent standards setting and certification programs. At the same time, there is tremendous support for social and environmental labeling in some European governments, which presents an opportunity for the project. 61 302. Larger coffee companies that are engaged in sustainability have long been aware of the importance of providing inputs to the policy processes which are attempting to define policy and regulatory frameworks, which can shape and even entirely determine the future of sustainability in coffee. These companies are already monitoring and participating in policy dialogue. In addition, organizations such as the International Social and Environmental Accreditation and Labeling (ISEAL) Alliance, and the International Institute for Sustainable Development (IISD) monitor and participate in international policy fora. The project will establish partnerships with companies and organizations to increase availability of information on policy trends, as well as to increase influence in policy processes. Outcome 6: Increased learning and adaptive management (GEF contribution: USD 1,341,281; Co-financing, USD 225,000) 303. There is a need to continually improve the coffee certification program, maximize its impacts, and increase cost-efficiency. In order to do that, the project will help create a learning and adaptive management system, which will document the impact of the certification program, and explicitly test its assumptions, as well as provide access to inputs, and knowledge from outside groups and stakeholders. The insights generated by these activities will serve to make continual adjustments to the certification program strategy, its sustainability standards, and audit practices. 304. By making a formal commitment to a learning and adaptive management system, the project will adopt an explicitly experimental approach to its program activities, in which learning and change will become integral elements of the system. During the proposal preparation stage, the project worked with the Washington DC-based not-for-profit organization ‘Foundations of Success’ which is working with a number of international conservation organizations to improve design, implementation and measurement of impact of conservation activities. FOS is participating in the collaborative initiative ‘Conservation Measures Partnership’ (CMP) with prominent conservation organizations such as Conservation International, The Nature Conservancy, Wildlife Conservation Society and World Wildlife Fund to formulate best practices and standards for monitoring impact and adaptive management. The project expects to establish a state-of-the-art adaptive management system by capitalizing on the most innovative thinking in the conservation world. 305. The project will capitalize on the knowledge generated by other conservation organizations, and the project will help establish information- and knowledge-sharing channels with peer institutions which will formalize exchange. Formalized sharing of knowledge between relevant organizations is another element of the learning and adaptive management strategy. In particular, during its inception phase the project will formalize information-sharing agreements with project country governments to ensure that knowledge generated about biodiversity in coffee landscapes, recommended coffee landscapes conservation measures, on-farm biodiversity farm management practices and other relevant information will reach the governments and help them in their work to promote sustainability in agriculture and the fulfillment of their sustainability- and biodiversity conservation action plans. 306. Finally, the project will help improve the participatory nature of the certification standard development. While the standards have always been developed through a multi-stakeholder participatory process, there has not been a formalized process in place which guarantees in-depth local producing country stakeholder inputs to standards development beyond the local NGOs in the network. As the certification program grows and is adopted more broadly in the coffee industry, it becomes increasingly important to expand and improve the standards setting processes. Output 6.1 Monitoring program established in all project countries 62 307. The project will help establish an advanced impact monitoring program to document the biodiversity and environmental, as well as social and economic impacts of the coffee certification program. As this GEF project will help expand the certification program, the impact monitoring program will produce evidence to the GEF, to the coffee world, to the conservation community and to the coffee consumers in general that biodiversity-friendly coffee is a highly attractive conservation strategy in tropical coffee producing countries, as a complement to centrally planned conservation strategies, such as protected area systems. Beyond documentation, the impact monitoring system will generate information to inform the Adaptive Management program, and thereby ensure a continuing series of improvement to the program, including maximizing conservation impacts. 308. The certified coffee impact monitoring system is a part of, but not identical to a project monitoring system. The project will use a variety of indicators – including market indicators – to document project impact as defined in the project’s logical framework matrix, whereas the coffee program impact monitoring system is a specific deliverable of this project and focuses on the impacts of all coffee certification activities on the ground. This program impact monitoring system will not focus on how the GEF project reaches its targets, but on determining the certification tool’s impacts, and on how to maximize them. The review of scientific literature which was performed during the PDF B does indicate a tremendous value of sustainable coffee for biodiversity, but the impact monitoring system will be specifically aimed at providing systematic data for the certification system. 309. Biodiversity benefits will be measured in a number of ways: through population increase of keystone species, through aerial photos to determine canopy cover, through threat reduction and so on. A preliminary set of indicators are given in the draft monitoring plan in Annex XIII. The indicators will be adjusted and refined during the project inception phase. 310. The project commits to produce on-farm biodiversity benefits, because the certified farm is the unit for which the certification can guarantee changes to sustainable production methods. The coffee program impact monitoring system will measure on-farm biodiversity benefits in all six project countries. However, as discussed above, depending on density of certification activities and threats from surrounding areas (which of course contain many other activities than coffee), it is estimated that certification can have a substantial benefit in the wider coffee landscape. Output 6.2 Landscape level planning and monitoring established in two pilot countries 311. During the PDF B process, the project worked with FOS to produce a conceptual model of the threats toward biodiversity in a pilot coffee area, and to spell out the causal relationships between farm changes resulting from implementing the certification standards, threat mitigation, and habitat protection. This work serves to identify assumptions regarding causality between the standards implementation and biodiversity impact, which will then be tested by the monitoring system. A draft monitoring plan was produced for the pilot area, the Apaneca corridor in El Salvador. Some of the monitoring activities will be incorporated in the audits which are performed yearly on all certified farms, and other monitoring activities will be done through more specialized monitoring techniques. A more thorough description of the methodology used and the draft monitoring plan can be found in Annex XIII. At project inception, baseline values will be determined for all indicators in the monitoring plan, and realistic targets will be defined for threat mitigation levels and habitat impact. At the same time, the pilot experience will be repeated in the other five project countries, so that by the end of the first project year a full-scale impact monitoring system is in place covering coffee regions in all project countries, complete with baseline values, targets and final country-specific monitoring plans. 312. In two countries (El Salvador and Colombia) the project will perform landscape level monitoring activities, to demonstrate the relationship between certified coffee production and biodiversity benefits in 63 the wider coffee landscape. The landscape-level monitoring activities are the first step towards a possible future landscape strategy for certification. The project will work with conservation experts and organizations to analyze the possibility of strengthening landscape-level impact through target use of the certification tool. Output 6.3 Adaptive management and strategic planning system established at project and certification system levels 313. As the certified coffee impact monitoring system – and other sources of information – generates knowledge and lessons learned about the impacts of certification activities and improved understanding of necessary changes, this output will establish formalized procedures within the certification program to incorporate changes and implement adjustments in the program. That will happen at annual planning events, which the project will help design and carry out. Once the procedures have been implemented and institutionalized over a period of several years, they will be able to continue without the help of the project or other external support. 314. Within the project itself, a similar process will be established with periodic review of the project’s performance and systematic adjustments of the implementation strategy when needed. 315. For more information on the adaptive management program, please refer to Annex XII. Output 6.4 Lessons learned and impact data are gathered, documented and disseminated to key internal and external audiences. 316. Once information is gathered and lessons learned are generated in a systematic way, the project will help disseminate the knowledge to a number of different audiences. The project’s information and knowledge dissemination activities will target the projects stakeholders including government institutions, decision makers and local NGOs; the broader coffee industry including other coffee certification programs and organizations; biodiversity conservation and development organization which work in coffee areas or otherwise promote sustainable agriculture, as well as the broader public through media organizations. 317. These activities will have multiple benefits of guaranteeing transparency, increase learning and replication outside the certification system (see section on Replicability), as well as promote a healthy exchange of opinions and knowledge. 318. The project will utilize a range of communication means to share information and knowledge. The project will publish a series of working papers on technical issues for specialized audiences, as well as guidebooks for producers and coffee companies on how best to promote sustainability in production and trade. It will also publish articles about lessons learned, both for the broader public as well as for the coffee producing and conservation communities. A broad range of resources will be made available on an increasingly advanced and sophisticated Sustainable Agriculture section of the Rainforest Alliance’s public website. Finally the project will gather and disseminate information through thematic workshops in years 3 and 6 for select audiences. Output 6.5 Multi-stakeholder consultation and involvement at country and international levels secures inputs in certification program and standard setting process. 319. The certification standards were originally set through a series of stakeholder workshops, and have since been updated in a process involving multiple stakeholders participating by electronic mail. The project will help to formalize a multi-stakeholder consultation and involvement process, both at country 64 and international levels, to secure necessary inputs to the on-going improvement of certification standards. This will be done by establishing local and international standards advisory groups that provide general input, technical expertise and guidance regarding standards content and related policies. The formalization of the participatory process is a necessary and integral part of the development of a certification system which before the end of the project will be certifying a substantial share of the world’s coffee production. Project Indicators, Risks and Assumptions 320. A measure for the project’s overall success at the Objective level is that coffee habitat area with high biodiversity value certified by the program has drastically increased by the end of the project’s seven-year lifetime. The indicator for habitat extension is growth of habitat area under sustainable management on coffee farms as a result of certification, and the indicator for the quality of the coffee habitat and the biodiversity benefits is increased populations of keystone species on certified farms. 321. The chances of success depend on the following assumptions: (a) that market fluctuations will not severely limit the interest of farmers in getting and staying certified. The risk that this assumption will not hold true is estimated to be low, as there historically has been detected growing interest in certification among farmers both in times of crisis as well in times with good coffee prices. (b) It is assumed that consumers and coffee companies will maintain interest in sustainability issues. The risk of this not holding true is estimated as low, as awareness of sustainability issues among consumers and in the coffee sector has been steadily growing over many years. 322. At the project Outcome level, the success of Outcome 1 (increased market demand) will be measured by increase in amounts (measured in metric tons) of coffee sold as certified on international coffee markets and the width of penetration in the coffee sector by the increase in number of roasters that buy certified coffee and the number of outlets carrying certified products. 323. An assumption for Outcome 1 is that companies find increased reasons to promote responsible sourcing policies. The risk associated with this assumption is thought to be low, as all tendencies in the coffee world point to increased company interest in responsible sourcing policies. 324. The success of Outcome 2 (consumer interest) will be measured by increase in consumer recognition of the seal and awareness of what it means, which is to be measured in key markets during the project’s lifetime. 325. It is assumed that consumers increasingly will find certified products a credible way for them to support sustainability and conservation of biodiversity. The risk of this not holding true is viewed as low, as consumers reportedly show increasing interest in certification as a tool to promote sustainability and environmental protection. The project will help the coffee certification system in limiting this risk by clearly communicating the impacts of the certification activities. To be able to document impact on consumer interest for certified coffee, it is assumed that corporations will conduct consumer surveys and share information with the coffee certification program. Due to excellent working relationships between the certification program and coffee companies, which have been consolidated over the last few years, the risk of this assumption not holding true is seen as low. 326. Achievement of Outcome 3 (national capacities to certify) will be indicated by number of auditors, ISO 65 certification for RAC, producer satisfaction levels, and increased amounts of coffee certified from smallholders 65 327. It is assumed that local TA providers are willing to receive training in certification standards and provide TA to producers, and the risk of this assumption not holding true is seen as low. 328. Realization of Outcome 4 (economic sustainability of certified farms) will be measured by the better prices earned by certified farmers compared to non-certified farmers, as well as the degree to which certified farmers feel that certification has helped improve their ability to survive a future coffee crisis. 329. In order to document improvement in economic sustainability, it is assumed that certified farms will be willing to share price and cost information with the project’s executing NGOs, perhaps in a confidential manner. The risk is seen as medium to low. This type of sensitive information is normally hard to get, but most certified farmers are very loyal to the program and eager to help the program advance. It is also assumed that the coffee industry is willing to continue to reward certified sustainable coffee. The related risk is seen as low, as all trends point toward increased engagement of the coffee sector. 330. Achievement of Outcome 5 (policy threats and opportunities) will be measured by the number of policy initiatives/threats which have been addressed, and partners in major coffee producing and coffee consuming countries, as well as the success in addressing these. It will also be measured by the establishment of policy working groups formed with relevant public, private and research organizations in each of the 6 project countries 331. The assumption, on which achievement of Outcome 5 depends, is that policy makers will be willing to engage with the project and its strategic partners in the various countries or markets. The risk that the assumption will not hold true is seen as medium. On the one hand, policy makers are usually interested in getting inputs from stakeholders in the industry, but on the other hand it has been shown to be very difficult to change given policies in favor of sustainability. 332. The success of Outcome 6 (increased learning and adaptive management) will be measured by the degree to which systematic information is available to document the impact of certification on biodiversity and socio-economic conditions, and that learning generated enables improved strategic planning and coffee certification program design and implementation. 333. There are no particular assumptions about this outcome which are vital for its success. 334. The project will continually monitor if the assumptions continue to hold true and assess the risk of them not holding true. If factors or developments outside the control of the project will render the risk of the assumptions not holding true high, the project will be analyzing alternatives to adopt modified strategies to reduce dependency of the particular assumption. For more detail, please refer to the Logical Framework Matrix: Annex B of the Executive Summary. COST EFFECTIVENESS 335. Securing cost effectiveness has been a key priority in the design of this project. The strategic considerations mentioned above illustrate the principles of a cost-efficient project design, such as building on installed capacity, capitalizing on market forces and partnering with institutions which have better or more specialized capacities in certain areas, instead of trying to create these capacities themselves. In particular, the cost efficiency of the project consists in a highly catalytic project intervention, where the GEF investment will be replicated in large areas, and generate high amounts of co-financing and leveraged financing. The following figures show that the proposed GEF alternative is highly catalytic: 66 336. The GEF alternative will help increase the number of certified hectares more than fifteen times, from 93,000 hectares in August of 2005 to 1.5 million hectares by the end of the project. This equals 1 million hectares of productive land, or 10% of the world’s productive coffee area, and an additional 500,000 hectares of conservation areas set aside on certified farms. This target has been determined after careful projection of 70 current and prospective coffee company partners surveyed during the PDF B. A discussion of the targets can be found in Annex VIII-A. With a GEF investment in this project of USD 12 million, the incremental part of the cost of conservation will be USD 8 per hectare, for each additional hectare certified during the project’s lifetime. As a comparison to illustrate cost-efficiency, the Costa Rican National Forestry Financing Fund (FONAFIFO) rewards farmers to maintain their forests by paying them USD 45 per hectare per year over five years, or USD 226. 337. The biodiversity value of certified farms in a coffee landscape is likely to reach well beyond the certified farms themselves, depending on the certification activity and the threats against biodiversity in the surrounding area, because species typical for much larger ecosystems can survive on sustainable coffee farms in conjunction with remaining tracts of intact habitat, even if the larger ecosystem is degraded. On average, the larger multiple-use area which will benefit from coffee certification could be as large as 7-10 times the size of the certified farms themselves, between 10-15 million hectares by the end of the project, equivalent to a GEF investment of USD 0.8 to 1.2 per hectare. 338. Driven by market incentives created by this project, farmers will undertake investments on their farms to become eligible for certification. Farmers will spend an average of USD 545 per hectare of coffee production to implement sustainability measures, which will yield a total investment of USD 494 million in on-farm investments – or more than 40 times the GEF investment. For more detail, see the discussion on co-financing and leveraging potential in Section III. 339. Companies will pay premiums to producers in return for sustainability measures taken on farm, equalling a payment for environmental services. During the PDF-B, a survey of coffee companies established that a majority of companies expected the premium to remain at current levels. Assuming the size of this “sustainability differential” is USD 10 cents per pound of coffee sold10 the total amounts of premiums will amount to USD 363 million. This amount is based on cumulative sales over the lifetime of the project, increasing from currently 30,000 tons per year to a total of 500,000 tons by the end of the project. This amount represents 10% of global export markets. Some of the RA Certified coffee will not be sold with the RA seal. This is because some RAC certified producers will sell their coffee to buyers who are not interested in the RAC seal, or – for producers who hold several certifications – will sell it under other sustainability seals and systems, such as Organic or Starbuck’s C.A.F.E. Practices. 340. The price that will be paid to farmers for certified sustainable coffee during the project’s lifetime amounts to USD 3.723 billion. This represents the shift in coffee company purchases from nonsustainable products to certified sustainable coffee. The value is calculated using the average New York Board of Trade average coffee price over the last ten years. 341. The above estimates are based on projected increase in certified area and production during the project’s lifetime. However, as Rainforest Alliance believes its coffee certification activities will reach a tipping point beyond which the certification activities and sales will continue to grow11, numbers are likely to be even larger in the years following the project’s conclusion. Details on the estimated cofinancing and leveraged financing can be found in Section II, Part I Incremental Cost Analysis, and in Section III of the project document. 10 11 See discussions on this in the Co-financing and Leverage Potential discussion in project document, Section III. See discussion on this in sustainability section of project document. 67 342. The following model illustrates projected growth in RAC production areas and coffee sales during the project’s lifetime. Table D – Growth in Rainforest Alliance Certified Production and Sales during the Project Rainforest Alliance Certified Coffee: Projected Certification and Sales 2006-2013 Certified production and sales 1,500,000 ha certified (1M prod. + 0.5M cons.) 500,000 tons sold Projected certification and sales Increase in amount of coffee sold during project lifetime: 1,645,000 tons = 3,626,567,000 lbs Est. NYBoT value: USD 3.723 bn. Est. price premium paid to farmers: USD 363 M Est. producer on-farm investment: USD 494 M Current certification and sales 93,000 ha certified 30,000 tons sold End of project Year 6 Year 5 Year 4 Year 3 Year 2 Year 1 Project Inception Years Alternatives Considered 343. A number of design options were considered and rejected during the design phase because they were found to be unrealistic, less effective, or less cost-efficient. 344. In particular, the project design team considered alternatives to market-based interventions. It was considered to adopt non-market-based, centrally planned approaches in the coffee landscape to increase impact in certain areas, because it was recognized that transformation of a single productive sector will only remove some of the threats to biodiversity in a multiple-use coffee landscape. But it was found that an approach where this project would commit to remove all threats at a landscape level (from pollution to land planning to cattle ranching and much more) would be extremely expensive, it would duplicate the efforts of many other actors, and it would require Rainforest Alliance to abandon its comparative strength, which is coffee certification. It would move the project intervention away from its primary focus: to transform the means and ways of a productive sector through expansion of international markets for coffee grown under sustainable and biodiversity-friendly conditions. It was reckoned that other institutions and actors were better placed to implement a comprehensive landscape-specific conservation approach. Instead, Rainforest Alliance and its partner NGOs would do what it does best, and 68 do what few – if any – others can do: transform coffee farming practices thoroughly in biodiversity-rich coffee landscapes, in complement to other important efforts. 345. It was decided that the coffee program impact monitoring system, established by the project, would try to determine how coffee certification strategies could have most impact at the landscape level. The project is open for a future change in strategy if new information will point to better ways to increase impact at the landscape level. 346. Institutional alternatives were considered, such as with whom to work in the producing countries and the extent to which the project would work with policy makers. It was decided that an overwhelming strength of the certification program is network of local NGOs, and that the project activities at the production side, when possible, should be executed in collaboration with the local partners. But the project will also engage a broad series of other stakeholders, as outlined in the Stakeholder Participation Plan. Please refer to Section IV, Part IV for more information. Collaboration with policy makers was regarded as extremely difficult, because of disappointing results in earlier efforts to change producer country and consumer country policies. But it was agreed that the project would make an effort to participate in policy processes to promote sustainability in coffee production and trade. 347. It was considered how best to engage coffee companies in project activities. The certification program has a working relationship with many companies, ranging from limited and ad-hoc support to intimate working relationships to promote certified coffee on international markets. It was decided to approach twelve of the most engaged companies to formalize a working relationship with them by involving them in project activities and increase their commitment to certified coffee. As the project begins implementation, this core group of partner companies will gradually be expanded. 348. With regard to participation of different producer countries, several geographical alternatives were considered. The PDF B had listed five producer countries, but after consultations in Colombia it was decided to include that country and expand the number of project countries to six. It was also considered to expand the project scope and include African and Asian producer countries, as it is a key priority to be able to certify coffee production in all origins. But this option was finally abandoned, partly because it would imply a highly differentiated implementation strategy, with hugely different project activities required to establish capacity in the new origins, compared with the needs of the more established and mature certification programs in the selected Latin American countries. 349. Finally, several alternatives were considered with regard to the costs of the proposed project intervention. After much analysis and deliberation, it was agreed that a project objective which aims to transform the coffee sector by becoming a mainstream program in the coffee industry, rather than a niche initiative, would require a much more solid intervention than what would be possible with the amount previously envisaged. The growth potential of the coffee certification program is truly remarkable, and it was concluded that a more modest project intervention – while still welcome – would fail to reap the potential benefits outlined above, fail in bringing the program to the “tipping point,” where its size and recognition would allow it to continue to grow, and where consolidation of the certification program would ensure sustainability of the project intervention. The coffee industry is very large – according to ICO amounting to USD 70 billion/yr in retail value – and the coffee world is exceedingly complex; transforming it is no easy feat. The project proposes to transform international coffee markets and increase certification in six project countries. Arguably there is no other crop in the tropical world which is as important for the conservation of biodiversity as coffee, and no better tool to guarantee the conservation value of coffee production than certification. And there are few or no other systems which potentially can transform the industry and catalyze changes in coffee sector investments as outlined above. It was therefore found that the cost of the proposed investment was justified. Please refer to Section III for a further discussion on budgets. 69 Expected Global, National and Local Benefits 350. At the Global level, the project will result in the conservation of coffee habitat in eight biodiversity-rich Project Coffee Regions in Brazil, Colombia El Salvador, Guatemala, Honduras and Peru. All selected coffee landscapes are within the Conservation International hotspots of Mesoamerica, Tropical Andes, Brazilian Cerrado and Brazilian Atlantic Forest. The selected Project Coffee Regions cover a total area of 312,231 km2 of coffee production and other land uses. The project will allow the area of certified coffee to grow from a current 93,000 hectares to a total of 1 million hectares of productive coffee area and 0.5 million hectares of conservation areas. A million hectares is equivalent to ten percent of world’s coffee production area12. Each hectare certified is guaranteed to produce coffee through biodiversity-friendly practices and in harmony with the local ecosystem, as prescribed by the sustainability standards (see Annexes VIII and IX), and provide habitat and biodiversity benefits for species of global importance (see Annex X). The conservation of biodiversity-rich coffee farms will provide habitat protection value for a much larger area, estimated between 10-15 million hectares. 351. Traditional shade coffee production grown under a diverse canopy cover, which bears resemblance to a natural forest ecosystem, is most often the least disruptive production alternative that has occurred in a naturally forested ecosystem, but farms that apply traditional low-impact production methods are under threat from conversion to other crops or other land use, or from conversion to intensive, mechanized coffee monoculture. Farm conversion invariably represents a significant reduction, or total loss, of biodiversity value. The project strategy is to conserve diverse coffee production landscapes by giving farmers an alternative to conversion or transformation to intensive production, while at the same time improving the conservation value of existing coffee farms by requiring specific changes in production measures. By doing that, the project will help to maintain and even improve complex agroforestry ecosystems. 352. Coffee production activities which are a result of illegal encroachment in natural areas cannot be certified under the standards. On the other hand, legal coffee production is often found inside areas of high conservation value, and its certification will have tremendous value for the sustainability of these areas. 353. The value of certified, forested coffee farms for globally important biodiversity is multi-faceted. According to a comprehensive review of scientific literature of biodiversity benefits in sustainable coffee production done during the project’s PDF B phase, and which has been submitted for publication in a peer reviewed journal (See Annex XIV for a reproduction of the review article), coffee agroforests are complex ecosystems in their own right. They provide habitat for restricted-range endemic species of importance to global biodiversity conservation. They provide habitat for long-distance migratory species. The provide habitat for some globally threatened species and habitat buffering for others. They contribute to the functionality of landscapes and their biological corridors. Often, species density is much higher on sustainable coffee farms than in forested areas nearby. In addition to this, sustainable coffee farms produce a series of indirect benefits for global biodiversity, like reduced pollution – including pollution from Persistent Organic Pollutants – soil conservation, climate regulation, and favorable social attitudes towards biodiversity. 12 As certification is a market-based tool, the system cannot control where certification is going to occur. The target of 1.5 million hectares certified is likely to cover all the world’s coffee regions, but the project will particularly promote certification in the Project Coffee Regions selected for this project. Also, the target of 1.5 million ha. also includes 500,000 hectares of non-productive areas on coffee farms, such as tracts of forested lands which is being protected as private reserves. 70 354. The project directly benefits a large number of protected areas which are within the Project Coffee Regions, and is also likely to create benefits for even more protected areas which are within a limited distance from the selected areas, by creating additional connectivity or by creating a mosaic of conservation areas within the larger ecosystem. 355. At the National level, the project will contribute to the competitiveness of the coffee sectors in the project countries. The coffee exports are a significant source of export earnings for these major coffee producing countries. Increased economic sustainability on certified coffee farms will also help the governments guarantee employment and improve livelihoods in rural areas 356. The project will help national governments meet their targets for national biodiversity strategies and action plans, many of which have sustainable coffee as a key activity. It will help improve water resource management by reducing agrochemical run-off and sedimentation in rivers and streams, benefiting downstream water users, including hydroelectric installations, irrigation agriculture, and potable water supply, thus reducing government investment needs for water supply from other sources. It will also help governments meet the targets set out in their Strategic Action Programs for Persistent Organic Pollutants. 357. At the Local level the project will help local producers survive as coffee farmers, and by increasing their economic sustainability, bolster them for possible future coffee crises. The project will benefit tens of thousands of small and larger coffee producers in the six project countries and elsewhere. 358. Farm workers and their families get access to a range of benefits through certification of the coffee farm where they work, and often live. The project – by increasing the number of farms certified – will benefit hundreds of thousands of farm workers and their families in project countries, and beyond. Farm workers on certified farms get paid at least the minimum wage, which most often is a significant improvement from conditions on non-certified farms. Improved working conditions lead to fewer accidents, including intoxication from toxic agrochemicals. Workers’ families get access to health care, better housing and sanitary facilities, and their children are assured access to education. 359. By helping farmers, and farm workers and their families, benefit from sustainable and biodiversity-friendly coffee production, the project will help improve the fabric of local communities in coffee regions. 360. Please refer to the Incremental Cost Analysis in Section II for more detail. Country Ownership: Country Eligibility and Country Drivenness 361. The target countries have all ratified the CBD, as follows: El Salvador, September 1994; Guatemala, July 1995; Honduras, July 1995; Brazil, February 1994; and Peru, June 1993. All countries are eligible to receive funding from UNDP. Section IV presents endorsement letters from national operational focal points. CONTRIBUTION TO NATIONAL PLANS AND POLICIES 362. The project is consistent with the priorities of each focal country as identified in the national reports and communications to the Convention and the National Biodiversity Strategy and Action Plans (NBSAPs). 71 363. During the project design phase, discussions have been held with government authorities and national coffee associations in all project countries, and feedback has been included as a part of the project design. Not least requests for partnerships around technical assistance on sustainable best management practices for farmers have been included in this project proposal. 364. The execution modality where supply-side activities are channeled through SAN partners secures local ownership and country drivenness at the civil society level. The project will benefit considerably by the SAN partners local presence, knowledge and contacts to increase impacts. In particular through policy dialogue with national authorities, the project will benefit from local ownership, which will increase the chances to meet national priorities while achieving project objectives. 365. For example, the NBSAPs of Guatemala and El Salvador specifically mention shade coffee as a key factor in their biodiversity strategy, and numerous national reports to the CBD for each focal country mention coffee farm or sustainable agriculture/agroforestry importance. 366. In Central America, strict coherence has been ensured with the Mesoamerican Biological Corridor initiative. By planning selection of Project Coffee Areas in a way which ensures overlap with the MBC, the present proposal will help give content to this ambitious multinational conservation effort 367. All project countries have policies to promote small, medium and micro enterprises (SMME’s) in the private sector. Through its efforts to further environmental, social and economic sustainability of small farmers, the project will further the goals of these private-sector development plans. In Guatemala, for example, the project will further the goals of the Strategic Plan from 2004 of the Vice-ministry SMME development. In El Salvador, the project will contribute to the National Strategy for the Development of the Micro and Small Companies, of the National Commission for Micro and Small Enterprises, CONAMYPE. In Honduras, it will further the work of the office of the Director General for the Promotion of SMMEs and the Social Sector of the Economy, within the Ministry of Industry and Trade. In Peru, the project will contribute to the activities of the Peruvian government to promote Small and Medium Enterprise development. In Colombia, the project will further the goals of the National Government Policy to support SMMEs of the High Council of the Small and Medium Enterprise. 368. Several governments are executing MIF/IDB-financed projects to promote SMMEs, such as the Microenterprise Development in the Agricultural Sector project in Brazil and the Program to Support Agro-enterprise Competitiveness in El Salvador. 369. The project countries have national institutions (some are public, others private, and some are mixed) to represent and further the interests of the coffee sectors. These institutions have sector development plans which are important elements in securing sustainability in the national coffee sectors. 370. The full project will work to identify how it can best contribute to and create synergic effects with these national efforts, policies and plans. It is envisaged that the project will be in close dialogue with national authorities both to identify how the project can best contribute to the stated objectives of relevant national plans and policies, as well as to provide inputs to the policy formulation processes so that sustainability issues are properly reflected. It should be pointed out the outcome 5 of this project specifically is aimed at ensuring true national ownership of the project, and dialogue about country priorities. CONTRIBUTION TO NATIONAL EFFORTS TO ACHIEVE MILLENIUM DEVELOPMENT GOALS 72 371. The project also addresses four of the Millennium Development Goals through the implementation on the farm of sustainability standards, and the partnerships developed with the private sector coffee companies, including: 372. MDG #1 Eradicate Extreme Poverty and Hunger – specifically related to Target 1 of reducing the proportion of people whose income is less than 1$ a day. All workers on certified farms must receive at least minimum wage as defined in the particular country. All too often, workers on non-certified farms in the coffee sector receive substantially lower salaries than the official minimum wage. 373. MDG#2 Achieve universal primary education – specifically related to Target 3 of ensuring that children will be able to complete a full course of primary schooling on certified farms. 374. The sustainability standards specifically require that workers and their families have access to education, medical care, public transportation and recreational facilities. Current research is studying the most appropriate way to incorporate impact indicators that can measure this type of outcome, including those proposed by the MDGs such as “Net enrollment in primary education” and/or “Proportion of pupils starting grade 1 who reach grade 5”. 375. MDG #7 Ensure Environmental Sustainability – specifically related to the areas to “Integrate the principles of sustainable development into country policies and programmes; reverse loss of environmental resources” on certified farms percentage relative to surrounding area and/or country; and “reducing the proportion of people without sustainable access to safe drinking water and basic sanitation.” These issues will be addressed through the specific requirements to certified farms set out in the RAC standards. 376. MDG #8 Develop a Global Partnership for Development – specifically to the areas related to “Develop further an open trading and financial system that is rule-based, predictable and nondiscriminatory. Includes a commitment to good governance, development and poverty reduction— nationally and internationally.” Also the target to “the development, in cooperation with developing countries, of strategies for decent and productive work for youth.”, and “In cooperation with the private sector, make available them benefits of technologies, especially information and communication.” 377. Finally, the project responds to UNDP mandates in Capacity Development (CD) and PublicPrivate Partnerships (PPPs). Specifically, the certification program’s implementation by a democratic coalition of local NGOs, the training of local auditors and extensionists, as well as standards that help farmers achieve sustainability by developing their own, appropriate solutions to meeting the requirements, create and retain local capacity to reduce poverty and create positive biodiversity impacts. The project’s multiple partnerships with corporations large and small, and linkages to direct sourcing with coffee communities, create equitable PPPs between companies and producers/local people for achieving project goals. 378. Additional detail of how the project will contribute to national plans and policies will be provided at CEO endorsement. Sustainability 379. General sustainability: The project is designed so that it will help the certification system to grow beyond a niche initiative, and reach a “tipping point” where the program is so well-known and appreciated that it will continue to grow without external donor financing. Once barriers to growth are addressed and removed, there are seemingly unlimited possibilities to increase certification of sustainable 73 coffee within the massive coffee sector, equivalent to true mainstreaming. Rainforest Alliance bases the estimates on solid experience in a much related field, namely the SmartWood program, which is Rainforest Alliance’s FSC accredited forestry certification program. SmartWood has grown to be the biggest FSC certifier in the world, with a total of 21 million hectares in 53 countries under biodiversityfriendly management, equaling 36% of all FSC certified forests. SmartWood – as well as the FSC certification system itself – continues to grow much beyond initial expectations because it has received sufficient recognition in the industry as well as with consumers. 380. The tipping point is reached when industry and consumers at a broader scale recognize the validity of the certification standards and corresponding seal and take an active preference for the certified product. When that happens, producers will have incentives to deliver their product with the seal, and will make transformation of their productive practices accordingly. This market-driven logic is the opportunity for sustainability within the coffee sector: demand among consumers and coffee companies will drive a continued effort on behalf of producers to comply with what the market demands. Which in this case is a product produced under biodiversity-friendly and sustainable production practices. As the producer is rewarded in the market place for his efforts, a virtuous effect is created where the entire coffee industry eventually recognizes the need for change. Even companies and producers who are not certified will begin to internalize the message that a commodity can be grown in a responsible way, to the benefit of farmers, workers, and the environment. 381. Environmental and social sustainability: Farmers will respond to increased market demand and implement environmental and social sustainability measures on their farm according to the standards of the certification system, because they are interested in enjoying the benefits that certification can bring in the market place. The farm improvements are paid by the farmer, who is again rewarded by companies in the supply chain that pay a premium for certified coffee, or give the farmer other benefits, such as favorable contracts. In return, the producer will voluntarily ensure environmental and social sustainability on his farm. Farmers throughout the world of coffee will continue to implement environmental and social sustainability on their, while responding to market demand for biodiversity-friendly coffee. 382. Institutional: There are important institutional sustainability considerations both on production side, as well as on the market side. On the production side, the project will ensure institutional sustainability by establishing a partnership and training mechanism for local TA providers. During the initial years, when the project is working to overcome a series of barriers to growth, the project will cover costs related to this important capacity building work. But later – well before the end of the project – continued training and maintenance of institutional capacities will be conducted on a cost recovery basis. Because TA providers typically are paid by farmers to provide assistance so the farmer can obtain the competitive advantage of certification, the TA providers will have incentives to continually invest in upgrading their knowledge, so they themselves can stay competitive on the TA market. With regard to certification audits, this is also paid for by certified farmers on a cost-recovery basis, which will enable the NGO partner certifiers to allow for continued expansion of audit activities. The project will ensure that the NGO partners will be geared to manage growth. Once that happens (planned to happen around year 5), growth in audit activities will be completely self-sustained. 383. On the market side, much the same considerations can be applied. Services will be provided to companies who are interested in buying and promoting certified coffee. Once the marketing support and communication capacities are established, they will be self-sustained because companies will pay for services received. As an example, it will cost to develop point-of-sales materials that the company can use to spread the message that buying certified coffee helps protect wildlife, but once the materials are developed the companies will be willing to pay for them, generating revenues for continued development of new materials. There are significant challenges in building institutional infrastructure to promote certification with a large part of the coffee industry, but once initial barriers are overcome, users will have 74 a continued interest in financing the institutional infrastructure. It should also be noted that once a fullfledged system is operating, it doesn’t necessarily cost more to operate even if more companies join the program. 384. Financial: A fundamental principle of certification, and correspondingly of this project intervention, is that once sustainability becomes an issue in the coffee sector – which is what is currently happening – then actors in the market place will actively support it, not because they are necessarily personally convinced about the cause of biodiversity conservation and sustainability (though the majority is), but because it becomes rational business behavior to buy biodiversity-friendly coffee. The powerful rationale behind the market-driven approach is illustrated by the large amounts of company financing which is being shifted from non-sustainable practices into sustainable practices – more than USD 4.5 billion within the project’s lifetime. This amount will increase after the project ends. Companies will continue to pour billions of dollars into purchases of a product produced under the strictest environmental standards, pay hundreds of millions of dollars in price premiums, or “sustainability differentials” for certified coffee, and producers will continue to invest other hundreds of millions of dollars on specific measures on their farms which will help protect habitat in biodiversity-rich coffee landscapes. All this, so that consumers can drink their coffee with a clear conscience. 385. The above considerations explain why the need for long-term post-project investments from donor sources is negligent, and most likely nil. On the other hand, investments made by the private sector will continue to fuel changes in coffee production, throughout the 50 third-world countries that produce coffee. Replicability 386. The approach presented in this project proposal is highly innovative, and important lessons will be generated with potential for replication at many different levels. 387. The project will result in replication in coffee production throughout the eight Project Coffee Regions. As project activities help increase local capacities and awareness of sustainable production methods, such as building capacity of national coffee agencies’ extension programs to deliver advisory services to farmers with an emphasis on sustainability and conservation measures, it will not only benefit farmers which aim to get certified, but also spread more broadly within the coffee community as best farm management practices. 388. The experiences can be replicated within the coffee certification program outside the selected project countries. Currently, coffee certification is done in 10 countries, of which only six participate in this project. Certification activities in other countries are planned for the imminent future (Ethiopia), and within a few years it is envisioned that the certification program will be active throughout Africa and Asia, covering all major coffee origins. The lessons learned in this project will be replicated extensively in the certification programs of those countries. 389. Just as coffee certification has been able to apply lessons learned from the more established FSC certification program, lessons learned in this project are potentially replicable for other crops which are currently being certified with Rainforest Alliance. This includes bananas, cacao, pineapple, citrus, and ferns. Lessons learned that are transferable to the banana certification program, for example, can potentially have immediate impact on 15% of the world’s banana production currently certified by Rainforest Alliance. Standards are being prepared to expand the variety of crops which can be certified to cover nascent demand in other sectors. Possible future certifiable crops include melon, avocado, mango, 75 cut flowers, and even sugar and soybean. Many of the new systems and tools developed within this project can be adapted in these programs. Even non-agriculture sectors can potentially benefit from this project’s replicability potential, such as cattle ranching. The replication to other Rainforest Alliance programs will not have a cost for the project. 390. Experiences can also be replicated outside Rainforest Alliance’s certification programs. At present, the standards have already had profound effect on other certification programs and industry initiatives. Starbucks’s C.A.F.E. practices have been modeled largely on RAC standards, and received Rainforest Alliance guidance in their development. The EurepGAP standards, which are the European supermarkets’ sustainability standards, are also largely based on the standards, albeit in a less rigorous version. The coffee industry initiative, the Common Code for the Coffee Community, have received substantial input from Rainforest Alliance and SalvaNATURA, the Salvadoran country partner. Whereas some industry standards are less rigorous than Rainforest Alliance’s standards, on-going dialogue can help gradually engage the mainstream coffee community and strengthen their commitment to effective standards. This project will help disseminate its lessons learned on how best to achieve social and environmental impact sustainability standards throughout the industry. 391. The project will actively identify lessons learned and knowledge generated through its rigorous monitoring and adaptive management program. Distilled lessons will be made available to the general public as well as within agricultural sectors, and conservation community, through thematic publications, white papers, and to a broader audience through the electronic and printed press. 392. Lessons will be disseminated to targeted audiences at trade shows and specialized conferences. Two larger workshops will be held during the project’s lifetime for conservation community, government representatives and donors on how to apply market-driven solutions to sustainability problems. 393. Rainforest Alliance’s public website has a coffee section which will be continuously expanded so interested actors can easily access information on sustainability, biodiversity protection in productive landscapes, Best Management Practices on farms etcetera. 394. Dissemination of project information and reports available for download via the Eco-Index bilingual conservation almanac that is visited by 40,000 people each month. (www.eco-index.org) PART III : Management Arrangements IMPLEMENTATION/EXECUTION ARRANGEMENTS 395. The project’s coordination structure is designed to effectively manage the overall project, the demand-side international marketing and communications activities, and the activities in the six participating producing countries. The institutional structure and institutions responsible for the management of the project are as follows: General Project Management UNDP is the project’s Implementing Agency Rainforest Alliance is the project’s Executing Agency A Project Steering Committee will oversee project implementation A Project Management Group will be responsible for important management decisions that cannot wait until next meeting of the Project Steering Committee 76 A Project Coordination Unit is responsible for the day-to-day project coordination and management. A Coffee Sector Advisory Group will guide project implementation Implementing Agency 396. The UNDP Country Office in Guatemala will maintain day-to-day oversight responsibility of the project implementation and fulfil the duties and responsibilities of a GEF Implementing Agency. It will be responsible for financial oversight of the project and ensure that GEF project funds are spent as intended. It will work with the project’s Executing Agency to ensure proper financial reporting of financial expenditure and quarterly disbursement of project funds according to annual work plans approved by the Project Steering Committee. The CO will review the quarterly disbursement reports from RA which will contain all project expenditure information. 397. The Country Office will oversee that project activities are executed according to plans and that the project delivers impacts to achieve its objectives. Project monitoring includes periodic visits to project sites, arranging and participating in monitoring missions, and participation in relevant meetings, including Project Steering Committee meetings and Tripartite Review meetings. The UNDP country office will also help organize and participate in project planning efforts, including in the Project Inception Workshop. The country office staff will maintain a regular communication with the project’s Executing Agency and project staff, and will assist project staff in stakeholder outreach and dialogue. The lead Country Office will coordinate with the other participating Country Offices to promote their involvement in supporting strengthening of national policy and lessons learned relevant to the project. 398. UNDP Country Offices in Brazil, Colombia, El Salvador, Guatemala, Honduras and Peru will be key partners for the present project. Through regular contact with the Project Manager and the national SAN network partner in each country, UNDP country office staff will keep themselves generally informed of progress of the project, and in particular of the project activities executed in their country. The Country Office staff will support the project in general and in particular through involvement in a number of project activities and thereby strengthen project impacts in project countries. The role of the UNDP country offices will be promoted and coordinated by the UNDP/GEF Task Manager (see below), and the programme officer of the lead country office (Guatemala). Country Office involvement is envisaged in outcomes three through six, in the following manner: Outcome 3: The country offices will support the concept of certification in national planning processes involving sustainable agriculture (particularly coffee), and help the project establish partnership with national agencies in charge of extension services to farmers. Outcome 4: The country offices will assist the project in ensuring synergic relationships between interventions of this project and other projects and initiatives that promote economic sustainability of agricultural producers and strengthening of SME’s. This includes facilitating coordination with projects of the World Bank, IDB and others. Outcome 5: UNDP country offices play a key role in facilitating the project work on improving national policy environments in favour of sustainability in agricultural production. This includes facilitation of intra-institutional policy coordination between government ministries and agencies, such as promoting fiscal incentives in favour of sustainable production, facilitating exports of sustainably produced products, promoting sustainable terms of trade, facilitating access to credits through public or donor-led loan enhancement programs, as well as other initiatives that require the collaboration between several government institutions. Helping overcome the barriers to institutional coordination is one of the most important roles of UNDP. Outcome 6: the country offices will support the project’s efforts to disseminate lessons learned throughout the government institutions, to other projects and initiatives, and to key stakeholders. 77 Each country office will do that by investing its prestige and power of convergence of actors and institutions in project countries. The country office will help mobilize stakeholder involvement in the project, including the coffee sector, local groups in the Project Coffee Regions, as well as local and national governments 399. The role of UNDP country offices will be further defined during the project inception phase. 400. UNDP/GEF’s Regional Coordination Unit for Latin America and the Caribbean, through its designated Task Manager, will be responsible for project oversight, ensuring that the project maintains the principles of incrementality while achieving global environmental benefits. The Task Manager will guide the project on all aspects to ensure the project achieves its outcomes and objectives. The Task Manager will guide the project and the UNDP country office staff on project management issues and GEF issues, norms and policies, as well as on UNDP’s responsibilities as GEF Implementing Agency, and will ensure periodic reporting of project progress to the GEF Secretariat and GEF Council. The Task Manager will play a key role coordinating and organizing UNDP’s collective efforts in support of the project and its objectives. This could include convening internal UNDP meetings with or without the participation of Rainforest Alliance or project staff, and ranging from highly specialized policy discussions at headquarters level, to broader meetings with programme officers in country offices to coordinate project support. 401. The UNDP/GEF Task Manager will participate as a member of the Project Steering Committee when his or her presence is called for. The TM will also be briefed on all issues discussed in the Project Management Group and will participate in the group on a no-objection basis. 402. UNDP Policy Experts based in the UNDP headquarters in New York, and regional policy offices, will support the project when needed. This can be to support Rainforest Alliance and the project team in dialogue with producer and consumer country governments at the highest levels, or support dialogue with large multinational companies to promote their involvement in certified sustainable coffee. The policy experts can also be called upon to provide inputs to important strategy and policy discussions specifically aimed at enhancing project impacts, or more broadly on sustainability issues. Executing Agency 403. Rainforest Alliance is the project’s Executing Agency (ExA). The project will be executed in accordance with UNDP’s NGO execution modality under a Project Cooperation Agreement signed between Rainforest Alliance and UNDP. The Executing Agency is directly responsible for the execution of project activities and for the achievement of project objectives and outcomes. In particular, the responsibilities of the Executing Agency as follows: Jointly selecting, in co-operation with UNDP/Guatemala and UNDP/GEF, staff of the Project Coordination Unit Planning and monitoring of project activities and ensuring quality of project products and deliverables. This includes regular field visits and monitoring according to benchmarks defined in the project logical framework Actively participating in all relevant project activities where appropriate Reporting to UNDP lead Country Office on a quarterly basis the substantive progress of the project by country and outcome and the project disbursements. Adopting, during the course of the project, the systems, products and tools developed by the project to ensure sustainability of the project outcomes Play an active role in coordinating with stakeholders throughout the project 78 Preparation and submission of periodic progress reports to UNDP, and regular consultations with beneficiaries and contractors Chairing the Project Steering Committee (PSC) and annual Tripartite Review (TPR) meetings Ensuring advanced funds are used in accordance with agreed work plans and project budget Preparing, authorizing and adjusting commitments and expenditures; ensuring timely disbursements, financial recording and reporting against budgets and work plans Managing and maintaining budgets, including tracking commitments, expenditures and planned expenditures against budget and work plan Maintaining productive, regular and professional communication with UNDP and other project stakeholders to ensure the smooth progress of project implementation. 404. The Executing Agency will be represented by the Project Director. The Project Director will be the Director of Rainforest Alliance’s Sustainable Agriculture Division. The Project Director will ensure that all relevant Rainforest Alliance staff contribute to and support the project’s efforts, and that all relevant project deliverables and lessons learned gets disseminated and mainstreamed within the ExA. 405. Rainforest Alliance has experience in executing large, regional projects, such as the USAIDfunded Certified Sustainable Products Alliance in Mesoamerica, and the IDB-funded Sustainable Tourism Project for SMEs. The organization has sufficient capacity and experience to execute this project, which will be documented through a rigorous Capacity Assessment which will be submitted with the Project Document for CEO endorsement. Project Steering Committee 406. The Project Steering Committee (PSC) is responsible for approving the project’s annual work plans and budgets and to oversee the progress of project implementation, in accordance with what is set out in the Project Document. The PSC must approve the project’s annual progress reports. The PSC is responsible for guiding project implementation and taking corrective measures and performing adaptive management of the project strategy if necessary. The PSC will focus on the big picture and overall direction of the project and delegate more specific day-to-day decisions to the Project Management Group. In particular, the PSC must ensure that policy requirements of the GEF and the UNDP are met, including coordination with other projects and initiatives, and stakeholder participation in project execution. 407. The PSC will be established at project inception, and the members will represent a mix of responsibilities, views and experience, to provide the maximum width in its oversight and guidance functions. It is envisaged that the PSC will consist of UNDP (Guatemala and or UNDP/GEF as appropriate), Rainforest Alliance (represented by the Project Director), a SAN network representative (selected between the participating SAN project partners), a coffee producer representative (an experienced RA certified producer), and a coffee company representative. One or several experienced project mentors will be selected, preferably members of the Rainforest Alliance Board. 408. The PSC will meet twice a year to review progress and monitoring results, approve work plans and budgets, and take important decisions regarding project management and strategy. The Project Coordinator will be the Secretary of the PSC, will set up meetings, circulate documentation for review, take minutes and prepare reports from the meetings. Project Management Group 409. Important day-to-day management decisions will be made by a Project Management Group (PMG). The PSC will delimit specific responsibilities and delegate them to the PMG during the first PSC meeting, which will take place during the inception phase of the project. The PMG will be chaired by the 79 Project Director. Additional members will include the UNDP/Guatemala Programme Officer and the Project Coordinator. The UNDP/GEF Task Manager will be briefed on all issues and will participate in the PMG on a no-objection basis. Typical areas of responsibility and decision-making will include approval of larger contracts, approval of larger expenditures, staff matters that require immediate attention, and approval of quarterly progress reports for UNDP and GEF if approval cannot wait for the next PSC meeting. Project Coordination Unit 410. A Project Coordination Unit (PCU) is entrusted with execution and oversight of project activities. The PCU will be based with Rainforest Alliance’s Sustainable Agriculture Division in Costa Rica. In particular, the PCU will: Be responsible for the achievement of the project outcomes and objective Manage day-to-day implementation of the project, coordinate project activities in accordance with the rules and procedures of UNDP and the GEF, and based on the general guidance provided by the PSC Provide overall project co-ordination Provide technical input as appropriate into project activities, outputs and outcomes Coordinate with the project stakeholders and other projects and programs of relevance to the project Organize project-level meetings and workshops, e.g., inception workshop, PSC meetings, etc. Work closely with UNDP offices in the region in organizing and providing technical and logistic support and coordination to all missions and assignments by international and national consultants Prepare overall project reporting 411. The PCU will be lead by a Project Coordinator. The project coordinator will be a person with substantial technical skills related to the project as well as strong management skills. The project coordinator will have the ability to communicate to a diverse group of stakeholders in a multinational and multilingual working environment. 412. Terms of reference for key project staff will be provided prior to GEF CEO endorsement. Coffee Sector Advisory Group 413. A Coffee Sector Advisory Group (CSAG) will be formed to guide the project on how to achieve maximum impact in the coffee sector and improve interaction with coffee companies. 414. The CSAG will be established during the project’s inception phase. The group will consist of representatives of key members of the group of coffee companies who have agreed to be partners in the current project. The 3-5 members must represent different links in the coffee supply chain from producers to roasters and must represent companies which wholeheartedly support RAC principles of sustainability and are experienced and ideally influential members of the coffee community. 415. The CSAG will, if at all possible, meet physically once a year to review project progress. As the group members are likely to be based in different countries the group will also work virtually as an electronic network or discussion group. Key issues and strategic decisions will be consulted with this group of coffee sector insiders. Demand Side Execution Arrangement 80 416. Demand side project activities will be managed by the Marketing and Communications unit of the Rainforest Alliance. The project will retain a marketing specialist to assume responsibility of the execution of project activities, in close coordination with Marketing and Communications unit, and supervised by the PCU and PSC. The marketing specialist will help develop the products and services that coffee companies need in order to scale up their involvement in certified sustainable coffee. Once developed, these products and services will be paid for by the companies on a cost-recovery basis, and help sustain the costs of continuing marketing and communications activities after the lifetime of the project. 417. Activities to promote certified coffee on European markets will be supported by the Rainforest Alliance Director of Europe, based in the Rainforest Alliance Amsterdam office and Rainforest Alliance representatives in European consumer countries. Additionally, the project will retain marketing specialists on an as-needed basis to execute project activities targeted at European coffee companies, civil society groups, media and consumers. 418. To execute project activities in Japan, the project will retain part-time marketing and communication specialists 419. It should be emphasized that the project strategy to increase the presence of certified coffee on consumer markets will be done in close coordination with the vanguard of coffee companies that already invest large sums to sensitize consumers, engage local civil society groups, and involve media in support of sustainability. The project activities executed through these arrangements mainly pertain to Outcomes one and two. 420. Policy dialogue with governments in consumer countries will be supported by a Policy Coordinator, supported by specialized Rainforest Alliance staff and specialized external policy experts as needed, as well as a “rapid response team” of Rainforest Alliance legal, executive and program staff. Also policy dialogue with consumer country governments will be done in collaboration with the on-going efforts of coffee companies to promote a positive policy environment for sustainable coffee. The project activities executed pertain to Outcome five. 421. Detailed demand-side project execution arrangements will be elaborated and submitted with the Project Document for CEO endorsement. Supply Side Execution Arrangements 422. In the six participating countries the project will be executed in partnership with the members of the Sustainable Agriculture Network, the group of local NGOs that implement the certification program. A co-execution or sub-execution agreement will be signed with each participating SAN partner. 423. The local co-executing agencies are: Brazil: Institute for Agricultural and Forestry Management and Certification (Imaflora) Colombia: Fundación Natura El Salvador: SalvaNATURA Guatemala: Fundación Interamericana de Investigación Tropical (FIIT) Honduras: Instituto Para La Cooperación y Autodesarrollo (ICADE) Peru: There is currently no SAN partner in Peru, but the project will help establish permanent representation and certification capacity in that country. 81 424. Each SAN partner has a certification unit in place that will be responsible for promoting certification services to farmers, conducting diagnostic and certification audits, and providing ongoing service to certified producers. The certification units will undergo significant strengthening to be able to process an intensive growth in certification activities to meet increased demand. 425. A National Coordinator will support the execution of project activities in each participating country. The National Coordinator will be based within each local executing agency and report to the Project Coordinator for the duration of the project. The National Coordinator will ensure that the project’s objectives get thoroughly mainstreamed within each SAN partners’ business plans, so that each partner will contribute to the project objectives through their regular activities. 426. The National Coordinators will be responsible for a series of technical assistance activities to support certification which has not normally been performed by the certification units of the SAN partners. It should be understood that there is a potential risk of conflict of interest between providing detailed technical assistance to farmers to improve their practices, and then to audit and certify the same farmer. The National Coordinators will perform their functions strictly separated from the certification operations as prescribed by the ISO 65 standards that govern certification organizations. The National Coordinators will gradually establish internal capacity within SAN partners to perform a broad series of technical assistance and capacity building in the coffee sector, with due separation from their audit activities. 427. The National Coordinators will be responsible for developing relationships with key stakeholders and policy makers in their country, creating partnerships with technical assistance providers, organizing and delivering training activities, creating relationships with local financing institutions and providing information on financing opportunities to farmers, and facilitating monitoring and evaluation efforts and the gathering of lessons learned. The National Coordinators will conduct a formal annual stakeholder meeting which will bring national institutions together with relevant civil society organizations, technical service providers and producer groups to debate the advances of sustainability in coffee production in the country and harmonize actions to promote it. 428. The Project will finance the National Coordinators during the first several years, but gradually the local SAN partners will take over responsibility for these costs and internalize the functions of the National Coordinators. By the end of the project, each SAN partner will have established internal capacity to continue the technical assistance, capacity building and training activities and outreach and communication activities to effectively support an increased certification program. 429. The outlined execution arrangements will ensure a smooth delivery of project activities related to outcomes three through six. 430. To ensure delivery of outcome six, the Project will contract a learning manager. The learning manager will ensure the coordination of project monitoring activities and corresponding adaptive management actions throughout the project and the certification program. He or she will also be responsible for exchange of lessons learned with other organizations and broader communication of knowledge and lessons learned with stakeholders and the broader public. 431. In order to accord proper acknowledgement to GEF for providing funding, a GEF logo will appear on all relevant GEF project publications, including among others, project hardware and vehicles purchased with GEF funds. Any citation on publications regarding projects funded by GEF should also accord proper acknowledgment to GEF. The UNDP logo will be more prominent, and separated from the GEF logo if possible, as UN visibility is important for security purposes. 82 CONSULTATION, COORDINATION, AND COLLABORATION BETWEEN IAS AND EAS 432. The project will work to coordinate and collaborate with a number of GEF projects that work in conservation, or with coffee production. As a minimum, the project will make an effort to share information and lessons learned with these projects, and to learn from the experiences generated in these other projects. Where possible, this project will try to formalize a collaboration around certain thematic issues, and even plan project activities in such a way that they complement other efforts in the best possible way. As most GEF-financed conservation projects will not be able to work with market-based certification tools themselves, the project will potentially be able to provide valuable complementary inputs to other projects that work in coffee-growing regions. 433. In particular, the current project will seek formalized collaboration with the following GEFfinanced initiatives: 434. In Central America the project will collaborate with the newly approved UNDP/GEF project “Central American Markets for Biodiversity (CAMBio)”, executed by the Central American Bank for Economic Integration, CABEI. That project will catalyze loan funding through CABEI’s network of local banking and non-banking finance institutions for small-, medium- and micro enterprises that seek to realize biodiversity-friendly investments. The project will do that through partial credit guarantees and other innovative loan-enhancing instruments. It will also support business development of small-, medium- and micro enterprises, as well as promote an enabling environment for green investments. The project specifically states certification of coffee as a key green investment activity which will be eligible for support. This present project will work with CABEI and the CAMBio project to facilitate credits to farmers in Guatemala, Honduras and El Salvador, who want to get certified, and to certified farmers who need credit to strengthen their businesses, including exports. 435. The regional project “Establishment of a Programme for the Consolidation of the Mesoamerican Biological Corridor” is due to end by the end of 2006, but it will leave in place one of the most ambitious frameworks for regional collaboration on biodiversity conservation, including a well-defined set of Protected Areas and a system of biological corridors which connect them, covering the Mesoamerican countries from Southern Mexico to Panama. This project is building on the concept of the Mesoamerican Biological Corridor, by promoting conservation and sustainable use within the defined corridors in Guatemala, Honduras and El Salvador, and it will help give the MBC concept real content and meaning in the productive corridor zones. 436. A new Colombian full-size project – currently at Concept stage – is entitled “Biodiversity Conservation and Sustainable Land Use for the Benefit of the People in Three Coffee Producing Areas in Colombia.” The project is being prepared by the National Federation of Coffee Growers of Colombia, and the Alexander von Humboldt Biological Resources Research Institute, though UNDP. This project will combine biodiversity conservation and land use planning, and is highly complementary to the present project. The Coffee Federation/Humboldt Institute’s proposal focuses on site-specific interventions in three main coffee regions in the country, including poverty alleviation and municipal strengthening. There is no site overlap with this present project, and the projects are thematically very different. It is envisioned that the project can complement the other project’s land use planning efforts by enabling the certification tool to contribute to conservation efforts in the three selected areas. The two projects will also collaborate to exchange knowledge and lessons learned about best conservation and land use practices on coffee farms. 83 437. The project will collaborate with the newly approved Venezuelan full-size project “Biodiversity Conservation in the Productive Landscape of the Venezuelan Andes.” That project works to conserve threatened biodiversity-friendly production systems, in particular shade-grown coffee. It is envisioned that the current project could collaborate with the Venezuelan intervention by providing increased access to certification as a conservation tool, as a complementary approach to the intervention outlined in that proposal. This project will also seek to exchange lessons learned with the Venezuelan project for mutual benefit. 438. The World Bank implemented regional Central American project “Integrated Ecosystem Management in Indigenous Communities” has as its overall goal to support an emerging network of indigenous communities engaged in integrated ecosystem management in the Central American region, in order to enhance the sustainability of human-managed systems that have been evolving for centuries in Central America and conserving high levels of biodiversity, but that are under increasing threat. The building of community networks across the region will create links between communities with established best practice examples of Integrated Ecosystem Management (IEM) and those with comparable environmental characteristics and similar potential for IEM. The long-term outcome will be that successful and proven regional models are effectively adopted in local and national initiatives, including World Bank and IDB-assisted projects, and that a common vision emerges among indigenous communities on how best to manage their traditional resources. As many coffee-producing small-holders in Central America belong to indigenous communities, sustainable coffee production is an excellent way to contribute to IEM. The present project will seek to contribute to the regional WB project by providing expertise and support in coffee certification issues. PART IV : Monitoring and Evaluation Plan and Budget 439. Project monitoring and evaluation will be conducted in accordance with established UNDP and GEF procedures and will be provided by the project team and the UNDP Country Office (UNDP-CO) with support from UNDP/GEF. In addition, the project will implement a broader impact monitoring system to determine environmental, social and economic impacts of the coffee certification program. 440. The logical framework in Annex B of the Executive Summary provides performance and impact indicators for project implementation along with their corresponding means of verification. 441. The following sections outline the components of the Monitoring and Evaluation Plan and cost estimates related to M&E activities. The project's Monitoring and Evaluation Plan will be presented and finalized at the Project's Inception Report following a collective fine-tuning of indicators, means of verification, and the full definition of project staff M&E responsibilities. 1. MONITORING AND REPORTING 1.1. Project Inception Phase 442. A Project Inception Workshop will be conducted with the full project team, relevant government counterparts, co-financing partners, the UNDP-CO and representation from the UNDP-GEF Regional Coordinating Unit, as well as UNDP-GEF (HQs) as appropriate. 443. A fundamental objective of this Inception Workshop will be to assist the project team to understand and take ownership of the project’s goals and objectives, as well as finalize preparation of the project's first annual work plan on the basis of the project's logframe matrix. This will include reviewing 84 the logframe (indicators, means of verification, assumptions), imparting additional detail as needed, and on the basis of this exercise finalize the Annual Work Plan (AWP) with precise and measurable performance indicators, and in a manner consistent with the expected outcomes for the project. 444. Additionally, the purpose and objective of the Inception Workshop (IW) will be to: (i) introduce project staff with the UNDP-GEF expanded team which will support the project during its implementation, namely the CO and responsible Regional Coordinating Unit staff; (ii) detail the roles, support services and complementary responsibilities of UNDP-CO and RCU staff vis à vis the project team; (iii) provide a detailed overview of UNDP-GEF reporting and monitoring and evaluation (M&E) requirements, with particular emphasis on the Annual Project Implementation Reviews (PIRs) and related documentation, the Annual Project Report (APR), Tripartite Review Meetings, as well as mid-term and final evaluations. Equally, the IW will provide an opportunity to inform the project team on UNDP project related budgetary planning, budget reviews, and mandatory budget rephasings. 445. The IW will also provide an opportunity for all parties to understand their roles, functions, and responsibilities within the project's decision-making structures, including reporting and communication lines, and conflict resolution mechanisms. The Terms of Reference for project staff and decision-making structures will be discussed again, as needed, in order to clarify for all, each party’s responsibilities during the project's implementation phase. 1.2. Monitoring responsibilities and events 446. A detailed schedule of project reviews meetings will be developed by the project management, in consultation with project implementation partners and stakeholder representatives and incorporated in the Project Inception Report. Such a schedule will include: (i) tentative time frames for Tripartite Reviews, Steering Committee Meetings, (or relevant advisory and/or coordination mechanisms) and (ii) project related Monitoring and Evaluation activities. 447. Day to day monitoring of implementation progress will be the responsibility of the Project manager, based on the project's Annual Work Plan and its indicators. The Project Team will inform the UNDP-CO of any delays or difficulties faced during implementation so that the appropriate support or corrective measures can be adopted in a timely and remedial fashion. 448. The Project Manager and the Project GEF Technical Advisor will fine-tune the progress and performance/impact indicators of the project in consultation with the full project team at the Inception Workshop with support from UNDP-CO and assisted by the UNDP-GEF Regional Coordinating Unit. Specific targets for the first year implementation progress indicators together with their means of verification will be developed at this Workshop. These will be used to assess whether implementation is proceeding at the intended pace and in the right direction and will form part of the Annual Work Plan. 449. Measurement of impact indicators related to global benefits will occur according to the schedules defined in the Inception Workshop and tentatively outlined in the indicative Impact Measurement Template. 450. Periodic monitoring of implementation progress will be undertaken by the UNDP-CO through quarterly meetings with the project proponent, or more frequently as deemed necessary. This will allow parties to take stock and to troubleshoot any problems pertaining to the project in a timely fashion to ensure smooth implementation of project activities. 85 451. UNDP Country Offices and UNDP-GEF RCUs as appropriate, will conduct yearly visits to projects that have field sites, or more often based on an agreed upon scheduled to be detailed in the project's Inception Report / Annual Work Plan to assess first hand project progress. Any other member of the Steering Committee can also accompany, as decided by the SC. A Field Visit Report will be prepared by the CO and circulated no less than one month after the visit to the project team, all SC members, and UNDP-GEF. 452. Annual Monitoring will occur through the Tripartite Review (TPR). This is the highest policylevel meeting of the parties directly involved in the implementation of a project. The project will be subject to Tripartite Review (TPR) at least once every year. The first such meeting will be held within the first twelve months of the start of full implementation. The project proponent will prepare an Annual Project Report (APR) and submit it to UNDP-CO and the UNDP-GEF regional office at least two weeks prior to the TPR for review and comments. 453. The APR will be used as one of the basic documents for discussions in the TPR meeting. The project proponent will present the APR to the TPR, highlighting policy issues and recommendations for the decision of the TPR participants. The project proponent also informs the participants of any agreement reached by stakeholders during the APR preparation on how to resolve operational issues. Separate reviews of each project component may also be conducted if necessary. Terminal Tripartite Review (TTR) 454. The terminal tripartite review is held in the last month of project operations. The project proponent is responsible for preparing the Terminal Report and submitting it to UNDP-CO and LACGEF's Regional Coordinating Unit. It shall be prepared in draft at least two months in advance of the TTR in order to allow review, and will serve as the basis for discussions in the TTR. The terminal tripartite review considers the implementation of the project as a whole, paying particular attention to whether the project has achieved its stated objectives and contributed to the broader environmental objective. It decides whether any actions are still necessary, particularly in relation to sustainability of project results, and acts as a vehicle through which lessons learnt can be captured to feed into other projects under implementation of formulation. 455. The TPR has the authority to suspend disbursement if project performance benchmarks are not met. Benchmarks will be developed at the Inception Workshop, based on delivery rates, and qualitative assessments of achievements of outputs. 1.3. Project Monitoring Reporting 456. The Project Coordinator in conjunction with the UNDP-GEF extended team will be responsible for the preparation and submission of the following reports that form part of the monitoring process. Items (a) through (f) are mandatory and strictly related to monitoring, while (g) through (h) have a broader function and the frequency and nature is project specific to be defined throughout implementation. Inception Report (IR) 457. A Project Inception Report will be prepared immediately following the Inception Workshop. It will include a detailed First Year/ Annual Work Plan divided in quarterly time-frames detailing the activities and progress indicators that will guide implementation during the first year of the project. The Report will also include the detailed project budget for the first full year of implementation, prepared on 86 the basis of the Annual Work Plan, and including any monitoring and evaluation requirements to effectively measure project performance during the targeted 12 months time-frame. 458. The Inception Report will include a more detailed narrative on the institutional roles, responsibilities, coordinating actions and feedback mechanisms of project related partners. In addition, a section will be included on progress to date on project establishment and start-up activities and an update of any changed external conditions that may effect project implementation. 459. When finalized the report will be circulated to project counterparts who will be given a period of one calendar month in which to respond with comments or queries. Prior to this circulation of the IR, the UNDP Country Office and UNDP-GEF’s Regional Coordinating Unit will review the document. Annual Project Report (APR) 460. The APR is a UNDP requirement and part of UNDP’s Country Office central oversight, monitoring and project management. It is a self -assessment report by project management to the CO and provides input to the country office reporting process and the ROAR, as well as forming a key input to the Tripartite Project Review. An APR will be prepared on an annual basis prior to the Tripartite Project Review, to reflect progress achieved in meeting the project's Annual Work Plan and assess performance of the project in contributing to intended outcomes through outputs and partnership work. 461. The format of the APR is flexible but should include the following: An analysis of project performance over the reporting period, including outputs produced and, where possible, information on the status of the outcome The constraints experienced in the progress towards results and the reasons for these The three (at most) major constraints to achievement of results AWP, CAE and other expenditure reports (ERP generated) Lessons learned Clear recommendations for future orientation in addressing key problems in lack of progress Project Implementation Review (PIR) 462. The PIR is an annual monitoring process mandated by the GEF. It has become an essential management and monitoring tool for project managers and offers the main vehicle for extracting lessons from ongoing projects. Once the project has been under implementation for a year, a Project Implementation Report must be completed by the CO together with the project. The PIR can be prepared any time during the year (July-June) and ideally prior to the TPR. The PIR should then be discussed in the TPR so that the result would be a PIR that has been agreed upon by the project, the executing agency, UNDP CO and the concerned RC. 463. The individual PIRs are collected, reviewed and analyzed by the RCs prior to sending them to the focal area clusters at the UNDP/GEF headquarters. The focal area clusters supported by the UNDP/GEF M&E Unit analyse the PIRs by focal area, theme and region for common issues/results and lessons. The TAs and PTAs play a key role in this consolidating analysis. 464. The focal area PIRs are then discussed in the GEF Interagency Focal Area Task Forces in or around November each year and consolidated reports by focal area are collated by the GEF Independent M&E Unit based on the Task Force findings. 87 465. The GEF M&E Unit provides the scope and content of the PIR. In light of the similarities of both APR and PIR, UNDP/GEF has prepared a harmonized format for reference. Quarterly Progress Reports 466. Short reports outlining main updates in project progress will be provided quarterly to the local UNDP Country Office and the UNDP-GEF regional office by the project team. Periodic Thematic Reports 467. As and when called for by UNDP, UNDP-GEF or the Implementing Partner, the project team will prepare Specific Thematic Reports, focusing on specific issues or areas of activity. The request for a Thematic Report will be provided to the project team in written form by UNDP and will clearly state the issue or activities that need to be reported on. These reports can be used as a form of lessons learnt exercise, specific oversight in key areas, or as troubleshooting exercises to evaluate and overcome obstacles and difficulties encountered. UNDP is requested to minimize its requests for Thematic Reports, and when such are necessary will allow reasonable timeframes for their preparation by the project team. Project Terminal Report 468. During the last three months of the project the project team will prepare the Project Terminal Report. This comprehensive report will summarize all activities, achievements and outputs of the Project, lessons learnt, objectives met, or not achieved, structures and systems implemented, etc. and will be the definitive statement of the Project’s activities during its lifetime. It will also lay out recommendations for any further steps that may need to be taken to ensure sustainability and replicability of the Project’s activities. Reports 469. Technical Reports are detailed documents covering specific areas of analysis or scientific specializations within the overall project. As part of the Inception Report, the project team will prepare a draft Reports List, detailing the technical reports that are expected to be prepared on key areas of activity during the course of the Project, and tentative due dates. Where necessary this Reports List will be revised and updated, and included in subsequent APRs. Technical Reports may also be prepared by external consultants and should be comprehensive, specialized analyses of clearly defined areas of research within the framework of the project and its sites. These technical reports will represent, as appropriate, the project's substantive contribution to specific areas, and will be used in efforts to disseminate relevant information and best practices at local, national and international levels. Project Publications 470. Project Publications will form a key method of crystallizing and disseminating the results and achievements of the Project. These publications may be scientific or informational texts on the activities and achievements of the Project, in the form of journal articles, multimedia publications, etc. These publications can be based on Technical Reports, depending upon the relevance, scientific worth, etc. of these Reports, or may be summaries or compilations of a series of Technical Reports and other research. The project team will determine if any of the Technical Reports merit formal publication, and will also (in consultation with UNDP, the government and other relevant stakeholder groups) plan and produce these Publications in a consistent and recognizable format. Project resources will need to be defined and allocated for these activities as appropriate and in a manner commensurate with the project's budget. 88 INDEPENDENT EVALUATION 471. The project will be subjected to at least two independent external evaluations as follows: Mid-term Evaluation 472. An independent Mid-Term Evaluation will be undertaken at the end of the second year of implementation. The Mid-Term Evaluation will determine progress being made towards the achievement of outcomes and will identify course correction if needed. It will focus on the effectiveness, efficiency and timeliness of project implementation; will highlight issues requiring decisions and actions; and will present initial lessons learned about project design, implementation and management. Findings of this review will be incorporated as recommendations for enhanced implementation during the final half of the project’s term. The organization, terms of reference and timing of the mid-term evaluation will be decided after consultation between the parties to the project document. The Terms of Reference for this Mid-term evaluation will be prepared by the UNDP CO based on guidance from the Regional Coordinating Unit and UNDP-GEF. Final Evaluation 473. An independent Final Evaluation will take place three months prior to the terminal tripartite review meeting, and will focus on the same issues as the mid-term evaluation. The final evaluation will also look at impact and sustainability of results, including the contribution to capacity development and the achievement of global environmental goals. The Final Evaluation should also provide recommendations for follow-up activities. The Terms of Reference for this evaluation will be prepared by the UNDP CO based on guidance from the Regional Coordinating Unit and UNDP-GEF. Audit Clause 474. The Government will provide the Resident Representative with certified periodic financial statements, and with an annual audit of the financial statements relating to the status of UNDP (including GEF) funds according to the established procedures set out in the Programming and Finance manuals. The Audit will be conducted by the legally recognized auditor of the Government, or by a commercial auditor engaged by the Government. 3. LEARNING AND KNOWLEDGE SHARING 475. Results from the project will be disseminated within and beyond the project intervention zone through a number of existing information sharing networks and forums. In addition: The project will participate, as relevant and appropriate, in UNDP/GEF sponsored networks, organized for Senior Personnel working on projects that share common characteristics. UNDP/GEF shall establish a number of networks, such as Integrated Ecosystem Management, eco-tourism, co-management, etc, that will largely function on the basis of an electronic platform. The project will identify and participate, as relevant and appropriate, in scientific, policy-based and/or any other networks, which may be of benefit to project implementation though lessons learned. 89 476. The project will identify, analyze, and share lessons learned that might be beneficial in the design and implementation of similar future projects. Identify and analyzing lessons learned is an on- going process, and the need to communicate such lessons as one of the project's central contributions is a requirement to be delivered not less frequently than once every 12 months. UNDP/GEF shall provide a format and assist the project team in categorizing, documenting and reporting on lessons learned. To this end a percentage of project resources will need to be allocated for these activities. TABLE E - INDICATIVE MONITORING AND EVALUATION WORK PLAN AND CORRESPONDING BUDGET Type of M&E activity Responsible Parties Inception Report Impact monitoring and adaptive management Field based impact monitoring in 2 countries Farm level monitoring in six countries APR and PIR TPR and TPR report Project Manager UNDP CO UNDP GEF Project Management Unit UNDP CO Oversight by Project Manager Adaptive management Planning workshops in 2 project countries. Oversight by Project Manager Local NGO partner External consultants Oversight by Project Manager Local NGO partner External consultants Project Management Unit UNDP-CO UNDP-GEF Government Counterparts UNDP CO Project Management Unit UNDP-GEF Regional Coordinating Unit Project Manager NGO partners UNDP CO Project Management Unit Inception Workshop Periodic status reports Steering Committee Meetings Technical reports Mid-term External Evaluation Final External Evaluation Budget US$ Excluding project team Staff time Project Management Unit Hired consultants as needed Project Management Unit UNDP- CO UNDP-GEF Regional Coordinating Unit External Consultants (i.e. evaluation team) Project Management Unit, UNDP-CO UNDP-GEF Regional Coordinating Unit 90 $25,000 None $50,000 Time frame Within first two months of project start up Immediately following IW Annually for first two years of project $250,000 Start, mid and end of project $200,000 On-going None Annually None Every year, upon receipt of APR $75,000 Following Project IW and subsequently at least once a year To be determined by Project team and UNDP CO To be determined by Project Team and UNDP-CO At the mid-point of project implementation. 0 15,000 100,000 100,000 At the end of project implementation External Consultants (i.e. evaluation team) Project Management Unit UNDP-CO External Consultant Lessons learned Project Management Unit Audit UNDP-CO Project Management Unit Project Management Unit UNDP Country Office UNDP-GEF Regional Coordinating Unit (as appropriate) Terminal Report Visits to field sites None 14,000 (average 2,000 per year) $40,000 (average $5000 per calendar year) At least one month before the end of the project Yearly Yearly Yearly $50,000 (average one visit per country per year) TOTAL INDICATIVE COST US$ 919,000 Excluding project team staff time and UNDP staff and travel expenses IMPACT MEASUREMENT TEMPLATE 477. These indicators will to be fine tuned and detailed in the Inception Workshop Table F – Key Impact Indicators and Targets Key Impact Indicator Target Means of Verification Sampling frequency Location Growth in habitat area under sustainable management on certified farms Reduction in key threats to biodiversity on coffee farms Increase of certified area from 92,000 ha. in 2006 to 1,500,000 ha. in 2013 Certification records Yearly Globally A scorecard of common threats shows substantial reduction in threats Certified Coffee Impact Monitoring System Yearly Coffee regions in six project countries Increased populations of keystone species on certified farms show BD conservation benefits By year 4 documented increase (see monitoring plan) in keystone species on certified farms compared to non-certified farms Certified Coffee Impact Monitoring System Yearly Coffee regions in six project countries PART V: Legal Context 478. A Project Cooperation Agreement (PCA) will be signed by Rainforest Alliance and UNDP. Please refer to Annex XX for a copy of the Project Cooperation Agreement. 91 479. The UNDP Resident Representative in Guatemala is authorized to effect in writing the following types of revision to this Project Document, provided that he/she has verified the agreement thereto by the UNDP-GEF Unit and is assured that the other signatories to the Project Document have no objection to the proposed changes: Revision of, or addition to, any of the annexes to the Project Document; Revisions which do not involve significant changes in the immediate objectives, outputs or activities of the project, but are caused by the rearrangement of the inputs already agreed to or by cost increases due to inflation; Mandatory annual revisions which re-phase the delivery of agreed project inputs or increased expert or other costs due to inflation or take into account agency expenditure flexibility; and Inclusion of additional annexes and attachments only as set out here in this Project Document SECTION II : STRATEGIC RESULTS FRAMEWORK AND GEF INCREMENT PART I: Incremental Cost Analysis PROJECT BACKGROUND 480. This 7-year project seeks to protect the habitat value of biologically diverse coffee farms by increasing the number of farmers who transform their productive practices to comply with the sustainability standards. Traditional shaded coffee farms are under threat of being converted to land use with less value for biodiversity, including industrialized full-sun production. By providing alternatives to farm conversion and intensified monoculture, the project will help protect a complex agroforestry production system which provides habitats for an abundance of species, and serves as corridors and buffer zones for protected areas. During its lifetime, the project will help increase coffee habitat in certified farms from the current 93,000 hectares certified to 1.5 million hectares; virtually all of that within Conservation International Hotspots. INCREMENTAL COST ASSESSMENT 481. There are significant baseline activities on which this project will build, both in the coffee production areas of the project countries, as well as within the international coffee community. These include the relationships the certification program has built with coffee companies interested in buying certified coffee (related to Outcome 1 – increasing demand), and the process that many of them have already undergone to register to use the seal. These companies have also made many investments at various levels in sustainability projects over the last three years in particular, contributing to increased awareness. In terms of baseline promotion (related to Outcome 2 – increased consumer interest), some of the biggest companies have already launched products with major events and media outreach. Others have created various promotional materials. The Rainforest Alliance has also conducted successful media outreach. In terms of certification capacity (Outcome 3), the Rainforest Alliance has developed various training programs and is working towards ISO65 accreditation. A newly hired Supply Chain Coordinator 92 at the Rainforest Alliance is improving market linkages between buyers and suppliers and educating farmers on how to access markets (related to Outcome 4 – improved economic sustainability on farms). Online auctions of quality coffee that certified producers are participating in, as well as the Coffee Corps program that recruits volunteers from the coffee industry to assist producers and cooperatives are also active in this area. Finally, related to economic sustainability for farmers, Ecologic Finance and USAID are providing access to trade financing for producers practicing sustainable coffee production. In the policy area (Outcome 5) several of the local executing agencies are engaging local policy makers, and the Rainforest Alliance serves as board chair for the ISEAL Alliance, which producers a quarterly “policy watch” for its NGO certification members. Some larger coffee companies, such as Kraft Foods, also monitor policy developments. Finally, in terms of learning and adaptive management (Outcome 6), a number of other institutions are interested in studying the benefits of sustainable coffee. Smithsonian Migratory Bird Center has studied the benefits of shade coffee for a decade. Several of the new coffee industry initiatives, such as the CCCC and the Sustainable Agriculture Initiative, are interested in better understanding the impacts of sustainable projection. Baseline 482. The certification program has grown substantially over the last years, and has reached a level where many producers and most coffee companies have heard of the program, though are not necessarily aware of what the program means in any detail, and what benefits it brings. Rainforest Alliance is a dynamic NGO, but the rapid growth has pushed available resources to a limit, and there is an urgent need to consolidate before further growth can be managed. It cannot automatically be assumed that growth can be continued without access to new resources. While the organization is exceptionally well-placed in the coffee market and has a tremendous potential for growth, there are a number of hurdles to overcome and outstanding work to be done. 483. Under the baseline scenario, the certification program could continue grow modestly depending on the availability of ad-hoc resources, while it would be surpassed by other coffee certification programs that use standards that bring significantly less benefit for biodiversity. The certification program would be regarded by the coffee community as a niche initiative among many others, without the potential of transforming the coffee sector. Most importantly, impacts on biodiversity would remain very limited, even insignificant, compared to the vast size of the coffee business. 484. There is no guarantee that the certification program can maintain even a modest growth under the baseline scenario, even if it is the certification program which brings the best conservation benefits to biodiversity, as well as other sustainability benefits. Many coffee companies are enthusiastic about the certification system, not for what it currently is, but for what it potentially can become. What it can become is a credible way in which coffee companies can address sustainability problems in coffee, and a way in which they can act responsibly while staying competitive. There is a built-in growth expectation in the partnerships established with companies, but these are likely to reconsider their commitment with the program if it fails in growing sufficiently to satisfy companies’ need for sustainable solutions in coffee. Under the baseline scenario, there is a real risk that the certification program could collapse if coffee companies grow tired of waiting for their coffee. 485. At the producer level, an increasing number of coffee growers know, or are familiarizing themselves, with the certification system, and learning what it means for them to implement sustainable, biodiversity-friendly measures on their coffee farms. The NGOs that implement the program try to manage expectation, but interest is growing and newly certified farmers – as well as already certified farmers – will be expecting market opportunities and benefits in return for their efforts and investments. If farmers find that the program fails in bringing about these benefits, it can quickly result in farmers leaving the program. 93 486. A slow growth is equal to failure for the certification program, which must either grow fast or become obsolete and lose the tremendous opportunities that are within its reach. Without the certification program, companies and producers will still struggle with sustainability issues, perhaps by adopting less rigorous certification schemes as have been discussed within the coffee community over the last several years. 487. Under this baseline scenario, biodiversity-rich forested coffee landscape will continue to disappear. Farms will continue to be transformed to other crops, cattle grazing or other land use. Others will be transformed to high-intensity, full-sun monoculture production systems. Some shade coffee production will remain, but conservation and sustainability issues will be downplayed as they will not be rewarded in the market place. As some farms are transformed, and others adhere to less rigorous standards, producer countries will continue to lose some of their last biologically diverse productive landscapes where local and migrating species survive and which serve as buffer zones to protected areas, or as corridors connecting them. Alternative 488. With the proposed GEF alternative, the certification system will be able to address existing barriers for growth and manage a truly global and much larger certification program. GEF incremental support will focus on the removal of these barriers to scale up RAC coffee, as described throughout this proposal. This growth will allow the certification program to deliver large amounts of coffee from certified farms, and catalyze huge investments in sustainability from coffee companies. The alternative will allow the program to certify an estimated 1.5 million hectares in threatened hotspot ecosystems, and change the productive practices of tens of thousand independent coffee producers. 489. The resulting global benefits will be conservation of the habitat value of these 1.5 million hectares of certified farms, and an expected 10-15 million hectares of surrounding lands in the threatened ecosystems. On certified lands, species will thrive, and farms will serve as buffer zones to protected areas and as biological corridors. There are also global benefits in reduced land degradation and soil erosion, as well as reduction and elimination of Persistent Organic Pollutants. Moreover, the global benefits of the project will be in a changed behavior and attitude towards conservation by the international coffee industry, and by producers in a number of countries. The transformation of productive practices in the coffee sector, and the fact that actors in the market place reward sustainability by paying sustainability premiums and give other benefits to farmers who apply biodiversity-friendly and sustainable practices is a key benefit of this project. At the national levels, countries will benefit from a more competitive coffee production and more stable export earnings, and from social benefits enjoyed by their populations. They will also benefit by the way certified coffee production helps reach national conservation goals, targets for reduction of toxic agrochemicals, and improved hydrological resource management. As a result, national and local governments will have a reduced need for infrastructure investments for natural resource management. At the local level, small and large farmers will improve economic sustainability of their farms. Farm workers and their families will enjoy multiple benefits including a safer working environment, improved health, earning at least the minimum wage, better housing and sanitary installations, food security, schooling for children and other benefits. These benefits will entirely be paid by farmers, who are then rewarded in the market place. It is expected that tens of thousand of farmers and hundreds of thousands of farm workers will benefit from the expansion of the certification program. Cofinancing 490. The project will generate co-financing and leveraged financing from a variety of sources, namely coffee companies, coffee producers, national governments, international bilateral donors, NGO’s, and research institutions. 94 491. Total co-financing amounts to more than USD 110 million. For a breakdown of this figure, please refer to the project’s budget or the Incremental Cost Matrix. 492. This amount includes investments made by key project partner companies in marketing and promoting coffee sustainability and biodiversity-friendly coffee on international coffee markets and to consumers. It also includes their investments in policy dialogue with lawmakers, and their work with producers to promote sustainability and conservation in coffee production. Finally it includes the sustainability differential which they are willing to pay over and above the normal market price, to reward producers who implement sustainability measures on their farms. 493. Many companies are unable to define their investments in coffee sustainability for the next seven years, or they are hesitant to disclose their investments in coffee sustainability in writing for inclusion in a public document. The co-financing presented in the proposal represents written commitments to predefined financing levels. 494. Co-financing will also be provided by bilateral and private donors, as in the case of USAID, which provides a major contribution to Rainforest Alliance’s certification programs, and Kraft, which donates funds to strengthen Rainforest Alliance’s coffee certification activities. This co-financing will be channeled directly through Rainforest Alliance. The project will also generate co-financing from Rainforest Alliance’s own core funding, and from partner NGOs and research institutions. 495. National governments in producer countries will provide co-financing through their own efforts to support sustainability in their coffee producing sectors, including coffee components of rural development programs and extension services. Leveraged financing 496. As the certification program continues to grow, companies new to the program will gradually start to source increasing amounts of coffee, and existing buyers will buy even more. The price premium paid equals a payment for environmental services. As in other projects which aim to catalyze private sector investments in biodiversity conservation and sustainability, co-financing letters typically cannot be obtained before the project starts. The sustainability differentials paid by companies for future increases in amounts of coffee sold is estimated at USD 363 million. The part of this amount for which the project is not able to obtain written letters of commitment before CEO approval, are therefore defined as “leveraged financing” and amount to a total of USD 321 million. 497. The value of increased coffee sales of biodiversity-friendly coffee generated by this project represents a very important shift in purchasing priorities of coffee companies. By shifting coffee purchases from production systems, which are degrading the environment, to products produced in accordance to rigorous environmental and social standards, equals an investment in sustainability. Without these conscious efforts on behalf of the coffee companies to support a change in productive practices, efforts to conserve diverse coffee habitats would be futile. Therefore, the value represented by shifts to sustainable coffee must also be counted as leveraged financing. The estimated value represents a total of USD 3.723 billion dollars during the project’s lifetime. 498. Finally, farmers themselves invest large amounts of their own funding in transforming their farm practices and implementing conservation measures and social improvements for workers. As in the case of future company investments, it is impossible to obtain co-financing letters from farmers who have not yet taken the decision to certify, but based on average cost per hectare for improvements made on already certified farms, the investments which will be made by farmers – large and small – who get certified during the project’s lifetime amount to USD 494 million. For details on the calculation of these figures, please refer to Section III of this proposal. 95 499. The amounts stated for leveraged financing indicate the tremendous potential benefit that can come from engaging powerful private-sector interests in the process. Systems boundary 500. The present proposal outlines a supply-chain based project, not a site-specific project. Farmers change their practices and implements conservation measures because they intend to reap a benefit in the market place, i.e. they respond to market incentives to change production. Therefore, the true systems boundary of this project is the entire coffee industry supply-chain, from coffee producers anywhere and all the way to retailers and consumers. The project will scale up demand for certified coffee, but it cannot fully control where and who will respond to that demand. But as virtually all the world’s coffee is grown in critically threatened and biologically rich ecosystems, a hectare certified is a hectare conserved for globally important biodiversity. 501. Nevertheless, this project aims to promote certified production particularly in six countries in the Neotropics. The project will ensure that producers in those countries can meet the increased demand. Therefore, at the production level, the project countries, and in particular the selected Project Coffee Regions are the project’s boundary. These eight regions are all within the four ‘hotspot’ regions of Mesoamerica, Tropical Andes, Brazilian Cerrado and Brazilian Atlantic Forest, and comprise a total area of more than 31 million hectares. 502. Please see Incremental Cost Matrix please see Table G on the next page for more details. 96 Table G: Incremental Cost Matrix Cost/Benefit Domestic Benefits Baseline (B) Alternative (A) Increment (A-B) Increased sustainability of certified farms, providing better earnings for farmers and employment for workers Health and social conditions of workers and their families drastically improved Local communities in coffee landscapes benefit as farm workers earn better wages and improve livelihoods Shaded coffee farms provide environmental services to surrounding environment and communities Proliferation and long-term sustainability of biodiversity-friendly shade coffee production systems Long-term maintenance of biodiversity in coffee habitat Shift in coffee company investment to promote conservation in coffee production Price premiums paid and favorable terms of trade offered for certified coffee as a reward for sustainability Farmers invest in conservation and sustainable production practices on their farms Global Benefits Weak sustainability of shade coffee farms threatens stability of traditional production systems Farm conversions lead to loss of jobs and income in local communities Health and social conditions among hundreds of thousand of farm workers remain very low Environmental services deteriorate as coffee producers pass on the burden of environmental degradation from production to surrounding environment and communities Some sporadic investment in sustainability in coffee, but insufficient to reverse trends of conversion and intensification Biodiversity-rich coffee farms are transformed to other land use, leading to habitat loss Intensified coffee production abandons shade-coffee production model, leading to reduced habitat value Remaining natural areas lose connectivity provided by agroforested production systems Costs Baseline: Outcome 1: Demand USD 14,000,000 Estimated Baseline: USD 14,000,000 97 Internalization of cost of environmental degradation More stable local production systems Better local livelihoods Population have better access to environmental services Conservation of biodiversityfriendly, low-impact production systems Habitat in agro-forest production systems are preserved and harbor increased amounts of species Conservation of habitat-value of larger coffee landscapes Coffee landscapes provide better buffer zones and connectivity between protected areas Catalyzed transformation of productive practices in coffee production Catalyzed transformation of coffee industry business practices to emphasize and internalize conservation and sustainability issues GEF: USD 3,804,925 Cost/Benefit for biodiversityfriendly coffee on international coffee markets has increased Baseline (B) investments by 20 exporters, importers and roasters in promotion and marketing of sustainable coffee within the coffee supply chain Total: USD 14,000,000 Outcome 2: Consumer interest to purchase certified coffee increased Baseline: USD 35,000,000 Estimated investments by 40 roasters and retailers in promotion and marketing of sustainable coffee Total: USD 35,000,000 Outcome 3: National capacities to certify all sizes of coffee farms in biologically rich production landscapes has increased Baseline: USD 7,000,000 Estimated investments by five roasters and exporters annually to provide financial and technical assistance to farmers in achieving certification. Total: USD 7,000,000 Outcome 4: Baseline: Alternative (A) Co-Financing: USD 1,000,000: USAID (exec. by RA) USD 1,400,000: Kraft Foods (exec. by RA) USD 7,227,252: Company investments in promotion of sustainable coffee GEF: USD 3,804,925 Total: USD 27,432,177 Baseline: USD 35,000,000 Co-Financing: USD 400,000: USAID (exec. by RA) USD 350,000: Rainforest Alliance USD 9,392,106: Company investments in marketing of sustainable coffee to consumers GEF: USD 1,274,086 Total: USD 46,416,192 Baseline: USD 7,000,000 Co-Financing: USD 800,000: USAID (exec. by RA) USD 2,800,000: Rainforest Alliance USD 4,433,020: Local NGOs USD 6,471,326: Company financing to support producers in getting certified GEF: USD 3,141,352 Total: USD 24,645,698 Baseline: 98 Increment (A-B) Total: USD 3,804,925 GEF: USD 1,274,086 Total: USD 1,274,086 GEF: USD 3,141,352 Total: USD 3,141,352 GEF: Cost/Benefit Economic sustainability of certified coffee farms has increased Baseline (B) USD 24,000,000 Donor development support and technical assistance to farmers USD 16,000,000 NGO development support for coffee farmers USD 15,000,000 Coffee industry development support and technical assistance for coffee producers Outcome 5: Increased capacity to engage policy makers in coffeeproducing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy initiatives/threats to sustainable coffee. Outcome 6: Increased learning and adaptive management. Total: USD 55,000,000 Baseline: USD 1,750,000 Total: USD 1,750,000 Baseline: USD 3,500,000 Total: USD 3,500,000 Alternative (A) USD 55,000,000 Co-Financing: USD 200,000: USAID (exec. by RA) USD 911,000: Gov’t Institutions USD 13,000,000: National coffee organizations USD 55,827: NGO’s USD 57,372,908: Company sustainability differentials paid to producers above regular market price (committed in writing): GEF: USD 1,898,735 Total: USD 128,438,470 Baseline: USD 1,750,000 Co-Financing: USD 250,000: Rainforest Alliance USD 280,000: NGOs (ISEAL Alliance) USD 3,508,142: Companies GEF: USD 539,621 Total: USD 6,327,763 Increment (A-B) USD 1,898,735 Total: USD 1,898,735 Baseline: USD 3,500,000 Co-Financing: USD 225,000: Rainforest Alliance GEF: GEF: USD 1,341,281 Total: USD 1,341,281 99 GEF: USD 539,621 Total: USD 539,621 Cost/Benefit Baseline (B) Cost Total Baseline: USD 116,250,000 Total: USD 116,250,000 Alternative (A) USD 1,341,281 Total: USD 5,066,281 Baseline: USD 116,250,000 Co-Financing: USD 110,076,581 GEF: USD 12,000,000 Total: USD 238,326,581 100 Increment (A-B) GEF: USD 12,000,000 Total: USD 12,000,000 PART II : Logical Framework Analysis Table H: Project Logical Framework and Objectively Verifiable Impact Indicators Project Strategy Objectively verifiable indicators Goal Increased conservation of globally important biodiversity in coffee landscapes by transformation of the coffee market in support of sustainable productive practices on coffee farms Indicator Project Objective Demand and sales of biodiversityfriendly coffee increases from niche to mainstream product allowing a significant growth in farms adopting biodiversity-friendly, sustainable productive practices and showing onfarm BD benefits. Outcome 1 Demand for biodiversity-friendly coffee on international coffee markets has increased Baseline Target Sources of verification 1. Growth in habitat area under sustainable management on certified farms 93,000 hectares of coffee as of August 1, 2005 10% of area of world coffee production, plus conservation area on certified coffee farms, or 1,500,000 hectares by year 7. 5% or 750,000 ha by year 4 Certification records 2. Increased populations of keystone species on certified farms show BD conservation benefits Populations of keystone species on noncertified farms (see monitoring plan for species) Monitoring system established and operating by the end of year 1. By year 4 documented increase in keystone species on certified farms (see monitoring plan). RAC Coffee Impact Monitoring System 1. Volume of certified coffee sold 30,000 metric tons per year 10% of total export market, or 500,000 metric tons per year in year 7. 5% or 250,000 by year 4 Client and products database report Roaster baseline: Category / Roasted size coffee in MT A 100k up B 10k- 100k C 5k to 10k D 1k to 5k E 1 to 1000 Total Roaster targets: category 2013 / size Targets A 1 B 5 C 5 D 25 E 300 Total 336 2. Number of roasters of varying sizes buying certified coffee 101 Baseline 0 0 1 0 82 83 Client and products database report Risks and Assumptions Market fluctuations will not severely limit the interest of farmers in getting and staying certified Consumers and companies will maintain interest in sustainability issues Companies find increased reason to promote responsible sourcing policies 3. Number of outlets selling biodiversityfriendly, RAC coffee. Point of Sale baseline (showing company categories of varying sizes): category Number of Baselin / size outlets e 10k up 1 A 5k to 10k 1 B 1k to 5k 1 C 100 to 1000 5? D 1 to 100 80? E 88 Total Point of Sale targets: category / size 2013 6 A 10 B 20 C 50 D 500 E 586 Total Client and products database report Within five years after introduction of certified products on a market, 20% of coffee consumers will recognize the seal. By the end of year 2, project will have produced systems and materials to support company campaigns Consumer surveys conducted every 2 years by coffee (retail) companies. Outputs for Outcome 1 1.1 Existing markets and market segments expanded 1.2 Efficient information management enables scaling up number of certified coffee buyers 1.3 New markets and new companies sell certified coffee. 1.4 Coffee companies made aware of full range of benefits from engaging with certification 1.5 Company employees embrace biodiversity-friendly coffee Outcome 2 Consumer interest to purchase certified coffee increased 1. Consumers in key markets increasingly recognize the seal. Baseline survey to be done in key countries by several coffee companies at project inception. Consumers increasingly find certified products a credible way for them to support sustainability and conservation of BD. Corporations that conduct consumer surveys on sustainability will share information with the project. 102 Outputs for Outcome 2 2.1 Roasters and retailers increase promotion of certified coffee to consumers 2.2 Media in key markets writes stories about the benefits of biodiversityfriendly agriculture and certification. 2.3 Key stakeholders support biodiversity-friendly agriculture. 2.4 Large institutional consumers (such as Fortune 500 companies, large universities, government institutions) have sustainable procurement policies and source certified coffee, FSC paper and other sustainable products Outcome 3 National capacities to certify all sizes of coffee farms in biologically rich production landscapes has increased Number of auditors Number (tbd) of auditors at project start date (in each of the 6 countries and combined); Number of auditors has doubled by year 3 and tripled by year 7 Auditor training workshop records. RAC has obtained ISO 65 accreditation Initial phase of preparation to obtain accreditation By year 2, RAC has been ISO 65 accredited ISO accreditation Increase in satisfaction levels with RAC among farmers who are audited for the first time Baseline survey will determine satisfaction levels among newly certified farmers Dissatisfaction has been reduced by 40% in year 4 and 67% in year 7 Annual survey. Increased volume of certified coffee produced by smallholders. 23% of total certified production comes from smallholders 30% of total certified production comes from smallholders in year 7 By the end of year 2, group certification system is fully developed and auditors trained in its application Certification records Outputs for Outcome 3 3.1 Producers implement changes required to get certified. 3.2 Biodiversity threats are reduced due to changes implemented by producers involved in program 3.3 Capacity has been built to manage growth in certification 103 Local agricultural technical assistance providers are willing to receive training in certification standards and provide technical assistance to producers. 3.4 Local capacity created for technical extension service in implementation of standards 3.5 A group certification system developed and applied Outcome 4 Economic sustainability of certified coffee farms has increased Certified farmers earn better prices than comparable noncertified farmers Baseline information will be collected during the harvest/sales season in year 1. In year 3, at least 50% of farmers earn a clearly detectable price premium. By year 7, 67% of farmers earn a premium Benchmark studies track a representative group of farmers Certified farmers feel certification has helped improve their ability to survive a future coffee crisis Baseline information will be collected in year 1 through a study of certified farmers By year 3, 50% of farmers feel better prepared. By year 7, 80% of farmers feel better prepared Annual surveys of certified farmers RAC partners have limited influence on policy issues. By year 6, effective response to policy opportunities and threats to facilitate greater demand for RAC coffee. Periodic reports from the various policy initiatives; media coverage. Certified farms will be willing to share price with project partners. Coffee industry is willing to continue to reward certified sustainable coffee Outputs for Outcome 4 4.1 Best Management Practices collected and promoted among certified farmers 4.2 Access to markets for certified products improved for certified farmers 4.3 Farmers’ access to financing (particularly for small producers) has been improved through partnerships with financing institutions and programs 4.4 Coffee quality improvement techniques promoted with producers 4.5 Sustainable terms of trade promoted throughout the supply chain 4.6 Good business, marketing and sales practices promoted with producers Outcome 5 Increased capacity to engage policy makers in coffee-producing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy 1. Number of policy initiatives/threats addressed in major coffee producing and coffee consuming countries; extent of 104 Policy makers will be willing to engage with the project partners in the various countries/ initiatives/threats to sustainable coffee. . Outputs for Outcome 5 5.1 Policies implemented and policy threats mitigated in producing countries 5.2 Fiscal incentives implemented by project country governments 5.3 Policies implemented and policy threats mitigated in consuming countries Outcome 6 Increased learning and adaptive management success in addressing these (high, medium, low). markets. 2. Policy working groups formed with relevant public, private and research organizations in each of the 6 project countries (over time the priority policy issues that have been identified and the extent to which they’ve been addressed). During the project inception, current levels of policy-level activity/engagement will be determined for each of the 6 countries. By end of year 2, policy working groups established in the 6 project countries and at least one policy issue identified as a priority. Periodic written reports from these groups stating the opinion of group members regarding the extent to which they feel the group is being effective. 1. Systematic information is available to document the impact of certification on biodiversity and socialeconomic conditions. Currently only sporadic measure of the impacts of the certification system By year 2, systematic information is generated annually in each project country. By year 5, clear evidence has been obtained of the biodiversity benefits in coffee Decisions taken in yearly strategic planning exercises 2. Learning enables improved strategic planning and program design and implementation. No widespread or systematic use of adaptive management. By year 2, clear evidence of adaptive management leading to changes in the design and implementation of program activities. Yearly reports from Impact Monitoring Program Outputs for Outcome 6 6.1 Monitoring program established in all project countries 6.2 Landscape level planning and monitoring established in two pilot countries 6.3 Adaptive management and 105 strategic planning system established at project and certification system levels 6.4 Lessons learned and impact data are gathered, documented and disseminated to key internal and external audiences. 6.5 Multi-stakeholder consultation and involvement at country and international levels secures inputs in certification program and standard setting process. 106 Table I: Indicative Main/Strategic Activities No. 1.1 Output 1.2 Efficient information management enables scaling up number of certified coffee buyers. 1.3 New markets and new companies sell certified coffee. Existing markets and market segments expanded. Main/strategic activities Develop marketing materials and make available to companies on business to business web portal. These promotional, educational, and informational materials will be geared toward specific market segments. Easily downloadable and available in multiple languages. Will include materials for retailers, roasters, and importers. Some printed versions will also be produced. Provide individualized assistance to larger companies with stakeholder outreach and crafting their public message about their certified coffee products. Launching events in collaboration with companies. Many companies organize their own PR events to publicly launch new certified products. The project will provide a range of support to these events. Conferences and Tradeshows. Includes sharing a booth with a client at a tradeshow, presenting together with a client on a conference panel. Hold an annual meeting and sustainable coffee breakfast for all participants in the supply chain for certified coffee at Specialty Coffee Association of America annual conference. Efficient information management is the key strategy for scaling up the number of buyers of certified coffee. Information systems will enable hundreds of companies to connect to the certification program and access resources without requiring staff to provide this service. In addition to the business to business web portal, this includes client relationship management software, consumer web portal including interactive maps. Web-based sales tracking and product traceability tool. Providing on-line registration of availability and sales of certified products, this tool will help to track sales of product and use of seal, and will allow producers and buyers to better connect. Seal management systems. Includes registration of seal in new markets, further development and implementation of use of seal guidelines, guidance materials for companies. Marketing planning. Every two years the project will conduct market research to create updated marketing plan. Conduct personal meetings with potential companies. Conferences and tradeshows – Marketing staff attend, present and/or host booth at the most relevant shows for each segment in each region. As a result meet potential new clients and raise profile of program. Create tools to attract new companies. This includes a series of materials needed to make the case for certification. Includes regularly updated CD ROM and DVD, material showing the benefits of certification, brochures for different market segments in multiple languages, and presentation tools. Create business to business web portal. This would be an on-line resource for companies 107 1.4 Coffee companies made aware of full range of benefits from engaging with certification. 1.5 Company employees embrace biodiversity-friendly coffee. 2.1 Roasters and retailers increase promotion of certified coffee to consumers. to learn about certification and download materials to help promote their certified products. Would include on-line registration, information about where to buy certified coffee, information on logo use, electronic newsletter, materials resource center. Media outreach to industry trade publications. Develop relationships with editors, pitch stories, write stories. There are trade publications for each segment of the market, so the outreach strategy will be targeted to these different segments. Companies considering buying certified products need to understand how they will benefit, and once they are buying they need to promote the concepts behind the seal. A key marketing strategy is to provide better information to make these arguments. Strengthen business case for buying certified products. Produce case studies, stories from the field. Produce data on impacts in the field from monitoring system, case studies, collaboration with other research efforts. Produce materials detailing benefits to companies. Roaster sales staff training and motivation. Develop materials, such as sell sheet, frequently asked questions sheet, PP presentation or DVD, and brochure targeting respective client base (supermarkets or foodservice) will be developed for companies to use for internal training purposes. For key partners, staff will present materials in person at headquarters during company’s annual national meeting. Roaster retailer sales staff training and motivation. For roaster retailer companies the marketing team will develop very simple educational materials and message about the program for companies to use in their internal training of baristas and frontline employees. For key partners in this segment (i.e. Caribou, Timothy’s, Gloria Jeans), the marketing team will attend national store manager or franchisee meeting to present program personally. Farm tours. Includes two types of programs. For personnel within key partner companies marketing staff will help develop trip agenda, organize logistics, and accompany trip to educate key partner staff about certification. Approximately four trips per year. The second program would be a “Prize tour” for top selling retail salespeople. In this program marketing staff will create the concept and tour for companies interested in providing this incentive to employees. Companies pay for the actual cost of the tours. Consumer incentive and loyalty program. Provide concept design and on-line materials for companies to offer consumers incentives to purchase certified coffee, such as frequency cards, raffles, contests, giveaways. Companies implement programs. Design sample point of sale materials and other promotional materials that retailers can use to increase sales, available for download on business to business web portal. Design and provide on-line guidance materials on how to conduct certified coffee tastings. Develop partnerships with other entities to stimulate sales through coupons for certified coffee. 108 2.2 Media in key markets writes stories about the benefits of biodiversity-friendly agriculture and certification. 2.3 Key stakeholders support biodiversity-friendly agriculture. 2.4 Large institutional consumers (such as Fortune 500 companies, large universities, government institutions) implement sustainable procurement policies and source certified coffee, FSC paper and other sustainable products. 3.1 Producers implement changes required to get certified. General media outreach. Communications staff and project consultants will identify key media contacts, write and send press releases, hold press conferences and media events in consuming countries. Conduct media outreach to provide support to companies’ consumer campaigns. Expand media work in Europe and to Japan and other emerging markets through local pr/media consultants. Develop relationships with media in new geographic locations globally as companies expand their certified coffee sales to new markets. Conduct media tours to farms. Communications staff will organize trips for U.S. and European media representatives to visit coffee farms. Journalists will pay their expenses, and staff will arrange logistics and accompanies the journalists to the farm to educate about certification. Identify and engage global celebrity spokespeople and endorsements. Produce communications support materials – coffee information newsletter, website articles, farm profiles, eco-index, and fact sheets – in the languages of the key markets. Available in print an on-line. During the seven year project an increased use of new media and internet related work is anticipated as a key strategy for increasing awareness. This may include streaming video from certified farms into coffee shops, coffee blogs, viral marketing, video press conferencing, a more interactive website. Create concept promotion partnerships with NGOs focused on conservation, rural development, and poverty alleviation. These partners will help promote, explain, defend, and endorse the concept of biodiversity-friendly agriculture to their members, government institutions, companies, and other key stakeholders. Strengthen collaborative and constructive relationships with other certification schemes through regular meetings to promote harmonization between standards, audit practices, media outreach and other areas where certification schemes are likely to be able to find synergy effects. Increased collaboration will be to the benefits for certification organizations, farmers, companies and consumers Student outreach toolkit. An on-line tool to engage this powerful group of activists, thought and trend leaders. Will focus on ways students can support conservation and sustainable coffee. SmartSource. Program to attract interest of institutional buyers. Hold direct meetings with companies, participate in CSR conferences, help companies develop procurement policies. Student campaigns. Work with student groups identified through on-line student toolkit to encourage universities to adopt certified products. Produce educational materials for producers focused on the standards explaining how to implement required changes on the farm. Includes printed manuals, instructional DVD where the standards and practices are explained (before and after examples) and the 109 3.2 Biodiversity threats are reduced due to changes implemented by producers involved in program. 3.3 Capacity has been built to manage growth in certification 3.4 Local technical extension service providers provide support to producers in implementation of the standards. 3.5 Groups of producers are able to get certified through group certification system. farmer is run though an audit, improved on-line accessibility of information to producers. The project will conduct workshops to train producers in how to get certified. Workshop series will focus in-depth on how to implement different aspects of the certification standards. The project will conduct introductory workshops/meetings to provide a general overview of the standards. Presentations on certification to industry associations, farmer groups, cooperatives. Develop case studies on the benefits to farmers beyond price premiums and incorporate into promotional materials for farmers. Conduct annual strategic planning/adaptive management workshops for each coffee region to determine landscape level threats and identify ways to best address these threats and maximize biodiversity impacts through training and certification activities and other planned project interventions. Incorporate specific biodiversity threat reduction elements tailored to each landscape into workshops training producers in how to get certified. These elements will change over time based on feedback from adaptive management system. Business planning. Create and periodically update business plans for each network partner. Improve and adapt certification fee structure to improve long-term financial sustainability of certification system. Strengthen individual partners to accommodate growth, as identified in business planning process. Install permanent capacity to deliver certification services in Peru, where there is no current partner. Consolidate and strengthen network secretariat functions. Implement systems and achieve ISO 65 and EurepGap accreditation. Improve use of on-line information systems to streamline audit and reporting process. Explore and establish partnerships with existing technical assistance providers in each country. The project will provide in-depth training in meeting the standards to external and internal technical assistance providers. Annual train the trainers workshops to update the knowledge of technical assistance providers, including the local NGO partners. Certification standards and procedures evolve, and new techniques develop. This training would ensure that all technical assistance providers have access to the most up to date knowledge. Database of technical assistance providers. Provides farmers with on-line access to information on local TA providers. Develop educational materials for groups in how to implement internal control systems. Internal control systems are the administrative control function that provides an outside certification auditor with assurance that a group is well managed, allowing the auditor to select only a portion of the group for auditing instead of visiting every farm. Workshops and information meetings to train groups in how to implement internal control 110 4.1 Increased sharing and implementation of Best Management Practices. 4.2 Certified farmers have improved access to markets for certified products. 4.3 Farmers’ access to financing (particularly for small producers) has been improved through partnerships with financing institutions and programs. 4.4 Certified producers implement coffee quality improvement techniques. systems. Informational meetings would provide a general overview of what is required to implement an internal control system, and workshops would provide in-depth training in the concept. Presentations to cooperative associations. These presentations would introduce groups to the group certification process. Identify, collect and document best management practices on certified farms. Certification requires a farm to implement continuous improvement, which often creates a culture of innovation on the farm. The project will capture and disseminate these innovations. Training materials and events. Develop manuals on identified best management practices, incorporate into training workshops. Facilitate farmer exchanges. Create opportunities for farmer to farmer training. Produce informational materials for producers on how to increase their access to the market for certified products. Deliver this information through the website and through annual marketing workshop for producers in each project country. Traceability database will allow exporters and other buyers to more easily identify certified coffee available. Supply chain coordinators. Staff members with detailed knowledge of the market who attend conferences, workshops, and individual meetings to link producers to buyers. Partnership with credit institutions and programs. Project management staff and National Coordinators will identify credit institutions and programs that are interested in making biodiversity-friendly loans, educate them about the certification program, and create partnerships. Information on availability of financing. On-line and printed materials to help farmers understand availability of and access to financing from partner institutions. Local cupping events. Promotional events in each country where certified producers are invited to submit samples of product to be evaluated by a professional coffee “cupper” (taster). Industry and media representatives are invited to the event, and the results are released to the media. International cupping event (local and international cupping events also benefit output 4.2). Annual event in the U.S. timed to make announcement of winner at the annual SCAA conference. Similar to the local events but including all certified producers, internationally recognized cuppers, and international media. Write and produce guidance for producers on best practices to improve quality. Include in market access materials and workshops for producers. Create partnerships with local TA providers such as CQI and local coffee associations to incorporate topic into planned producer training activities, such as the marketing workshops. Quality practices evaluations in audits. This would be voluntary at first, and then 111 4.5 4.6 Sustainable terms of trade between certified coffee buyers and sellers included in purchase contracts. Producers improve business, marketing and sales practices. 5.1 Policies implemented and policy threats mitigated in producer countries. 5.2 Fiscal incentives implemented by project country governments. . 5.3 Policies implemented and policy threats mitigated in consuming countries. 6.1 Monitoring program established in all project countries 6.2 Landscape level planning and monitoring established in two investigate the feasibility of revising audit standards and make quality practices a formal part of certification. Disseminate results of IISD research. Printed materials for different segments of the supply chain outlining and recommending sustainable terms of trade. Incorporate information into presentations, public information materials, website. Incorporate recommendations into the certification system when possible. Disseminated in useful ways to the farmers (toolkit) and industry (e.g. articles) Business tools for farmers. Instructional DVD for certified farmers which contains information on financing, business practices, quality improvement. Farm management software (ABC not PhD), and annotated farm management plan template and example. Provide guidance on improving farm management plans to include more business elements and standardizing those plans with other certification and verification programs (organic, Starbucks, Utz). Partnerships with local providers of business skills training. Incorporate topic (with assistance providers) into workshop series or other training. Marketing and sales topics will be included in the marketing toolkit for producers. Hire consultant to conduct study on some of the “best practices” in policies that partners could use to present to government agencies. Dialogue with national authorities to give inputs to policy formulation processes Policy working groups formed with relevant public, private and research organizations in each of the project countries. UNDP Country Offices to provide support in these efforts as appropriate. Baseline study of fiscal incentives that affect sustainable coffee in producing countries National Coordinators promote fiscal incentives to local governments. Create policy monitoring partnerships with NGOs, companies, and other organizations, and coordinate with corporate and ngo partners to identify threats to and opportunities for biodiversity-friendly agriculture. “Rapid response team” of legal, program, communications and executive staff respond to threats as they arise. Policy Coordinator will actively seek support for certification standards from European governments. Policy Coordinator will seek support from UNDP in these efforts as appropriate. Adaptive management system implemented at farm level in all countries. Establish baseline indicators and detailed monitoring plans for each country for 7 year period. Determine how to better use certification auditing system to collect monitoring data. Implement. Initial strategic planning workshops determine landscape level threats and develop plans 112 pilot countries 6.3 Adaptive management and strategic planning system established at project and certification system levels. 6.4 Lessons learned and impact data are gathered, documented and disseminated to key internal and external audiences. 6.5 Multi-stakeholder consultation and involvement at country and international levels secures inputs in certification program and standard setting process. to address through project interventions. Establish baselines for pilot countries – repeat El Salvador strategic planning model. Adaptive management system implemented at landscape level in pilot countries. Analyze data from monitoring system and identify needs for adapting project interventions and certification systems. Incorporate into annual planning process. Build learning into adjustments of standards, certification system, program interventions. Gather data and write case studies on impacts. Publish articles and other documents on lessons learned. Conduct workshops in year 3 and 6 to share lessons learned and impacts. Key audiences: Rainforest Alliance Agriculture program and local NGO partners, other Rainforest Alliance programs, coffee sector stakeholders, other certification systems, decision makers – policy, donor, ngos, media. Coordination mechanism developed between National Coordinators and local stakeholders, including government agencies, industry associations, and others to provide regular communication on certification program activities and receive feedback and input. Establish and coordinate local and international standards and policy advisory groups that provide general input, technical expertise and guidance regarding standards content and related policies. Facilitate harmonization with other standards. Coordinate and provide guidance for the development and implementation of local and international certification standards, policies and procedures. Coordinate local and international stakeholder consultation on new standards, local standards, and standards updates. 113 SECTION III : Total Budget and Workplan BUDGET CONSIDERATIONS 503. The PDF B phase for this project has been tremendously successful. Having worked to build the coffee certification system for more than a decade, it is only within the last years that the coffee world has begun to see its full potential, in terms of improving sustainability and protecting biodiversity in diverse coffee landscapes. With relatively modest resources and a small group of people, the coffee certification program has already achieved truly unusual results, won respect within the coffee community, and opened the doors to an enormous growth potential. 504. The PDF B process has enabled the project to look beyond the current situation to assess the future of the coffee certification program and to understand the challenges and opportunities from a longterm perspective. The chance of being able to plan growth over the next 7 years is a rare opportunity for an NGO-led program, and the process has clearly given a new dimension to the program to the extent that the future of the certification program very much depends on the current project proposal. 505. Working together during the planning phase, Rainforest Alliance and UNDP came to recognize that realizing the full potential impact of sustainable coffee certification for biodiversity in coffee landscapes would take a more ambitious project intervention than was anticipated in the early stages of Concept development. There are a series of reasons why it was found that the project needed to increase its scope. The approved Concept document was approved in November 2003, almost two years ago. Since then, the certification program has been in rapid growth. Two years ago certified products were available in approximately 1,000 sales outlets, whereas the current number is 20,000. A total of certified hectares were 23,000, which has grown to 93,000 hectares. Certified hectares increased by 57,000 in the last year alone. Correspondingly, what seemed like tremendous growth opportunities just two years ago has long since been surpassed, and the certification program has justified expectations of impacts at a much larger scale. Reflecting the new opportunities which were analyzed during the PDF B process, targets for project intervention were set substantially higher than what was thought possible by the time of Concept development. Direct conservation benefits by transformation of productive practices on 1.5 million hectares of mostly shade-coffee production in some of the World’s most rich and endangered hotspots, and certifying ten percent of world coffee production within a limited timeframe, seemed a powerful justification for a larger project intervention The response to the project from coffee companies has been overwhelming. Some of the largest and most innovative companies in the coffee world have offered to be a partner in the project, helping and contributing to develop activities and products. Strong company interest has raised expectations, but it has also sharply raised chances of impact. Project countries were expanded from five to six to be able to cover the six largest Latin American producers, which are all among the world’s top-ten producers. While targeting these major producer countries is a challenge, the massive coffee sectors in these countries are also an opportunity to maximize impact. Project Coffee Regions were defined as much larger landscapes than originally envisioned, because it was recognized that it would take enormous increase in certification to satisfy future 114 demand. The eight PCR’s together amount to almost the size of Germany, within four of the most biodiverse, but threatened, hotspots on earth. Finally, project duration was increased from 5 to 7 years to allow time for markets and producers to mature their commitment to sustainability. 506. Rainforest Alliance and UNDP agreed that the amount stipulated in the Concept document – USD 5 million – had perhaps been underestimated at the time of Concept development, but also that the potential of the certification program had seriously outgrown the scope of the project as laid out in the Concept paper. It was concluded that a budget range as the originally stipulated would not be sufficient to catalyze impact on the scale desired and now realistic. For a large, regional project, which will work both with biodiversity conservation at coffee supply side, as well as demand side on international coffee markets, in collaboration with numerous, large coffee companies, a larger budget of USD 12 million will be needed. This amount has been determined based on detailed costing of planned project outputs and activities. COFINANCING AND LEVERAGING POTENTIAL 507. The requested GEF investment is not only justified because of the large area which will be protected through project activities, but also because of the substantial co-financing and leveraging potential of the project design model. This financing will catalyze a lasting change in the coffee industry and help effectively mainstream biodiversity and sustainability concerns in productive practices on coffee farms. 508. On-farm improvements to achieve certification require considerable investment on the part of the farmer. The ability to leverage large amounts of private sector investments in biodiversity-friendly productive practices is one of the key strength of the certification system. During the PDF B, ten farms and cooperatives in six countries were surveyed about the investments they had made to qualify for certification. The farms and cooperatives covered a total productive area of almost six thousand hectares. The average investments per farm ranged from USD 400 per hectare to almost USD 1000 per hectare, usually invested over 1-3 years, and the average total investment per hectare for all the farms was USD 5451. As the project will help increase certified production area from 93,000 to one million hectares over the project’s lifetime, and assuming a similar investment pattern for future certified farmers, the increase in certified area represents a private sector investment of USD 494 million – or more than forty times the GEF investment. This is what private producers – large and small – will invest in sustainability and onfarm biodiversity conservation as a result of the GEF intervention. 509. The project will also catalyze large investments by coffee companies that pay premiums above the normal New York Board of Trade “C” price, to reward the sustainability and conservation measures taken on coffee farms. This in fact represents a payment for environmental services, which will continue to encourage farmers to produce in a sustainable manner. In a study conducted during the PDF B phase, it was found that certified farmers were paid an average of USD 12 cents per pound of coffee sold. Even if a more conservative estimate of future premiums of USD 10 cents per pound is used, premiums paid to certified farmers will amount to USD 363 million during the project’s lifetime. 510. The value of the increased amount of RAC coffee traded on international markets as a result of this project intervention is considerable. Using the New York Board of Trade historical average “C” coffee price over the last ten years, the price that will be paid to farmers for RAC coffee during the 1 Note that the system does not require investments of this scale to become certified. Also, this is mostly a one-time investment to qualify for certification. It is anticipated that the producer will enjoy efficiency gains and benefits in the market place in the longer term which will make the investments worthwhile. 115 project’s seven year lifetime amounts to USD 3.723 billion. This amount represents the shift in private sector purchases from non-sustainable products to products produced under biodiversity-friendly production practices. The amounts leveraged in farmer investments, in price premiums, and in shifts in purchases from unsustainable to sustainable coffee show the potential of engaging the largest crop commodity industry in the world in sustainable practices. 511. The project design would catalyze healthy amounts of co-financing, more than USD 110 million confirmed in writing. This amount does not accurately reflect real co-financing amounts in the coffee sector, but rather the project’s ability to capture investments in written co-financing letters. Coffee companies invest in all this project’s outcome categories: in promoting sustainable coffee through the supply chain, and with consumers; assisting producers in getting certified, and with strengthening economic sustainability through improvement of farm practices. The larger companies invest in policy dialogue to further a policy environment favorable for sustainable products, and in research and pilot projects to increase knowledge of how to achieve sustainability in their business. 512. Coffee is arguably the most important crop for biodiversity in the tropics, but there are few, or perhaps no other certification system which leverage similar shifts in private sector investments, or which can offer the potential to transform the coffee sector by offering market driven incentives to change. This is the reason the GEF should finance the project intervention at the requested level 116 Total Budget and Workplan Award: 00044021 Award Title: PIMS 3083 BD FSP Regional: BD Conservation in Coffee Production Project ID: 00051603 GEF Outcome/Atlas Activity Responsib. Party Source of Funds Rainforest Alliance GEF ERP/ATLAS Budget Description Audio Visual and Printing Production 74200 Costs 71200 International Consultants 71300 Local Consultants 71600 Travel 72100 Contractual services - companies 72200 Cofinancing (own execution) Amount 2007 (USD) Amount 2008 (USD) 66,000 55,000 11,000 Amount 2009 (USD) 0 Amount 2010 (USD) 0 Amount 2011 (USD) 0 Amount 2012 (USD) 0 Amount 2013 (USD) (5 months) 0 88,000 205,920 172,515 86,615 38,605 26,766 0 0 618,421 506,836 503,017 550,282 374,682 156,136 40,247 7,432 2,446,204 11,000 66,000 66,000 66,000 33,000 55,000 0 0 297,000 55,000 38,500 44,000 0 0 0 0 275,000 Equipment and furniture 3,300 5,500 4,400 0 0 0 0 0 13,200 72500 Supplies 3,300 3,300 3,300 0 0 0 0 0 9,900 73100 Rental and Maintenance - Premises 3,300 3,300 3,300 3,300 0 0 0 0 13,200 619,970 900,856 802,032 750,197 446,288 237,903 40,247 7,432 3,804,925 USAID 1,000,000 Kraft Foods 1,400,000 Kraft Foods 3,599,369 Caribou Coffee 1,145,585 UCC Ueshima Coffee Company, Ltd. 127,400 Boyd Coffee Company 122,130 Luigi Lavazza S.p.A. 407,100 Drie Mollen Holding B.V. 610,651 DR Wakefield and Company 8,142 830,485 Royal Cup Coffee 376,390 Sub-total co-financing GEF Outcome 1 (GEF+ Co-financing) Audio Visual and Printing Production 74200 Costs 71200 International Consultants Rainforest Alliance 132,000 307,570 Matthiew Algie & Company Limited OUTCOME 2: Consumer interest to purchase RA certified coffee has increased Total (USD) 137,500 Sub-total GEF OUTCOME 1: Demand for biodiversityfriendly coffee on international coffee markets has increased Amount 2006 (USD) (7 months) 9,627,252 13,432,177 27,500 49,500 55,000 33,000 16,500 11,000 11,000 11,000 214,500 526,734 139,627 206,378 134,205 46,524 0 0 0 0 71300 Local Consultants 19,800 30,888 22,486 8,352 0 0 0 0 81,527 71600 Travel 16,500 33,000 33,000 33,000 5,500 0 0 0 121,000 73100 Rental and Maintenance - Premises 33,000 33,000 33,000 33,000 33,000 33,000 11,000 5,500 214,500 74500 Miscellaneous exp. 23,643 35,277 27,769 15,388 5,500 4,400 2,200 1,650 115,826 260,069 388,042 305,461 169,264 60,500 48,400 24,200 18,150 1,274,086 Sub-total GEF 117 USAID 400,000 Rainforest Alliance 350,000 Kraft Foods 5,220,373 Caribou Coffee 2,012,310 UCC Ueshima Coffee Company, Ltd. Cofinancing (own execution) 350,000 Boyd Coffee Company 81,420 Luigi Lavazza S.p.A. 407,100 Drie Mollen Holding B.V. 610,651 Diedrichs Coffee Inc./Gloria Jean’s Coffees 610,651 DR Wakefield and Company 99,601 Sub-total co-financing Rainforest Alliance OUTCOME 3: National capacities to certify all sizes of coffee farms in biologically rich production landscapes has increased 11,416,192 82,500 88,000 71,500 99,000 77,000 66,000 27,500 11,000 522,500 181,500 226,600 178,463 185,603 38,605 0 0 0 810,771 71300 Local Consultants 138,174 191,343 170,287 158,723 94,526 29,504 16,043 5,562 804,162 71600 Travel 49,500 60,500 77,000 77,000 55,000 44,000 27,500 11,000 401,500 72100 Contractual services - companies 11,000 220,000 110,000 44,000 22,000 16,500 5,500 0 429,000 74100 Professional services 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 26,400 74500 Miscellaneous exp. 23,134 39,322 30,363 28,216 14,357 7,800 3,827 0 147,019 489,108 829,065 640,913 595,842 304,788 167,104 83,671 30,862 3,141,352 Sub-total GEF USAID 800,000 Rainforest Alliance 2,800,000 IMAFLORA (Brazil) Cofinancing (own execution) 970,000 Fundacion Natura (Colombia) 1,026,020 SalvaNATURA (El Salvador) 722,000 FIIT (Guatemala) 820,000 ICADE (Honduras) 895,000 Caribou Coffee 1,281,246 DR Wakefield and Company 5,166,362 Boyd Coffee Company 23,718 Sub-total co-financing 14,504,346 Outcome 3 (GEF+ Co-financing) Audio Visual and Printing Production 74200 Costs 71200 International Consultants Rainforest 71300 Local Consultants Alliance 71600 Travel GEF OUTCOME 4: Economic sustainability of certified coffee farms has increased GEF Outcome 2 (GEF+ Co-financing) Audio Visual and Printing Production 74200 Costs 71200 International Consultants 10,142,106 72500 Supplies 72200 Equipment and furniture 17,645,698 49,500 55,000 55,000 49,500 33,000 44,000 38,500 16,500 341,000 73,333 114,400 118,976 123,735 25,737 0 0 0 456,181 113,052 156,554 139,325 129,865 77,339 24,139 13,126 4,551 657,951 22,000 27,500 27,500 27,500 27,500 5,500 5,500 0 143,000 5,500 7,700 7,700 5,500 5,500 2,200 2,200 0 36,300 11,000 22,000 22,000 22,000 22,000 0 0 0 99,000 118 73100 Rental and Maintenance – Premises 74500 Miscellaneous exp. Sub-total GEF 11,000 33,000 33,000 33,000 0 0 0 0 8,562 12,485 12,105 11,733 5,732 2,275 1,780 632 55,303 293,946 428,638 403,501 402,833 196,808 78,115 61,106 21,682 1,898,735 USAID 200,000 Government of Brazil 600,000 Federación Nacional de Cafeteros De Colombia 11,000,000 ANACAFE of Guatemala 2,000,000 Guatemala – Association of Private Reserves of Guatemala 55,827 Government of Honduras 182,000 Government of Peru Cofinancing (own execution) 129,000 Kraft Foods 29,331,808 Caribou Coffee 3,022,285 UCC Ueshima Coffee Company, Ltd. 2,930,307 Boyd Coffee Company 474,359 Drie Mollen Holding B.V. 892,717 Diedrichs Coffee Inc./Gloria Jean’s Coffees 375,692 DR Wakefield and Company 6,632,334 Matthiew Algie & Company Limited 13,306,306 Royal Cup Coffee 407,100 Sub-total co-financing OUTCOME 6: Increased learning and adaptive management Outcome 4 (GEF+ Co-financing) Audio Visual and Printing Production 74200 Costs 71200 International Consultants Rainforest Alliance GEF OUTCOME 5: Increased capacity to engage policy makers in coffeeproducing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy initiatives/ threats to sustainable coffee 71,539,735 73,438,470 3,300 7,700 5,500 3,300 2,200 0 0 0 22,000 106,333 165,880 101,130 0 0 0 0 0 373,343 71300 Local Consultants 6,502 10,144 10,549 10,972 11,410 2,967 3,085 1,070 56,699 71600 Travel 7,700 11,000 11,000 7,700 7,700 5,500 4,400 0 55,000 72500 Supplies 5,500 5,500 5,500 5,500 0 0 0 0 22,000 74500 Miscellaneous exp. 2,587 4,004 2,674 549 426 169 150 21 10,581 131,922 204,228 136,353 28,021 21,736 8,636 7,635 1,091 539,622 Sub-total GEF Rainforest Alliance Cofinancing (own execution) 250,000 Kraft Foods 3,500,000 DR Wakefield 8,142 ISEAL 280,000 Sub-total co-financing 4,038,142 Outcome 5 (GEF+ Co-financing) Rainforest Alliance 110,000 71300 Local Consultants 71600 Travel 72500 74100 4,577,763 108,900 187,387 194,883 202,678 105,393 109,608 113,993 0 1,022,841 11,000 11,000 11,000 2,200 2,200 $0 0 0 37,400 Supplies 1,100 6,600 2,739 3,850 2,750 $0 0 0 17,039 Professional services 5,500 5,500 115,500 5,500 5,500 5,500 5,500 115,500 264,000 126,500 210,487 324,122 214,228 115,843 115,108 119,493 115,500 1,341,280 Sub-total GEF 119 Rainforest Alliance Co-fin. 225,000 Sub-total co-financing 225,000 Outcome 6 (GEF+ Co-financing) TOTAL GEF $1,566,280 878,977 Company co-financing Co-financing per financier 1,430,895 1,273,795 982,634 481,130 330,612 227,363 164,512 12,000,000 83,971,734 Government co-financing 911,000 Co-financing from national coffee organizations 13,055,827 Other co-financing 12,138,020 TOTAL co-financing 110,076,581 Project GRAND TOTAL 122,076,581 GEF PDF-B is $640,092 The total Executing Agency fee is $1.2m. 120 BUDGET BY OUTPUT Project Title: Biodiversity Conservation in Coffee Budget Per Output Description Outcome 1 1.1 Existing markets and market segments expanded 1.2 Information management enables scaling up 1.3 New markets and new companies sell certified coffee 1.4 Coffee companies made aware of full range of benefits 1.5 Company employees embrace certified sustainable coffee Sub-Total Outcome 1 $1,516,996 $472,507 $1,019,620 $363,084 $432,717 $3,804,925 Outcome 2 2.1 Roasters and retailers increase promotion to consumers 2.2 Media in key markets writes stories about certification 2.3 Key stakeholders support certified sustainable agriculture 2.4 Large institutional consumers certified sustainable products Sub-Total Outcome 2 $524,624 $474,660 $124,910 $149,892 Outcome 3 3.1 Producers implement changes required to get certified 3.2 Increased biodiversity impacts result from changes 3.3 Capacity built to manage growth in certification 3.4 Technical extension service provided to producers 3.5 Groups of producers implement group certification systems Sub-Total Outcome 3 $1,212,366 $559,553 $682,262 $309,227 $377,944 Outcome 4 4.1 Sharing and implementation of Best Management Practices 4.2 Improved access to markets for certified products 4.3 Farmers’ access to financing improved 4.4 Certified producers implement quality techniques 4.5 Sustainable terms of trade included in purchase contracts 4.6 Producers improve business, marketing and sales practices Sub-Total Outcome 4 $438,608 $778,956 $119,146 $206,013 $118,671 $237,342 Outcome 5 5.1 Policies implemented and threats mitigated in producer countries. 5.2 Fiscal incentives implemented by governments. 121 Budget Per Outcome $1,274,086 $3,141,352 $1,898,735 $171,698 $122,641 5.3 Policies implemented and policy threats mitigated in consuming countries. Sub-Total Outcome 5 Outcome 6 6.1 Monitoring program established in all project countries 6.2 Landscape level planning and monitoring in two pilot countries 6.3 Adaptive management and strategic planning system established 6.4 Lessons learned and impact data gathered, documented and disseminated 6.5 Multi-stakeholder consultation and involvement Sub-Total Outcome 6 Total Budget $245,282 $539,621 $262,424 $437,374 $145,791 $379,057 $116,633 $1,341,280 $12,000,000 122 SECTION IV : ADDITIONAL INFORMATION PART I : Other agreements 513. Please see separate PDF file for the letters of financial commitment. A draft Project Cooperation Agreement (PCA) can be found in Part (Annex) XX of this proposal. The PCA between Rainforest Alliance and UNDP will be signed before project execution begins. PART II : Project Structure 514. Rainforest Alliance is the Executing Agency for this project. The model below shows how the project will be executed through Rainforest Alliance’s and partners’ existing structures. The project will also help establish new entities, such as the Sustainable Farmers’ Support Alliance. Rather than establishing parallel capacity in a traditional, temporal Project Coordination Unit, new capacity will be built within different departments and units. This will ensure maximum levels of mainstreaming and sustainability of project results, as project capacity will be gradually absorbed by the certification system. MATRIX AND REPORTING STRUCTURE 515. The project structure will cut across a number of specialized units in Rainforest Alliance and Sustainable Agriculture Network (SAN) partners, and help build capacity needed to manage the expansion in demand and supply of biodiversity-friendly Rainforest Alliance certified coffee. Each unit has key functions that are integral parts of the full certification system, such as standards-setting, certification, marketing and communications/media. Managers of each unit are responsible for achieving concrete deliverables within the coffee certification program, and will be responsible for the execution of project components that fall within their responsibility and require their particular expertise. The project manager (entitled Coffee Program Manager, please see TORs below) and the managers of each specialized unit will constitute the core project team and will meet regularly throughout the project’s lifetime to (a) plan project activities so that they fit into the work plans of the units in a way that will enable each unit to achieve the results necessary to reach the project objectives, (b) review progress in project activities to ensure that they produce the desired results, and (c) trouble shoot intervention plans and strategies and perform adaptive management to continuously optimize project impacts. The project team will work under the guidance of the senior management of Rainforest Alliance’s Sustainable Agriculture Division. 516. Rainforest Alliance will place project staff within specialized units, to ensure sufficient capacity to execute project activities. This project staff will gradually be incorporated into the permanent structure of the coffee program, financed by non-project sources of funding. In this way, the project will help build permanent capacity to sustain project results after the project ends. These project staff will work in a matrix arrangement, with direct reporting responsibilities to their unit manager, but also with concrete responsibilities with regard to execution of project activities. To ensure a clear reporting structure, each unit manager will consolidate the results generated by project staff and co-financed staff in his or her particular unit, and periodically report on project achievements to the Coffee Program Manager. The Coffee Program Manager and the specialized unit managers all report to the Project Director, who is also the Director of the Rainforest Alliance’s Sustainable Agriculture Division. The Project Director will ensure that all units perform according to agreed plans, and will take corrective action if a unit fails to do so. Through the matrix structure, the project will build on installed expertise in each specialized unit, while it ensures strict coherence between the works of these units thanks to a unified strategic plan for the coffee program. To ensure coherence in all coffee program activities, the strategic 123 plan for the coffee program will cover both project activities financed by the GEF and work financed by cofinancing sources. The Coffee Program Manager will be responsible for periodical reporting of project progress and achievements to UNDP and the GEF. 517. In the model below, each specialized unit is represented by a yellow vertical column. In each column is shown the key project staff that will be assigned to project activities within that unit, but also some of the nonGEF financed unit staff will execute GEF project activities. Where a project staff member will undertake broader RA or non-coffee related work, a cost sharing arranging will be established so that the GEF only pays for project-related work. The project is represented by the orange vertical bar that cut across specialized units. Some project staff is dedicated to the project as a whole, such as the Coffee Manager, Learning Manager, and administrative staff. The EU Policy Specialist will work directly with the Sustainable Agriculture Division senior management, and not as a part of specialized units. Biodiversity Conservation in Coffee - location of key project staff & reporting structure Independent Network Rainforest Alliance Unit Managers report on project achievements Standards & Policy Project staff report to unit manager RA Coffee Program ●Standards GEF Coffee Project manager ●Coffee Manager ●Learning Manager ●EU Policy Specialist ●Project Administrator ●Project Assistant RA Certification Services Marketing Sustainable Farmers’ Support Alliance Media SAN partner national programs Team staff report to unit manager Project staff report to unit manager Project staff report to unit manager Project staff report to unit manager C.C. report to SAN Dir (I) & Coffee Manager (II) ●Certification Business Unit Team (cofinanced) ●Marketing Managers ●Client Relations Mgr ●Regional Marketing Reps ●Sr. Manager (overall coordination and partnership building ●Technical Manager ●Media Reps ●Country Coordinators SUBCONTRACTING AND PARTNERSHIPS 518. As can be seen from the model, some project activities will be sub-executed by partners of the Rainforest Alliance. The members of the Sustainable Agriculture Network (SAN) guarantee presence and capacity in each project country (with the exception of Peru where there is currently no SAN member. The project will help build permanent certification capacity in that country). Most on-the-ground activities in the project countries will be executed through SAN partners. Rainforest Alliance is a member of the SAN, and also hosts the Secretariat of the network. The close coordination between Rainforest Alliance and the SAN partners will optimize the chance of success of the sub-executed components. 519. For several components (such as Outcomes 3 and 4), the project has defined a partnership strategy, acknowledging that one project alone cannot expect to cover all the needs of tens of thousands of farmers in a number of different countries. Instead, the project will build on existing specialized knowledge and capacity 124 wherever that can be identified, by establishing partnerships with actors and institutions that have capacity to help farmers improve sustainability (such as financing institutions, technical assistance service providers and so on). Already, a multitude of different institutions, donors and projects are working to improve the situation for farmers, but oftentimes these efforts are not well coordinated. The project will help establish a Sustainable Farmers Support Alliance (SFSA) to coordinate efforts and make sure that available assistance actually get to the certified farmers and meet their needs for assistance. The SFSA will be coordinated by Rainforest Alliance and take advantage of the established capacity with the SAN partners. Though the SAN network will play a key role within the SFSA, the two networks will be regarded as separate networks. The Alliance will initially focus heavily on GEF project activities in GEF project countries, but as the partnerships grow stronger and experience is built, the Alliance will take a broader scope, incorporating a wider range of partners, in more countries, and covering producers of other crops than coffee. SFSA activities that are outside the scope of this present project will not be financed with GEF funding. PART III : Terms of References for key project staff and main subcontracts TERMS OF REFERENCE FOR PROJECT MANAGEMENT 520. Terms of Reference for Executing Agency Rainforest Alliance is the project’s Executing Agency (ExA). The project will be executed in accordance with UNDP’s NGO execution modality under a Project Cooperation Agreement signed between Rainforest Alliance and UNDP. The Executing Agency is directly responsible for the execution of project activities and for the achievement of project objectives and outcomes. In particular, the responsibilities of the Executing Agency are as follows: Overall responsibility for project impacts Responsibility and accountability for cost-effective expenditure for all activities undertaken by the project team, project partners, and subcontractors, in accordance with the project’s logical framework Submit to UNDP an annual work plan and budget that - upon approval - will serve as basis for budget advances. Reporting to UNDP and the GEF on a quarterly basis on project progress and all project expenditure. Ensuring advanced funds are used in accordance with agreed work plans and project budget Preparing, authorizing and adjusting commitments and expenditures; ensuring timely disbursements, financial recording and reporting against budgets and work plans Supervising the performance of project team, project partners and sub-contracts. Actively supporting all relevant project activities where appropriate Adopting, during the course of the project, the systems, products and tools developed by the project to ensure sustainability of the project outcomes In consultation with UNDP/Guatemala and UNDP/GEF, select the Project Manager (Coffee Manager) Play an active role in coordinating with stakeholders throughout the project 125 521. Terms of Reference for Project Steering Committee The Project Steering Committee (PSC) is responsible for approving the project’s annual work plans and budgets and to oversee the progress of project implementation, in accordance with what is set out in the Project Document. The PSC must approve the project’s annual progress reports. The PSC is responsible for guiding project implementation and taking corrective measures and performing adaptive management of the project strategy if necessary. The PSC will focus on the big picture and overall direction of the project and delegate more specific day-to-day decisions to the Project Management Group. In particular, the PSC must ensure that policy requirements of the GEF and the UNDP are met, including coordination with other projects and initiatives, and stakeholder participation in project execution. The PSC will be established at project inception, and the members will represent a mix of responsibilities, views and experience, to provide the maximum width in its oversight and guidance functions. It is envisaged that the PSC will consist of UNDP (UNDP/Guatemala and or UNDP/GEF as appropriate), Rainforest Alliance (represented by Rainforest Alliance’s Executive Director), one government representative (Guatemala’s National Protected Areas Council, CONAP, has expressed interest in participating), a SAN network representative (selected between the participating SAN project partners), a coffee producer representative (an experienced RA certified producer), and a coffee company representative (to be determined early in the inception phase). Each member of the PSC must be sufficiently senior so that the individual has sufficient authority to make decisions on behalf of the institution or agency that s/he represents. One or several experienced project mentors will be selected, preferably members of the Rainforest Alliance Board. The first PSC meeting will occur during the project’s inception phase. The PSC will meet twice a year to review progress and monitoring results, approve work plans and budgets, and take important decisions regarding project management and strategy. The PSC will be chaired by the Rainforest Alliance’s Executive Director. The Project Coordinator (Coffee Program Manager) participates in the PSC meetings in an ex-officio capacity, and will set up meetings, circulate documentation for review, take minutes and prepare reports from the meetings. The specific tasks to be achieved during each Annual PSC Meeting include the following: to adopt Rules of Procedure (at its first meeting) to review and assess the progress of the Project and its components – particularly with respect to its Logical Framework Matrix and associated indicators – as highlighted in the Annual Report, and ensure that the project is achieving its objectives. to provide policy guidance and decisions to the Project Director, Coffee Program Manager and the wider project team To identify any major problems that may arise in the project and seek corresponding solutions to review and approve the Annual Workplan (including updated budgets of the Project and its activities) and the preceding year’s Annual Report, and to ensure mainstreaming of project activities and outcomes into Government plans, policies and actions Although the PSC will have decision-making power as well as advisory functions, it will not have the authority to alter the project goal or outcomes. However, the PSC may alter specific project outputs, activities and/or implementation arrangements, including arrangements for sub-contracts (ensuring due process is followed), in cases where there is clear and consistent evidence that the project activities are 126 failing to deliver project outputs, or the sub-contracts are failing to meet their obligations under their Terms of Reference. 522. Terms of Reference for Project Management Group Important day-to-day management decisions will be made by a Project Management Group (PMG). The PSC will delimit specific responsibilities and delegate them to the PMG during the first PSC meeting, which will take place during the inception phase of the project. The PMG will be chaired by the Project Director. Additional members will include the UNDP/Guatemala Programme Officer and the Coffee Program Manager. The UNDP/GEF Task Manager will be briefed on all issues and will participate in the PMG on a no-objection basis. Typical areas of responsibility and decision-making will include: 523. Approval of larger contracts and larger expenditures Approval of substantial adjustments in project work plans and budgets, if this cannot wait for the next PSC meeting Project staff matters that require immediate attention Decide on important project management decisions Provide feedback on draft work plans, budgets and project Annual Report before these are submitted for the consideration or the PSC Approval of quarterly progress reports for UNDP and GEF Discussion and agreement on technical matters in the project which are either too technical or too complex to resolve in PSC meetings. The PMG can choose to summarize points and issues for the consideration of the Steering Committee, along with its recommendations for appropriate decisions and actions. Terms of Reference for Project Director The Executing Agency will be represented by the Project Director. The Project Director will be the Director of Rainforest Alliance’s Sustainable Agriculture Division. The Project Director will ensure that all relevant Rainforest Alliance staff contribute to and support the project’s efforts, and that all relevant project deliverables and lessons learned gets disseminated and mainstreamed within the Executing Agency. The Project Director will: Chair the Project Management Group Approve revisions in budgets and work plans that do not have to be discussed in the PSC and PMG Directly supervises the overall performance of the project team and the achievement of project objectives Approve terms of reference, selection of project staff and consultants Provide feedback on performance of key project staff Approve/sign off on main project reports and deliverables produced by RA and project staff and consultants Ensure that there is a clear and unambiguous decision-making process for project implementation so that project activities can be carried out smoothly and effectively Approve/Sign off on project monitoring reports, audit reports and evaluation reports 127 524. Liaise with UNDP and other project partners as necessary to ensure successful delivery of expected project outcomes Present and represent the project in appropriate fora Terms of Reference for Coffee Sector Advisory Group A Coffee Sector Advisory Group (CSAG) will be formed to guide the project on how to achieve maximum impact in the coffee sector and improve interaction with coffee companies. The CSAG will be established during the project’s inception phase. The group will consist of representatives of the group of coffee companies who have agreed to be partners in the current project, representing different links in the coffee supply chain from producers to roasters. These are companies which wholeheartedly support RAC principles of sustainability and are experienced and influential members of the coffee community. As the CSAG members are likely to be based in different countries the group will mainly work virtually as an electronic network or discussion group. Key issues and strategic decisions will be consulted with this group of coffee sector insiders. When possible, the project will seek to establish physical sessions with individual members or subsets of the CSAG. In particular, the CSAG will: Provide feedback on the general performance of Rainforest Alliance’s certification program and on possible and necessary improvements Help optimize the growth projections and long-term development plans of the coffee program. This includes growth to origins in Africa and Asia Provide a “reality check” of RAC estimates of market demand and certification growth needs Provide feedback on the effectiveness of RA efforts to strengthen the outreach to and sustainability of RAC certified farmers, particularly in the six project countries Guide RA to optimize the coffee program’s value for coffee companies 525. Terms of Reference for Project Manager/Coffee Program Manager (CPM) The project will be the primary instrument to achieve the ambitious growth targets of the Rainforest Alliance coffee program as set out in the project proposal. To achieve the maximum degree of mainstreaming of project activities within the coffee certification program, all GEF project activities will be closely coordinated with other activities within the coffee program. To emphasize the coherence between the GEF project and the Rainforest Alliance coffee program, the GEF project coordinator will be given the title and responsibility of Coffee Program Manager (CPM) in Rainforest Alliance. The project will create the function of the CPM and fully integrate it within the coffee certification system. Before the end of the project, the project will have created a financing system that can sustain the cost of the program, including the CPM. The CPM will be responsible for providing oversight and coordination of the project activities and other co-financed activities within the RA coffee program. S/he will ensure that both GEF-financed and cofinanced activities are planned and executed in harmony and will achieve their intended objectives. In collaboration with Sustainable Agriculture Division senior management and RA colleagues, the Coffee Program Manager will facilitate the development of detailed Rainforest Alliance Coffee Program strategic 128 plans which will define targets and guide the work of the project team, project consultants, and all RA coffee related work. In close collaboration with the Project Director, who is also the Director of the RA Sustainable Agriculture (AG) Division, the CPM will work closely with managers of specialized units in the AG Division (e.g. Standards Setting, Marketing, Certification Business Unit, and Capacity Support), and in Rainforest Alliance in general (e.g. Communications), to plan activities to achieve project objectives and reach the targets set for the RA Coffee program. These activities will then be implemented by the relevant AG or RA units, or by specialized project staff or consultants. The CPM will participate directly in project activities when pertinent. The CPM is the immediate responsible for the achievement of the project objective and targets as stated in the projects logical framework. The CPM reports to the senior management of the Sustainable Agriculture Division. Responsibilities The CPM is responsible for the following Ensure accomplishment of the project objective and outcomes as defined in the project logical framework, and meeting the targets as set out in the coffee certification program business plans Coordinate planning efforts of the GEF project and the RA coffee certification program in close collaboration with RA colleagues and SAN partners. Periodic planning exercises will result in coffee certification program strategic plans and detailed annual project work plans, complete with targets and measurable indicators Coordinate a project team and consultants retained for specific work. Ensure execution of project activities and guide project implementation. Supervise and monitor project impacts, perform regular trouble shooting of project intervention, and take corrective measures to optimize project intervention strategy Manage project budgets in accordance with GEF, UNDP, and RA standards and requirements In collaboration with SAN partners, dialogue with project country government representatives to build ownership, promote coordination with government-led efforts to enhance sustainability in agriculture, ensure mainstreaming of project results and to garner support for policy measures that promote sustainability in coffee production In collaboration with SAN partners and other AG colleagues, work actively to ensure participation of relevant stakeholders in project execution. Work to enhance stakeholder participation in the coffee certification program Report to AG and RA senior management on project implementation progress and the development and growth of the coffee certification program Report to UNDP and the GEF as required and maintain UNDP Programme Officers duly informed of project activities Prepare progress reports and other material for Project Management Group and Steering Committee meetings. Convene PMG and SC meetings with the agreed intervals. Take action on decisions made by PMG and SC. Report back to PMG and SC on progress made on earlier decisions Coordinate meetings (including virtual meetings) in the Coffee Sector Advisory Group and make sure advice is duly considered in project implementation and throughout the coffee certification program Participate in project-sponsored events and activities. The CPM will undertake certain project activities as agreed with the Project Director and managers of specialized units within the certification system. These are likely to include specific activities within several outcomes, such as policy work, media relations and outreach, monitoring activities and events and activities with partner companies. 129 Participate in planning exercises with project partner companies to define project activities and general collaboration with RA as necessary Work closely with the lead UNDP/Guatemala Programme Officer to ensure smooth project execution and administration. Ensure that all GEF and UNDP requirements are met in project operation and administration. Work with designated UNDP/GEF task manager to ensure highquality technical inputs to the project execution Work closely with UNDP offices in the region in organizing and providing technical and logistic support and coordination to all missions and assignments by international and national consultants Qualifications: Masters or equivalent degree in agronomy, natural resources management, international development, or related field; At least 5 years’ experience in project management and -oversight. Strong management skills with a team-oriented focus; Experience with United Nations Development Programme or similar donor agencies; Good understanding of the Global Environment Facility, GEF projects and biodiversity conservation issues; Excellent understanding of the global coffee industry and solid insights in themes and issues related to sustainability in the coffee sector; Experience with certification systems and certification issues (Rainforest Alliance, Organic, Fairtrade, EurepGAP, FSC or others) ; Substantial technical skills related to the project’s areas of intervention; Strong planning skills and ability to show initiative and work independently; Analytical strength and creative mind adept to finding innovative solutions to complex problems; Outstanding interpersonal skills and ability to forge consensus among different people in a multicultural working environment; Ability to communicate to a diverse group of stakeholders ranging from small coffee producers, NGO representatives to ministers of environment and coffee company executives; Full command of English and Spanish (verbal and written) and demonstrated ability to work effectively in Latin American as well as North American and European working environments; Ability and willingness to travel 25% of the time 526. Terms of Reference for Project Administrator (PA): The Project Administrator will be responsible for financial oversight and contracting for the project. The PA will be responsible for meeting performance measures and for complying with finance, contracts and administrative requirements as established by the RA Director of Finance and Operations as well as the procedures and guidelines established by UNDP. Works under the supervision of the project manager but with additional oversight provided by the Rainforest Alliance Program Administrator. Responsibilities: Coordinates periodic budgeting processes for the project both as part of RA’s internal budget and according to UNDP’s project planning procedures. Assist in the preparation of project workplan documents. Monitors expenses and revenues to ensure that the project does not overspend available revenue and that restricted funds are used according to donor requirements. Prepares project contractual agreements using appropriate RA templates and in accordance with RA procedures and donor requirements. Supports project staff in negotiation of consulting contracts, 130 subcontracts, subagreements and other contractual agreements, involving Program Administrator, Finance and Legal as required. Review financial reports submitted by consultants, subcontractors and receipients of subagreements to ensure accuracy and completeness and process payments according to RA policies. Monitor all RA-issued project contractual agreements to ensure compliance with their terms, including deliverables, outputs, and reporting. Ensures that all project activities are carried out according to the restrictions and requirements of UNDP and the GEF. Coordinates the preparation of periodic financial reports and reimbursement requests to UNDP in close coordination with Rainforest Alliance’s Program Administrator and RA Finance. Notifies project staff of any problems or discrepancies and provides technical assistance to recipients of subagreements in resolving problems. Coordinate project procurement process in accordance with RA procedures and UNDP’s requirements. Assist in the organization and logistics of project-related events and workshops as well as in arranging missions and visits by evaluation teams, donor representatives, and others. Serves as a resource to project staff for financial and administrative policies. Coordinates with Program Administrator regarding information-sharing both intra-departmentally and interdepartmentally, as well as externally. Maintains close contract with Program Administrator to ensure the effective implementation of the project as well as compliance by project staff with both RA and UNDP’s policies and procedures. Performs other duties as assigned. Qualifications: Bachelor’s/Licenciatura degree or Master’s degree in Business Administration, Marketing, Economics, Accounting or related discipline; A minimum of 5 years experience in budgeting and financial management with 2 years experience in multi-lateral grants/contracts administration, business or project management; Experience with UNDP project administration and operational procedures desirable Fluent English and Spanish (both verbal and written communications skills); Strong word processing, spreadsheet and computer skills; Strong analytical skills Excellent organizational skills, ability to work independently as well as in a team environment, assess priorities and multi-task with strong attention to detail; TERMS OF REFERENCE FOR SPECIALIZED PROJECT STAFF MARKETING SPECIALISTS: 527. It is of key importance for increasing market demand for certified sustainable coffee to build capacity to support coffee companies, be it to approach new companies and convince them of the benefits by sourcing RAC coffee, or to help companies who are already involved in RAC coffee to increase volumes sourced. The project will finance the establishment of a series of specialized positions to assist with the delivery of mainly Outcomes 1 and 2. These positions will gradually be institutionalized into a permanent RAC program structure and will be fully funded by Rainforest Alliance before the end of the project. The marketing project staff will – unless otherwise noted – refer directly to the Senior Marketing Manager with regard to their day-to-day duties, but with some coordination with the Coffee Manager with regard to the planning, execution and monitoring of GEF project activities. 131 528. Terms of Reference for Marketing Managers (MM) (3 positions: Europe, USA, and Japan) Responsibilities: The Marketing Managers will be directly responsible for the ensuring rapidly increase in market demand for Rainforest Alliance certified coffee on consumer markets In collaboration with the Senior Marketing Manager, the MM will define a strategy for engaging coffee roasters and retailers who are not yet involved in Rainforest Alliance’s coffee certification program. This includes performing background research on the companies with regard to structure, size, product range, and key representatives, thus facilitating contacts to the company Approach new coffee roasters and retailers to convince them of the benefits in sourcing Rainforest Alliance Certified coffee, and involve them in the program Nurture existing relationships with roasters and retailers who are already sourcing RA certified coffee to increase and deepen their engagement in the coffee certification program Periodically meet with partner companies to plan joint activities and events, and to determine their demand for coffee. The MM will collaborate with companies on the timely delivery of these activities and events. This includes collaboration with company staff and RA colleagues on e.g. logistics and press For the GEF partner companies, the MM will define collaboration on demand-side project activities, oversee the execution of project activities and report to the Sr. Marketing Manager on progress and impact of the activities. Account management. The MM will be the day-to-day contact for a number of coffee companies. In the medium to longer term a number of regional marketing representatives will gradually take over some of the direct responsibilities of managing the relationships with coffee companies, and the MM will assume oversight functions and guide the system of regional marketing representatives to ensure that companies are highly satisfied with their involvement with Rainforest Alliance’s certification program In collaboration with RA media representatives, coordinate media coverage and events in support of specific companies and company activities. Support companies in marketing campaigns In collaboration with the Sr. Marketing Manager and other marketing staff, work to determine short, medium-, and long-term market demand. This will gradually develop into a reliable and continually updated tool that will serve to guide expansion of certification activities to meet the growing demand. Attend coffee industry events and organize corporate RA response to threats and opportunities Gradually assume function in marketing of other Rainforest Alliance Certified crops (cofinanced). Other responsibilities as assigned by the supervisor Qualifications: The candidate will hold a masters degree and have approximately 10 years of experience in the food and beverage industry The candidate will have experience in sales/client management, preferably in the supermarket or coffee industries. The candidate should be familiar with the intricacies of the coffee market and the special needs of coffee companies Extensive knowledge of local business culture and markets Experience with sustainability issues an advantage Capacity to work in an independent and systematic way Strong analytical skills and strategic planning skills Strong communicator and winning personality 132 529. People management skills and experience Fluent in English as well as relevant local language(s). Must be able to travel at least 30% of the time Terms of Reference for Client Relations Manager The Client Relations Manager will serve as a liaison between the marketing staff and other agriculture division staff, and each client ensuring seamless communication between all groups. This position will manage RA’s Use of Seal process, organize trade shows and other events, and assist in developing marketing materials and a unified message for the RA certified products in an international marketplace. Responsibilities: Recruit companies to the RA Certified program through participation in trade shows and industry events, and through pitch letters and meetings; Develop a client management strategy and protocols for the RA’s diverse and international client base in coordination with the Senior Marketing Manager; Manage and provide oversight of the RA’s Use of Seal review and approval process; Internal management and keeper of the RA Certified guidelines in consultation with legal counsel; Oversight of enrollment process for companies sourcing and promoting certified sustainable products Support and organize joint marketing events with participating coffee and food companies, including trade shows, pr, special events, and conferences; Collaborate with marketing and communication teams in positioning the RA Certified products in key consumer markets (U.S., Europe and Japan); Compile weekly status reports and monthly and quarterly marketing updates with input from the marketing team; Oversight of creative files/ RA portfolio on companies with examples of artwork and ad copy; Provide timely response to inquiries by consumers, companies, and activists as needed; and Other duties as assigned by supervisor Qualifications: Bachelor’s degree required, Master’s degree preferred; Three years account or client management experience; Sales, marketing, and/or communications experience related to agricultural commodities or food products; Familiarity with certification programs such as organic or fair trade preferred; Clear understanding of concepts of sustainable agriculture preferred; Familiarity of the global coffee industry preferred; Must have excellent writing and verbal communications skills in English and Spanish; High degree of organizational and time management skills, including the ability to manage multiple priorities and work under tight deadlines; A strong commitment to the Rainforest Alliance mission with international conservation experience a plus; Ability to work independently and as part of a team that is both local, cross-divisional and international; Must have excellent computer skills (Microsoft Office and Internet); and Willingness to travel up to 10% of the time. 133 530. Terms of Reference for Client Relations Associate (CRA) Responsibilities: Outreach to companies to ensure they receive the services that Rainforest Alliance can provide, in close collaborations with Client Relations Manager and Senior Marketing Manager Inform RA colleagues about companies’ needs for services Develop and structure types of services to deliver to different types of companies Coordinate RA certified artwork approval process. In borderline cases the CRA will work with the Client Relations Manager to clarify artwork approval Maintain digital files of approved artwork Maintain communications trails with clients Some trade show responsibilities (1-2 shows a year) Other responsibilities as assigned by the supervisor Qualifications: Bachelors degree 4-6 years of proven client management experience Ability to resolve companies’ needs Proactive individual with initiative Strong written and verbal communications skills 531. Terms of Reference for Regional Marketing Representatives (RMR) The RA Regional Marketing Representatives are part-time specialists who work to increase market demand in their respective regions by working directly with local roasters and retailers. As the RAC program grows, RMRs will be retained to build up regional market demand. The RMRs in Europe will work under the supervision of the Marketing Manager for Europe, but with some oversight by the RA Senior Marketing Manager Responsibilities: Strategic targeting of potential buyers Provide inputs to the MM for the development of regional RAC marketing plans Maintain day-to-day relationship with companies in their region. Determine the coffee companies needs for support and respond to those needs Through high-quality service maximize company satisfaction by their involvement in the RA certification program, and thereby deepen their involvement and source more RA certified coffee Determine the needs of coffee companies for Rainforest Alliance Certified coffee in the short-, medium-, and long term Through on-going contact, research, build and maintain fact-sheets and profiles on companies that source RA certified coffee. Determine joint events with the companies and collaborate with them on the timely delivery of these events. This includes collaboration with company staff and RA colleagues on e.g. logistics and press. If relevant, participate in local trade shows The RMR will perform some representative functions on behalf of RA, and work to maintain relationships and build alliances with relevant groups. The RMR will be present at events in the coffee industry in their region and organize corporate RA response to threats and opportunities 134 Other responsibilities as assigned by the supervisor Qualifications: The candidate will hold a Master’s or a bachelor’s degree or the equivalent in a business or marketing related field. The candidate will have experience in sales, client management, or business development, preferably in the coffee industry, or more broadly in the food industry/restaurant/hospitality sectors. The candidate will have an extensive knowledge of local business culture, and be fluent in the local language Strong verbal and presentational skills and sense of diplomacy. Capacity to work in an independently and proactively in a systematic way Strong analytical skills and strategic planning skills There will be a moderate need for travel, mostly within each region MEDIA SPECIALISTS 532. The media specialists will work within the RA Communications Department with specific responsibilities for the delivery of the media outreach predominantly within Outcome 2, with the overall aim of increasing consumer interest in and demand for RAC coffee. The media specialists will report directly to the Communications Director, but with some coordination with the Coffee Manager with regard to the planning, execution and monitoring of GEF project activities. 533. Terms of Reference for Media Representative(s) (MR) As the RAC program grows, there will be a need to retain part-time MRs in several key coffee markets to provide media support to RAC activities and in general ensure awareness raising among coffee consumers with regard to sustainability issues and coffee certification. The need for media support will be determined through the project’s yearly planning exercises. Responsibilities: In collaboration with the Communications Director and relevant RA colleagues, design and implement a program of targeted media outreach in a particular region, focusing in particular on trade media, specialist consumer/food/drink media, and environment and consumer affairs media, but also broad mainstream printed and electronic news media The MR will coordinate closely with relevant RA colleagues – in particular marketing staff and other staff that is responsible for execution of GEF project activities – to ensure media support in the expansion of the RA coffee certification program The MR will work proactively to develop and maintain relationships with key media people in the region s/he covers, with the aim to secure exposure for RAC coffee, and sustainability issues important for raising consumer awareness of certified sustainable products. Work to secure media coverage of issues like corporate responsibility, ethical trade and sustainable development issues Increase awareness of media representatives by providing relevant information and intriguing story leads for local media. This includes convincing journalists to visit RA certified coffee farms to increase the understanding of the program and maximize the chance of media exposure of the benefits related to RA certification Adapt communications materials so they will fit the needs of the particular region, including language and style. 135 Monitor media outlets of the country/region with regards to coverage of sustainability issues. Particularly for media coverage touching on the work of Rainforest Alliance or other certification bodies the MR will guide RA colleagues and help coordinate an appropriate response For MRs covering European markets, coordinate with the EU Policy Specialist to ensure targeted communication efforts to national policy makers. Through the contact with national policy makers, the MR will provide some screening of themes and issues that might require an organized RA policy response, and report these to the EU Policy Specialist Help orchestrate media events/press conferences Assist corporate partners’ campaigns that aim to promote certified products, by providing RA presence and information outreach Other responsibilities as assigned by the supervisor Qualifications: Background in journalism, media or communications Intimate knowledge of the media world in the country/region s/he is covering. Extensive personal network in the media world preferable Knowledge of sustainability and sustainable trade issues. Familiarity with the reality of Third World agriculture producers preferable Convincing, energetic and proactive personality Strong verbal and written communicator in the local language as well as in English Willingness to travel within the assigned region CAPACITY BUILDING SPECIALISTS 534. The capacity building specialists will predominantly support the project activities of Outcomes 3 and 4, which will help more farmers to get ready for RAC certification, and improve economic sustainability for all farmers. This will be done through the new Sustainable Farmers’ Support Alliance (SFSA), a network of institutions and actors that provide technical assistance and services to farmers. Rainforest Alliance’s Sustainable Agriculture Division will host a secretariat function for the SFSA, and the capacity building specialists will ensure that necessary support be delivered, thereby measurably improve sustainability on coffee farms. The present project will support the establishment of the SFSA as well as its coordinating functions. Before the end of the project the financing of the proposed positions will have been assumed by the SFSA and Rainforest Alliance. 535. Terms of Reference for Senior Manager, Sustainable Farmers’ Support Alliance (SrM-SFSA) The Senior Manager of the SFSA will be responsible for setting up the Alliance, as well as its overall coordination, strategic orientation, and financing. The SM-SFSA will report to AG Senior Management, and coordinate extensively with the Coffee Manager with regard to the execution of GEF project activities. Responsibilities: In collaboration with the Coffee Program Manager, plan and oversee the execution of GEF-financed project activities. In collaboration with the Learning and Knowledge Manager and the Technical Manager of the SFSA, ensure proper monitoring of the impacts of the SFSA on farmers’ sustainability. In collaboration with the Technical Manager of the SFSA (see below), SFSA staff and other relevant RA and SAN colleagues (team), design and establish a structure that will allow farmers to 136 access technical assistance, information, and services that will help improve sustainability of coffee farms (such as: access to financing, coffee quality improvement, best farm management practices, development of business-, marketing-, and sales skills, income diversification, sustainable terms of trade, market access and others) In collaboration with team, develop strategic plans for the operation of the SFSA In collaboration with team, perform needs assessments to identify topics crucial to sustainability on coffee farms, and determine farmers’ demand in each producer country for support/info/services in these areas (particularly GEF project countries) In collaboration with relevant RA and SAN colleagues, identify institutions that possess specialized knowledge that will help improve sustainability on farms Identify private sector service providers who are already providing outreach and support to coffee farmers and who have valuable local knowledge Approach and establish relationships and partnerships with institutions and private service providers/consultants that will allow RA certified farmers to access needed expertise and services Establish a coordination mechanism that will allow the programming of regional and national support platform activities Identify and fundraise with donors to obtain financing for the general support and management of the platform and for specific activities that donors would fund (e.g. productivity with small farmers, best management practices in the coffee sector, biodiversity protection in specific areas, strengthening of coops, etc) Other responsibilities as assigned by the supervisor Qualifications: Relevant Masters’ degree and extensive experience in planning and oversight of capacity building projects, including intimate knowledge of the working modalities of major donors. At least 10 years of experience with donor-financed projects, aimed at capacity building, rural development and environmental management Visionary and creative individual with the ability to lead the development of a highly complex and ambitious capacity building instrument Strong managerial skills. Highly organized with the proven ability to lead a multi-disciplinary team to success Strong negotiation skills and ability to create consensus between people with different backgrounds and different interests Diplomatic sense and ability to represent farmers’ interest and cause in high-level meetings and situations. Ability to create excitement over the possibility of improving the lives of povertystricken farmers Extensive working knowledge from the Latin American region. Working knowledge of Asia and Africa an advantage Fluent in Spanish and English with full working capacity in both Ability to travel at least 30% of the time 536. Terms of Reference for Technical Manager, Sustainable Farmers’ Support Alliance (TM-SFSA) The TM-SFSA will report to the SrM-SFSA, but the two will generally work as a team on equal terms and complementing each other. The Technical Manager will be responsible for generating information services, tools and training to coffee farmers in the areas mentioned within Outcomes 3 and 4. Responsibilities: 137 In collaboration with the SrM-SFSA, develop implementation plans with measurable performance indicators for the establishment and rollout of support alliance activities to be directly implemented by RA. Monitor the implementation of the plan. Work with GEF project Country Coordinators based in SAN partner institutions to implement support alliance activities in each country. Oversee and assist support platform activities of each SAN partner Create a series of tools that will help farmers implement on-farm changes to become eligible for certification, as well as tools to help farmers improve their general sustainability Arrange “train the trainers” for institutions and private service providers so they will be able to provide farmers with precise information and first quality support when improving their farms for RA certification Establish “in-house” capacity within the SAN network (through GEF Country Coordinators, other SAN and RA staff, or retainer consultants) to perform technical support as a complement to technical support through external partnerships Develop a financing system that would allow as many elements as possible of the support platform to be self-financing through cost-coverage by users In close collaboration with the Coffee Program Manager, be responsible for the planning and execution of GEF project activities aimed at technical assistance to coffee farmers Report on progress of execution of GEF project activities according to established performance indicators and GEF work plans In collaboration with the SrM-SFSA and the Learning and Knowledge Manager, perform impact monitoring to determine improvements in sustainability according to GEF project and other indicators. Other responsibilities as assigned by the supervisor Qualifications: Licenciatura or Masters degree in Agriculture, Forestry, Biology, Rural Development, Natural Resources Management or similar field. At least 7 years’ experience in projects, institutions, or initiatives that provide extension services, outreach or capacity building to farmers, particularly coffee farmers Intimate knowledge of the reality and challenges facing coffee farmers Good understanding of certification systems and issues, and their role in improving sustainability in the coffee sector. Knowledge of and experience with Rainforest Alliance’s certification system an advantage. Extensive experience with donor-financed projects, including work planning, budgeting, impact monitoring and reporting People management experience Intimate knowledge of the Latin American region Ability to communicate at all levels, from small farmers, to government ministers, donor representatives and coffee company executives Fluency in Spanish and English, both in speech and writing. Working knowledge of Portuguese an asset Ability to travel 30% of the time 537. Terms of Reference for Country Coordinators A Country Coordinator will support the execution of project activities in each participating country. The Country Coordinator will be based within each local SAN partner and reports to the Executive Director of 138 the particular organization. The Country Coordinator is thus part of the organizational structure of the local project partner, but will be entirely dedicated to project activities. To ensure that project objectives are met and to ensure coordination of the regional project, the Country Coordinator will have secondary reporting requirement to the Coffee Program Manager for the duration of the project. The Country Coordinator will ensure that the project’s objectives get thoroughly mainstreamed within each SAN partners’ business plans, so that each partner will contribute to the project objectives through their regular activities. In collaboration with the SFSA secretariat, the Country Coordinators will be responsible for the planning and execution of a series of SFSA activities that will provide coffee farmers with support when preparing for certification. The technical support platform will facilitate social, environmental and economic sustainability on coffee farms. The Project will finance the Country Coordinators during the first several years, but gradually the local SAN partners will take over responsibility for these costs and internalize the functions of the Country Coordinators. By the end of the project, each SAN partner will have established internal capacity to continue the technical assistance, capacity building and training activities and outreach and communication activities to effectively support an increased certification program. Responsibilities: Develop relationships with key stakeholders and policy makers in their country Develop the SAN partners outreach capacity to potential future certified coffee farmers In collaboration with the SFSA secretariat, create partnerships with public and private technical assistance providers or develop technical capacities within the SAN partner, as appropriate Organize training activities for farmers Assist the SFSA secretariat in creating relationships with local financing institutions Provide information on financing opportunities to farmers Facilitate monitoring and evaluation efforts and the gathering of lessons learned Conduct a formal annual stakeholder meeting which will bring national institutions together with relevant civil society organizations, technical service providers and producer groups to debate the advances of sustainability in coffee production in the country and harmonize actions to promote it Maintain regular contact with the local UNDP office to coordinate local project activities and secure that the project benefits from the capacities and clout of the agency Other responsibilities as assigned by the supervisor Qualifications: Good knowledge preferred of the coffee business and the reality of coffee producers in the particular country Excellent understanding of capacity building issues and challenges. Must have demonstrated experience with rural and agricultural extension work. Good understanding of the Rainforest Alliance certification system and its implications for certified farmers is an advantage, particularly the capacity building needs of farmers who struggle to prepare their coffee farms for Rainforest Alliance certification. Must have excellent planning skills, be very well-organized, and the have the ability to establish an ambitious support alliance at the country level to help farmers prepare for Rainforest Alliance certification. This will be done in close collaboration with the SAN partner Director and SFSA staff. Ability to work both independently, as well as within a team, and with the ability to work closely with a large and complex group of colleagues and stakeholders. Dynamic and proactive individual, with the ability to produce innovative solutions to complex problems. 139 Well-developed communications skills and ability to engage multiple groups of project stakeholders, such as farmers, national coffee organizations, technical assistance and extension service providers, as well as government ministries and agencies. Leadership skills with a demonstrated talent of leading the work of others. Five to ten years of relevant work experience is expected, including both solid field experience as well as planning responsibilities. POLICY SPECIALISTS 538. The policy specialist will be responsible for the delivery of results within the project’s Outcome 5. S/he will report directly to the senior management of the Sustainable Agriculture Division. The policy work in production countries will be performed by the Coffee Program Manager in collaboration with SAN Executive Directors. This work will be supported by concrete inputs from specialized policy consultants. 539. Terms of Reference for EU Policy Specialist (Part-time position) The Senior Policy Specialist will contribute to a better understanding of the Rainforest Alliance in European regulatory circles through dialogue with relevant European policy makers and opinion leaders by promoting the Rainforest Alliance’s point of view on EU policy primarily with regard to sustainable trade and certification of coffee, as well as other sustainable certified crops. Responsibilities: Perform desk intelligence to identify all key players with regard to our objectives in all the relevant EU bodies Organize mailing lists for rapid electronic dissemination of information and back-up lists with postal mailing addresses. Monitor EU policy developments in order to produce a periodic email bulletin through the consultation press, newsletters as well as through regular meetings with contacts in the Commission or peers from partner organizations Target the European Commission with its corresponding administrations (Directorate Generals), as the body where all EU policy work is initiated. Of primary interest will be the Commissioners for Agriculture, Environment and Development, and of subsequent interest Employment, Trade and Enterprise. Once the EU Commission is covered, the Sr. Policy Specialist will gradually broaden the focus and cover also the EU Parliament and other EU bodies Raise the profile for Rainforest Alliance’s certification systems with EU officials and at relevant events organized by the EU and promote the certification system and certified products as a tool for ensuring sustainability in the third world production countries Orchestrate Rainforest Alliance corporate response to relevant policy matters, be it either threats to the certification system or opportunities to promote it Promote the dialogue between companies engaged with Rainforest Alliance certified products and European policy makers (within the EU and at national levels where possible) to catalyze consensus around the value of the certification system Liaise with policy and sustainability officers of companies engaged with RA certification, to define mutually supportive collaboration Collaborate in policy-themed meetings with industry, NGO’s, academia, and policy makers Where appropriate, coordinate and guide policy work in EU countries performed mainly by other RA staff and consultants. 140 Other responsibilities as assigned by the supervisor Qualifications: At least ten years of direct experience with policy work at the highest levels, preferably with issues relevant to sustainability (environment, social issues) Intimate familiarity with the mechanics of the policy environment of the European Union Experience and familiarity with companies and corporate social responsibility issues Powerful and credible presenter at meetings (such as hearings) Fluent in English and preferably (an)other European language(s) Ability to work effectively in an independent way Willingness and ability to travel 20% of the time LEARNING AND KNOWLEDGE SPECIALIST 540. The learning and knowledge specialist will be responsible for activities within the project’s Outcome 6, and will report directly to AG senior management. 541. Terms of Reference for (Coffee) Learning and Knowledge Manager Responsibilities: In collaboration with the Coffee Manager, help plan and carry out monitoring of project-level impact as defined by log-frame indicators, and trouble shoot with regard to necessary or desirable project-level adaptive management actions to maximize impacts and cost-efficiency in project execution Establish a monitoring system for the coffee certification program, using respected and scientifically valid standards. Monitoring system will collect data on impacts of the coffee certification program. In collaboration with AG colleagues, SAN colleagues and external experts where necessary, the Learning and Knowledge Manager will lead the following : o Definition of monitoring methodology o Definition of monitoring area and units, such as coffee farms o Formulation of monitoring plans and indicators o Assemble and if necessary train monitoring teams who will perform data gathering o Measure baseline values of indicator species and other types of indicators o Organize periodic measurement of progress on the indicators o Ensure organization of data storage and processing systems The Learning and Knowledge Manager will ensure monitoring of on-farm impacts in all project countries, and landscape-wide in two project countries (El Salvador and Colombia) Through initial strategic planning workshops determine landscape-wide threats and determine how the certification system and/or the GEF project can best address these threats through targeted project activities Ensure that monitoring system documents impacts of the Rainforest Alliance coffee certification system on the environment and biodiversity, on workers and their families, on surrounding communities, on the wider coffee landscapes, and on the benefits of the farmers by being certified by Rainforest Alliance In collaboration with RA colleagues, identify and distil lessons learned on impacts of coffee certification, best management techniques, certification standards, biodiversity conservation measures, etc. 141 Analyze data from monitoring system and coordinate internal discussion to determine where in the RA certification system there are needs or even possibilities for improvements. This includes audit methodologies and practices, standards, administrative procedures, auditor-, SAN- or RA staff capacity, and others In collaboration with AG colleagues, design and implement an adaptive management system to guarantee continuous improvement of AG systems Organize knowledge gathering that will provide best possible evidence of the benefits for farmers of being RA certified Write case studies on impact. Produce technical articles for a variety of audiences on lessons learned, and social, environmental, and economic impacts of RA coffee certification. This material will provide inputs to Rainforest Alliance’s public relations and media work. Conduct workshops and events to share knowledge on lessons learned and impacts achieved through the GEF project and in the RA coffee certification program Participate in specialized events and conferences with the aim of increasing the knowledge and recognition of the Rainforest Alliance certification system as a superb tool to promote environmental, social, and economic sustainability in the coffee/agricultural sector Network with experts and institutions with whom RA has an interest in technical information exchange and dialogue Engage respected conservation organizations and sustainable development organizations in the RA certification program with the aim of obtaining their approval, support, and active endorsement of the benefits of RA certification Outreach to NGO partners, coffee sector stakeholders, other certification systems, decision makers, and media, on issues that relates to the technical credibility and impacts of the RA certification program Support marketing-, media-, policy, and other program staff by providing evidence and documentation in the technical credibility and impacts of the certification program Coordinate closely with similar knowledge management efforts made in other RA divisions to promote exchange and avoid duplication of efforts Where relevant and where needed, promote the application of the monitoring methodologies, adaptive management mechanisms, and learning, and knowledge generation in other AG certification programs, and wider in other RA divisions. Gradually assume a greater corporate role in ensuring the highest standards throughout Rainforest Alliance with regard to monitoring, adaptive management, and learning. Other responsibilities as assigned by the supervisor Qualifications: The candidate will have a solid technical/scientific background and hold a M.Sc or PhD in a relevant natural scientific area, such as biology, agronomy, forestry, ecology, or the like Excellent understanding of ecosystem functions and biodiversity conservation issues related to tropical agro-forestry systems. High technical credibility and personal integrity Demonstrated ability to write on technical issues for technical and scientific journals Ability to interact and dialogue with top-level experts and scientists world-wide on issues related to certification, biodiversity conservation, sustainability issues in agriculture in general and sustainable coffee issues in particular Extensive knowledge of and experience with biodiversity monitoring and data collection methods Insight in institutional capacity building and principles of learning organizations Good communication skills Full command of English in speech and writing. Good working knowledge of Spanish 142 MAJOR CONSULTANCY SUB-CONTRACTS 542. The project will hire consultants for specialized work on an ad-hoc basis when the desired outcome does not warrant a permanent project staff. Full terms of reference will be elaborated once the precise character and extent of the work has been determined. Some anticipated consultancy subcontracts are: Biodiversity specialists. Generally the Learning and Knowledge manager will be the in-house specialist on scientific biodiversity issues, but particularly in the set-up and operation of the biodiversity impact monitoring system, it is anticipated that additional expertise will be needed. Policy experts will be called upon to elaborate specific studies and tools to help the project team achieve impact at policy levels in producer countries. Policy work in consumer countries (mainly the EU) will be covered by the Policy Specialist (see TORs above) Electronic data bases and information management tools will be sub-contracted to qualified specialists, who are both familiar with the technical programming aspects, as well as with the working processes of the different units that have to use the software systems (such as marketing and client relations management). PART IV: Stakeholder Involvement Plan 543. The executing agencies of this project have conducted regular meetings with government representatives from several ministries, state and municipalities, producers, cooperatives, coffee associations, private sector partners, NGO’s and representatives of other initiatives to present the project and get feedback and involvement from these stakeholders. 544. During the course of the project planning phase, the local NGO partners have worked with the Project Coordination Unit to deepen these relationships as they pertain to the coffee sector in each country, and to explore the scope for collaboration with existing and planned coffee-related activities, while seeking to avoid any duplication of effort. Summary of consultations and stakeholder participation during PDF-B project preparation Consultations with coffee companies: 545. As part of the PDF B planning process, more than 20 potential certified coffee buyers and 50 current buyers in the United States, Canada, UK, Europe, Japan and Australia were interviewed either by telephone or during one-on-one interviews. Companies were surveyed about their motivation to buy certified sustainable coffee, how they market their certified products, and how the project could best help them in this effort, key origins for certified coffee purchases, and growth projections for certified coffee. The results were compiled in a summary market assessment outlining key strategies for engaging the market and achieving coffee sales growth objectives. From this a list of target partners who best meet the priority profile was developed for each geographic region. Direct conversations were held with the target partners to determine interest and commitment, and a final group of twelve companies agreed to formal partnerships with the project. Consultation with Policy and Civil Society Organizations: 546. As identified in the table below, there are a number of policy and civil society organizations that have been identified for their ability to support project objectives. During the PDF-B implementation staff presented the project to the majority of these organizations and discussed collaboration opportunities. 143 Consultation with national governments: 547. At the initiation of the PDF B process, project staff traveled to each country to present the proposed intervention to government environment ministries and receive feedback. Local members of the Sustainable Agriculture Network participated in each meeting, providing the opportunity to build or strengthen the relationship between these local actors. Consultation with national coffee organizations 548. During the initial field visits to meet with government ministries, meetings were also held with local coffee organizations. Further follow up meetings were held between the local associations and the local SAN partner to discuss the project. Table J: Summary of stakeholders and potential involvement in project implementation Stakeholder Role Relevance for project Participation in project Potential impact INTERNATIONAL LEVEL Coffee companies Kraft Europe and US Coffee roaster, launching certified Kenco, Gevalia, and Jaques Vabre in Europe, and Yuban and All Life brands in the US Global leader in purchases of certified coffee. Plans long term commitment to purchases. Coffee company partner Caribou U.S. based coffee roaster, owns chain of coffee shops UCC Ueshima Largest wholesale coffee roaster in Japan. Works with two of the largest participating importers in Rainforest Alliance’s coffee program and has developed dozens of certified products which are available through mail order, by the cup at cafes around the country, in restaurants, thousands of convenience stores and other retail outlets such as Family Mart. Wholesale coffee roaster Increasing purchases of certified coffee. Consumer awareness in the U.S. Direct support to farmers in their supply chain for achieving certification. Coffee company partner Increasing purchases of certified coffee, Coffee company partner Java City Coffee company partner 144 Projected to continue to be largest buyer of certified coffee. Also supports producer development projects, monitors international policy, provides direct financial support to coffee certification program Consumer awareness, increased hectares certified Consumer awareness, coffee purchases, expanded demand from others in their supply chain. Coffee purchases, expanded Boyds Wholesale coffee roaster Coffee company partner Lavazza Major Italian coffee roaster, launching certified Tierra! brand in Europe Proctor & Gamble Millstone’s certified Rainforest Reserve, is sold in over 3,700 stores in the US, including Walmart SuperCenters, Safeway, Kroger, Albertsons, Stater Bros and Save Mart. Drie Mollen is a multinational company headquartered in the Netherlands and is ranked among the six largest coffee roasters in Europe, with operating units in the Netherlands, France, Germany, Spain, Switzerland Buys coffee from Colombia, Peru and Honduras. Coffee company partner Coffee company partner Drie Mollen Dietrichs/Gloria Jean’s Colruyt Family Mart Royal Cup Policy institutions ISEAL Alliance Gala Coffee & Tea, a subsidiary of the Drie Mollen group, launched certified Lyons Original. Found in Tesco, Sainsbury, Asda, Morrisons/Safeway, Waitrose and Somerfield, in over 2500 stores throughout the UK. Gloria Jean’s Coffee, a subsidiary of Diedrich Coffee, offers certified coffee in 147 mall kiosks and shops across the US One of Belgium's largest retail chains. Offers Certified coffee in its 250 supermarkets in Belgium and France. Japanese retailer with 7000 convenience stores Wholesale coffee roaster Setting credibility standards, monitoring and advising on policy issues demand from others in their supply chain. Coffee purchases, expanded demand from others in their supply chain. Consumer awareness, coffee purchases. Market leader in Europe/Italy Market leader in U.S., consumer awareness Coffee company partner Market leader in Europe, consumer awareness, coffee purchases Coffee company partner Consumer awareness, coffee purchases Coffee company partner Leader in Belgium, consumer awareness Coffee company partner Consumer awareness in Japan Coffee purchases, high end consumers Coffee company partner The “trade association” for NGO social and environmental standard setters. The only group 145 Provides quarterly policy analysis to member organizations. Monitors threats to independent, third CSR Europe Policy monitoring and advisory European Coordinating and lobbying Environmental Bureau body for green groups Civil Society Organizations KRAV Leading Swedish organic organization Grolink monitoring policy in the name of all international NGO standards setting and certification groups Leading policy group with corporate members, including Kraft and Starbucks. Policy monitoring, advice and lobbying party NGO social and environmental standards setting and labeling. Provide local credibility and support for project Local stakeholder outreach, policy monitoring, conduct chain of custody auditing Local representative for media, stakeholders Promote biodiversityfriendly coffee to members, government, and other stakeholders. Promote biodiversityfriendly coffee to members, government, and other stakeholders. Promote biodiversityfriendly coffee to members, government, and other stakeholders. Share coffee impact research, monitor and share policy information Swedish technical assistance agency Wildlife protection group Provide local credibility and support for project Provide local credibility and support for project BirdLife International Wildlife protection group Provide local credibility and support for project WWF International, WWF Switzerland WWF UK Leading international wildlife and environment groups Provide local credibility and support for project International Institute for Sustainable Development and UNCTAD Sustainable Agriculture Initiative Joint managers of the Sustainable Coffee Partnership Tool development, policy, strategy, research, M&E Industry group Standards development, trade and food policy, support Royal Society for the Protection of Birds Policy monitoring and advice for project Policy monitoring and advice for project Monitor and share policy information NATIONAL LEVELS Brazil Ministry of Agriculture Secretaria de agricultura e Secretaria de Medio Ambiente Municipio de Venda Nova do Imigrante – Espirito Santo EMBRAPA - Brazilian Agricultural Research Corporation Formulation and coordination of the execution and follow-up of policies which promote food security, promotion of the development of agroproductive circuits and agro/food systems. Responsible for Environmental Policy and Legislation management and enforcement in Espirito Santo State. Maximum authority for agricultural planning and projects. Member of Steering Committee Recipient of technical assistance to incorporate BD friendly approach in its programs. Provides support to PRONOVA, a cooperative of 300 farmer located in an important region for the Project. Partner in project implementation. Coordination unit with other national projects The Brazilian Agricultural Research Corporation's mission is to provide Embrapa develops special programs and projects concerning areas such as Potential partner in project execution activities 146 CETCAF – (Center for the Development of Achieta Coffee) INCAPER – Capichaba Institute of Research, Technical Assistance and Rural Extension SOS Foundation Mata Atlantica feasible solutions for the sustainable development of Brazilian agribusiness through knowledge and technology generation and transfer. Cetcaf supports coffee production on small family properties. INCAPER is the responsible for technical assistance to coffee producers and other crops of Estado do Espírito Santo One of the principal NGOs working on conservation projects in Mata Atlantica food safety, family agriculture, natural resources, advanced technology and agribusiness, and acts as a partner in several others. Farmers do not have the ability to compete and generate income with their low-quality, high-cost production. The result is unemployment leading to a rural exodus. Lessons learned from technical support initiatives undertaken in pursue of sustainable agriculture. Potential partner for project activities execution Potencial partner for the data collection and analisys for the Monitoring and Evaluation plan. Biodiversity conservation experiences and lessons learned for the project implementation Potencial partner for the data collection and analisys for the Monitoring and Evaluation plan. Responsible for Policy and Legislation management and enforcement in the country Sectorial – Coffee buyer for the Federación Nacional de Cafeteros in the Santander Region GEF Focal Point Green Markets Office Supports Sustainable Certification practices Offers financing options to associates. Entirely owned and controlled by Colombia's coffee farmers, (cafeteros) of whom there are over 500,000. Research on a wide variety of topics from genetic studies to determine new species to industrialization of coffee to satisfy consumer demand. Principal Organization in the coffee sector at national level. Receives y buys coffee of the region. Capable of managing resources for investments in coffee activities. Partner in project implementation. Unidad Administrativa del Sistema de Parques Nacionales Naturales Government Entity responsible for the administration of National Natural Parks Instituto Alexander von Humboldt Biodiversity Research Institute Management of protected areas near coffee regions. Experience in other conservation projects in buffer zones. Andes Colombia GEF Project executor, with a component on rural landscapes in coffee regions. Colombia Ministry of Environment, Housing and Land Use COOPERATIVA DE CAFETEROS DE SANTANDER The Colombian Coffee Federation (FNC) CENICAFE National Center for Coffee Research Research on Clean Technologies, sustainable practices and Biodiversity in coffee farms. 147 Promotes clean Technologies for coffee processing and manages information on BD in coffee. Important organization for monitoring and evaluation system. Partner in project implementation. Coordination unit with other BD conservation projects Potencial partner for the data collection and analysis for the Monitoring and Evaluation plan. El Salvador MARN Ministry of Environment and Natural Resources Ministry of Agriculture and Livestock CSC El Salvador Coffee Council APECAFE El Salvador Small Producers Association PROCAFE El Salvador Foundation for Coffee Research UCAFES El Salvador Coffee Cooperatives Union Coordination of activities for the promotion, conservation, defense, restoration and improvement of the environment; promotion of land use planning; implementation of control measures to prevent possible environmental damage Formulation and coordination of the execution and follow-up of policies which promote food security, promotion of the development of agroproductive circuits and agro/food systems. Official forum for discussion between public and private sectors Represents 11 cooperatives of small producers in the country Provide the coffee sector with services and technology solutions for sustainable coffee production Private. Offers technical assistance, business development support and other consultancies Focal Point for GEF Partner in project implementation. Coordination unit with other national projects Principal authority for agricultural planning and projects. Coordination unit with other national projects related to sustainable agriculture and conservation of biodiversity. Linkage private-public sectors Facilitates private-public alliances for sustainable coffee practices Coordination of project activities in selected project regions In the area of interest there are successful examples from which lessons could be learnt. Some of them apply BD friendly approaches and export to fairtrade markets. Principal Organization in the coffee sector at national level. Potential partner in training activities, dissemination of results and monitoring & evaluation Lessons learned from training and initiatives undertaken in pursue of sustainability in farms. Successful cooperatives as partners in certification programs from which lessons could be learnt. Guatemala CONAP Protected Areas National Council Government entity. Direction and coordination of Guatemalan Protected Areas System Focal Point for GEF. Coordination and management of protected areas Partner in project implementation. Coordination unit with other national projects ANACAFE National Integrated by producers and traders in the coffee sector in coordination with public authorities. Private non-profit entity, with the goal to promote and develop the exports of non-traditional products of Guatemala Dedicated to support small Principal Organization in the coffee sector at national level. Coordination of project activities in selected project regions The relevance is related with the market component of the project Coordination of project activities in selected project regions, particularly in the markets and exports side. Represents interests of Coordination of project Coffee Association AGEXPRONT Guatemala Non Traditional Products Exporters’ Association FEDECOCAGUA 148 Guatemala Federation of Coffee Producers Cooperatives producers coffee sector, particularly small producers. activities in selected project regions Coordination of activities for the promotion, conservation, defense, restoration and improvement of the environment; promotion of land use planning; implementation of control measures to prevent possible environmental damage Private Organization. Integrated by producers in the coffee sector and coordinates coffee productive circuit Provides Technical Support to coffee farmers. Private Institution. Focal Point for GEF Partner in project implementation. Coordination unit with other national projects Represents interests of coffee sector in general. Coordination of project activities in selected project regions Principal Organization in the coffee sector at national level in regards to technical assistance Represents interests of coffee sector in general. Potential partner in training activities, dissemination of results and monitoring & evaluation Coordination of project activities in selected project regions Honduras SERNA Natural Resources and Environment Secretariat ANACAFE Nacional Coffee Association IHCAFE Honduran Coffee Institute AHPROCAFE Honduran Coffee Producers Association CNC Coffee National Council Private Organization. Represents members from all different sectors in coffee. Oldest Organization. Public Organization. Responsible for national policies related to coffee Involvement of governmental institution in regards to coffee initiatives Peru National Coffee Council (Junta Nacional del Café) CONAM Environment National Council Peru Coffee Chamber Ministry of Agriculture Integrated by private farmers in the coffee sector for coordination of coffee productive circuit Coordination of activities for the promotion, conservation, defense, restoration and improvement of the environment; promotion of land use planning; implementation of control measures to prevent possible environmental damage Initiatives and activities related to coffee exports Formulation and coordination of the execution and follow-up of Principal Organization in the coffee sector at national level. Focal Point for GEF The relevance is related with the market component of the project, particularly exports sector. Maximum authority for agricultural planning and projects. 149 Partner in project implementation. Coordination unit with other national projects Partner in project implementation. Coordination unit with other national projects Lessons learned from exports to sustainable markets Coordination unit with other national projects related to sustainable policies which promote food security, promotion of the development of agroproductive circuits and agro/food systems. agriculture and conservation of biodiversity. Project Stakeholder Involvement Strategy 549. Coffee Industry Involvement Strategy: Corporate partners are coffee buying companies – roasters, wholesalers, and retailers - that have expressed an intention to expand their involvement with RA certification through participation in the project. These companies will deepen their commitment to sustainability as a result of their participation, providing increased training about sustainable coffee to company staff, promoting certified sustainable coffee to consumers, helping producers in their supply chain to achieve certification, and, ultimately, purchasing more certified coffee. 550. The project will begin with an initial core group of twelve dedicated partner companies. As other companies increase their involvement in the project and express a commitment to expand their growth, new companies can be added to the list. Due to the nature of the marketing intervention, the project will be in frequent contact with potential new corporate partners. The initial partner companies will be Kraft Foods, UCC Ueshima, Caribou Coffee, Boyds, Lavazza, Procter and Gamble, Drie Mollen, Colruyt, Dietrich’s/Gloria Jeans, Family Mart, Royal Cup. Letters from these companies, confirming their commitment as partners in this project, as well as co-financing contributions, will be delivered at CEO endorsement. 551. Within the project, corporate partners will work in collaboration with the project to develop approaches, activities and products to help the companies increase their purchases and sales of certified coffee. Many of the proposed project interventions on the market and consumer demand side were developed based on stakeholder consultation during the PDF B phase. Corporate partners will then help pilot the activities within their own companies and test the newly developed products and systems to optimize them for wide application within the coffee sector. This approach implies a win-win situation where the project gets a chance to try out approaches and receive valuable feedback from friendly company allies, and the companies get a chance to participate at the forefront in activities which will help them achieve maximum benefits from their involvement in certified sustainable coffee. The larger the benefit for coffee companies, the higher the demand for sustainably produced products. 552. A key part of the products and systems developed will be a private sector capacity building strategy to mainstream sustainability issues internally within companies. As with other project deliverables, a pilot capacity building program will be tried out with project partners, and then rolled out to cover larger amounts of new coffee companies interested in engaging in sustainable coffee. 553. Because each company has a different organizational structure and culture, and different marketing requirements, the project will work with individually with each partner on an annual basis to determine the package of activities to implement, and exactly how to implement each activity. During the project inception phase, the projects will be invited to participate in the detailed planning of project activities that will be executed in collaboration with partner companies. A joint exercise will map which companies will participate in each project activity, and what the partner company can offer the project in terms of providing inputs to the project process. The planning exercise will determine what is required to develop products which will satisfy the needs of coffee companies to scale up their coffee purchases, how to develop necessary products and how to test them 150 in collaboration with corporate partners. Finally, the project will determine a roll-out strategy to reach the largest amount of new coffee companies. 554. In addition to their role as partners in piloting project activities, corporate partners will also have an important role as advisors to the project. Representatives for the Coffee Sector Advisory Group will also be selected from the partners (see section on project Implementation/Execution Arrangements). A bi-annual marketing survey and plan will form an additional feedback mechanism for corporate stakeholders. 555. Policy Organizations: Several organizations provide regular monitoring of the international regulatory environment for standards setting and certification. The International Social and Environmental Accreditation and Labeling (ISEAL) Alliance is a membership organization made up of NGO led standards setting and certification schemes, and provides regular policy monitoring for its members. The project can benefit from these regular policy updates. In addition, a small number of the corporate partners monitor policy and will provide feedback, and advice to the project. 556. Civil Society Organizations: Civil society organizations, such as international environmental organizations, can help support the project through outreach to their members and other key stakeholders about the importance of certified sustainable coffee. Some organizations monitor policy, have key stakeholder contacts, or have a mission of promoting sustainable agriculture. The project will explore collaborations and information sharing with this group of stakeholders. 557. National government authorities in project countries: National government agencies will play an integral role in the project. The national coordinator will engage with the appropriate agencies, keeping them abreast of project developments and soliciting feedback. Governments will be engaged in local policy initiatives in support of sustainable coffee production efforts. Given that the project crosses so many sectors – environment, agriculture, SMME development –government actors can play a key role in enabling dialog and information sharing across sectors. 558. National coffee organizations in project countries: National coffee organizations are key production side stakeholders, and will play an active role in project activities. These activities range from educating their members about certification, receiving technical training in the standards, jointly promoting local certified farmers through cupping events, to providing technical assistance to member producers. Many of the project country coffee associations already play an active role in the certification program, and will be able to increase their role during the project. 559. Local institutions and stakeholders: Local institutions will play a key part of the project implementation. In each country, project activities will be coordinated through a local NGO member of the Sustainable Agriculture Network. These local conservation organizations have local members, local boards of directors, and years of experience working with local stakeholders. 151 Part (Annex) V : Barrier and Root Causes Analysis Barriers and Root Causes Facing Rainforest Allicance Certified Coffee Production and Sales Root causes Companies do not realize that benefits of buying RA certified coffee is about much more than seal use Some companies do not see business value in RA certified coffee Low integration of supply chain for RA certified coffee Capacity constraints in RA in supporting a growing number of companies on international markets Lack of incentives and awareness among company staff prevent broader company engagement RA has limited capacity to inform companies of RA certification Low media coverage of sustainability issues Newsworthy sustainability stories are not told Low point-of-sale visibility for RA certified products Institutional consumers do not have sustainability policies SAN partners have not concentrated on technical assistance or information dissemination related to certification Absense of extension service providers trained in implementation of RA standards Farmers protect Best Management Practices as competitive advantages No structure identifies and promotes Best Management Practices in a systematic way Available credit options for small producers are unknown Little knowledge about sustainable farm diversification strategies Geographic conditions do not support good coffee quality Processing practices fail to produce the best possible coffee Companies on international coffee markets find it hard to identify desired RA certified coffee Barriers Objective Goal Project Objective: 5 Coffee Project Regions in LA Project Goal Limited market demand for RAcert coffee Companies and other stakeholders unaware of what RA certification is Respected civil society organizations fail to embrace and promote RA certification as conservation strategy Low RA certification seal recognition by consumers Limited distribution of RA certified products prevents potential costumers in buying RA certified coffee Limited consumer Interest in RAcert coffee Institutional consumers do not source sustainable products Farmers with potential for RA certification lack knowledge of RA standards and how to implement them SAN partners face growth challenges Expensive for small farmers to certify individually Capacity constraints in scaling up certification activities Coffee farmers RA certify sust. production practices Best Management Practices are not shared between certified farmers Difficult market access for RA certified farmers Some small farmers find it difficult to access finance for farm improvements and trade Monocropping increases vulnerability to fluctuations on coffee market On some farms, coffee quality is too low to achieve price premium on RA certified coffee Farmers little aware of alternative trade relationships Inequitable power relationships and intransparent terms of trade maintain farmers at a disadvantage RA sustainability standards are not effectively promoted at policy levels Weak producer business-, marketing- and sales practices Unawareness of RA sustainability standards among policy makers and industry representatives Governments, industry agencies and trade agencies promote policies that create disincentives or barriers to sustainable coffee production and trade Lobby from industry representatives and other certification systems promote non-sustainable standards Governments, industry agencies and trade agencies fail to create incentives for sustainable coffee production and trade Weak economic sustainability on RA certified coffee farms Unfavorable policies limit production or trade of certified sustainable coffee RA and SAN do not have the capacity to monitor or respond to policy threats No systematic impact monitoring is performed for RA certification activities Knowledge and best practices are not exchanged with peer conservation organizations Weak stakeholder representation in certification standard setting RA has little systematic information on costs and benefits of RA certification Information and knowledge is not systematically generated to inform decision-making and adaptive management in RA cert. system 152 BD, social and economic benefits on coffee farms BD conservation in coffee landscapes Part (Annex) VI: Coffee Industry and Sustainability Overview Like most commodity environments, the coffee sector is reliably unstable and unpredictable. The many actors in the global coffee sector have tried to address “sustainability” since long before that term came into popular use. In 1962, in an effort to address the boom and bust cycles which prevailed in the coffee sector, the International Coffee Organization (ICO) was formed. Today, its members include 95% of the coffee producing country governments and 60% of the coffee consuming nation governments. For nearly three decades, the ICO had some success with market interventions until the system collapsed in 1989. Currently, the ICO is working with its members to promote an awareness of the need for a sustainable coffee economy by making stakeholders in the coffee sector aware of the extreme economic conditions for producers, and proposing measures in areas such as quality, promotion and diversification to restore greater balance to the world coffee market. Indeed, one of the objectives of the International Coffee Agreement 2001 was to encourage ICO members to develop a sustainable coffee economy, resulting from the United Nations Conference on Environment and Development, which requires sustainability to be considered in the context of economic, social and environmental aspects. These and other measures are a result of farm-gate prices having dropped to historic lows in recent years, pressuring the coffee sector to act. Early in the process, however, there was little consensus on what should be done and who should be responsible for doing it. Through an impressive stream of meetings, experiments and negotiations, especially during the past five years, some common ground is being reached. There is growing agreement, for example, that the three pillars of sustainability should be addressed as an integrated whole, that solutions will be built on conventional market forces, and that there must be more transparency, equity and information flow along the supply chain. The following “Principles for Sustainable Development,” drawn from existing initiatives within the coffee sector, provide a broad foundation for the development of an integrated approach within the coffee sector: Principles for Sustainable Development in Coffee Trade1 Principle 1: Principle 2: Principle 3: Principle 4: Principle 5: Producers should be paid a price/wage that covers production, living and environmental costs within a competitive framework and which displays a measured degree of stability. Employment relationships should be maintained in accordance with core ILO conventions and local law. Production practices should be environmentally sustainable. Producers should have enhanced access to credit and opportunities for diversification. Producers should have enhanced access to trade information and trade channels. The Role of NGOs For much of the past decade, NGOs have driven much of the discussion. Oxfam published its influential “Coffee Rescue Plan” in March 2002 as part of its “Make Trade Fair Campaign” at a time when global coffee production (117 million bags) exceeded global coffee consumption (109 million bags) by an amount nearly equal to the total production of Central America. Oxfam and other NGOs also called for managing supply, reducing volatility, improving coffee quality, maintaining coffee prices within “price bands,” and eliminating agriculture subsidies. Coffee industry representatives generally agreed with these remedies, but finding ways to move them towards implementation of these ideas proved difficult. Principles for sustainable development drawn from, inter alia, the UN Global Compact’s 9 principles, Fair Trade Labelling Organizations International Fair Trade Generic Criteria and the Conservation Principles for Coffee Production, Utz Kapeh Foundation criteria. 1 153 Oxfam and others also called for the destruction of low-grade coffee stocks accumulating in warehouses around the world, but industry and governments could not agree on that proposal. The coffee manufacturing industry noted that the remedy most within its control and area of responsibility was increasing demand, a proposal that some NGOs declared as self-serving. The only actor along the supply chain profiting from the low farm-gate prices – the retail sector – remained silent and bore little criticism. Long before the recent (and now receding) price crisis, however, environmental NGOs had been promoting the biodiversity benefits of traditional, tree-shaded coffee production and agreeing on farm management standards. After many conferences and field projects in the 1990s, environmental groups met in the year 2000 to agree on “consensus standards for conservation coffee,” which were published by the Consumers’ Choice Council. These standards closely reflected the Rainforest Alliance/Sustainable Agriculture Network’s (SAN) principles, which had already been in use on hundreds of farms in Latin America for a decade. Additionally, several NGOs, most notably the Smithsonian Migratory Bird Center, Conservation International and Rainforest Alliance/SAN have steadfastly continued to promote the concept of biodiversity friendly coffee, both at the farm level and in the marketplace, prompting the NAFTA Commission on Environmental Cooperation to publish a summarizing report on biodiversity and shade coffee in September 2001. In recent years, the like-minded but fractured initiatives focusing on the environmental opportunities of coffee and those pursuing the economic and equity aspects have begun to merge under the “sustainability” umbrella. Even Oxfam and the fairtrade movement, long focused on farm-gate prices, have begun to talk of sustainability. And at any coffee conference this year, the word “sustainable” will be in many of the presentations and banners. The Role of Industry Industry, perhaps out of necessity, has also embraced the concept of sustainability. The food industry created the Sustainable Agriculture Initiative (SAI), an initiative dedicated to researching best farm management practices. While the SAI includes other food sectors includes the leading coffee companies but also other food sectors. Starbucks, Neumann Kaffee Gruppe and other companies developed their own “verification systems” to guide farms toward sustainability and reward complying producers. At the request of Nestle, SAN technicians developed a system to evaluate social, environmental, production and quality practices in an integrated way on farms supplying the high-end niche company Nespresso. Perhaps the most significant industry initiative is the “Common Code for the Coffee Community (CCCC) 2,” created by the German government development agency, GTZ, and the German coffee association with support from some global coffee companies. Over the past three years, the CCCC has grown into an important forum for the discussion of coffee sustainability issues, as a multi-stakeholder initiative, bringing in the large industry players often absent from other platforms. The CCCC has also developed a code of good farm practices, and is now trying to find agreement on how coffee traders and companies will participate. The industry representatives argue that NGO-led certification programs are too slow, narrow and cumbersome to deal with mainstream coffee, noting that all the NGO programs together account for less than 5% of global production. At this point, following the years of discussion on sustainability, industry’s contributions are driven by 1) the desire to shape the guidelines for sustainability and 2) the need to be seen by the market as a leader in offering 2 For more information on the Common Code for the Coffee Community see www.sustainable-coffee.net 154 sustainable products. As the quantity of sustainable products increase in the marketplace, companies aren’t willing to be left behind. The Role of Multilateral Agencies The multilateral development agencies, as well, have been very active in the coffee sector, holding joint conferences in coffee-producing countries. The World Bank, IDB, USAID and other donors have their own agendas, but have increasingly worked toward a common understanding. At a joint conference in Nicaragua in December 2004, the participants, including global coffee companies, farmers and leading NGOs identified the most-often-proposed lines of action as follows: Increase Consumption – promote coffee drinking in both producing and traditional market countries. Increased consumption is based in part on improving quality and increasing consumer understanding, awareness and interest through certification seals. Improve Producer Support Risk management – inform producers of techniques, such as hedging and purchase options, to manage their risks. Market information – facilitate transparency of information to producers, especially on markets, prices, and crop and yield forecasting. Extension services – improve coffee-related agricultural extension services, including sustainable practices and yield management. Upgrading quality – support producers in moving toward gourmet or specialty grade coffees that are increasingly in demand. Certification – support certification of sustainable farm practices. Diversification – promote partial or total diversification of coffee farms into other crops and income-generating activities. Business training – provide improved business skills, awareness of appropriate business practices and training opportunities. Vertical integration – encourage producers to add value to their product through milling and other methods. Roaster relations – encourage long-term, trust-based relations between roasters and producers. Financing – provide improved access to credit for producers as well as debt restructuring at the producer and national levels. Macroeconomic Policy Fixes Quality standards – institute quality resolutions to remove low-quality beans from the market. Stabilization funds – create long-term stabilization funds to minimize price volatility. Quotas – impose export quotas on coffee producing countries. Tax policy – reduce the tax burden on coffee farmers. Crisis relief – provide relief services for displaced farmers and workers. Reduce trade barriers – lower European and US trade barriers on non-coffee products (there are few tariffs or barriers on green coffee). Most of the participants in the sustainable coffee discussions are pushing one or more of the actions listed above. The Future of Sustainable Coffee Though the amount of sustainably-grown coffee available in the marketplace is still considerably small, the number of voices hoping to be heard on the issue has grown. Recognized and proven programs devoted to the production of sustainable coffee will find their efforts and products increase as the amount of responsibly-grown 155 coffee increases, as it most certainly will. The market for high-quality, sustainably-grown coffee will continue to increase as farmers, companies and consumers continue to recognize the benefits. 156 Part (Annex) VII: Coffee Sector and Rainforest Alliance Marketing The Certification Seal The Rainforest Alliance, a conservation organization, has been a pioneer in harnessing the power of the private sector. This includes learning about and influencing markets. The Rainforest Alliance programs are not “market-driven” – they are mission-driven, butt they are also sensitive to the changes in consumer attitudes and interests and closely aware of commodity market drivers. An important element of the Rainforest Alliance and SAN mission is to change consumer behavior – to transform the current culture of consumerism into a popular culture of sustainability. The certification seal is the most important tool for achieving that goal. The first priority for any certification program is to guard the credibility of the seal. Earning credibility requires arduous work, careful planning, clear objectives, transparent operations, a willingness to receive and act on criticisms, a record of achievement, consistency, persistence, and honesty. Credibility is difficult to gain and easy to lose, and is the most important asset in developing public awareness and demand for the certified products. The long-term success of ecolabeling programs such as Rainforest Alliance Certified will depend in part on whether or not consumers buy the labeled goods, thus rewarding certified producers and those companies trading the certified products. The Rainforest Alliance, as the owner of the certification seal and as the secretariat of the Sustainable Agriculture Network (SAN), recognizes its responsibility to generate consumer demand, but – unlike, say, the fairtrade movement – the Alliance has built other rewards and drivers into the system all along the supply chain. Farmers, for example, find that meeting the standards and installing a program of continuous improvement brings many tangible and moral benefits beyond the promise of higher prices. Companies find that the certification program is a valuable Corporate Social Responsibility (CSR) platform, reduces risks, improves the corporate image, increases employee morale and aids business planning. Even so, coffee companies also want public recognition for their efforts and increased sales, and these benefits largely depend on consumer uptake of the program. Many NGOs believe that the success of certification programs is built on consumer demand, but that belief is not supported by the evidence. The growth in markets for recycled paper, fairtrade products and FSC wood were developed by companies, governments and activist groups in the face of a jaded, price-conscious and largely uninterested public. Recognizing this – and in the interest of cost-effectiveness – the Rainforest Alliance concentrates its marketing efforts on the behind-thescenes sectors of the supply chain, allowing companies with their expertise, famous brands and substantial marketing budgets to carry the message to the end consumers. This is not to say that reaching the pubic is unimportant. As noted above, changing consumer behavior is part of the Rainforest Alliance and SAN mission. The certification seal is an effective tool for conveying a concise message to consumers, acting as a form of communication between farmers and shoppers. Farmers use the seal to tell consumers that they have met prescribed standards; buyers send a message back to farmers, saying that they approve. For the Rainforest Alliance and other activists, closing this circle is an essential element of environmental education. 157 Through the Media With limited budgets and a small staff devoted to communications, the Rainforest Alliance must be thoughtful in how it spreads its message through the media. An efficient strategy has been to piggyback media efforts on existing, or developing, company campaigns. In addition, the Rainforest Alliance will provide companies with materials, information and ideas to support their campaigns. While raising public awareness, media mentions are also valuable to the program’s champions in participating companies, helping them build internal enthusiasm and understanding for the initiative. This is necessary to convince management to budget funds for promotion and expansion of the program. The priority marketing targets for the Rainforest Alliance include: farmers, activists, governments, coffee companies, retail chains and other agenda-setters and change-makers. Their support is absolutely necessary to building initial market demand; consumer awareness and brand preference can follow. Actor Coffee farmers Message On-farm benefits of the certification program, possible price premiums Coffee traders Benefits of buying and selling sustainable coffee, information about supply and demand Coffee roasters Business benefits of certification, such as ensuring long-term supply of quality beans, traceability, transparency, increasing brand loyalty, improved image, risk management, opportunities for leadership in CSR Business benefits of offering certified coffee, such as building brand loyalty, generating excitement and demand, demonstrating leadership and innovation, CSR Retailers, coffee shops and supermarkets Coffee activists and sister NGOs Other certification programs Conservation and rural development benefits of certified sustainable coffee farming. Shared objectives, technical information, methodologies, policy, marketing plans, alignment Media Direct contact through the SAN members, special materials, farmer to farmer communication, training workshops, government and private extension services, traders Direct contact through the SAN members and Rainforest Alliance staff, Rainforest Alliance websites, including the Eco-Index, and publications, special materials, conferences and meetings. Joint projects. 158 Direct contact by Rainforest Alliance staff and supportive traders, Rainforest Alliance website and publications, special materials, conferences and meetings. Joint projects. Trade publications Popular media Direct contact by Rainforest Alliance staff and the sales forces of participating roasters, special materials and trainings. Joint projects. Website Conferences and trade shows Trade publications Popular media Direct contact with SAN and Rainforest Alliance staff. Meetings and conferences. Joint projects. Rainforest Alliance websites, including the Eco-Index, and publications. Organizational bulletins and magazines. Popular media Direct contact with Rainforest Alliance and SAN staff. Meetings and conferences. Government agencies Consumers Economic and rural development benefits of sustainable coffee farming. Certification is an opportunity, not a barrier to trade. Other policy issues. Certified farms as allies in national and regional conservation, development and marketing programs. Rainforest Alliance compliance with labeling regulations. Benefits to farmers, workers, wildlife and the environment of certified, sustainable coffee farming. Good quality coffee. Support participating companies. Buy certified. Rainforest Alliance websites, including the Eco-Index, and publications. ISEAL. Meetings, workshops and conferences. Joint projects. Organizational bulletins and websites. Popular and specialty media. Direct contact with Rainforest Alliance and SAN staff. Meetings and conferences. Rainforest Alliance websites, including the Eco-Index, and publications. ISEAL. Meetings, workshops and conferences. Joint projects. Popular and specialty media. Popular media. Specialty publications, such as supermarket magazines. Point-of-sale information. In-store campaigns. Does Consumer Awareness Translate into Sales? There is little or no consumer awareness of the Rainforest Alliance Certified seal today, though the seal is quite well known among farmers, coffee companies, traders, activists and NGOs. Rainforest Alliance Communications Department will generate consumer awareness of the seal through strategically selected media and by piggybacking on the campaigns of participating companies. The expected growth in consumer awareness will give confidence to the venders of certified coffee and create a receptive environment for their promotions. This is important and necessary, but we know that sales are not necessarily proportional to consumer awareness. The Fairtrade movement, for example, has done studies of consumer awareness in several countries and found that large majorities – often around 80% – of survey respondents recognize the Fairtrade mark. However, the number of people willing to buy Fairtrade products remains low, rarely breaking the five percent barrier. Certified products will only go mainstream if they are marketed to mainstream consumers by companies with well-known brands. With the exception of organic groceries – in which products are often purchased for personal health reasons – most certified products are selected by shoppers because they are readily available, fairly priced and effectively promoted. In other words, shoppers buy what is marketed to them. 159 Unlike Fairtrade, the Rainforest Alliance does not want its seal to be seen as a brand. In this sense, it is more like an organic seal, a trustmark to support and add value to a company brand. Thus, consumer awareness of the seal is important and useful, but not essential to sales, especially at the beginning of a campaign. Credibility is essential. If a journalist or consumer activist looks for the program behind the seal, the program must be sound. And marketing is essential. Fairtrade and organic programs have had the benefit of promotion by governments, churches, unions and NGOs such as Oxfam. Rainforest Alliance Certified will have to develop similar support. Marketing This is a propitious moment for UNDP/ GEF to support the marketing of Rainforest Alliance Certified, since two global market leaders are launching campaigns in several countries. Kraft is introducing certified coffee in the UK, France, Sweden and Italy this fall and in the U.S. next year. Chiquita will put millions of bananas bearing the seal on store shelves in Austria, Belgium, Denmark, Finland, Germany, Holland, Norway, Sweden and Switzerland, beginning in October. Presumably, these product introductions and their accompanying media campaigns will increase consumer awareness, but it will be years before recognition of the Rainforest Alliance seal competes with recognition of the Fairtrade and organic seals. These latter programs have been marketing for more than 20 years, with multi-million-dollar grants, media support and collaborative governmental initiatives. Since seal recognition does not directly translate into sales – and sales are a motor of the program – we will measure sales in terms of volumes and use that as a proxy for seal recognition. At the moment, we estimate that Rainforest Alliance Certified products are available in 20,000 outlets in the U.S., Europe and Japan. For snapshots of various companies and the marketing they have done with Rainforest Alliance Certified products, please download the PDF file at http://www.rainforestalliance.org/gef/cert_promo_campaigns.pdf 160 Part (Annex) VIII: Rainforest Alliance Coffee Certification Program The Sustainable Agriculture Network (SAN) is a coalition of independent, nonprofit, conservation organizations that promotes the social and environmental sustainability of agricultural activities through the development of standards, and by certifying farms that meet those standards. Network members provide certification services to the producers and agricultural companies in their countries, and contribute knowledge and experience to the development of Rainforest Alliance Sustainable Agriculture standards. The SAN uses the Rainforest Alliance Certified™ seal, which is awarded to those farms that meet certification requirements. Rainforest Alliance is the secretariat of the SAN. It administers certification systems for the network, and provides certification services in Costa Rica and other select countries. Rainforest Alliance Sustainable Agriculture is currently reviewing and revising the Sustainable Agriculture certification systems in order to obtain ISO 65 accreditation. SAN Standards Rainforest Alliance began developing the Sustainable Agriculture standards in 1991 through a process of research, stakeholder consultation, and field testing. The first standards were specifically for banana production, and were used for the first certifications in 1993. The program was then known as “ECO-O.K.” The current standards, approved by the SAN, are based on ten principles, with specific indicators for banana, coffee, citrus, ornamental flowers and foliage, and cacao. Rainforest Alliance, along with other mission-driven, nonprofit certification and accreditation entities, is a member of the ISEAL (International Social and Environmental Accreditation and Labeling) Alliance. Part of ISEAL’s activities includes the development of policies and other instruments to ensure the credibility of its members’ certification and accreditation activities. Rainforest Alliance strives to comply with ISEAL’s Code of Good Practice for Setting Social and Environmental Standards for the revision of existing standards, or for the development of standards for new crops or services. 13 13 Standards Standards Development Development Process Process Research, Research,&& consultation consultation Existing Existing or orgeneric generic standards standards Proposed Proposed indicators indicators Audits Audits &&field field testing testing Final Finalversion version of ofstandards standards Review Reviewby by SAN SAN Modifications Modifications Public Public Consultation Consultation © Copyright 2002. Rainforest Alliance © Copyright 2002. Rainforest Alliance Final Finaldraft draft proposed proposed standards standards&& indicators indicators Thursday, November 04, Thursday, November 04, 2004 2004 Sustainable Agriculture Network standards specify criteria for best management practices and social and environmental performance for farms. The scope of the standards covers agronomic practices and integrated crop management; social, labor, and community relations; environmental management, and occupational health and safety. By September 2005, Rainforest Alliance and the SAN will begin using generic standards (illustration) that can be applied to all crops, including multiple-crop systems, with additional crop-specific indicators for banana, coffee, citrus, ornamental flowers and foliage, and cacao. This structure will allow for optional joint audits for other certification and supplier verification systems to meet the needs of SAN-certified clients. 161 The SAN may determine that some crops may require specific indicators that more clearly define best management practices and help to reduce or avoid negative social and environmental impacts associated with those crops. These indicators will require full evaluation and approval by the SAN, as well as a public consultation process. In addition, SAN members may want to use indicators that account for local social, environmental, or cultural conditions. These indicators must not be less strict than those found in the general standards. SAN members will be responsible for developing these indicators, and for carrying out a public consultation process in their respective countries. Certification Process SAN certification is designed to drive continual improvement of social and environmental best management practices on farms. The process begins with the first contact between a producer 1 and Rainforest Alliance or another SAN member. The producer completes and submits an application form. Based on the information in the form, Rainforest Alliance or the SAN member recommends that the farm undergo a diagnostic audit, or moves straight to a certification audit. A diagnostic audit is designed to generate information about the challenges a farm must overcome to achieve certification. Although a diagnostic audit represents an additional cost, it provides a better indication of where producers invest their time and resources for their farms to certified. Farms with previous certification experience often choose to forgo a diagnostic and request a certification audit. 9 9 Certification Certification process... process... 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. First First contact; contact; application application Diagnostic audit Diagnostic audit (optional) (optional) Farm Farm improvements improvements Certification Certification audit audit Continual Continual improvement improvement must be Planning Planning audit, Review Review Report Report and and review review Certification Certification decision decision & & Implementation contract Implementation contract Annual audits Annual audits 6. 6. All farms are audited by teams of SAN or Rainforest Alliance auditors. The length and 7. 7. of the audit depend on many factors, among farm size, the type of crop, the complexity of cropping or production systems, the existence processing or packing facilities on the farm, and the number of farm workers. © Copyright 2002. Rainforest Alliance © Copyright 2002. Rainforest Alliance cost them Thursday, November 04, Thursday, November 04, 2004 2004 of All certified farms must undergo annual audits to evaluate compliance with the standards and to verify that previous non-compliance issues have been or are in the process of being rectified. Annual audits tend to focus more on previous non-compliance issues, but not at the expense of evaluating overall farm performance against the Sustainable Agriculture standards. Farms that do not demonstrate compliance or clear progress on improvements will be assigned corrective actions and will need to undergo a verification audit. Rainforest Alliance can suspend or cancel the certification of any farm that does not demonstrate progress on corrective actions. What is Audited? Rainforest Alliance certifies farms, not products. Farms are certified based on their performance with respect to established social and environmental best management practices in the Rainforest Alliance Sustainable Agriculture standards. The performance is determined by auditors who gather evidence of compliance with the standards during the audit process described above. 1 Producer, as used here, is the farmer, farm manager or owner, or the designated representative of the farm or owner of the farm. 162 Throughout the audit process, the audit team uses different techniques to collect, verify, and analyze evidence in order to evaluate farm performance against the respective standards. These techniques include document reviews, interviews, and observations of farm operations and management practices. At the conclusion of the farm visit, the team discusses preliminary findings with farm management, so that these findings are clearly understood, and so that management has the opportunity to provide further information that may change any findings. It is important to point out that the audit team always attempts to “triangulate” or cross-check evidence as much as possible. A typical example would be an audit team reviewing specific workers’ contracts, training, pay, and medical records; observing the workers’ activities; and interviewing the workers regarding conditions, training that they received, how they carry out their activities, if they underwent medical exams, and how they are paid. Evidence of inconsistencies between documentation, observations, and interviews would provoke further investigation and possible non-conformities if evidence indicates that conditions are consistent throughout the farm, or are otherwise systemic. In summary, the objective of a farm audit is to confirm the execution of best management practices according to their definition in the Sustainable Agriculture standards. Incidents of non-compliance are evaluated to determine whether they are an isolated incident or the result of the lack of a systematic approach to implementing best management practices. Compliance An audit team assigns a “non-conformity” when a farm does not comply fully or partially with some aspect of the standards. There are three categories of non-conformities: Critical non-conformity. This is essentially a “fatal flaw,” and is assigned when a farm does not demonstrate full compliance with a standard that is identified as critical. An example would be discharging untreated wastewaters directly to natural water bodies. A farm must fully comply with all critical standards before it can be certified. Major non-conformity. This non-conformity is assigned when a farm does not fully comply with any noncritical standard. Minor non-conformity. A minor non-conformity is assigned when there is partial, but not complete compliance with a standard. In general, non-conformities are assigned only to those compliance problems that are systemic, and are not isolated or temporary incidents. Again, the audit team must determine if non-compliance issues are indeed isolated incidents, or if they reflect the lack of a management system, policies and procedures or a genuinely systemic approach to social and environmental management on the farm. In the case of an isolated incident, an audit team can assign an “observation” to alert the producer, and future audit teams, to a potential problem. For non-conformities, the audit team can assign a compliance period, anywhere from six months up to two years, based on the level of compliance; the potential environmental, social or human health and safety impacts of noncompliance; and the resources the farm has available to achieve full compliance. Each article or sub-article of the standards is worth one point, and deductions are made for each category of nonconformity. The percent compliance for each Principle of the standards is the average score of all of the articles of the Principle, multiplied by 100 to obtain a percentage (see example). To achieve or maintain certification, farms must comply with least 50% of each of the nine Principles, and have at least 80% overall compliance with the standards. The scoring system guides and encourages farmers to make continual improvements in all areas, and it allows farmers to compare their performance with neighbors and producers in other regions. Certification Decisions 163 The audit team indicates in the certification or annual audit report the farm’s level of compliance with the standards. An audit team cannot recommend or decide whether or not to certify a farm. The certification decision is made by the Rainforest Alliance’s certification committee, whose members do not participate in the audits. According to ISO 65 guidelines, a certification entity cannot delegate a decision regarding the certification of a client. To comply with ISO 65, Rainforest Alliance Sustainable Agriculture has established a certification committee comprised of experienced Rainforest Alliance technical staff and associated professionals, in some cases auditors. Members of the committee review audit reports and decide whether or not to certify a farm based on the conclusions of the audit team. Members of the certification committee that participated in an audit of the client farm within the past year cannot participate in the certification decision regarding that farm. The certification committee also reviews annual audit reports to verify that progress is being made on farm improvements and standards compliance. The committee also reviews complaints from stakeholders regarding certified farms, as well as other potential non-compliance issues that may lead to an investigative or verification audit. 164 PART (Annex) VIII-A Coffee Certification Program: Sustainable Certified Coffee Growth Projections The project anticipates total purchases of 500,000 metric tons of certified coffee at the end of the project, increasing from a current base of 30,000 metric tons. Based on current short term demand this baseline is expected to increase to 100,000 by July 2006. To project future volumes of certified coffee, a careful analysis was conducted of the market to identify potential future buyers. The company survey conducted during the PDF B targeted 20 important potential companies and 50 current companies regarding their future potential for purchasing certified coffee. From these interviews, a segmented list was developed of current and potential companies with their purchasing potential. In addition, the list of targets was expanded from ongoing market contacts. This target list was used to develop the target indicators outlined for the project. Due to the confidential nature of company business projections specific company names and projections cannot be shared, but it includes some of the world’s most prominent coffee companies. Rainforest Alliance is in negotiations with a series of very large supermarket chains in the US, Europe and Japan, and several very wellknown coffee shop and fast food chains. These companies are considering joining the program and their business is very significant. The project projects a total certified area of 1,500,000 hectares at the end of the project period. Of this total area, 1,000,000 hectares are anticipated to be in coffee production. These projections are based on the close link between demand for certified coffee and supply provided from farms. From April of 2002 to July of 2004, the area certified increased steadily from 6,000 hectares to 36,000 hectares. Kraft Foods announced its commitment to purchasing certified coffee in October of 2003, after which the speed at which farms became certified during the next harvest season increased substantially. Certification is also expanding in new geographic regions based on demand from roasters and retailers, resulting in larger production areas to join the offering. Certification in Peru increased during the first half of 2005, and the first farms in Ethiopia will be certified in the second half of 2005. The program will expand to Indonesia in 2006. Sustainable Coffee Hectares Certified Historical and Projected 250,000 Hectares 200,000 150,000 100,000 50,000 0 April '02 Actual June '03 Actual June '04 Actual 165 June '05 Actual October '05 in process June '06 Projected Part (Annex) IX: Typical on-farm changes and benefits of Rainforest Alliance coffee certification Farm Aspects Common Problems RA Certified Farms Benefits Conservation Tree Cover (only for select crops like coffee and cocoa) No shade trees or only scattered shade of a few tree species. Often exotic species of little value to wildlife are used. At least 10 native species and 70 shade trees per hectare in two strata. Canopy cover is 40%. Forest Conservation Completely deforested or with little natural forest. Existing forest unprotected. Forests protected or sustainably managed. Degraded and nonagricultural areas reforested. Wildlife Protection Hunting or extraction of flora and flora common. All natural ecosystems and their flora and fauna must be protected. Soil Resources No soil conservation measures, heavy reliance on chemical fertilizers and herbicides Soil and fertility conservation program and measures implemented. Abundant use of vegetative ground cover and natural fertilizers Excessive water use. Streams and rivers contaminated with processing and domestic wastewaters and garbage. Riverbanks and watersheds deforested Water use is measured and conservation measures implemented. All wastewaters treated before release to environment. Riverbanks reforested, watersheds protected. Water Resources Worker conditions 166 Increased environmental services: water yields, carbon sequestration, recreation opportunities and biodiversity. Increased flora and flora for better natural pest control. Appropriate land uses: best lands for agriculture mean better yields and lower costs. Decreased runoff and stream sedimentation Increased natural fertility, decreased fertilization costs. Reduced herbicide use. Reduced water consumption and need for wastewater treatment. Increased water yields from farm for internal consumption and use by neighbors Farm Aspects Occupational Health Worker Housing Worker Rights Health and Education Child labor Common Problems Nonexistant or insufficient worker safety procedures and equipment. Unsafe conditions, numerous accidents. No worker participation in improving conditions. RA Certified Farms Occupational health and safety program in place; part of daily activities. Trained workers and better safety awareness and conditions. Workers have and use safety equipment. Worker health and safety committees exist. Rustic, run-down housing often with dirt floors, insufficient latrines, showers and other facilities Decent housing with cement floors, showers, toilets, cooking and laundry washing areas. Workers do no know their legal rights and responsibilities. No contracts. Pay below minimum wage, often without legal benefits. Worker intimidation. No right to organize or bargain collectively. Discrimination may exist. Rights and responsabilities regarding pay, benefits and working hours are clear and in line with ILO conventions and legal requirements. Contracts for permanent workers. Legal minimum or above-minimum wages paid. Freedom to organize and bargain collectively. Access to management. Discrimination prohibited. No or poor access to education for workers or families. Workers ignorant of basic health, higiene and environmental practices. On-farm schools or transportation provided to community schools. Appropriate health, higiene, and environmental education provided to workers and families. Minors (less than 15 years old) often employed for less pay and benefits. Often involved in dangerous activities without training. No educational opportunities. Employment of minors prohibited. Employment of young workers (15-17 years old) carefully controlled and monitored; not involved in dangerous tasks. Work doesn’t interfere with school. Farm Management 167 Benefits Lower accident rates. Higher worker productivity and less worker turnover resulting in less labor cost. Lower training costs. Higher quality products. Less probability of union or worker actions. Workers have pride, feel good about their job. More knowledgeable workers. Better workermanagement communications. Families are content and healthier. Children and young workers have educational opportunities. Workers are better environmental stewards. No minors employed in violation of local laws and ILO conventions. Young workers protected and not exploited. Farm Aspects Pesticides Waste Management Community Relations Common Problems Toxic and environmentally dangerous pesticides used. Excessive pesticide use. Workers unaware of dangers and don’t wear protective gear when applying pesticides. Chemical storage and transport unsafe. Farms littered with garbage. Processing and domestic waste dumped into rivers or not treated. Domestic and human waste not collected and treated. No benefits for neighboring communities and region beyond employment. Value of services and resources consumed by farm often higher than benefits generated. Isolated from neighbors. RA Certified Farms Internationally recognized highly toxic and dangerous pesticides banned. Pesticide use controlled and minimized; integrated pest management emphasized. Only trained workers apply and handle pestices while using protective gear. Chemicals stored in locked sheds far from housing and waterways. Spill protection and collection safeguards in place. Waste is identified and quantified, where possible. All waste is properly disposed, reused or recycled. Processing and domestic waste properly treated; organic waste is often used as fertilizer. Facilities for proper human and domestic waste collection and disposal available. Farm provides employment and educational opportunities. Contributes to local development. Protects resources and minimizes and compensates consumption. Communicates with neighbors. 168 Benefits Decreased pesticide costs. Less long-term toxicity and contamination impacts. Decreased pest problems due to pesticide resistance. Minimize potential for residuals on products. Workers protected, healthy, with no long-term effects. Spills and other incidents minimized and quickly contained and cleaned up. Clean farm, work and housing areas; increased worker pride and productivity. Reduced materials costs. Minimal probability of regulatory issues. Better worker health and higiene. Minimize potential for product contamination. Good neighbor. Good relationships with community. Minimal resistance to changes or projects. Part (Annex) X: Criteria for selection of Project Coffee Regions Why select a Project Coffee Region? The RA certification system is market driven and neither Rainforest Alliance nor the SAN partners choose which farms to certify. Rather, certification occurs where a farmer chooses to transform production practices according to the SAN’s sustainability standards, and requests certification. Certification is therefore not necessarily concentrated in an area which is particularly important to biodiversity. On the other hand, it is important for the project to be able to show impact in specific geographical areas important to global biodiversity. Rainforest Alliance and the Country Representatives must select Project Coffee Regions in which we would particularly like to have impact, both in terms of biodiversity conservation, as well as in certification. It was decided that the Project Coffee Regions should be a fairly large area, which could coincide with a main coffee growing region in the country. A larger area will allow the project to demonstrate larger impacts in terms of hectares certified and amounts of sustainable coffee produced. Information about the country’s coffee regions During the initial part of the selection process of Project Coffee Regions, the project Country Representatives collected basic information about each main coffee region in the country. The information enabled the project team and Country Representative to analyze the options for Project Coffee Regions, as well as demonstrating to the GEF as well as project partners and different interest groups that the project has followed a rigorous process for selection of regions. For each of the country’s main coffee regions the following information was provided: Size of area Number of farms in area Number of RA certified farms in area Coffee coverage in Ha Rainforest Alliance certified coffee coverage in Ha Altitude range Average or typical farm size Socio-economic data (e.g. poverty levels) (describe in one paragraph) Farmer organization: individual producers or cooperatives (describe in one paragraph) Cultural aspects (indigenous communities, particular customs, social conflict or tension) (1-2 paragraphs) Other important aspects which would help to understand the special characteristics of the coffee region (1-3 paragraphs) Criteria for selection of Project Coffee Regions The selection of a Project Coffee Region was done based on multiple factors, weighed against each other. Each country is different, and so is the reality of the coffee sector in each country. A coffee region will have particularities which may or may not make it a good candidate to be chosen for the project intervention, but these are not necessarily the same in each country. Below are the three criteria which guided the choice of Project Coffee Regions. A. Presence of biodiversity of global value Conservation of globally important biodiversity is the GEF’s objective for this project, and a priority for the RA certification system. The project selected coffee regions which harbor important biodiversity and ecosystems of global importance and of high conservation priority. The biodiversity importance is typically defined by 169 indicators such as richness of species, high degree of endemic species, threatened species and species in danger of extinction. It can also be characteristics which are linked to the particularity of the ecosystem and its functions. If coffee is grown sustainably in these regions, it will help protect the ecosystems and the biodiversity in it. In analyzing the biodiversity value of the country’s coffee regions, indicators for biodiversity importance should were listed. Furthermore, the biodiversity importance was indicated by analyzing the areas’ proximity to natural areas with national conservation priority, such as national parks, wildlife refuges, wildlife sanctuaries and other protected or priority natural areas. The coffee regions’ proximity to areas of international recognition such as UNESCO Biosphere Reserves, World Heritage Sites, RAMSAR sites, or CI Biodiversity Hotspots was also documented. If the region is a part of recognized biological corridors, such as the Mesoamerican Biological Corridor, it also testified to its importance for biodiversity. B. Coffee quality and market demand This GEF project aims to protect biodiversity by enlisting market forces in the efforts to conserve biodiversity in productive landscapes. Therefore we cannot only look at the biodiversity value of the coffee regions, but must make sure that the coffee produced in our project area has a good demand in international markets. By selecting coffee regions where the coffee is in good demand we can maximize our chances of impact. Many factors determine if the coffee from a particular region is in good demand. Coffee quality, consistency, flavor, and fame are all determinants of demand. By analyzing the country’s coffee regions, the Country Representative must determine if the coffee from each region is in particular demand. The better the demand, the easier it will be for the project to help achieve increased sales of certified coffee. The project does not necessarily prefer to promote a certain type and quality of coffee, as long as the demand exists. C. Strategic considerations Biodiversity value and market demand for the coffee were they key determinants in the selection of Project Coffee Regions. But there were other considerations as well which were taken into account when selecting the strategically important regions. The reasons why a particular area were of strategic importance to the SAN member and RA certification system varied from one country to the next. Some of these other considerations included increased chances of success (such as significant farmer or buyer interest), importance to the strategy of a SAN partner’s certification program, and the possibility of increased co-financing. Rating methodology A general information collection of the country’s major coffee regions was collected first, as explained above. Each region was then analyzed to identify its biodiversity importance, the market demand situation for the coffee from each region, and the variety of strategic considerations which could be taken into account in the selection process. Each region was then rated against the selection criteria and given a score from 1 to 5. 170 Part (Annex) XI: Global Biodiversity Value of Project Coffee Regions The Role of Sustainable Coffee Plantations in Preserving Globallyimportant Biodiversity Oliver Komar1 This DRAFT manuscript has been submitted for publication to BioScience, but is not yet published. Please contact the author for permission to cite. Summary Biodiversity conservation in agricultural landscapes is a central goal in the cultivation of ecologically sustainable permanent crops. Coffee offers excellent opportunities for biodiversity conservation, when grown under a canopy of diverse, native shade trees and associated epiphytic plants. The tropical hillsides where coffee grows best are located in the midst of global biodiversity hotspots, within landscapes that are home to a spectacular array of native plants and wildlife, and large numbers of globally-threatened species. The opportunity to improve biodiversity conservation in these landscapes through global market-driven forces (e.g., via certified sustainable export of coffee) is especially important given recent instability of coffee prices and and consequent risks to producer countries’ protected areas. The global biodiversity benefits from so-called “wildlife-friendly” coffee cultivation are numerous. Ecologically-sustainable coffee plantations can provide (1) a complex ecosystem supporting diverse 1 Oliver Komar (e-mail: okomar@salvanatura.org) is a conservation ecologist and ornithologist at the SalvaNATURA Conservation Science Program, 33 Avenida Sur #640, San Salvador, El Salvador. SalvaNATURA is a member of the Sustainable Agriculture Network. species; (2) habitat for restricted-range species of global conservation importance; (3) habitat for migratory species; (4) habitat for globally threatened species; (5) contribution to the ecological functionality of landscapes and their biological corridors; and (6) indirect benefits such as reduced pollution, increased soil and water conservation, climate regulation, and improved attitudes towards biodiversity. A single ecologically-sustainable coffee plantation of moderate size can provide diverse natural resources for the maintenance of literally thousands of plant and animal species. Individual farms in the Neotropics (where most inventory studies have taken place), if managed appropriately, can maintain among the rows of coffee shrubs, nearly 300 species of wild plants, thousands of species of fungi and invertebrates (insects, spiders), and over 200 vertebrate species (amphibians, reptiles, mammals, birds), and more when natural forest reserves are maintained. The complex ecosystems of such sustainable farms prevent pest outbreaks and provide diverse ecological services that benefit farmers and local economies. Such ecologically attractive farms are nonetheless highly disturbed habitats where globally threatened wildlife are scarce. Even so, a number of studies have demonstrated that sustainable coffee farms provide habitat for globally-important biodiversity. Many restricted-range “endemic” species found in just one or a few ecoregions live in shaded coffee plantations. In El Salvador, 64 percent of endemic birds are resident in coffee plantations. In Jamaica, 49 percent of the island’s endemic bird species are found in coffee plantations. At least nine globally threatened wildlife species, including a tree frog and eight birds including three migratory species, live in Neotropical shaded coffee plantations. In fact, 15 Nearctic-Neotropical migratory bird species that winter in coffee plantations are on the North American Conservation Watch List. In total, 90 migratory bird species are reported to winter in Neotropical coffee plantations, where many are more abundant than in natural forest habitats. Given its extensive cultivation area in the world’s biodiversity hotspots, coffee offers unparalleled opportunities for biodiversity conservation within agricultural landscapes. Draft date: 22 September 2005. 171 Keywords: Coffea arabica, endemic species, migratory species, shade coffee, threatened species Cultivating coffee (Coffea arabica and to a lesser extent C. canephora) in an ecological sustainable agroecosystem, such as under a canopy of diverse shade trees, or in conjunction with forested stream borders and natural forest reserves, can conserve biodiversity while contributing to economic and social goals in agricultural landscapes (Perfecto et al. 1996, Donald 2004). Biodiversity conservation in unprotected, managed lands and in the agricultural landscape is important because protected areas (11.5 percent of the planet’s land surface, Chape et al. 2003) are considered too small or not well enough protected to preserve the world’s biodiversity by themselves (Western and Pearl 1989, Pimental et al. 1992, Franklin 1993, Moguel and Toledo 1999). The opportunity to improve biodiversity conservation in tropical montane landscapes through global marketdriven forces (e.g., via certified sustainable export products such as coffee) is especially important given recent instability of global coffee prices, putting coffee-producing countries’ economies and protected areas at risk. In 2004, coffee (Coffea spp.) was cultivated on approximately 10.2 million ha of land globally (FAO 2005), including 3.9 million ha in South America, 1.6 million ha in Central America (including Mexico), and 0.3 million ha in the Caribbean region. More than half of the world’s coffee production area, and most of the production area of C. arabica, is in the Neotropics. Estimates suggest that the overall land area under ecologically-sustainable (non-modernized) shaded coffee production in the Neotropics approaches 2 million ha (C. Wille, Rainforest Alliance, San José, Costa Rica, personal communication, 19 September 2005). Unless otherwise stated, sustainable plantations mentioned in this paper include commercial polyculture, traditional polyculture, or rustic production systems (sensu Moguel and Toledo 1999) or “coffee under remnant forest” and “multistrata polyculture” (sensu Somarriba et al. 2004). The agroecosystem can also be considered ecologically sustainable with less attractive shade systems or no shade at all if significant natural habitat patches are maintained on the farm, either as biodiversity reserves or as stream buffers, and if wildlife extraction activities and pollution impacts from agrochemicals are minimized. To be so considered, the agroecosystem should support the long-term presence of many wildlife species that help sustain the ecological integrity of surrounding landscapes as well as the farm (e.g., through pest control, pollination, and resource recycling). In 2003, the Sustainable Agriculture Network certified suncoffee plantations in the Brazilian Cerrado because the farms offered 1:1 mitigation, protecting as much land for natural habitat conservation as they used for coffee production (C. Wille, Rainforest Alliance, San José, Costa Rica, personal communication, 21 September 2005). The global biodiversity benefits of such plantations are mainly in the extensive habitat patches set aside as nature reserves. The patches are often in landscapes with few or no protected areas, and thus provide important biodiversity refugia. In Brazil, a single certified farm protects nearly 3500 ha of native Cerrado habitat (Rainforest Alliance, unpublished documents). Such patches contain important biological resources and biodiversity, including habitat for longdistance and medium distance migratory birds, regionally endemic species with restricted ranges, and globally threatened fauna such as the Giant Anteater (Myrmecophaga tridactyla). The Brazilian Cerrado ecoregion is thought to have more than 10,000 plant species, more than 10,000 butterfly and moth species, and similarly impressive diversity in other taxa. Only 1.4 percent of the ecoregion is protected, despite 4400 plant species found nowhere else and more than 50 globally-threatened vertebrate species (Conservation International 2005). A turning point for sustainable coffee occurred in 1996, with the organization of the first sustainable coffee congress (Rice et al. 1997). Since then, two principal programs have been developed to certify sustainable production, in order to promote environmentally-friendly coffee. The Rainforest Alliance Certified program, implemented by the Sustainable Agriculture Network, recognizes plantations that are ecologically, socially, and economically sustainable (Skinner 1997, Wille 2003). By 2005, >92,000 ha of coffee had been certified (C. Wille, Rainforest Alliance, San José, Costa Rica, personal communication, 21 September 2005). The Bird Friendly® coffee program has stricter standards regarding use of agrochemicals (i.e., producers must also have organic certification to qualify), and focuses only on the ecological aspects of farms; the program is facilitated by the Smithsonian Migratory Bird Center which trains independent auditors to carry out farm certifications. Other international programs exist to 172 certify social benefits to coffee farmers (fair trade certified) and agronomic practices (certified organic), but are less stringent with regard to ecological practices (Rice and McLean 1999). Dietsch (2000) and Niesten et al. (2004) noted that most coffee production takes place within global biodiversity hotspots, areas with high numbers of endemic plant species and much reduced natural vegetation (Myers et al. 2000). This fact, in itself, does not imply importance for coffee plantations, as most forms of agriculture actually threaten biodiversity. Ecologically sustainable coffee production, however, potentially could benefit some biodiversity in hotspot regions, following reasoning presented herein. In 2004, approximately 98.4 percent of global coffee production area was located within 13 global hotspot regions (Table 1). Within the 13 regions combined, less than 5 percent of the original natural vegetation is adequately protected in national parks and reserves, mean population density is 138 people/km2, 124 species extinctions have been documented since the year 1500, more than 85,000 endemic plant species grow, and over 2090 endemic vertebrate species are globally threatened according to IUCN standards. A Neotropical subgroup (five hotspots) retains 19 percent of the original natural vegetation but only 4 percent is adequately protected. In these areas, mean population density is 73 people/km2, 48 species extinctions have been documented since the year 1500, almost 37,000 endemic plant species grow, and over 1140 globally- threatened endemic vertebrate species live. Despite numerous ecological studies, the extent to which coffee plantations may contribute or detract from the conservation of this important biodiversity is poorly understood. In the Neotropics alone, the area under coffee cultivation is 23 times larger than the area adequately protected. Biodiversity conservation in coffee plantations has been reviewed regularly (Perfecto et al. 1996, Moguel and Toledo 1999, Dietsch 2000, Donald 2004, Somarriba et al. 2004), yet much new information has been published recently. Over 20 studies of biodiversity in coffee plantations were published in 2004 alone (Komar and Escobar 2005). With the exception of Dietsch (2000), none of the previous reviews have focused on global biodiversity conservation aspects of coffee cultivation. Many observations and several experimental studies have demonstrated how diverse wild species and ecosystem processes (together, biodiversity) in coffee plantations benefit agricultural production and farmers themselves, through pest control, pollination services, food and medicinal sources, and other uses (Le Pelley 1968 and citations within, Alcorn 1983, Greenberg et al. 2000, Roubik 2002, Soto-Pinto et al. 2002, Philpott et al. 2004, Perfecto et al. 2004, Ricketts et al. 2004). Evidence that biodiversity in plantations help make them sustainable seems irrefutable. Is the relationship symbiotic, or are species’ services being used (by farmers) with no compensation? This review summarizes known benefits to biodiversity from the plantations, although I do not intend to argue that benefits provided are (or are not) sufficient, fair, or reasonable. Below, I expand upon the apparent global biodiversity benefits of traditional, shaded coffee plantations, without taking into account the added value of any natural habitat patches that may be maintained within or adjacent to the borders of plantations. Sustainable coffee cultivation provides a habitat that is rich in biodiversity, compared not only with other agricultural habitats but often even with natural forest habitats (Perfecto et al. 1996, Greenberg et al. 1997b). Although not as valuable as natural habitat for threatened species, sustainable coffee plantations can contribute to long-term conservation of many species over regional and multinational scales. I will demonstrate how shaded, sustainable coffee plantations appear to provide (1) a complex ecosystem with diverse resources; (2) habitat for restricted-range endemic species of importance to global biodiversity conservation; (3) habitat for longdistance migratory species; (4) habitat for some globally threatened species, and buffering for others; (5) a contribution to the ecological functionality of landscapes and their biological corridors; and (6) indirect benefits such as reduced pollution, increased soil and water conservation, climate regulation, and favorable social attitudes towards biodiversity. Methodological notes In this paper, I examine the global and regional biodiversity benefits from ecologically sustainable coffee agroecosystems, based on literature published through March 2005. Details of the literature search are given elsewhere (Komar and Escobar 2005). Most research on this issue was generated in the Neotropics, and therefore I focus on that region. In comparing biodiversity associated with coffee cultivation to the biodiversity of other habitats, appropriate comparisons are with other agricultural habitats, yet most comparisons have been with the original natural forest 173 habitat. Sustainable coffee cultivation, no matter how many shade trees or wildlife species are present, is never going to be as beneficial as natural habitat for biodiversity (Rappole et al. 2003). In this paper, I avoided considering the relative harm to native biodiversity caused by conversion of natural forest to coffee cultivation, precisely because farmers are generally not in a position to opt for converting their plantations back to natural forest (Philpott and Dietsch 2003). Even if a coffee plantation becomes economically unsustainable, the majority of farmers in the developing countries where most coffee is grown will seek another economically productive use of the land or sell the land to investors who will do so, for financial reasons alone, rather than permit regeneration of natural forest. Throughout, I consider a “plantation” any patch of cultivation, including small holdings. How sustainable coffee plantations benefit biodiversity Sustainable coffee production maintains a complex ecosystem with diverse resources for life. In some tropical montane areas of the world, coffee was traditionally grown as one of many sustainable crops in diverse gardens, which sometimes contained over 300 useful species that provided food, animal feed, construction materials, and medicines (Alcorn 1983). While such rustic gardens were ecologically sustainable, they were often economically unproductive, and largely have been replaced by more modern farms with higher production of cash crops like coffee. Nonetheless, many modern coffee plantations are also probably ecologically sustainable, frequently cultivating coffee under a diverse canopy of native tree species. Although canopy cover is often 30–60 percent, considerably less than the original forest cover (85–95 percent), many of the original ecosystem elements may still be present. The plantation overstory can include dozens of tree species in a single farm of small or moderate size (<100 ha), diverse epiphytic plants such as orchids and bromeliads, and a diverse canopy faunal community (Fig. 1). Furthermore, some of the original forest understory elements may still exist along streams and on especially steep hillsides, or in uncultivated forest reserves maintained by some plantation owners for a variety of reasons. Brash (1987) credited ecologically diverse and sustainable shaded coffee plantations as serving as a refugia and gene bank for Puerto Rico’s biodiversity in the early twentieth century when the original natural forest habitat was reduced to under 1 percent of the island, but shaded plantations covered 9 percent of the island. Plants. Sustainable coffee plantations can maintain a remarkably diverse plant community. Monro et al. (2002) described 261 tree species from El Salvador plantations, where over 130 native tree species have been found providing shade on a single coffee farm (R. Rivera, in litt.) and up to 39 species provide shade within 0.5 ha of coffee production (author’s unpublished data). Thus, in El Salvador, about 22 percent of tree species (Linares 2005) persist as shade in coffee plantations. Monro et al. (2001) identified 38 fern species in Salvadoran coffee plantations, 11 percent of the country’s ferns. Hietz (2005) found 89 epiphyte species in Veracruz coffee plantations, representing 72 percent of the forest epiphyte diversity in the area. The epiphytic bromeliads, orchids, mistletoes, and other types of plants were not just holdovers from the original forest, doomed to eventual extirpation. Plantations with only planted canopy trees (non-original forest cover) still contained 60 percent of the area’s epiphyte species. Another study in Veracruz found a healthy epiphytic orchid population in a shaded plantation, with nearly 10,000 individuals/ha (Solís Montero et al. 2005). The diversity of herbaceous ground cover plants is reported as varying from 20 to 90 species in individual coffee farms (studies reviewed by Somarriba et al. 2004), although a plantation in Guerrero, México, had 101 herbaceous species (Moguel and Toledo 1999). Thus a single farm could have over 300 different plant species within the coffee production area. Fungi. Diverse fungal flora live in coffee plantations, including moulds, mushrooms, symbiotic fungi (such as those that form part of lichens and vesicular arbuscular mycorrhizae), and fungal parasites and diseases of both floral and faunal species. Unfortunately, no fungal inventory of a coffee plantation is readily available, but fungal richness of a single shaded plantation (of any size) is probably in the hundreds of species. One study in Colombia identified 20 species of vesicular arbuscular mycorrhizae in coffee roots 174 alone (Bolaños et al. 2000, cited in Somarriba et al. 2004). Arthropods. Large numbers of insects and spider species have been documented from shaded coffee plantations (Table 2), but no single farm has been completely inventoried. In a world-wide summary of coffee pests, Le Pelley (1968) listed approximately 850 insect species found to attack the coffee plant itself, although just a few of these species were considered serious pests. He also listed nearly 400 insect species known to prey on or parasitize the pest species. The actual arthropod richness in coffee plantations with diverse shade canopies is probably orders of magnitude higher, given that arthropod diversity of tropical agroecosystems in general can range up to 1000 species/ha (Pimental et al. 1992). Comparisons of arthropod diversity among natural forest and different types of coffee plantations have found higher diversity in traditional shaded plantations, compared both to natural forests and to modern “technified” shade or sun plantations (Perfecto et al. 1996 and citations within; Perfecto et al. 1997; Pineda et al. 2005). Few shaded plantations suffer from arthropod pest infestations, and this large diversity appears to form part of a functional ecosystem that prevents population explosions or pest outbreaks (Perfecto et al. 1996 and citations within; Greenberg et al. 2000, Perfecto et al. 2004). As such, diverse arthropod fauna contributes to economic sustainability, as well as ecological sustainability, of coffee farms. Arthropods have rarely been evaluated for specific conservation importance (e.g., threatened, endemic, or migratory status). Thus, this group features little in the discussions presented below about conservation importance of coffee for biodiversity. Nonetheless, the huge diversity of the world’s arthropods, many of which are ecologically poorly understood or as yet undescribed to science, suggests that this group may in fact be of paramount conservation importance, especially because of ecosystem services they provide, on which human ecology frequently depends. Until arthropod distribution, taxonomy, and ecology are considerably better understood, it may be reasonable to assume that any organic or low-input agriculture is relatively valuable for the conservation of biodiversity, with respect to high-input, modern agriculture. Vertebrates. Individual shaded coffee plantations, even those located far from natural forest habitats, are likely to have a vertebrate fauna of over 200 species. Pineda et al. (2005) reported 13 amphibian species from three plantations in Veracruz, Mexico. Leenders and Watkins Colwell (2004) documented 13 species of amphibians and reptiles in two Salvadoran shade coffee plantations, but a complete inventory of any sustainable plantation in that country would likely record more than 20 species (author’s unpublished data). Gallina et al. (1996) documented 24 mediumsized mammals in coffee plantations of Barranca Grande, Veracruz, including charismatic species such as puma (Felis concolor), margay (Leopardus weidii), tamandua anteater (Tamandua mexicanus), and river otter (Lutra longicaudus). McCann et al. (2003) counted about 900 Mantled Howler Monkeys (Alouatta palliata) in approximately 2500 ha of shaded coffee in Nicaragua. Along a 1-km transect of a shaded plantation of Chiapas, Cruz-Lara et al. (2004) captured 42 mammal species, including seven medium-sized, 25 bat, and 10 other small mammal species. Thus, even fairly small, sustainable shaded plantations in Mesoamerica are likely to contain at least 50 medium and small mammal species, more if they are near sizeable natural forest patches. Many studies of birds in Neotropical regions, reviewed in Donald (2004) and Komar (in press), have shown that more species of birds live in complex shade coffee ecosystems than in simple sun coffee ecosystems or other agricultural habitats. Actual species richness may even be higher in some shaded plantations than in nearby forest habitats, in part a result of disturbance opening up the original ecosystem to colonization by generalist and open-habitat species (Komar in press). I caution that high species richness or even abundance does not alone indicate that a habitat is high quality or beneficial (van Horne 1983, Pulliam 1988, Latta and Baltz 1997, Gordon and Ornelas 2000, Komar 2003, Rappole et al. 2003); for some species, sustainable coffee plantations could represent a sink habitat. Coffee plantations in Mexico and Central America with diverse-species shade canopies typically have 80–120 bird species (Calvo and Blake 1998, Tejeda-Cruz and Sutherland 2004, author’s unpubl. data). Plantations close to natural forests may have even more. Jones et al. (2002) documented 191 bird species from several Venezuelan shaded coffee plantations. No overall bird species list for coffee has been published, but 10–20 percent of the world’s terrestrial bird species likely live in or visit 175 shaded coffee plantations. Shaded coffee plantations can be used by both forest birds and open-area (field) species. The coffee shrubs themselves serve as nesting habitat for open area foragers such as doves and sparrows (Cintra 1988). In Costa Rica, coffee bushes provided higher avian nesting success than other plants within the same plantation (Lindell and Smith 2003). Restricted-range endemic species Many of the world’s coffee-growing areas happen to also fall within priority conservation areas known as biodiversity hotspots (Myers et al. 2000). These areas have exceptionally high numbers of species, in part because of the presence of many restricted-range (hereafter, “endemic”) species, each found in a small area of the world and nowhere else. Most areas where many endemic species are found together are also biodiversity hotspots, and also happen to be tropical areas where coffee is grown in middle elevations (Dietsch 2000). In most areas, lists of species living in coffee plantations are not readily available, so it is impractical to examine how many endemic species also live in coffee plantations. Therefore, as an example, I examine the question for birds in a small area in El Salvador known as the Sierra de Apaneca, an area of about 96,000 ha which includes several montane forest fragments (totaling 9000 ha), extensive coffee agroecosystems (80,000 ha), and miscellaneous other land uses (7000 ha). Eleven bird species restricted to the montane forests of northern Central America occur in the Sierra de Apaneca (Komar 2002). At least seven, or 64 percent, are also resident in the area’s coffee plantations (author’s unpublished data; they include White-bellied Chachalaca Ortalis leucogaster, Pacific Parakeet Aratinga strenua, Rufous Sabrewing Campylopterus rufus, Greenthroated Mountain-gem Lampornis viridipallens, Bushy-crested Jay Cyanocorax melanocyaneus, Blueand-white Mockingbird Melanotis hypoleucus, and Bar-winged Oriole Icterus maculialatus). Even if suboptimal habitat for these species of conservation importance, coffee plantations could play a role in facilitating these species’ dispersal and gene flow among forest fragments. In another example, Johnson (2000) reported 17 of 35 (49 percent) Jamaican endemic bird species in coffee plantations. Migratory species Migratory species are generally of conservation concern because each depends on a variety of habitats in many different geographical areas, thus potential threats are multiplied (Robbins et al. 1989). Concerns that the widespread conversion of traditional coffee farms to technified plantations was linked to declines of migratory songbirds (Tangley 1996) drove the sustainable coffee movement and development of certification programs (Wille 2003). Research has targeted migratory birds wintering in Neotropical coffee plantations, with at least 26 papers published between 1992 and 2004 (Komar, in press). Oddly, no research has reported on migratory birds in Paleotropical coffee plantations, or on other kinds of migratory fauna (butterflies, bats) in any coffee plantations. At least 90 species of migratory hawks, flycatchers, vireos, thrushes, warblers, and other types of terrestrial birds that breed in North America readily occupy shaded coffee plantations as feeding areas in winter or during migration (Komar, in press). A number of studies have shown an apparent preference of migratory birds for shaded coffee plantations, with higher abundance and species richness even than natural forest (Robbins et al. 1992, Wunderle and Latta 1996, Greenberg et al. 1997b, Petit et al. 1999, Tejeda-Cruz and Sutherland 2004). In some coffee plantations in the Greater Antilles, Mexico, and northern Central America, 45–50 percent of the “winter” bird population consists of migrants (Greenberg et al. 1997b, Johnson 2000). Mean densities of nearly 25 migrants/ha in Chiapas plantations (Greenberg et al. 1997b) may be even higher if corrected for detectability, but appropriate correction factors are unknown. Densities should be lower in South American plantations due to range limitations of migratory birds. Many migrants set up feeding territories in plantations, which they defend during six months of the year. Overwinter survival appears comparable to available natural habitats in at least four warbler species (Wunderle and Latta 2000, Strong and Sherry 2000, Johnson and Sherry 2001). Mexican and Central American coffee plantations also are used by transient species en route between North and South America, such as Alder Flycatcher (Empidonax alnorum), Olive-sided Flycatcher (Contopus cooperi), Blackburnian Warbler (Dendroica fusca), and Canada Warbler (Wilsonia canadensis) (Aguilar Ortiz 1982, author’s unpublished data). Fifteen longdistance migratory species recorded in Neotropical coffee plantations are considered of high conservation importance (Table 3), although it is unknown if 176 plantations have positive or negative impacts on these species’ populations, and several only use the plantations peripherally (Komar, in press). Endangered species Relatively few globally threatened species (i.e., species classified as vulnerable, endangered, or critically endangered on the IUCN Red-list, IUCN 2004) have been reported from coffee plantations. Where such species occur in anthropogenically-altered habitats, they tend to be rare and difficult to study. The critically endangered Black-eyed Tree Frog (Agalychnis moreletii) is abundant, however, in some coffee plantations in El Salvador (author’s observations). At least eight globally threatened bird species are reported from Neotropical coffee farms (Table 4), including three long-distance migrants . While two of the migrants only use plantations peripherally, Cerulean Warbler (Dendroica cerulea) densities approach one individual/ha in some Venezuelan coffee plantations (Jones et al. 2000). All nine threatened species listed in Table 4 were found in shaded plantations, but not sun plantations. Several threatened mammals were reported from African coffee plantations (Le Pelley 1968), but details about habitat use or plantation type were not given, and such occurrences may only be incidental in plantations adjacent to (or within?) nature reserves. These species include African Elephant (Loxodonta africana), rhinoceros (genus and species not reported), Red Colobus (Procolobus badius), and possibly Black Colobus (Colobus satanas). In Java, the vulnerable Pig-tailed Macaque (Macaca nemestrina) eats coffee cherries (La Pelley 1968). The transformation of natural forest or rustic coffee plantations to non-sustainable, low shade plantations is frequently criticized as contributing to the demise of threatened wildlife through habitat loss (e.g., O’Brien and Kinnaird 2004). Conversely, and despite lack of quantitative information, sustainable coffee plantations are sometimes praised as providing habitat for threatened species (not well supported in the literature), or buffers to key reserves for endangered species. Praise for a buffer effect is supported by theoretical considerations that assume that shaded plantations are preventing further forest destruction (Dietsch et al. 2004), preventing incursion of predators or other negative edge effects into reserves, and also that plantations are promoting dispersal and gene flow among populations through a rescue or corridor effect (Vandermeer and Carvajal 2001). Landscape and corridor functions Perfecto et al. (1996) proposed that a key role of shaded coffee plantations was the conservation of biodiversity in regions particularly hard-hit by deforestation, and with relatively few protected areas. In such areas, traditional shaded coffee plantations can serve as a gene bank until rural economies allow for forest regeneration (Brash 1987, Nir 1988). This concept remains valid today, and may increase in importance as human population densities continue to increase in coffee-growing landscapes and natural habitat continues to disappear at alarming rates. The natural ecosystem elements within sustainable coffee plantations (diverse tree species, moderately closed canopy, natural forest patches, forested stream buffers) probably contribute to landscape quality and the functionality of biological corridors. Even if these disturbed habitats are less than ideal for species of special conservation concern, they may facilitate movement among habitat patches and aid in the conservation of genetic diversity within the broader landscape. This section treats the theoretical benefits provided by sustainable coffee plantations to forest species not normally found in plantations. As mentioned earlier, some globally threatened and endemic species occur in shaded coffee plantations. These species may benefit from the corridor services of sustainable coffee plantations without using them frequently or even regularly. The corridor services potentially provided include: (1) increased movement for seasonal migrations; (2) increased dispersal events; (3) facilitation of gene flow among populations (conservation of genetic diversity); and (4) maintenance of metapopulations. As mentioned in the section on migratory species, coffee plantations serve as a destination for migratory birds. Perhaps even more important, they also serve as stopover sites during migration (e.g., Aguilar Ortiz 1982). That is, they help form the corridor of stopover feeding areas that migratory birds depend on to reach distant breeding or wintering areas. Locally resident forest birds also visit shaded coffee plantations seasonally to forage, not breed (Aguilar Ortiz 1982, Greenberg et al. 1997b, author’s unpublished data). Numerous mammal species in shaded coffee plantations may also represent seasonal presence of animals that breed in nearby forest patches (Somarriba et al. 2004). Whether such visits are due to local 177 migrations or dispersal, shaded plantations may help maintain local forest wildlife populations. The plantations can serve as movement corridors for forest bird and mammal species involved in altitudinal or other local migrations, common phenomena in tropical regions. Similarly, shaded coffee plantations may facilitate dispersal of forest animals and plants across a landscape. Dispersal is a natural ecosystem function, in which young plants (i.e., seeds) and animals leave their natal areas to avoid competition with their parents. Plant seeds can be dispersed significant distances by animal carriers. This process contributes to gene flow, genetic diversity, and colonization of new habitat patches. One study demonstrated the potential for shaded coffee plantations to serve as a dispersal corridor for forest birds. Researchers placed radio transmitters on fledgling White-throated Robins (Turdus assimilis) born in a Costa Rican pasture bordered by natural forest and by shaded coffee plantation (Cohen and Lindell 2004). All of the fledglings dispersed into the forest, their natural foraging habitat. Some of the fledglings moved first into the shaded coffee plantation, demonstrating that to these birds, the plantation was attractive as a dispersal corridor. Unfortunately, most of the predation events recorded in the study occurred in the plantation. In this sense, the coffee plantation appeared to be a higher risk corridor than the natural forest. Biological corridors are often proposed as a mechanism to conserve genetic diversity, through facilitation of gene flow among populations. While proposals to link forest fragments using wildlife corridors usually refer to corridors of natural habitat (e.g., Harrison 1992, Hill 1995), such corridors could be provided by agroecosystems (Franklin 1993). The long-term survival of species in habitat fragments may depend on genetic diversity that permits adaptation to a changing environment (Templeton et al. 1990). A truly sustainable coffee plantation should incorporate enough canopy cover to assist the conservation of natural ecosystems by functioning as a biological corridor, permitting gene flow among isolated populations of forest species. The dispersal opportunities provided by such a corridor would also help maintain metapopulations across the landscape as well as increase species richness in forest fragments (Merriam 1992, Hanski 1999, Vandermeer and Carvajal 2001). Genetic theory holds that genetic diversity can be maintained across subpopulations by dispersal events as rare as one dispersing individual every generation (Wang 2004). Thus, adequate gene flow can be achieved even when the dispersal event is so rare as to be virtually undetectable. Environmental and social benefits of sustainable coffee provide indirect biodiversity benefits. Environmental and social benefits from sustainable plantations include increased nitrogen fixation, increased soil and water conservation, reduced pollution, increased climate regulation, improved economic sustainability, improved education and health services (required by some certifiers), and improvements in social attitudes about biodiversity (Wille 2003, Philpott and Dietsch 2003). All may indirectly benefit biodiversity. Experiments showed that dangerous leaching of fertilizer byproducts was about a third less in shaded plantations than in sun plantations (Babbar and Zak 1995). Furthermore, in many sustainable plantations, fertilizer use is much reduced. Leaching of agrochemicals into ground water is a threat to both humans and wildlife (Papendick et al. 1986). Climate regulation is also important for biodiversity conservation. As global climate change accelerates, species are forced to adapt to changing environments causing shifting of potential ranges and unfamiliar community composition (Peterson et al. 2002, Root et al. 2003). Reducing the rate of climate change provides species more time to adapt, potentially averting local extinctions. Deforestation not only destroys habitat but leads to dessication within nearby forests (Lawton et al. 2001). Maintaining sustainable, shaded coffee plantations thus counters the effects of deforestation, softening the impact of global climate change on nearby forest patches. Shaded coffee plantations benefit biodiversity, compared to deforested agricultural habitats, in another sense. The forest-like canopies make wildlife and plant populations less vulnerable to storm damage (Wunderle et al. 1992). Improved economies and education, and shifts in social attitudes about wildlife should increase conservation actions and reduce hunting or habitat destruction. Conclusions Ecologically sustainable coffee plantations provide several important benefits to biodiversity. These include habitat for thousands of plant and wildlife 178 species, far more than open sun plantations or other farms that lack a diverse canopy of shade trees or significant forest reserves. Many of these species are regionally endemic, restricted to the world’s biodiversity hot-spots, and frequently suffer from a shortage of natural habitat in the regions where coffee is grown. A few globally threatened species have been documented using coffee plantations as habitat, although no data is available on the relative quality of the habitat for these species. Sustainable coffee plantations appear to be a high-quality habitat for dozens of long-distance migratory bird species, which often have higher densities in the plantations than in nearby natural forest. Furthermore, sustainable coffee plantations probably serve an important role in facilitating dispersal and migration of forest species across landscapes, helping to maintain genetic diversity of threatened and near-threatened forest specialist species. In some cases, traditional coffee plantations have probably served as a gene bank for the future recolonization of successional habitats. Finally, the social and environmental benefits that come with sustainable coffee certification efforts can help reduce hunting pressure, contamination, deforestation, climate change, and other agricultural impacts that adversely affect biodiversity in coffee-growing regions. Biodiversity research is still needed in coffee plantations. Biodiversity information is generated by taxonomic inventories, and indeed a fair amount of inventory work has taken place on plantations, sometimes documenting new species for science (a frog, fungi, and several insects recently; McCranie and Köhler 1999, San Martin and Lavin 1999, Morón and Solís 2001, Gauld et al. 2002, Peterson et al. 2003). Nonetheless, few inventories have demonstrated completeness (e.g., by species accumulation curves reaching asymptotes), and in most cases not all species, even within a single higher level taxon, were recorded (frog diversity reported by Pineda et al. 2005 is an exception). Furthermore, few multi-taxon surveys have been carried out on individual farms. Thus, much more inventory work is needed to describe the biodiversity present on coffee farms. Almost no studies exist of productivity and population trends for species that reproduce in coffee plantations. Nor have effects been evaluated adequately of many agrochemicals on non-pest species in coffee plantations. Most of the available literature does not evaluate the conservation or sustainability of biodiversity. Little is known about how many species live sus- tainably (successfully) in coffee plantations, or how management practices within plantations can affect diverse wildlife species. Despite the need for more information, it seems safe to conclude that few agricultural crops offer the opportunities for biodiversity conservation that sustainable coffee offers, because of the option of growing coffee under a canopy formed by diverse, native tree species, each of which in the tropics practically forms an ecosystem unto itself. Nearly 2 million ha of coffee production are probably sustainably managed in northern Latin America alone, although only a fraction (perhaps <10 percent) is currently certified sustainable. Coffee’s geographical range, which coincides largely with the world’s biodiversity hot-spots, suggests that coffee’s impact on global biodiversity may be disproportional to its production area (Donald 2004). Most cash crops (sugar, corn, rice, bananas, oil palm, cattle, etc) grown for export in the tropics require more intensive production methods that are considerably less attractive for biodiversity and cause greater negative environmental impacts (Donald 2004). Conservationists should be seeking opportunities for biodiversity conservation in the landscape matrices around and between key protected nature reserves. Sustainable coffee cultivation provides such opportunities. With the exception of natural habitat protection, no better way has presented itself for conserving biodiversity within the agricultural landscape of middle elevations of many Neotropical countries. 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Hotspot original extent (km2) Hotspot vegetation remaining (km2) Area protected (km2) Area protected (km2) in IUCN categories I-IV Area of coffee cultivation (FAO 2005) Human population density (people/km2) Endemic plant species Endemic threatene d birds Endemic threatened mammals Endemic threatened amphibians 72 37 13 87 155 2,941 15,000 4,400 8,000 6,550 31 110 10 55 48 29 14 4 21 18 232 363 2 14 143 73 137 36,891 1,800 254 31 86 35 754 49 95 2,356 35 48 30 32 261 11,600 3,049 57 10 51 14 61 87 134 7,000 18 25 35 a Mesoamerica Tropical Andes Cerrado (Brazil) Atlantic Forest (Brazil) Caribbean Islands Neotropical hotspots combined Guinean Forests of West Africa Eastern Afromontane Madagascar and the Indian Ocean Islands Western Ghats and Sri Lanka Indo-Burma (includes Vietnam) Sundaland Wallacea Philippines All hotspots combined a 1,130,019 1,542,644 2,031,990 1,233,875 229,549 226,004 385,661 438,910 99,944 22,955 142,103 246,871 111,051 50,370 29,605 63,902 121,650 28,736 22,782 16,306 6,168,077 620,314 1,173,474 93,047 580,000 108,104 253,376 18,880 1,017,806 106,870 154,132 59,191 600,461 189,611 60,046 43,611 18,482 26,130 14,664 21,259 2,373,057 118,653 235,758 132,283 1,609,495 1,550,059 2,386,461b 285,566 5,831,581 812,360 1,008,000 194,665 341,500 618,256 1,501,063 338,494 100,571 50,774 179,723 24,387 77,408 19,702 1,118,603b 153 81 15,000 1,500 43 49 60 44 59 7 297,179 13,106,062 20,803 1,767,849 32,404 1,359,120 18,060 614,823 131,353 10,056,318 273 138 6,091 85,287 56 553 47 410 48 1,130 The areas given are estimated based on country statistics, assuming that a country’s entire coffee production area fell within the limits of the biodiversity hotspot. Coffee area figure for Cerrado includes Atlantic Forest, and figure for Sundaland includes Wallacea. b 183 Table 2. Examples of arthropod diversity reported from shaded coffee farms. Taxa Study area Species richness 609 Sources Diverse arthropod taxa A single Mexican farm, coffee shrub layer Spiders (Araneae) 10 coffee shrubs from a single Costa Rican coffee farm Soconusco region of Chiapas, Mexico 44 Perfecto et al. 1996 87 Ibarra Núñez and García Ballinas 1998 322 Auchenorrhyncha leafhoppers (Homoptera) Termites (Isoptera) A single Costa Rican coffee farm Farms in Turrialba, Costa Rica World Ants (Formicidae), other Hymenoptera, and beetles (Coleoptera) A single canopy tree in a Costa Rican shaded farm Somarriba et al. 2004 Rojas et al. 2001 Kashyap et al. 1984 Perfecto et al. 1996, 1997 Pimplinae wasps (Hymenoptera, Ichneumonidae) Scale insects and mealybugs (Homoptera, Coccoidea) Butterflies (Lepidoptera) El Salvador coffee district Spiders (Araneae: Araneidae, Tetragnathidae, Theridiidae) Diverse insect taxa World A single Colombian coffee farm 130 16 that attack coffee bushes 259 (30 ants 103 other hymenoptera 126 beetles) 50 Ibarra-Núñez 1990 Gauld et al. 2002 116 that attack coffee bushes Le Pelley 1968 168 Botero and Baker 2001 184 Table 3. Migratory birds reported from Neotropical coffee plantations and listed on the North American Continental Watch List, because of population declines and unabated threats to their breeding or wintering habitats (source: Rich et al. 2004). Some are rare or peripheral in coffee plantations. No data is available for migratory birds in Paleotropical coffee plantations. Species North American breeding biome Wintering region Olive-sided Flycatcher (Contopus cooperi) Bicknell’s Thrush (Catharus bicknelli) Wood Thrush (Hylocichla mustelina) Blue-winged Warbler (Vermivora pinus) Northern forests (>1 biome) Northern forest Eastern forest Eastern forest South America Golden-winged Warbler (V. chrysoptera) Eastern forests (>1 biome) Golden-cheeked Warbler (Dendroica chrysoparia) Hermit Warbler (D. occidentalis) Southwest (Juniper forests of c. Texas) Pacific forest Prairie Warbler (D. discolor) Bay-breasted Warbler (D. castanea) Eastern forest Northern forest Cerulean Warbler (D. cerulea) Eastern forest Worm-eating Warbler (Helmitheros vermivorum) Swainson’s Warbler (Lymnothlypis swainsonii) Kentucky Warbler (Oporornis formosus) Canada Warbler (Wilsonia canadensis) Painted Bunting (Passerina ciris) Global population estimate 1,200,000 40,000 14,000,000 390,000 Eastern forest Hispaniola Central America Central America and n. South America Central America and n. South America Pine-oak forests of n. Central America Pine-oak forests of Mexico and northern C. America Greater Antilles Northern South America N. Andes of South America Central America Eastern forest Caribbean basin 84,000 Eastern forest Northern forest SW and SE forests (>1 biome) Central America South America Central America 1,100,000 1,400,000 3,600,000 185 210,000 21,000 2,400,000 1,400,000 3,100,000 560,000 750,000 Table 4. Globally-threatened species recorded in Neotropical shaded coffee plantations. Some may only use plantations peripherally. Species Black-eyed Tree Frog (Agalychnis moreletii) Sources Hispaniolan Parrot (Amazona ventralis) Vulnerable Dominican Republic Hispaniolan Parakeet (Aratinga chloroptera) Vulnerable Dominican Republic Wunderle and Latta (1996) Three-wattled Bellbird (Procnias tricarunculatus) Vulnerable Honduras Bonta (2003) Bicknell’s Thrush (Catharus bicknelli)a Vulnerable Dominican Republic Wunderle and Latta (1996) Golden-cheeked Warbler (Dendroica chrysoparia)a Endangered Mexico Vulnerable Colombia, Venezuela Endangered Mexico Vulnerable Colombia Azure-rumped Tanager (Tangara cabanisi) Turquoise Dacnis (Dacnis hartlaubi) Critically Endangered Countries where reported in coffee farms El Salvador Leenders and Watkins-Colwell (2004) Wunderle and Latta (1996) Cerulean Warbler (D. cerulea)a a IUCN threat status Long-distance migratory species. 186 Dietsch (2000) Botero et al. (1999), Jones et al. (2000) Dietsch (2000) Botero and Verhelst (2001) Figure Legends Figure 1. A shaded coffee plantation in Nicaragua, with epiphyte-laden shade trees (photo Roberto Rivera/SalvaNATURA). . 187 Part (Annex) XII: Adaptive Management and Learning Through this project Rainforest Alliance (RA) and the Sustainable Agriculture Network (SAN) will use adaptive management to significantly improve their ability to promote sustainable coffee farming and assess the impact of their activities. More specifically, RA/SAN will: test assumptions regarding the promotion of certification activities and the certification standards themselves; improve how they promote coffee certification; deepen the measurement and analysis of their impact on coffee farms; and, in certain locations, go beyond the farm level to examine the cumulative effects of certification at the landscape level. During the PDF-B, RA/SAN worked with Foundations of Success (FOS), a not-for-profit organization committed to working with practitioners to learn how to promote environmental conservation better through the process of adaptive management. FOS explained the principles of adaptive management and assisted selected RA/SAN staff to clearly articulate conservation strategies, and the associated monitoring and evaluation plans, to address the primary threats to biodiversity in coffee producing areas. These strategies are inherent in the certification standards, but RA/SAN had not delineated them explicitly. In order to do so, FOS and RA/SAN first developed a “generic conceptual model” that can be applied to most coffee landscapes. They then adapted this model to develop strategies for a specific location in El Salvador, as a pilot for how this approach will be used in other countries during the course of the requested large-scale project. Adaptive management has been gaining popularity in the mainstream conservation community in recent years. This concept advocates an explicitly experimental – or "scientific" – approach to managing conservation projects as outlined in the following definition: Adaptive management incorporates research into conservation action. Specifically, it is the integration of design, management, and monitoring to systematically test assumptions in order to adapt and learn. FOS advocates a number of steps in the process of adaptive management, depicted in the following project cycle diagram: Generalized Project Management Cycle Analyze Implement Use/Adapt Actions M&E Plan Communicate Actions M&E - START - Iterate 189 Conceptualize These steps can be defined as follows: START: Clarify the organization’s mission STEP 1: Design a conceptual model based on local site conditions STEP 2: Develop a management plan: goals, threats, objectives, and activities; develop a monitoring plan STEP 3: Implement management and monitoring plans STEP 4: Analyze data STEP 5: Use the findings to make strategic adjustments STEP 6: Communicate results to relevant stakeholders and external audiences STEP 7: Iterate the process by using the findings and stakeholder feedback to modify the conceptual model and strategic plan as necessary FOS is currently working with a number of international conservation organizations that are committed to using adaptive management to develop better ways to design, manage, and measure the impacts of their conservation actions. A number of these organizations1 have formed a collaborative initiative, called Conservation Measures Partnership (CMP), to work on issues related to impact assessment and accountability. As part of this initiative, CMP has developed The Open Standards for the Practice of Conservation that bring together common concepts, approaches, and terminology in conservation project design, management, and monitoring in order to help conservation practitioners improve their actions. The standards are intended to provide the steps, principles, tasks, and guidance necessary for the successful implementation of conservation projects. They are also designed to facilitate comparison of strategies and results and learning among CMP members, and other conservation organizations. The decision to use adaptive management constitutes a significant departure for RA/SAN as it acknowledges the need to: more explicitly examine a number of assumptions about their sustainable agriculture operations, collect additional information at the farm level to better understand and measure the impact of the changes associated with obtaining certification, and develop strategies to conserve biodiversity at the landscape level, when appropriate. During the requested project, RA/SAN plan to use adaptive management to improve how they promote sustainable agriculture by being more analytical and specific about the factors they believe are responsible for motivating coffee farms to be interested in their certification programs in the first place and then taking the necessary steps to comply with the standards. Based on this analysis, RA/SAN will test various alternatives for providing training and generalized technical assistance to these potential clients in order to determine which forms of assistance are most effective, for various categories of farms in the five project countries. RA/SAN will also collect additional information on a sample of farms, beyond the scope of the traditional certification process, in order to determine with greater precision and certainty the impact that the various required management changes have on socio-economic and environmental factors and conditions. This information, in turn, will be used to inform periodic meetings held with international and local stakeholders regarding modifications to the definition and interpretation of the certification standards. By increasing the type and extent of data collection and analysis, and then sharing the findings with various interested parties, RA/SAN believe it should be possible to further streamline and improve the certification standards and process, making the entire system more effective. 1 Core members include the African Wildlife Foundation, Conservation International, The Nature Conservancy, Wildlife Conservation Society and World Wide Fund for Nature/World Wildlife Fund; collaborators include The Cambridge Conservation Forum, Enterprise Works Worldwide, World Commission on Protected Areas/IUCN and FOS, which serves as the coordinator of CMP 190 In addition to increasing the level of on-farm information and analysis, RA/SAN will also identify a number of priority landscapes in which they will develop broader conservation strategies and more extensive monitoring and evaluation plans. These landscapes will be selected based on two separate but related general criteria: they will either be 1) regions that SAN members have already identified as important for achieving their biodiversity conservation goals within their respective countries, and where coffee farming is a significant economic activity, (and/) or 2) coffee growing regions in which a significant percentage for the total coffee farm area is either already certified by RA/SAN or in the process of being certified and where significant biodiversity exists. In the first situation, the SAN members have already committed to focusing a greater level of time and resources to achieving conservation goals and to concentrating efforts to promote sustainable agricultural practices with farmers in the selected locations. In the second situation, RA/SAN will jointly determine when a critical mass of certified coffee farms in a given area has been achieved in order to make a plausible “cause and effect” relationship between the cumulative actions of RA/SAN-certified or “in process” farms and impacts at the landscape level. While RA/SAN have not yet determined what percentage of land needs to be certified, or “in process”, before a “tipping point” is reached and synergistic interactions and results begin to occur beyond the farms themselves, common sense would seem to suggest that such changes would begin to occur when 20 to 25 percent of the coffee farm area in a given location has been certified or is “in process”. Based on recent trends of increased demand for RA/SAN-certified coffee, RA/SAN believe that the number and area of certified coffee farms will expand rapidly in the five project countries in the short- to medium-term. As clusters of certified/in process farms begin to emerge in given regions, RA/SAN will, therefore, analyze the potential for selecting these areas as priority conservation sites and then launch more concerted certification promotional efforts in those regions that have good potential. Over time, they will also develop landscape-level conservation plans and conduct baseline assessments to document the prevailing conditions and threats to biodiversity in the areas. During the PDF-B, RA/SAN conducted preliminary analysis in each of the five countries to identify such potential priority sites. In El Salvador, the SAN partner, SalvaNatura, had already identified the Apeneca Biological Corridor as a priority conservation site and FOS worked with RA and SalvaNatura staff to develop a specific conservation strategy and associated monitoring and evaluation plan for the area (described in detail in Annex 2). During the early phase of the requested project, RA/SAN will collect baseline information in the Apeneca Corridor and also select several other priority conservation sites in the other project countries. They will then replicate the planning process conducted in El Salvador to develop landscape-level conservation strategies and monitoring and evaluation plans. As the conservation strategy and monitoring and evaluation plan for the Apeneca Corridor in El Salvador indicate, RA/SAN will go significantly beyond their current level of data collection and analysis. Over time, as this additional information is made available, it will help to inform RA/SAN’s work more generally and also provide more credible documentation regarding the likely conservation effects on individual farms outside these priority areas. RA/SAN will conduct annual strategic planning meetings in each country, as part of the adaptive management project cycle, to take stock of lessons learned during the previous year, reflect upon the implications of the findings of the their joint data collection and analysis, and modify their projected activities accordingly. These changes would be both for activities designed to promote sustainable agriculture and certification at the individual farm level and at the landscape level in selected priority sites. 191 Part (Annex) XIII: Rainforest Alliance Certified Coffee Impact Monitoring System Monitoring plan for evaluating biodiversity impacts and other results of coffee certification in El Salvador, 2006-2013. 1. Introduction and background This Annex describes the monitoring and evaluation plan for the Apeneca Biological Corridor (ABC) in El Salvador. This plan is indicative of a similar landscape-level plan that will be implemented in another coffee-growing region (in Colombia?) during the course of the requested project. In addition, the farm-level monitoring and evaluation activities outlined in this plan are indicative of the information that will be collected by RA/SAN in all five project countries. The ABC in El Salvador is an area of approximately 90,000 hectares, or 900 square kilometers. It is one of the largest coffee producing areas within El Salvador and contains some of that nation’s most significant biodiversity. SalvaNATURA, one of the members of the Sustainable Agriculture Network (or SAN, which carries out Rainforest Alliance (RA) certification activities) has managed two national parks that form the eastern and western boundaries of the corridor (El Imposible and Los Volcanes National Parks) in collaboration with the government of El Salvador for several years. In addition, SalvaNatura’s Conservation Science Program has ongoing biological monitoring activities of bird populations in the corridor. It has also been certifying sustainable coffee farms in the area for more than five years and is currently working with over 40 RA-certified coffee farms in the corridor. Analysis of Present Situation As noted in Annex 1, RA and SalvaNatura worked with Foundations of Success (FOS) to validate a generic model of threats to biodiversity in coffee production landscapes. They held a series of workshops with key stakeholders in El Salvador to analyze the threats to biodiversity, and their root causes, in the ABC. The participants identified the major threats to various habitats in the area and then prioritized them in terms of urgency, the area threatened, RA/SalvaNatura’s expertise/ability to address each threat, and the probability of being able to successfully reduce each threat. The following table summarizes this analysis: Treta Land Conversion Technification Forest Fires Hunting and Extraction Fragmentation Contamination Sedimentation Firewood extraction Urgency Area 1 2 5 4 3 6 7 8 1 7 6 5 2 3 4 7 RA/SAN expertize 3 2 1 1 4 1 1 1 Probability 1 7 6 2 8 3 4 5 Total Store 6 18 18 12 17 13 16 21 Ranking 1 6 6 2 5 3 4 7 Based on this ranking, the participants determined that Firewood Extraction does not currently represent a significant threat in the ABC. RA, SalvaNatura and FOS representatives then developed the following conceptual model that indicates the proposed strategies for addressing these various threats in the ABC (note: Firewood Extraction has been included in the model even though it is not a current threat because it could become a threat in future and this threat is likely to be significant in other coffee growing regions covered in this project, where this model will be applies and adapted in future). 192 Conceptual Model: El Imposible Corridor DRAFT v08-06-05eng Land use conversion to sedimentation to sedimentation and erosion Link farm practices to agroforest Land Use Changes Coffee to intensive crop systems Lotification Land-use planning policy Alternative activities/ sources of income Enforcement Project Scope: El Imposible Corridor Land values Need for food Subsistence and Sport Hunting Natural Forest Frags Flora/Fauna Extraction Employment opportunities Income Firewood Extraction Burning waste Agroforest Habitats Pests which attack shade trees and forests Transition of family farming to industrial Market prices Availability of alternative fuels Legislation Knowledge Cultural practices Arson/ accidents Fire Riparian Habitat Ag field preparation Technical alternatives Sedimentation Soil conservation Farm practices Use of agricultural chemicals Clean production alternatives Collection and treatment alternatives Domestic waste Fresh Water Habitat Pollution Non-point source Point source Apaneca Biological Corridor Vision, Goal, Objectives and Strategies RA, SalvaNatura and FOS representatives agreed upon the following definitions during the various workshops. Vision: To conserve biodiversity in El Salvador by maintaining and improving existing habitat in shade coffee farms within the Apeneca Biological Corridor. General Goal: By 2013, certify 40% of the coffee production area in the Apaneca Corridor, representing 32,800 ha (34% of the total area) as sustainable (Rainforest Alliance Certified) Project Objectives: 193 Species Industrial waste Erosion Minimize conversion of agroforests to more intensive (high disturbance) land uses: Degradation Reduce forest fires Reduce extraction of flora and fauna (including subsistence and sport hunting) Increase connectivity of forest fragments through improved agroforests and/or forest regeneration Reduce impacts caused by contamination (direct/indirect) and sedimentation o Reduce direct contamination of freshwater habitats o Reduce indirect contamination of freshwater habitats o Reduce erosion and sedimentation of freshwater habitats Reduce unsustainable firewood extraction from natural forest fragments or riparian habitats (not applicable for El Salvador model) The Following Table summarizes the key strategies and expected outcomes for the ABC: Expected Results/Outcomes (all by 2013) Strategy 1: Minimize conversion of agroforests to more intensive (high disturbance) land uses: Degradation. reduce the rate of coffee farm conversion to other uses (hectares) by 25% (currently 7% per year) In 5 years, have a 50% higher margin than conventional production. 90% of certified farms sell their coffee in the sustainable coffee market with a price premium Strategy 2: Reduce forest fires reduce the area affected by forest fires within certified coffee farms by 80% Strategy 3: Reduce extraction of flora and fauna (including subsistence and sport hunting) 100% of certified coffee farms pay at least the legal minimum wage. populations of indicator game species or extractable non-game species are stable or increasing in 80% of certified coffee farms in the Apaneca Corridor. reduce a degradation index by 80% in existing natural forest fragments within certified coffee farms of the Apaneca Corridor. Strategy 4: Increase connectivity of forest fragments through improved agroforests and/or forest regeneration reduce by 60% the fragmentation index for forest within certified farms in the Apaneca Corridor. 90% of the natural forest fragments in certified farms have protection plans (are guarded against extraction) and are larger than 1 hectare. reduce by 20% the fragmentation index for forest within the entire Apenca Corridor. Strategy 5: Reduce impacts caused by contamination (direct/indirect) and sedimentation 5.a. Reduce direct contamination of freshwater habitats reduce by 95% the quantity of domestic waste contaminants deposited in sources and springs within certified coffee farms of the Apaneca Corridor. reduce by 95% the quantity of agro-industrial contaminants deposited in sources and springs within certified coffee farms of the Apaneca Corridor. reduce by 80% the discharge of organically-contaminated waters (produced by coffee processing) into springs and rivers from certified coffee farms within the Apaneca Corridor. 5.b. Reduce indirect contamination of freshwater habitats 90% of the sources and springs in the certified coffee farms within the Apaneca Corridor are classified as healthy. reduce levels of Prior-Informed-Consent (PIC) and Persistent Organic Pollutants (POP) Convention-listed chemicals in the water sources and springs, in the certified coffee farms within the Apaneca Corridor, by 80%. 194 reduce levels of Prior-Informed-Consent (PIC) and Persistent Organic Pollutants (POP) Convention-listed chemicals used for coffee cultivation, in the certified coffee farms within the Apaneca Corridor, by 70%. eliminate use of chemicals of World Health Organization (WHO) toxicity categories I and II, and the restricted use pesticides (RUPs) of the Environmental Protection Agency (EPA), by 100% in certified coffee farms of the Apaneca Corridor. 5.c. Reduce erosion and sedimentation of freshwater habitats 90% of certified coffee farms within the Apaneca Corridor will have canopy cover of >40%. 60% of certified coffee farms within the Apaneca Corridor will have reduced herbicide use by >90%. a sedimentation index in springs and rivers of the Apaneca Corridor is reduced by 40% in certified coffee farms. Strategy 6: Reduce unsustainable firewood extraction from natural forest fragments or riparian habitats (not applicable for El Salvador model) restrict firewood extraction to the use of wood obtained from tree pruning activities related to coffee production, or to dedicated firewood production lots, in 100% of certified farms. restrict firewood extraction to waste from tree pruning activities related to coffee production, or to dedicated firewood production parcels, in 75% of non-certified farms. 195 Strategies in the Apaneca Biological Corridor For each of the priority strategies outlined in the table above, there is a corresponding “results chain” that contains the cause and effect relations between the proposed interventions and the expected outcomes. These chains include both expected final and intermediate results, thereby enabling RA/SAN to determine during the course of the project if the cause/effect relationships are valid and to make necessary adjustments to the strategies (according to the principles of adaptive management, as described outlined in Annex 1). The following is an example of the results chains developed for each of the strategies: Strategy 1: Minimize conversion of coffee agroforests to more intensive (high disturbance) land uses: Degradation. No. 1. Land Use Change Ecotourism, Marketing Env. Services Increased Reduced margins in costs with sustainable coffee BMPs production Sustainable Coffee Land Use Policy Land Use Planning Policy Natural Forest Frags Increased interest in sust coffee production Other Job Oportunities Less Transition of family farming to industrial Increased Land Values Minimize Conversion to Less Eviro Friendly Land Uses Generation shift (higher educated and less interest in farming Agroforest Riparian Habitat Freshwa ter Habitat Data Collection and Analysis As noted earlier, RA/SAN will collect information to assess the impact of the proposed strategic interventions primarily at the farm-level. Farm-level data will be collected during the course of the annual farm certification process on each farm. In addition, more detailed information will be collected from a representative sample (10%?) of RA- certified farms compared to number of similar non-certified coffee farms in each of the five countries. In El Salvador and Colombia, RA/SAN will also develop landscape-level conservation strategies and collect the associated information as previously indicated. This collection and analysis of this data is presented in the following summary table: Monitoring Plan 196 MAPA DEL CORREDOR APANECA—AREA PARA MONITOREO EN ELSALVADOR. (ver detalle siguiente página / See detail on following page). 197 Remote Sensing-generated habitat map for the Apaneca Corridor: Dark green is natural forest, brown is dense-canopy shade coffee, yellow is open-canopy shade coffee and/or sun coffee, gray is bare ground or lava flows, white is pasture or open agricultural fields, blue-green is mangrove forest, light blue is water, and red is urban areas. Green squares are study sites occupied by a Univ. KS/SIMBIOSIS study in 2000-2002. Source: O. Komar, unpublished data, and Univ. of Kansas Applied Remote Sensing Program. 198 Coffee Program Monitoring System Project Objectives Monitoring Plan 2006-2013 Biodiversity and Habitat Objectives By 2013, certify x% of the coffee production area as sustainable (Rainforest Alliance Certified). By 2013, x% of the natural forests found on certified farms are classified as healthy fragments. 1 By 2013, x% is in healthy agro-forests2 By 2013, x% of the riparian areas adjacent to springs, streams and rivers on certified farms are classified as natural habitat or healthy agroforests3 By 2013, x% of rivers and streams in priority watersheds classified as healthy. What? How? (Methods) When? Who? Unit Where? Comments Overall coffee production area Ministry of AG and coffee association stats Annually Project Monitoring Team (PMT) Landscape All countries Coordination costs Certified coffee production area Producer reports, maps Annual audits Auditor Farm All countries Audit, mapping consultant Natural forest fragments on certified farms Producer reports, maps Annual audits PMT Farm All countries Audit, mapping consultant Area in healthy agro forests Satellite images PMT Landscape El Sal and Colombia Maps and analysis Certified farm area adjacent to water bodies Kilometers of rivers and streams Indicator Species Producer reports, maps Baseline and end of project Annual audits PMT Farm All countries PMT Landscape El Sal and Colombia Conservation Science Program PMT Landscape El Sal and Colombia Bird Species Christmas Bird Count Baseline and end of project Baseline and end of project during wet and dry season Annually Audit, mapping consultant Maps and analysis PMT Landscape El Sal and Colombia (Indic ator) Satellite images Point Count Biodiversity Survey4 1 adequately protected against hunting and extraction and more than one hectare Healthy Agroforests is defined as a production area with an abundant mix of diverse native species (more than 10 species per hectare) and a minimum of 30% shade (average over the farm) 3 adjacent equals within 50 meters 2 4 199 Activities: Activity 1: define fragments, agro-forestry and priority watersheds Activity 2:. incorporate into auditor training materials and audit report Activity 3: create field in AG DB for data collection Activity 4: determine baseline agro forests and priority watersheds, mapped in digital format Activity 5: define indicator species for each site and create survey Activity 6: organize Bird Count participation Threat Reduction Objectives Specific Objective 1: Minimize conversion of agroforests to more intensive (high disturbance) land uses: Degradation. Reduce land conversion of coffee agroforests In 5 years, certified farms have a x% higher margin than conventional production. What? How? When? Who? Unit Where? Comments (Indi (Methods) cator) Land conversion rate from traditional coffee farms Coffee association records validated with Satellite Image maps Annually PMT Landscape El Sal and Colombia Coordination time Coffee Sales at a premium Export records of producers Baseline Sept (previous year) Producers reports Farm All countries Certified coffee profit margins and national average coffee profit margins Coffee Cost Administration Software Information submitted quarterly to RA Producers report to SN Farm All countries Staff time, Enter into Cert DB or CoC database? A sustainable coffee software for costs/sales info administration Activities: Activity 1: develop agreement with coffee associations to exchange information Activity 2: set up M&E system linked to CoC to compare actuals against C price. Develop survey format. Activity 3: decide on sample size and economic indicators Activity 4: train on use of software or alternative system Activity 5: include field in DB on profit margins per producer Specific Objective 2: Increase connectivity of forest fragments through improved regeneration of forests and expansion of certified agroforests reduce by x% the fragmentation index for forest within certified farms. x% of the natural forest fragments in certified farms have protection plans (are guarded against extraction) and > 1 hectare What? (Indicator) How? (Methods) When? Who? Where? Comments Shape, size and proximity of forest fragments to Satellite images GIS analysis of aerial photos baseline begin project 200 PMT Conservation Science Corridor, 30 farm sample Consultant SN time 15K year one neighboring fragments Protection enforcement rates Producer reports end of Program minimum Annual audit Producer report to SN All certified farms 25K last year Activities: Activity 1: define fragmentation index Activity 2: aerial photos of certified farms in Year1 to map existing forest fragments and areas of high or moderate shading Activity 3:. GIS technician conduct site visits to complement maps (4 months) Activity 4: repeat and expand in project final year Specific Objective 3: Reduce extraction of flora and fauna (including subsistence and sport hunting) populations of indicator game species or extractable non-game species are stable or increasing on certified operations 100% of certified coffee farms pay at least the legal minimum wage. What? (Indicator) How? (Methods) When? Who? Where? Comments Point Count Baseline Conservation Landscape El Sal and Key species Biodiversity and end of Science Colombia Survey5 project Program during wet PMT and dry season Wages Record reviews validated with surveys Annual Audit PMT Farm All countries Activities: Activity 1: identify game and non game indicator species such as dove, quail, paca Activity 2:.idenitfy other social indicators to include in farm audits Specific Objective 4: Reduce forest fires • reduce area affected by forest fires within certified plantations by x% # farms with implemented alternative waste solutions What? (Indicator) How? (Methods) When? Who? Where? Area burned (Ha) Alternative waste solutions Survey farm managers baseline annually at end of dry season Survey farm managers Annual audit Activities: Activity 1: develop surveys Activity 2:.expand DB fields 5 201 Auditor farm Auditor Farm Comments Staff time could be included in annual audit for last year’s data 5.a. Reduce direct contamination of freshwater habitats reduce by x% the quantity of domestic waste contaminants deposited in sources and springs within certified coffee farms in pilot sites. reduce by x% the quantity of agro-industrial contaminants deposited in sources and springs within certified coffee farms of the pilot sites. reduce by x% the discharge of organically-contaminated waters (produced by coffee processing) into springs and rivers from certified coffee farms within pilot sites. What? (Indicator) How? (Methods) When? Who? Where? Comments Volume of waste in Monitoring stations CMP 30 High estimated streams at sources and randomly costs according springs selected to SN, but certified believe can be farms done much cheaper – maybe 5K per year for grad students Organic discharge Farm records (estimates) Measure oxygen levels and stream fauna above and below discharge sites Annually within 2 weeks at end of processing season SN CMP 30 randomly selected certified farms Water specialist Approx $5K p.a. 5.b. Reduce indirect contamination of freshwater habitats x% of the sources and springs in the certified coffee farms within the pilot landscapes are classified as healthy. reduce use of Prior-Informed-Consent (PIC) and Persistent Organic Pollutants (POP) Conventionlisted chemicals in the sources and springs, in the certified coffee farms within the pilot landscapes, by x%. reduce levels of Prior-Informed-Consent (PIC) and Persistent Organic Pollutants (POP) Convention-listed chemicals used for coffee cultivation, in the certified coffee farms within the pilot landscapes, by x%. eliminate use of chemicals of World Health Organization (WHO) toxicity categories I and II, and the restricted use pesticides (RUPs) of the Environmental Protection Agency (EPA), by 100% in certified coffee farms. What? (Indicator) How? (Methods) When? Who? Where? Comments Oxygen content of Water sampling to annually CMP 30 water test for agrochemicals randomly and water quality selected indicators certified farms at entry and exit points Acidity (pH) of water Water sampling to CMP 30 test for agrochemicals randomly and water quality selected indicators certified farms at 202 Coliforms in water samples Water sampling to test for agrochemicals and water quality indicators CMP Agrochemicals in water samples Water sampling to test for agrochemicals and water quality indicators CMP Agrochemical use on certified farms versus non certified farms Audit on farm agrochemical use comparing records with Chemical containers in storage areas/ inventories for per hectare use Surveys of non certified farms Annual audit Annual surveys Auditor PMT entry and exit points 30 randomly selected certified farms at entry and exit points 30 randomly selected certified farms at entry and exit points All certified farms 30 randomly selected noncertified farms Activity depends on accurate and honest reporting Activities: Activity 1: develop questionnaire for chemical use: PIC/POC listed chemicals, WHO I and II, restricted use pesticides of the EPA and herbicides 5.c. Reduce erosion and sedimentation of freshwater habitats a sedimentation index in springs and rivers of the Apaneca Corridor is reduced by 40% in certified coffee farms. 90% of certified coffee farms within the Apaneca Corridor will have canopy cover of >40%. 60% of certified coffee farms within the Apaneca Corridor will have reduced herbicide use by >90%. What? (Indicator) How? (Methods) When? Who? Where? Comments Minimal Sediments index Combine with water additional costs sampling program above Herbicide Use Combine with 5b Activities: Activity 1: develop sedimentation index Activity 2:.expand DB fields 203 Part (Annex) XIV: Bibliography Please refer to Annex XI for a review article with an extensive bibliography on biodiversity benefits in coffee, including approximately 100 references. The article has submitted for publication in BioScience. In the Project Document is made reference to: Blackman, A., H. Albers, B. Avalos-Sartorio and L. Crooks. Deforestation and shadecoffee in Oaxaca, Mexico: key research findings. (Draft) Resources for the Future. 2004 “A Positive Future for Coffee,” presented in Amsterdam, February 2005 as part of the ECF’s “Agenda for Action.” 204 Part (Annex) XV: Maps of project countries: Protected Areas and Project Coffee Regions (See separate file) 205 Part (Annex) XVI: Tracking Tool for BD-2 Tracking Tool for GEF Biodiversity Focal Area Strategic Priority Two: “Mainstreaming Biodiversity in Production Landscapes and Sectors” Objective: This tracking tool will measure progress in achieving the coverage and impact targets established at the portfolio level under Strategic Priority Two of the biodiversity focal area and as agreed in the business plan for GEF Phase-3 (please see Annex A). The expected impacts of this strategic priority are to: (a) produce biodiversity gains in production systems; (b) improve livelihoods based on sustainable harvesting of natural resources; (c) replicate approaches applying positive incentive measures and instruments; and (d) mainstream biodiversity into the development and technical assistance, sector, and/or lending programs of the Implementing Agencies. Structure of Tracking Tool: This tracking tool reflects a review of the types of projects that have been supported under Strategic Priority Two. In addition, the content and structure of the tracking tool have been informed by feedback from the GEF biodiversity task force, input from a workshop held in Cambridge in 2003, and pre-testing of the tool.6 Guidance in Applying the Tracking Tool: This tracking tool will be applied three times: at work program inclusion7, at project mid-term during project implementation, and at project completion. The completed forms from projects will be aggregated for analysis of directional trends and patterns at a portfolio wide level. Projects which fall clearly within Strategic Priority (SP) #2 will only apply the tracking tool for SP#2. Projects that also contribute to SP#1, however, should also apply the tracking tool for SP#1. It is important to keep in mind that the objective is to capture the full range of a project’s contributions to delivering on the targets of the strategic priorities. The Implementing Agency will guide the project teams in the choice of the tracking tools. Please submit all information on a single project as one package (even where more than one tracking tool is applied). Multi-country projects may face unique circumstances in applying the tracking tools. The GEF requests that multi-country projects complete one tracking tool per country involved in the “GEF workshop to develop a “tracking tool” to evaluate the impacts of sustainable use activities in GEF Mainstreaming Projects”. Cambridge, October 2003. 7 For Medium Sized Projects when they are submitted for CEO approval. 6 206 project, based on the project circumstances and activities in each respective country. The completed forms for each country should then be submitted as one package to the GEF. Global projects which do not have a country focus, but for which the tracking tool is applicable, should complete the tracking tool as comprehensively as possible. The tracking tool is designed to be “user-friendly”, while attempting to ensure objective assessment of the progress of the project situation. Project proponents and managers will likely be the most appropriate individuals to complete the form, in collaboration with the project team, since they would be most knowledgeable about the project. Staff and consultants already working in the field could also provide assistance in filling out the form. The tracking tool will be used for the remainder of the third phase of the GEF (GEF-3) until June 30, 2006 at which time feedback will be sought from the users of the tracking tool in order to improve and refine it for application during the fourth phase of the GEF. The tracking tools are best thought of as a work in progress that will require refinement through an iterative process of application, reflection and analysis throughout GEF-3. Please keep track of your experiences in applying the tool so that the tool can be improved based on your practical experience in its application. Submission: The finalized form will be cleared by the Implementing Agencies and Executing Agencies under expanded opportunities before submission to GEF Secretariat for aggregation and analysis at the portfolio level. This tracking tool does not substitute or replace project level M&E processes, or Implementing Agencies’ own monitoring processes. As mentioned above, the tracking tool is to be submitted to the GEF Secretariat at three points: 1.) With the project document for work program inclusion8; 2.) Within 3 months of completion of the project’s mid-term evaluation or report; and 3.) With the project’s terminal evaluation or final completion report, and no later than 6 months after project closure. 8 For Medium Sized Projects when they are submitted for CEO approval. 207 ANNEX A Strategic Priority Two: Mainstreaming Biodiversity in Production Landscapes and Sectors 1. Rationale: To integrate biodiversity conservation into production systems/sectors (e.g. agriculture, forestry, fisheries, tourism, and/or others). 2. Expected impact: (i) Produce biodiversity gains in production systems and buffer zones of protected areas and (ii) Biodiversity mainstreamed into sector programs of the IAs. 3. Targets (coverage) a) At least 5 projects in each of the targeted sectors (agriculture, forestry, fisheries, and tourism) focused on mainstreaming biodiversity into the sector. b) At least 20 million ha in production landscapes and seascapes that contribute to biodiversity conservation or the sustainable use of its components. c) At least 5 countries promote conservation and sustainable use of wild species and landraces, taking into consideration their real and potential contribution to food security. 4. Performance indicators (impact) a) X (Y %) projects supported in each sector have included incorporated biodiversity aspects into sector policies and plans at national and sub-national levels, adapted appropriate regulations and implement plans accordingly. b) X ha of production systems that contribute to biodiversity conservation or the sustainable use of its components against the baseline scenarios. c) X people (Y % of total beneficiaries) show improved livelihoods (especially local and indigenous communities) based on more sustainable harvesting. d) X number of replications (reported & verified through the project) applying incentive measures & instruments (e.g. trust funds, payments for environmental services, certification) within and beyond project boundaries. e) X% of projects mainstream biodiversity into IA loan and/or sector work. 5. Modality to track “targets” (coverage) and “performance indicators” (impact) This tracking tool will be applied to all relevant projects approved under GEF-3 at work program inclusion, project mid-term and at project completion. The information from each project will be aggregated for portfolio-level analysis. The progress towards meeting the targets and performance indicators will be published annually. 208 I. Project General Information 1. Project name: “Biodiversity Conservation in Coffee: transforming productive practices in the coffee sector by increasing market demand for certified sustainable coffee” 2. Country (ies): Brazil, Colombia, El Salvador, Guatemala, Honduras, and Peru National Project:_______ Regional Project:___x___ Global Project:_________ 3. Name of reviewers completing tracking tool and completion dates: Work Program Inclusion Name Andrew Bovarnick Title Regional Technical Adviser Agency UNDP Project Mid-term Final Evaluation/project completion 4. Funding information GEF support:_USD 12,640,092___ Co-financing:_USD 81,613,497 Total Funding: USD 94,253,589 5. Project duration: Planned___7__ years 6. a. GEF Agency: x UNDP IADB EBRD FAO UNEP IFAD Actual _______ years World Bank UNIDO ADB 6. b. Lead Project Executing Agency (ies): Rainforest Alliance 7. GEF Operational Program: drylands (OP 1) coastal, marine, freshwater (OP 2) x forests (OP 3) x mountains (OP 4) agro-biodiversity (OP 13) integrated ecosystem management (OP 12) sustainable land management (OP 15) Other Operational Program not listed above:__________________________ 209 AfDB 8. Project Summary (one paragraph): Coffee is the second-largest traded commodity in the world after oil and employs 25 million people in the developing world. Coffee landscapes are very important for the world’s biodiversity. This project will result in conservation of biologically rich coffee areas though an increase in market demand for coffee produced under biodiversity-friendly, sustainable production practices. The project will work in Brazil, Colombia, El Salvador, Guatemala, Honduras and Peru and thereby deliver impacts in the Brazilian Atlantic Forest, Brazilian Cerrado, Mesoamerica, and in the Tropical Andes biomes. By increasing market demand for certified coffee from all origins, the project will also produce impact in other countries where certified sustainable coffee is produced. Providing market incentives through certification, the project will achieve transformation of the coffee sector, and ensure that it becomes a valuable complement to conservation efforts in protected areas. Results will include the direct conservation of 1,500,000 hectares of coffee, up from currently 93,000, with positive biodiversity impacts across coffee landscapes, representing approximately 10-15 million hectares. The project will foster an increase in the volume of sustainable coffee sold from 30,000 to 500,000 metric tons, with at least 100,000 of these metric tons coming from smallholders. The number of coffee companies supporting biodiversity conservation by selling sustainable coffee will increase to approximately 580. The project will work closely with governments in producer and consumer countries to make them partners in creating market-based solutions to conservation and development problems in coffee. 9. Project Development Objective: Increased conservation of globally important biodiversity in coffee landscapes by transformation of the coffee market in support of sustainable productive practices on coffee farms 10. Project Purpose/Immediate Objective: Demand and sales of biodiversity-friendly coffee increases from niche to mainstream product allowing a significant growth in farms adopting biodiversity-friendly, sustainable productive practices and showing on-farm BD benefits 11. Expected Outcomes (GEF-related): Outcome One: Demand for biodiversity-friendly coffee created on international coffee markets has increased Outcome Two: Consumer interest to purchase certified coffee has increased Outcome Three: National capacities to certify all sizes of coffee farms certified in biologically rich production landscapes has increased Outcome Four: Economic sustainability of certified coffee farms has increased Outcome Five: Increased capacity to engage policy makers in coffee-producing and consuming countries in promoting sustainable coffee practices and to monitor and respond to policy initiatives/threats to sustainable coffee. Outcome Six: Increased learning and adaptive management 12. Production sectors and/or ecosystem services directly targeted by project: 210 12. a. Please identify the main production sectors involved in the project. Please put “P” for sectors that are primarily and directly targeted by the project, and “S” for those that are secondary or incidentally affected by the project. Agriculture____P____ Fisheries__________ Forestry_____S_____ Tourism___________ Mining_______ Oil__________ Transportation_________ Other (please specify)___________ 12. b. For projects that are targeting the conservation or sustainable use of ecosystems goods and services, please specify the goods or services that are being targeted, for example, water, genetic resources, recreational, etc 1. _________Water__ 2. ________________ 3. ________________ 4. ________________ II. Project Landscape/Seascape Coverage 13. a. What is the extent (in hectares) of the landscape or seascape where the project will directly or indirectly contribute to biodiversity conservation or sustainable use of its components? An example is provided in the table below. Targets and Timeframe Project Coverage Landscape/seascape9 area directly10 covered by the project (ha) Landscape/seascape area indirectly11 covered by the project (ha) Foreseen at project start Achievement at Mid-term Evaluation of Project Achievement at Final Evaluation of Project 1,500,000 hectares 10-15,000,000 Explanation for indirect coverage numbers: 9 For projects working in seascapes (large marine ecosystems, fisheries etc.) please provide coverage figures and include explanatory text as necessary if reporting in hectares is not applicable or feasible. 10 Direct coverage refers to the area that is targeted by the project’s site intervention. For example, a project may be mainstreaming biodiversity into floodplain management in a pilot area of 1,000 hectares that is part of a much larger floodplain of 10,000 hectares. 11 Using the example in footnote 5 above, the same project may, for example, “indirectly” cover or influence the remaining 9,000 hectares of the floodplain through promoting learning exchanges and training at the project site as part of an awareness raising and capacity building strategy for the rest of the floodplain. Please explain the basis for extrapolation of indirect coverage when completing this part of the table. 211 The biodiversity value of certified farms in a coffee landscape is likely to reach well beyond the certified farms themselves, depending on the certification activity and the threats against biodiversity in the surrounding area, because species typical for much larger ecosystems can survive on sustainable coffee farms in conjunction with remaining tracts of intact habitat, even if the larger ecosystem is degraded. On average, the area which will benefit from coffee certification could be as large as 7-10 times the size of the certified farms themselves, between 10-15 million hectares by the end of the project 13. b. Are there Protected Areas within the landscape/seascape covered by the project? If so, names these PAs, their IUCN or national PA category, and their extent in hectares. Name of Protected Areas 1. Brazil IUCN and/or national category of PA Serra da Canastra Park Serra da Mantiqueira Protection Area Rebes Duas Bocas Biological Reserve Parque Nacional do Caparaó Parque Estadual da Pedra Azul no Espirito Santo IUCN II Protection Area N.A. IUCN II N.A. Extent in hectares of PA 71,525 422,873 26,000 Parque Nacional Natural: Serranía de los Yariguies Santuario de Flora y Fauna de Guanenta Alto Rio Fonce Santuario de Flora y Fauna de Iguaque Natural National Park 78,837 IUCN II 10,429 IUCN II 6,750 3. El Salvador IUCN II Protective Zone Not Known Protective Zone Not Known 3,820 350 516 823 296 4. Guatemala Visis Caba Biospere Reserve Sierra de los Cuchumatanes Special Protection Area Atitlan Multiple Use Area Volcan Fuego, “Zona de veda definida” Santo Tomas y Zunil“ Zona de veda definida” Lacandon“Zona de veda definida” IUCN VI Special Protection Area Multiple Use Area Zona de veda definida Montecillos Biological Reserve Montaña Santa Bárbara National Park Cerro Azul de Meambar National Park Cusuco National Park Biological Reserve National Park IUCN II 13,120 12,130 15,500 IUCN II 18,400 2. Colombia 5. Honduras El Imposible National Park Los Volcanes National Park “Complejo” Las Lajas “Complejo” Joya de Ceren “Complejo” Barra de Santiago 212 IUCN VI Zona de veda definida 45,000 97,619 89 4,526 4,325 2,972 6. Peru Alto Mayo Protected Forest Cordillera de Colan Reserve Zone Tabaconas-Namballe National Sanctuary Santiago Comaina Reserve Zone Cordillera Azul National Park Rio Abiseo National Park IUCN VI Reserve Zone IUCN III 182,000 64,114 295,000 Reserve Zone National Park IUCN II 1,642,567 1,353,191 274,520 III. Management Practices Applied 14.a. Within the scope and objectives of the project, please identify in the table below the management practices employed by project beneficiaries that integrate biodiversity considerations and the area of coverage of these management practices? Note: this could range from farmers applying organic agricultural practices, forest management agencies managing forests per Forest Stewardship Council (FSC) guidelines or other forest certification schemes, artisanal fisherfolk practicing sustainable fisheries management, or industries satisfying other similar agreed international standards, etc. An example is provided in the table below. Targets and Timeframe Specific management practices that integrate BD 1. Biodiversity-friendly coffee production (agroforestry) according to standards defined by the Rainforest Alliance certification system Area of coverage foreseen at start of project Achievement at Mid-term Evaluation of Project Achievement at Final Evaluation of Project 1,500,000 hectares by year 7 14. b. Is the project promoting the conservation and sustainable use of wild species or landraces? ____Yes __x_ No If yes, please list the wild species (WS) or landraces (L): Species (Genus sp., and common name) 1. 2. 3. 4… Wild Species (please check if this is a wild species) Landrace (please check if this is a landrace) 14. c. For the species identified above, or other target species of the project not included in the list above (E.g., domesticated species), please list the species, check the boxes as appropriate regarding the application of a certification system, and identify the certification system being used in the project, if any. An example is provided in the table below. 213 Certification Species 14. d. Is carbon sequestration an objective of the project? Yes x No If yes, the estimated amount of carbon sequestered is: ______________________ IV. Market Transformation and Mainstreaming Biodiversity 15. a. For those projects that have identified market transformation as a project objective, please describe the project's ability to integrate biodiversity considerations into the mainstream economy by measuring the market changes to which the project contributed. The sectors and subsectors and measures of impact in the table below are illustrative examples, only. Please complete per the objectives and specifics of the project. Name of the market that the project seeks to affect (sector and sub-sector) Sustainable agriculture (Certified Sustainable Coffee) Unit of measure of market impact Market condition at the start of the project 500,000 tons of Certified Sustainable Coffee sold 30,000 tons sold Market condition at midterm evaluation of project Market condition at final evaluation of the project 15. b. Please also note which (if any) market changes were directly caused by the project. _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ V. Improved Livelihoods 16. For those projects that have identified improving the livelihoods of a beneficiary population based on sustainable use /harvesting as a project objective, please list the targets identified in the logframe and record progress at the mid-term and final evaluation. An example is provided in the table below 214 Improved Livelihood Measure Number of targeted beneficiaries (if known) 1. Economic sustainability for farmers At least 50,000 farmers 2. Farm worker income At least 100,000 permanent farm workers and at least 500,000 seasonal workers At least 100,000 permanent farm workers and at least 500,000 seasonal workers 3. Farm worker access to health care Please Improvement Achievement identify Foreseen at at Mid-term local or project start Evaluation indigenous of Project communities project is working with Achievement at Final Evaluation of Project At least 50% of farmers achieve market benefits through certification (such as price premium or better terms of trade) All farm workers on certified farms earn minimum wage All farm workers on certified farms have access to regular health care VI. Project Replication Strategy 17. a . Does the project specify budget, activities, and outputs for implementing the replication strategy? Yes_x_ No___ 17. b. Is the replication strategy promoting incentive measures & instruments (e.g. trust funds, payments for environmental services, certification) within and beyond project boundaries? Yes_x__ No___ If yes, please list the incentive measures or instruments being promoted: “Rainforest Alliance Certified” gives a series of incentives for sustainable production (see project document for details) 17. c. For all projects, please complete box below. Two examples are provided. 215 Replication Quantification Measure (Examples: hectares of certified products, number of resource users participating in payment for environmental services programs, businesses established, etc.) Replication Target Foreseen at project start 1. Number of farmers applying sustainable coffee management practices 2. Hectares of biodiversity-friendly coffee production under certified management that incorporates biodiversity considerations At least 50,000 farmers 1,000,000 hectares 216 Achievement at Mid-term Evaluation of Project Achievement at Final Evaluation of Project VII. Enabling Environment For those projects that have identified addressing policy, legislation, regulations, and their implementation as project objectives, please complete the following series of questions: 18a, 18b, 18c. An example for a project that focused on the agriculture sector is provided in 18 a, b, and c. 18. a. Please complete this table at work program inclusion for each sector that is a primary or a secondary focus of the project. Please answer YES or NO to each statement under the sectors that are a focus of the project. Sector Statement: Please answer YES or NO for each sector that is a focus of the project. Biodiversity considerations are mentioned in sector policy Biodiversity considerations are mentioned in sector policy through specific legislation Regulations are in place to implement the legislation The regulations are under implementation The implementation of regulations is enforced Enforcement of regulations is monitored Agriculture Fisheries Forestry Tourism Other (please specify) Yes No Yes Yes No No No No No No No No 217 Other (please specify) 18. b . Please complete this table at the project mid-term for each sector that is a primary or a secondary focus of the project. Please answer YES or NO to each statement under the sectors that are a focus of the project. Sector Agriculture Fisheries Statement: Please answer YES or NO for each sector that is a focus of the project. Biodiversity considerations are mentioned in sector policy Biodiversity considerations are mentioned in sector policy through specific legislation Regulations are in place to implement the legislation The regulations are under implementation The implementation of regulations is enforced Enforcement of regulations is monitored Forestry Tourism Other (please specify) Other (please specify) 18. c. Please complete this table at project closure for each sector that is a primary or a secondary focus of the project. Please answer YES or NO to each statement under the sectors that are a focus of the project. Sector Agriculture Fisheries Statement: Please answer YES or NO for each sector that is a focus of the project. Biodiversity considerations are mentioned in sector policy Biodiversity considerations are mentioned in sector policy through specific legislation Regulations are in place to implement the legislation The regulations are under implementation The implementation of regulations is enforced Enforcement of regulations is monitored 218 Forestry Tourism Other (please specify) Other (please specify) All projects please complete this question at the project mid-term evaluation and at the final evaluation, if relevant: 18. d. Within the scope and objectives of the project, has the private sector undertaken voluntary measures to incorporate biodiversity considerations in production? If yes, please provide brief explanation and specifically mention the sectors involved. An example of this could be a mining company minimizing the impacts on biodiversity by using low-impact exploration techniques and by developing plans for restoration of biodiversity after exploration as part of the site management plan. ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ _______________ VIII. Mainstreaming biodiversity into the GEF Implementing Agencies’ Programs 19. At each time juncture of the project (work program inclusion, mid-term evaluation, and final evaluation), please check the box that depicts the status of mainstreaming biodiversity through the implementation of this project with on-going GEF Implementing Agencies’ development assistance, sector, lending, or other technical assistance programs. Time Frame Status of Mainstreaming The project is not linked to IA development assistance, sector, lending programs, or other technical assistance programs. The project is indirectly linked to IAs development assistance, sector, lending programs or other technical assistance programs. The project has direct links to IAs development assistance, sector, lending programs or other technical assistance programs. The project is demonstrating strong and sustained complementarity with on-going planned programs. Work Mid-Term Program Evaluation Inclusion Final Evaluation x IX. Other Impacts 20. Please briefly summarize other impacts that the project has had on mainstreaming biodiversity that have not been recorded above. __________________________________________________________________________________________ __________________________________________________________________________________________ 219 Part (Annex) XVII: Response to Reviews A. GUIDANCE FROM THE CBD SECRETARIAT CBD Comment Response to CBD Secretariat comments Response to comment The Secretariat has reviewed the proposal and finds it weak in terms of COP guidance. Although this is an important initiative we suggest more attention is given to the guidance provided by the COP. The Project Document’s section of Policy Conformity now better explain how the project has used COP guidance in the project design. This includes a reference to the Addis Ababa Principles and Guidelines for the Sustainable Use of Biological Diversity. The project is in close harmony with the decisions VII/12 and VII/18 of the last Conference of the Parties, and generally contributes to the key principles of the Convention’s Article 10 on Sustainable Use. Reference to change in project document See paragraphs 207-210 of the UNDP Project Document and paragraph 69 of the Executive Summary B. STAP REVIEW The project team would like to thank the STAP reviewer for very constructive and useful reviews. This STAP review replaces a first review of an earlier draft proposal, which was subsequently revised substantially in accordance with the STAP reviewer’s comments. The earlier review is no longer relevant and is superseded by this second review. STAP REVIEW BASED ON REVISED DOCUMENT 1. Baseline Analysis - The planned activities in paras 178 and onward need to be identified more clearly. As they stand, the document continues to identify barriers and opportunities. This is not the same as stating specifically what activities will be undertaken to overcome those barriers and achieve stated outcomes. This does happen later in the text, but the structure of the Strategy and later components needs to be clarified. Paras 181-194 are really just further details on barriers and problem analyses. 2. Part II Strategy- Further work is required to strengthen the management arrangements for implementation of the project. It is clear that major revisions have been made to the earlier project documents. However, my original comments about the need for a more robust explanation of how planned activities will deliver stated outputs and hoped for outcomes still need further consideration. Please reconsider the use of terms such as outputs and outcomes. These are sometimes confused which detracts from the integrity of the project strategy ad the design of the implementation arrangements. Some suggestions follow: a. It may be better to give details of the Project Conformity after you have set out the Goal, Objectives, Activities, Outputs and Outcomes b. The Outcomes set out in Para 213 repeat what has been said in Para 176. 220 c. Para 215- Change “barrier” to challenge (Increasing the market demand for certified coffee on international coffee markets is the single most important challenge in expanding certification activities in producer countries and thereby expanding coffee production area under sustainable management. d. Many of the Outputs still need to be re-worded as they tend to describe Outcomes. Examples: Para 218- the way the Output is expressed it describes an outcome (Output 1.1 Existing markets and market segments expanded- this is really an outcome ) The same is true for outputs 1.2 and 1.3 Response to STAP review comments STAP review comment Response to comment Baseline Analysis - The planned activities in paras 178 and onward need to be identified more clearly. As they stand, the document continues to identify barriers and opportunities. This is not the same as stating specifically what activities will be undertaken to overcome those barriers and achieve stated outcomes. This does happen later in the text, but the structure of the Strategy and later components needs to be clarified. Paras 181-194 are really just further details on barriers and problem analyses. The activities mentioned in the baseline analysis are not planned as a part of the project intervention, but are activities which are already done by a series of actors to promote sustainability in coffee. We have sought to explain this better in paragraphs 177-204. It is concluded in par. 204 that baseline activities are not sufficient to overcome the barriers to scaling up sustainable coffee production. The gap between what is needed and what is currently being done is what justifies the GEF intervention. The outcomes of the project intervention each address on of the six major barriers to increase sustainable production. The planned activities and outputs are explained under each outcome. Management Arrangements are described under Part III, and not under Part II: Strategy. We have sought to explain better how the planned activities will deliver stated outputs in the Strategy section. Management arrangements have been rewritten and substantially strengthened in the Management Arrangement section. Part II Strategy- Further work is required to strengthen the management arrangements for implementation of the project. It is clear that major revisions have been made to the earlier project documents. However, my original comments about the need for a more robust explanation of how planned activities will deliver stated outputs and hoped for outcomes still need further consideration. Please reconsider the use of terms such as outputs and outcomes. These are sometimes confused which detracts from the integrity of The document has generally been prepared with the terminology prescribed by UNDP for GEF projects. We have, however, 221 Reference to change in project document Rewritten paragraphs 177204 in Project Document See Project Goal, Objective Outcomes and Outputs/Activities section in Part II: Strategy. Part III: Management Arrangements has been rewritten. the project strategy ad the design of the implementation arrangements. Some suggestions follow: It may be better to give details of the Project Conformity after you have set out the Goal, Objectives, Activities, Outputs and Outcomes The Outcomes set out in Para 213 repeat what has been said in Para 176. Para 215- Change “barrier” to challenge (Increasing the market demand for certified coffee on international coffee markets is the single most important challenge in expanding certification activities in producer countries and thereby expanding coffee production area under sustainable management. Many of the Outputs still need to be re-worded as they tend to describe Outcomes. Examples: Para 218- the way the Output is expressed it describes an outcome (Output 1.1 Existing markets and market segments expanded- this is really an outcome ) The same is true for outputs 1.2 and 1.3 followed several of the concrete suggestions below. The order of the sections follow the format prescribed by UNDP and the GEF This has been addressed so it doesn’t seem repetitive. The review of baseline activities is now divided according to which barrier they help overcome, instead of which project outcome they contribute to. This is done as suggested Revised text par. 177-204 We have reformulated outputs as suggested Ouput formulations have been adjusted throughout Project Strategy and logical framework matrix. See current paragraph no. 216 C. RESPONSE TO GEF SECRETARIAT COMMENTS Response to GEF Secretariat review comments GEFSEC review comment Response to comment Please note total project financing is now $73.6 M and the GEF contribution totals 12.64 M. Of note is the co-financing of $50.5 M from companies which represents 68% of total funding. To avoid confusion, please explain in para. 27 why the co-financing figure of the PS will reach $360M The total project financing has been increased to a total of 122.1 M upon receipt of additional cofinancing commitments. Company co-financing is now 84.0 M representing 69% of total funding. Formulation in para. 27 was erroneous. Numbers referred to leveraged financing, not cofinancing. Annex numbers have been adjusted Please note that the pages in the Annex section do not correspond to the TOC 222 Reference to change in project document Numbers have been adjusted throughout the project document Please see adjusted Table of Contents p. 5 of the Project Document Expected at CEO Endorsement Please include the lessons learned from the Chemonics review on coffee certification in the project design It would be useful to identify the source of co-financing provided for each outcome The Chemonics review on coffee certification systems was one of many documents and studies examined as part of the project preparation process and the lessons from all of these have been fully incorporated in project design Source of co-financing for each outcome has been provided in the project budget Please see reference in par. 79 of the Project Document Please refer to the project budget D. RESPONSE TO GEF COUNCIL MEMBERS’ COMMENTS The Council Members’ comments and suggestions have led to a number of revisions of the main proposal. Additional clarifications on several issues have been provided in the table below. Unfortunately it seems that the extensive set of annexes submitted to the GEF Secretariat on 29 September, 2005 has not found its way to the council members (as noted in the comments from Switzerland). In the responses to comments, clarification has been provided on issues that might not have appeared clear without the annexes, and the annexes are resent for the consideration of the Council Members. Reference to Council members’ comments Response to comments section/ adjustment Comments from France Expected outputs are huge […] If outputs can be reached, the project is excellent. Then GEF Secretariat should monitor quantitative output indicators The project will rigorously monitor the impacts of the project and duly report on them to the GEF Secretariat Comments from Germany […] it may be discussed whether certification of coffee that has been produced according to the Rainforest Alliance standard on such a broad level as suggested in the proposal is the right approach. Certification is not an objective as such, but only a tool to proof that certain conditions which are claimed in marketing are verifiable. […] Certification as such has no impact on the environmental and To become certified by Rainforest Alliance, a farm must comply with rigorous standards which ensure that production is contributing to conservation of species and local ecosystems. For most farmers, living up to the standards means implementing multiple improvements on their farms. RAC obliges farmers to increase tree cover with native tree species; reduce the use of pesticides and implement Integrated Pest Management practices; implement water conservation measures, including protection zones around water bodies and waste water treatment systems; regenerate habitats by reforestation of areas with poor soils and steep slopes; and reduce pressure on wildlife through environmental education programs and curbing of extraction of plants and animals. As a result, sustainable coffee farms form habitat for a large number of species, and serve as buffer zones, biological corridors, or “ecological stepping stones” between natural 223 Please refer to Annex IX: Typical onfarm changes and benefits of Rainforest Alliance coffee certification, and Annex XI: Global Biodiversity Value of Project Coffee Regions (“The Role of social conditions in coffee areas. areas, thus facilitating species migration and gene flow. The project will help farmers in their work to implement the improvements necessary to attain the standards. The environmental benefits of forested coffee farms managed according to certification guidelines have been well studied, as summarized in the appendices. Sustainable Coffee Plantations in Preserving Globallyimportant Biodiversity”) The importance of coffee farmers implementing sustainable, biodiversity-friendly practices cannot be overstated. Virtually all the world’s coffee is grown in biodiversity-rich, critically endangered eco-regions. All this project’s selected coffee regions lie within some of the most endangered and biodiversity-rich hotspots on the Planet (Mesoamerica, Tropical Andes, Brazilian Cerrado and Brazilian Atlantic Forest). Certification is not intended as a substitute for conservation of remaining natural areas in these regions, but Rainforest Alliance’s standards ensure sustainable coffee farming in biodiversity rich production landscapes is an important complement to other conservation work. So far, the global market for certified coffee is limited to a niche of about 3%, though demand is increasing continuously In addition to guaranteeing on-farm change, the seal awarded to certified farmers follows the sustainable product from the farm and through the supply-chain to the consumer. The seal allows the consumer to show preference for a product grown under sustainable conditions. By linking consumer preference for sustainable products with sustainable coffee production practices, Rainforest Alliance certification creates powerful and lasting incentives for farmers to conserve ecosystems and create social improvements for workers. The Netherlands-based Green Development Foundation, which supports the four major certification organizations, estimates that currently 7-8% of the world’s coffee production is now certified. The market demand for RAC is increasing rapidly, as pointed out in annex VII-A, which appears not to have been made available for the reviewer. To cover increasing demand, total RAC certified area has increased from 93,000 ha at the time of submission to currently 110,000 ha. Given the enormous size of the global coffee market, even relatively minor shifts towards sustainable, biodiversityfriendly production represent huge values compared to other funding available for global conservation efforts. To illustrate, each additional percent of the world’s coffee production, which is certified according to RAC standards, means 100,000 hectares of biodiversity friendly agriculture in critically endangered biodiversity hotspots. Each additional percent of the coffee on international coffee markets that is sold as Rainforest Alliance Certified represents a yearly value of more than USD 100,000,000 paid directly to farmers. This project will protect ecosystems on coffee farms totaling an 224 Please refer to Annex VII-A 3 of the 6 suggested outcomes are in direct interest of buyers of sustainable coffee, rather than in the interest of supplyers of sustainable coffee. It is in the interest of coffee roasters to increase demand for sustainable coffee, to raise consumer’s interest to purchase certified coffee and to increase capacity to engage policy makers in coffeeproducing and consuming countries in promoting sustainable coffee practices. All these three outcomes are primarily in the commercial interest of the selling companies than in the interest of the environment or coffee growers. It must be stressed that the impact of the project focusses on protection of the environment and benefits for coffee growers Certification schemes are business and demand driven mechanisms. The implementation of standards and certification of the compliance with those standards must be in the interest of the buyers and the sellers. The scope of the project should, therefore, reflect the competition between existing standards and the competitive interest of companies purchasing certified coffee. Activities with direct relation to the commercial interest of companies may create market area larger than Costa Rica’s system of protected areas. Coffee companies are demand driven and have incentive to meet existing demand for sustainable coffee in the market place, but as consumer demand for sustainable coffee is still relatively low, many companies do not necessarily have a marked interest in working on their own to change consumer preferences. However, by helping companies with understanding sustainability issues and understanding how sustainability can become a part of their business model – which this project aims to do – it is oftentimes possible to catalyze remarkable shifts in companies’ attitudes and investment priorities. An example from Rainforest Alliance’s banana certification program can illustrate this. Chiquita Brands has worked for more than a decade to implement rigorous Rainforest Alliance standards on all the company’s banana plantations. For many company employees, this has been a process where initial skepticism has been replaced with acceptance and later with enthusiasm for sustainability concepts. As a result, Chiquita now sells Rainforest Alliance certified bananas and launched a 30 million dollar marketing campaign in nine European countries in which they explain to consumers why Chiquita has been working intensively with sustainability and with the Rainforest Alliance. The campaign is in Chiquita’s own interest but the company’s change process is not likely to have occurred without the support of the Rainforest Alliance. This project will not in any way subsidize what is in the direct interest of coffee companies, but it will help strengthen a certification system that is able to catalyze large shifts in company investments and buying patterns. While companies’ ventures into sustainability can be driven by a mix of business interest, risk mitigation, image improvement and genuine belief in the need to promote a common good, the resulting change in coffee companies’ behavior will benefit farmers, workers, and the environment. The question of free competition between companies is important. Rainforest Alliance’s certification program has been designed so it capitalizes on market forces, rather than restricting them. Rather than fixing prices in the market place, or encouraging charity as a solution to problems in the coffee world, the Rainforest Alliance Certified seal guarantees that any company can obtain recognition in the market place by sourcing a product which is produced under sustainable conditions. Hence, sustainability becomes yet another competitive parameter for coffee companies, along with other parameters like price and quality. In order to ensure true mainstreaming of biodiversity concerns into private-sector activities, environmental externalities must be internalized into regular business practices 225 See discussion of design principles and strategic considerations (par. 206). Also, sections on cost effectiveness (par. 335342), and cofinancing and leveraging potential in section III conditions that are not based on free competition of companies. It seems as if the private contribution is partly building on premiums paid by buyers of certified coffee. This premium is estimated to be on a constant level of 10 cts/lb. Currently a grower of certified coffee in Latin America receives in average a price for RAC coffee of 46 cts/lb, whereas for bird friendly he receives 52 cts/lb and for organic 50 cts/lb (in dry parchment coffee) (source: CIMS 2005). This includes a premium for RAC between 5-10 cts/lb in a constant under-supply situation of RAC coffee through the buying commitments of some big roasting companies. However, it is fully hypothetical to estimate a growing demand of RAC coffee during the next 7 years with the current growing rates, as done in the proposal. Though this market has grown enormously, it is still questionable if constant premiums will be paid to coffee growers. The Rainforest Alliance does not provide fixed price The project will not support activities that are in the direct commercial interest of any company. Rather, the project will remove barriers to allow any company to address environmental and social concerns as a part of their business model. The shift from business-as-usual without particular emphasis on sustainability to sustainable sourcing is difficult for many companies. Prior to investing significant amounts in changing sourcing policies and launching certified brands in the marketplace, companies need to understand how sustainability can be part of a commercially viable business model, how to communicate a sustainability message, that there is a market for certified products, what is the supply situation for the particular coffees in their blends, how they can get their staff trained to manage sustainability issues, just to mention some of the issues at stake. This project will work with coffee companies to convince them that sustainability works commercially. The project will seek to work with all companies that have an interest in environmental and social sustainability. Understanding the issues, the companies will then themselves undertake the investments necessary to promote what is in their commercial interest. The growth scenarios in the proposal are not based on current RAC growth rates, but rather on demand increase scenarios that came out of a survey of 70 coffee companies. The growth rates estimated in the proposal are substantially lower than the average RAC growth rates over the last 3 years. Furthermore, the market price for coffee has increased dramatically during 2005. The International Coffee Organization’s average “Composite Price” for 2005 was 89.36 US cents per pound, and the average price for January 2006 was slightly over one dollar per pound. During the PDF B, the project team had CIMS survey the average premium paid to farmers for RAC coffee. Average premiums amounted to 12 US cents per pound. The size of the premium is likely to fluctuate over time, and will depend on supply in relation to demand, as well as several other factors. CIMS found that a majority of coffee companies expected the premiums to continue. This project will help increase demand for RAC coffee, thus – ceteris paribus – increasing the likelihood of a high premium. For project planning purposes, to estimate a value of the premiums that will be paid during the project’s lifetime, was set at 10 US cents per pound, lower than the current premium levels. It should be emphasized, though, that the premium should not be regarded as the most important benefit of certification. 226 Please refer to Annex VIII-A for information regarding growth projections premiums, but premiums that are freely floating with the market’s demand and supply. As in the current market situation there is a constant demand for RAC coffee, price premiums are stable and high. Market analysts expect that this situation is not long lasting. It is important to stress that currently certified producers sell only a range of between 30 to 50% of the certified coffee into certified markets, where they receive the full price premium. All other coffee goes basically into conventional markets, where only quality components of coffee are remunerated. It must be noted, that the project gives the impression that all certified coffee goes into certification markets, which is not the case. Certification of coffee shall be in an interest of market participants. Therefore, such a significant support from public actors for one certification scheme may also distort the competition of certification schemes in Latin America, which should be fully market driven It is fully correct that not all coffee certified will be sold to buyers who will apply the certification seal or that all certified coffee will command a premium price. This has been further clarified in the project document. It is worth noting, however, that even if the farmer does not sell all his coffee as RAC, certification still brings a series of benefits, such as bringing farms to the attention of markets, increasing the farmers’ negotiating power at time of sale, generally increasing coffee quality and reducing farm production costs. Rainforest Alliance is investigating the best ways to measure the direct as well as the indirect economic benefits of certification. Finally, it should be noted that some of the RAC coffee that will not be sold as RAC, is very likely to be sold under other sustainability programs, such as Organic, or Starbuck’s C.A.F.E. practices, because many RA certified producers hold other certifications as well. One must distinguish between market competition between coffee companies, and what some perceive as competition between certification schemes. No certification scheme will distort the competition between companies, as all companies are free to enter the schemes they find will best help them address sustainability issues. The coffee sector largely perceives sustainability in coffee production as a “precompetitive” issue, and the coffee industry is already working together with stakeholders to address sustainability, e.g. through the Common Code for the Coffee Community (www.sustainable-coffee.net). Contrary to popular belief, coffee companies do not prefer excessively low market prices, but rather stable supplies and stable prices of the types and qualities of coffee they need. The recent severe coffee crisis not only hurt producers, but also caused serious problems in the coffee companies’ supply chains when long-time suppliers went out of business or left the coffee beans un-harvested because production costs exceeded market prices. The coffee crisis also hurt coffee companies’ public image as consumer groups accused companies of benefiting from human tragedy in coffee producing communities. Consequently, most coffee companies have realized that it is in their common interest to address sustainability issues at an industry level. As to the perceived competition between certification schemes, the main certification schemes are complementary. They emphasize different aspects of sustainability, apply to 227 Clarification added in par. 229 and 339 of the project document Multiple sustainability benefits by RAC certification are explained in Annex IX. Please see par. 79 for additional description of the different nature of certification schemes. different farms, and appeal to different consumer groups. But the main certification schemes do not place equal emphasis on biodiversity conservation. The rationale for the GEF in using RAC as an intervention strategy in this project is because its standards best help protect wildlife habitat and conserve biodiversity in coffee landscapes, while it also brings social and economic benefits to workers and producers. The GEF has clearly stated its commitment to mainstreaming of biodiversity concerns into productive sectors, and it is appropriate that it supports the only certification system which produces tangible GEF-eligible benefits in coffee landscapes. Other certification schemes have other priorities and strategies, which are not GEF-eligible. Fairtrade, for example, attempts to protect small producers from fluctuations on international coffee markets by guaranteeing a minimum price paid to the producer, and does not emphasize wildlife protection. Organic certification emphasizes the elimination of synthetic agrochemicals in farming and soil protection measures, which does produce environmental benefits but is not tantamount to biodiversity conservation. Other certification systems, such as Utz Kapeh, are entry-level standards mainly concerned with food safety and product traceability issues, arguably with limited impact for wildlife in coffee landscapes. All these certification schemes depend on donor funding (see response below). “Coffee certification, where the With regard to the economic benefit of sustainability production and processing certification, in terms of its positive impact on coffee prices, practices meet diverse social and the merits of certification schemes should not only be seen in environmental standards, is terms of an increased market price for certified coffee, but considered by many people in also in terms of better access to markets and increased demand Latin America as a good strategy for certified coffee. Many farmers obtain substantial to ensure better process and efficiency gains because the certification process lead to better marketing options. When the business practices as farmers start to systematize production reality of the international market and document production costs. Often worker productivity and the region’s industry is increases and turnover decreases as workers’ livelihoods analyzed in detail, what may be improve. Not least, many of the sustainability benefits derived concluded is that the economic from Rainforest Alliance certification are either intangible or benefit of sustainability difficult to measure in strictly economic terms. This applies to certification, measured in terms of the value of conserving wildlife and the value of a clean its positive impact on coffee potable water supply, for example. prices, increasingly tends to be less.” (Andrés Villalobos, “Prices and premiums for certified coffee”, by: Sustainable Markets Intelligence Center CIMS, 2005). We suggest that the GEF should All co-financing figures provided in the proposal are based on be cautious about the written letters of commitment from respected coffee companies. The partner companies have done formal and committed contribution of the intensive internal planning processes and the co-financing private partners as it is amounts are based on the price premiums companies plan to questionable that price premiums for RAC will stay on pay and the amount of coffee they plan to purchase. The 228 today’s level. participating companies have not taken it lightly to provide these sensitive data for a publicly available document, and the projections represent the best available estimate of sustainability premiums. It should also be pointed out that sustainability premiums registered in the co-financing letters are just a small share of the total amount of sustainability premiums that companies will pay for RAC coffee during the project’s lifetime. Comments from Switzerland Increase of the demand for RAC coffee The sustainability of the project depends to a high degree on the broad recognition, acceptance and financial validation of the RAC seal and certification system by the coffee industry and consumers. Around 43 % of GEF funds will be allocated in this area (Outcome 1 and Outcome 2). We regret that the information provided is not more explicit about the assumptions of increasing RAC certification and subsequently the export to a total amount of 10 % of the total global coffee market. We further regret the missing Annex VIII-A, where these issues are discussed. However, it is acknowledged that these issues are taken into consideration as possible barriers to sustainable production. Synergies with existing certifications and brands for sustainable coffee Coffee markets do not yet recognise a clear and transparent certification scheme of ‘sustainable’ coffee. Recent studies [Giovannucci 2001 & 2003] show that mainly the organic, fair trade and ecofriendly certified coffees are considered ‘sustainable’. An important increase in double or triple certification during the last years can be observed. We regret that the existence of other certification schemes, of possible It is regrettable that the annexes, which were submitted to the GEFSEC on 29 September, have not been made available to the council members. The current project document contains the original information to which is made reference. The growth targets were determined after a comprehensive study undertaken during the project’s design phase, in which a total of 70 coffee companies were surveyed about their current and projected needs for RAC coffee. Coffee sustainability and certification is a fast-moving world, and 3-5 years ago the size of Rainforest Alliance’s certification program was still limited. At the time Mr. Giovannucci grouped several schemes in a ‘sustainability’ category. This has changed. At the April 2006 Specialty Coffee Association of America conference (the biggest annual event in the coffee world), Mr. Giovannucci held a presentation of the main sustainability certification systems, where he prominently featured Rainforest Alliance. Despite the suggestions of confusion in the marketplace, there is no evidence that consumers or markets are inhibited by the various seals. On the contrary it is often argued that the existence of several systems have actually helped expand the total amount of sustainability certified coffee available to consumers. While more choice might seem confusing to some, many will appreciate the existence of programs that let 229 Annex VIII-A is resubmitted as documentation of the deliberations behind the project targets. Further clarification on certification schemes is provided in paragraph 79 of the project proposal. New activity is added under Output 2.3 synergies, or competing strategies are not further discussed. The studies mentioned observe that alternative certifications have a considerable risk of causing confusion for the coffee industry and consumers. consumers show preference for the issues they are most concerned with. This is essentially a question of market segmentation: while there are still many mainstream consumers who are not overly concerned with sustainability issues, the segments of consumers who care and who are conscious of the influence they exercise through their product preference is undoubtedly growing fast. Sustainability consists of a series of complex issues that cannot be boiled down to one “fit-all” solution. The project will work with companies and media in consumer countries to clarify for consumers the meaning behind the different seals (see outputs 2.1 and 2.2). Of key importance that major news media have begun writing about sustainability principles and certification schemes. Furthermore, with the current project and the proposed GEF support, the RAC system will get an important advantage, touching in some degree the competition rules among the coffee certification systems. In this sense, GEF should pay further attention to avoid distortions in the market competition of the private sector, by creating privileges for some of them RA and SAN staff work continually with the managers of other certification programs, both in the field and in the marketplace. Rainforest Alliance collaborates with both Fairtrade, Organic and a number of other certification and accreditation organizations in the International Social and Environmental Accreditation and Labelling (ISEAL) alliance. To exploit synergy benefits to the maximum and avoid duplicity between certification schemes, formal activities to facilitate dialogue and coordination between certification organizations have been included under output 2.3 Certification systems such as Fairtrade, Organic, Utz Kapeh and Rainforest Alliance Certified should be regarded as public, civil society driven initiatives, and are not competing the way that private companies compete in the marketplace. RAC is chosen for this project for its ability to catalyze conservation of biological diversity, and it is the only certification scheme to produce GEF-eligible benefits. It is important to recognize that the different coffee certification programs all offer instruments which allow the private sector to receive recognition for efforts invested in favour of the ‘global commons.’ Whether they work to eliminate pesticide use, improve conditions for farm workers, guarantee better prices for poor farmers or protect wildlife, the certification programs let companies get recognition for the extra effort which lies over and above what they are required to do. It should be recognized that certification systems are valuable instruments that promote voluntary activities for the larger public good. Therefore, it is appropriate that the certification systems receive support from private and public donors concerned with the public good, and – in fact – all certification organizations do receive substantial contributions for their programs. To illustrate this is provided a few examples from publicly available annual reports: In 2004, IFOAM – the Organic umbrella organization – received EUR 639,000 worth of donations for projects, 230 We miss the discussion of converting or adapting alternative certified producers (organic, fair trade, eco-friendly) into the RAC scheme. One may ask if this causes significant trade-offs between certification schemes instead of increasing the amount of producers benefiting from value adding certification systems Technical and financial assistance for coffee producers Adapting RAC-conform production methods implicates for coffee producers not only the need for access to knowledge and information, but also access to training, communication, financial and other non-financial business services. The project description concentrates mainly including from several European governments FLO, the worldwide Fairtrade organization received USD 864,616 in external grants for projects in 2004. During the same year, Transfair, the national Fairtrade organization in the US, received USD 531,000 in grants from a variety of donors The certification organization of Utz Kapeh received EUR 790,000 in subsidies from public and private donors in 2004, and EUR 1,146,016 for 2005 Multiple certification of the same farm is already a reality, but it is not necessarily a goal for all farmers, as it is likely to increase cost of production. Rather, each farmer should select the certification scheme that best fits his situation. While Rainforest Alliance will work to increase collaboration between certification schemes, full convergence of the existing schemes into one is not realistic, or desirable. For example: Fairtrade aims exclusively at small farmers, while other schemes are also concerned with sustainability on larger farms. Organic production is possible for some farmers, but many others find that yields diminish to the point where farms are not profitable. Some farmers find that Rainforest Alliance’s shade requirements do not fit with their mechanized and intensive production methods. Utz Kapeh appeals to producers and coffee companies who operate in mainstream markets with razor-thin margins and selling to consumers who are not willing to pay the higher premiums of other certification schemes. The presence of different certification schemes gives both farmers and consumers a choice. The possibility for farmers and consumers to choose a certification scheme that fits his or her situation and beliefs is likely to engage more people in sustainable coffee production. For farmers who do want to hold multiple certifications, the project will seek to bring down cost by harmonizing standards and audit procedures, where possible, between different certification schemes. The number of farmers who can benefit from a value-added from certification is determined more by market demand for certified products than by collaboration between certification schemes. The RAC standards do require certain good practices to be implemented on farms. Therefore, a RAC certification will typically not only bring about ecological and social benefits, but also help make the farm more efficient. However, most of the issues mentioned in Outcome 4 are not prerequisites for RAC certification. For example, the RAC standards do not require farmers to improve their coffee quality, or become better businessmen when selling their coffee to buyers. But the broad majority of the coffee community believes the farmers need access to technical assistance to make them more robust to weather a future coffee crisis. This applies to all 231 See revised text par. 79 and 82 of the project document. New activity is added under Output 2.3 on certification issues, describes. the changes in farm management and adapting new production practices as a logical consequence of the certification activities. Especially for small producers, this cause-effect link will most probably not apply Financial support for small producers is mainly planned through partnerships with existing financial institutes (such as credit institutes). We would not recommend mixing the services of technical advice and supply of credits within the project The level of commitment of the governments of the beneficiary countries is not yet sufficient On the one hand we recognize the importance of the great commitment and degree of cofinancing by the coffee private sector in the project proposal, but on the other hand we regret the small financial participation of the governments of the beneficiary countries, and in the case of Brazil, the complete lack of a financial commitment (the latter one is one of the most important coffee exporting countries of the world). Furthermore, the rather small amounts of governmental cofinancing are still awaiting confirmation (totalling for all countries: 840.000 USD). Although we recognize that for project sustainability the commitments of the private sector might be more decisive than governmental co-financing, we thoroughly regret the lack so far farmers, but particularly to small farmers who tend to be more vulnerable. Small farmers – often organized into cooperatives or producer associations – can potentially reap great benefits by establishing or strengthening internal control systems and help members improve productive practices. Motivation to join a certification program can be a driver of such a change, as can technical assistance broadly speaking. While RAC is for all farmers, technical assistance through this project will be focused particularly on small producers. The project will focus on building partnerships with microfinance institutions to provide credit to farmers and other donor projects which will build farmer capacity in business management. It will be the combined capacity building efforts which will lead to farmer sustainability. The idea to team up with existing credit providers is that – in most cases – credit is already available but due to a series of barriers, credit does not flow freely to the farmers. The project will not engage directly in provision of credit to farmers or technical advice on credit as such, but rather on facilitating contact between credit institutions and producers. Access to credit is an absolutely essential element for enhancing farmers’ economic sustainability. Government support to the project and to sustainability is considerable. Co-financing contributions to the project from government institutions amount to more than USD 900,000. Of this total, the government of Brazil provides a co-financing contribution of USD 600,000. While the coffee sectors of the project countries are indeed of key importance in national economies, the public budgets being channeled through government ministries and agencies in support of sustainability in the coffee sector are quite limited. It should be emphasized, though, that government support to the coffee sector is oftentimes channeled through national, semi-public coffee organizations such as ANACAFE of Guatemala and the National Coffee Federation of Colombia. These institutions have contributed co-financing letters amounting to USD 13 million showing robust national ownership and support of the project. 232 Please refer to co-financing letters from participating governments and national coffee institutions of financial commitment of the governments of the beneficiary countries, considering particularly that the host countries are direct beneficiaries of the project, in terms of biodiversity conservation impacts as well as of economic and social benefits. Possible incompatibilities of the project’s biodiversity database information system with the biodiversity information systems of the competent authorities of the recipient countries The project will be mainly executed by the private sector. Thus, there is a considerable risk that the valuable information on biodiversity which will be generated by the project will not be sufficiently compatible and well incorporated in the official information systems of the recipient countries' institutions. Although the project proponents seem to have the good intention of collaborating with the governmental institutions concerned, there is a need for strategy and for clear agreements on the cooperation between project and governmental institutions The RAC certification system is a public, NGO-driven system, and the information derived from project activities and monitoring will be valuable for project country governments, and will be widely shared. The project has a healthy budget for information sharing activities. Identifying the best ways for this project to support the countries’ biodiversity information systems, and establishing protocols for compatibility is a lengthy process and will be addressed in conjunction with the development of biodiversity data management systems as a part of the project’s biodiversity impact monitoring. The agreements with the project country governments detailing collaboration will be established during the project’s inception phase. 233 Please see additional comments par. 305 Conclusions and Recommendations We recognise the efforts made in the preparation of the project, support the project proposal, and recommend its approval by the GEF. The market-oriented project approach is very promising and includes all important themes and issues concerning sustainable coffee production, certification and commercialization. A main asset is the inclusion of important actors along the coffee value chain. We particularly appreciate the efforts to conglomerate the private coffee industry, government entities, and NGOs in this field. However, we would recommend considering alternative measures for project implementation with regard to the declared barriers, assumptions and risks. The challenges faced by the coffee industry do not depend on a new certification scheme Overproduction and subsequent low prices for most farmers remain at the top of the list. We would also recommend a clear strategy to cope with external factors such as market fluctuations or regional socioeconomic changes in producing or consuming countries that could jeopardize the outcome of the project. We regret that the study of the project document did not include the parts V – XVII. We consider that these annexes would have provided a deeper insight and some of the observations made above may thus have been superfluous RAC – which is one of the leading and oldest coffee certification schemes – is a credible alternative with the potential to help hundreds of thousands, perhaps even millions of farmers and farm workers. But as the Swiss council member points out, it does not pretend to solve a series of fundamental problems and issues in the coffee world, such as overproduction or price fluctuations on world coffee markets. It is outside the powers of most – if not all – organizations (including governments, coffee companies, and certification systems) to control the market fluctuations of commodity markets. Since the breakdown of the International Coffee Organization’s quota system, all actors have been subject to the conditions of the raw market forces. The project will work at the policy level in both producer and consumer countries to garner support for policy measures that will increase sustainability in the coffee sector. The project’s strategy is to bolster coffee producers by reducing their vulnerability to the fluctuations of the market and changes in their socio-economic context. This will be achieved by providing the farmers with the on-farm and market benefits brought about by RA certification, as well as empowering them through technical assistance to increase their access to tools, information and training. Better farm management techniques and increased efficiency will help the farmer survive under shifting market conditions, and support to crop diversification will help farmers depend less on one single commodity market. It is regrettable that the annexes have not reached the council members, because they would most likely have provided clarification of a number of issues. The clarifications provided here, though, have hopefully served to eliminate remaining doubts, and earlier documentation is resubmitted for consideration of the council members. 234 Please refer to resubmitted annexes Part (Annex) XVIII: Capacity Assessment of Rainforest Alliance’s capacities to act as Executing Agency Introduction UNDP's programming strategy is a logical and natural framework for the design of capacity assessment strategies. The programme approach, involving a country strategy, national programmes, programme support documents, and specific programme implementation arrangements provides the practical framework within which capacity assessment methodologies can be applied and practical results achieved. This capacity assessment was carried out by UNDP’s country office in Guatemala to review the institutional competence of Rain Forest Alliance to execute projects under the NGO Execution modality. Capacity assessment study of Rain Forest Alliance Rainforest Alliance, founded in 1986, is an international nonprofit conservation organization with a mission to protect ecosystems and the people and wildlife that live within them by implementing better land-use and business practices for biodiversity conservation and sustainability. Companies, cooperatives, and landowners that participate in programs meet rigorous standards for protecting the environment, wildlife, workers, and local communities. The Rainforest Alliance (RA) is a leader in developing best management practices in agriculture, and certifies coffee and other crops according to strict environmental and social standards. Farms that meet certification requirements are awarded the Rainforest Alliance CertifiedTM seal. It is one of the first organizations in the world to utilize market forces to conserve tropical forests, launching its sustainable forestry division in 1989 and its sustainable agriculture division in 1991, the Rainforest Alliance pioneered a worldwide certification movement. Relation to UNDP’s focus areas RA has clearly demonstrated its commitment to sustainable development, capacity development and poverty reduction. Its strategy is based on shaping market forces to recognize the added value of environmentally sound land use practices. Its main strategy and objectives are clearly related to UNDP’s focus areas. In its Millennium Declaration UNDP has set a goal of eradicating extreme poverty and hunger. Rainforest Alliance actively works to improve living conditions for poor smallholders, and farm workers, as well of increasing sustainability of farms, thereby consolidating stable, economic activities that provide income and job opportunities to rural dwellers. Its certification program includes rigorous socially responsible standards for workers and communities contributing to improved livelihood conditions of the more vulnerable. UNDP´s goal of guaranteeing environmental sustainability is fully congruent with RA’s efforts towards ensuring environmental sustainability promoting sustainable land use practices and market demand for environmentally responsible commodities like coffee, bananas, cocoa, citrus, and timber. Rainforest Alliance’s SmartWood program is the largest accredited certification body of the Forest Stewardship Council, having certified 27.5 million hectares of sustainable managed forests in 56 countries. Over 1,000 companies participate in this effort improving the quality of life of some 65,000 farm families. RA is strongly involved in promoting corporate social responsibility among powerful corporations like IKEA, Gibson Guitars, Amanco, Kraft Foods and Proter & Gamble and smaller yet important niche players among coffee roasters. RA’s experience in these partnerships is of great relevance to UNDP’s interest in partnering with the private sector in our efforts towards poverty eradication. RA’s Resource base Technical Capacity: 235 1. Undertake regular project visits and monitoring of progress benchmarks: RA certification program requires a strong monitoring component which has ample experience with the definition of benchmarks through their development and work with environmental and social standards for their Rainforest Alliance CertifiedTM labeled products. Monitoring of these standards is the linchpin of their certification programs giving RA ample experience with it. The organization has a sophisticated and comprehensive means of measuring progress, evaluating through yearly audits all certified farms against their internationally accepted standards. Auditors write detailed reports and are subject to extensive peer review. RA is currently implementing even more sophisticated information management and accounting systems to support its monitoring and evaluation program. 2. Ensure that periodic progress and technical reports are received and interpreted: Progress and technical reports need to be received and interpreted but also elaborated with sound technical capacity. RA’s technical capacity and ability to submit and interpret reports can be assessed by their accomplishments, such as the 27.5 million hectares of certified forests participating in their programs, its sustained leadership in promoting best management practices in agriculture, and reputable thirdparty certification program all of which have established a respectable name in sustainable forestry and agriculture for Rain Forest Alliance. 3. Carry out project progress evaluations and define adaptive management needs: RA’s information management and accounting systems provide a valuable tool for progress evaluations and decisions regarding adaptive management needs. Also, Rainforest Alliance’s Sustainable Agriculture Division is currently implementing structural changes to ensure adequate capacity for project execution. These include separation of certification functions from marketing, standards setting and capacity building, developing a solid, ISO65 accredited quality system for certification activities, expanding and strengthening information systems, and creating the structure for expanding the SAN in noncertification related support activities. Adaptive management principles are an integral part of this structure, and all units will periodically assess their performance and work plans according to results from the project monitoring program. The project’s Steering Committee and project Management Unit is responsible for guaranteeing that this will be an ongoing process. 4. Ensure regular consultations and when relevant partner with beneficiaries and contractors, including farmers, local government, and NGOs: RA certification standards are created in a public consultation processes, involving multiple stakeholders that include communities, industry and specialized scientists. RA is Secretariat of the Sustainable Agriculture Network (SAN), a coalition of nongovernment organizations in Latin America, through which credible and internationally recognized models and guidelines for sustainable agriculture are created. The SAN partners currently have installed technical capacity in their existing certification teams, and work with local partners and beneficiaries, thus enabling RA to carry out regular consultations with beneficiaries and partner organizations. On the ground actions performed by this network include partnering with local farmers and local government agents and NGO’s providing technical support. 5. Ability to partner with companies and access the coffee market: RA’s already established partnerships with multinational roasters like Kraft Foods and Procter & Gamble and with small and medium players in the coffee world are examples of RA’s ability to establish the partnerships and access the market that will help ensure project´s success. 6. Ability to partner with microfinancial institutions: RA has not had substantial experience in working with financial institutions. Through project execution, Rainforest Alliance will establish working relationship with commercial banks, development banks and financial institutions in order to guarantee credit flows to farmers. Dialogue has begun with several institutions, and concrete partnerships will be developed through a Sustainable Farmers’ Support Alliance. To further build and strengthen these alliances, Rainforest Alliance will retain an experienced manager for the Support Alliance. 7. Ability to partner with government: Rainforest Alliance and its partners in the SAN network have ample experience in working with specialized agencies and ministries of producer country governments that are responsible for sustainable agricultural, forestry, and environmental issues. The 236 project will ensure further strengthening of the on-going dialogue and partnership process with governments by retaining staff with capacity and experience with regard to establishing partnerships with governments. On the market side, Rainforest Alliance already has a senior policy specialist based in Brussels, who will assist Rainforest Alliance achieve its policy objectives in the European Union. All partners will receive training and orientation in working with government institutions. Opportunities for cross-training between partners with particular expertise and those with less experience will be explored. Managerial Capacity: 1. Ensure that an annual project review meeting is held, and 2. Be able to develop and review an annual work plan: RA already executes several large donorfinanced projects, which are all managed strictly according to the donor’s requirements. This includes work planning processes and periodic performance review meetings, monitoring, adaptive management etcetera. In collaboration with UNDP, RA executed a large, regional PDF B process ontime during a nine-month time-frame. RA will hire specific competent personnel to direct and manage the present project. The high personnel standards that must accompany the international recognition that RA has achieved apply to the project’s personnel and therefore the project will have adequate managerial capacity to develop, carry out, and review annual work plans and hold the required annual review meetings. The Project’s Steering Committee is responsible for approval of the annual work plan and supervision of project progress accompanying the Project’s Management Unit as the team directly responsible for project’s adequate and timely execution. 3. Possess adequate logistical infrastructure: office facilities, space, basic equipment, utilities, communications: RA has adequate logistical infrastructure in its principal regional office in Costa Rica where project headquarters will be located, its office in Guatemala, and partner organizations in all project countries with the exception of Peru. During the project inception phase RA will explore opportunities for partnering with a local NGO to implement activities versus setting up a small Rainforest Alliance office. All RA offices and SAN partner institutions have adequate communication and equipment, plus the project will acquire additional equipment as needed. Administrative Capacity: For the successful execution of a project the administrative capacity of RA must be able to provide adequate support to field and other project activities, especially in the following topics: 1. Ability to procure goods, services and works on a transparent and competitive basis 2. Ability to prepare, authorize and adjust commitments and expenditures 3. Ability to manage and maintain equipment. Their administrative capacity is reflected in their Finance and Operations team located in New York which provides support and guidance in key functions such as: budget management, financial reporting, contract administration and compliance, staff recruitment and training, procurement, and inventory management. In addition to the New York team, the Costa Rica and Guatemala offices both posses administrative staff who are trained and supported by New York in order to facilitate an efficient decentralization of duties in support of program implementation. The NY-based Finance and Administration office provides oversight to the CR office administration, and will provide support should any inefficiencies in project administration be found to occur. 4. Ability to recruit and manage the best qualified personnel on a transparent and competitive basis: RA has more than 15 years of work experience, headquarters in New York, major regional offices in Costa Rica and Vermont and experience managing a staff of 130. RA has received various awards recognizing its innovation and performance which are a result of its board and personnel capabilities and drive. For the project’s success RA’s ability to hire a sound team that can manage a large, multiyear and multi-country project is essential. RA has accrued a reputation as a sound and innovative organization, managing various large grants and with operations in more than 50 countries which 237 speak of the quality of its personnel and capacity to recruit strong, capable, driven, responsible individuals. Financial Capacity: RA manages an annual budget of US $ 15 million, four main offices, a network of 25,000 members and supporters and has had various major grants. These accomplishments speak of its financial capacity. Specifically, the following capabilities will permit adequate project execution: 1. Ability to produce project budget, 2. Ability to ensure physical security of advances, cash and records, 3. Ability to disburse funds in a timely and effective manner: RA is an NGO with experience in implementing large multi-year projects financed by agencies such as USAID and IDB. Due to RA’s successful record in implementing such projects, government funding has steadily increased from 4% of total revenue in FY1999 to 28% in FY2005. Our largest government funded projects, the USAIDfunded Certified Sustainable Products Alliance (CSPA) in Central America and Mexico, shows a steady record regarding disbursements vs the annual project workplans. Currently RA is entering the fourth and final year, and we have consistently been disbursing at between 80% and 90% of annual project plans. We maintain an open dialogue with the funding agency in order to address challenges that may periodically arise so that we ensure a timely achievement of intended project outcomes. RA also raises between $1.5 and $2 million dollars annually from foundations to support our program activities and we successfully disburse over 90% of those grants on a timely basis. 4. Ability to ensure financial recording and reporting: An annual budget of 15 million and activities in 50 countries require strong budget capabilities. Recently RA received major grants from USAID in 2004 (US $8.6 million for 3 years) and Inter-American Investment Bank in 2003 (US $3 million for 3 years), these grants are indicators of its reliable procedures for fund management including the security of funds received and their capacity to disburse and keep proper records and produce reports. RA’s growth over the past several years and continued expanding donor base in all categories of donors—foundation, corporate, individual, government—is further testament to its ability to attract a variety of donors in support of its mission and to satisfy the unique requirements of those donors. RA converted over a year ago to a new accounting and reporting system, Microsoft Solomon. This product is widely recognized as a leading software in the United States, and benefits from regular upgrades and improvements as a result of being part of Microsoft. Solomon enables RA to set up each project in a manner that responds to the particular requirements on the donor as well as the specific features of a given project. Data can be tracked and reported by program, by activity, by outcome and by country based on the set-up at the initiation of the project. Financial reporting is achieved through a partnership between RA Finance in New York and project administrators in the field who are assigned to large efforts such as the one anticipated with UNDP/GEF. Financials progress is monitored on a monthly basis in detail so that quarterly financial reports can be prepared more efficiently. Overall assessment and Comments RA is a solid organization with a sound of record of project performance, innovative approaches to sustainable development and successful partnerships with powerful market forces. The nature of the project: Biodiversity Conservation in Coffee: transforming productive practices in the coffee sector by increasing market demand for certified sustainable coffee requires an organization with RA’s profile and record; making it the natural and needed implementing agent. RA has experience with almost every aspect of the technical, administrative, managerial, and financial needs of the project and can focus on strengthening those where it is lacking. However a major challenge and one that needs to be thoroughly addressed is: its ability to takeover the project’s goals and activities when the project and its funding finish. RA’s capacity at the moment reflect an organization that can grow with the project and can secure 238 financial sustainability of its efforts with innovative approaches and partnerships with commercial and funding organizations. Yet, growth of the scale that RA is experiencing at the moment -various large grants awarded and diversification into new ventures, products and markets- could have a negative impact on its ability to continue with the commitment, quality and responsibility that have been its trademark. Cognizant of the challenge of managing rapid growth, RA is undertaking a series of steps to strengthen the organizational structure of its Sustainable Agriculture Division, to enable it to effectively execute this major project, as well as handle a steep growth of its certification program. These steps include separation of certification functions from marketing, standards setting and capacity building, developing a solid, ISO65 accredited quality system for certification activities, expanding and strengthening information systems, and creating the structure for expanding the SAN in non-certification related support activities. The project will help Rainforest Alliance by building additional capacity in accordance with the new demand and supply of sustainable certified coffee on international coffee markets. As the certification system grows, it will be able to sustain new functions and capacity generated by the project through increased certification fees, the implementation of licensing fees, and other program income generation opportunities. New functions will be internalized into the RA certification program well before the project ends, thereby demonstrating sustainability and Rainforest Alliance’s on-going commitment to overcome challenges, for the benefit of ecosystems and the people who live within them. 239 Part (Annex) XIX: Project Cooperation Agreement between Rainforest Alliance and UNDP PROJECT COOPERATION AGREEMENT between THE UNITED NATIONS DEVELOPMENT PROGRAMME and RAINFOREST ALLIANCE, Inc. Whereas the United Nations Development Programme ("UNDP") and Rainforest Alliance, Inc. ("the NGO") have, on the basis of their respective mandates, a common aim in the furtherance of sustainable human development; Whereas UNDP has been entrusted by its donors with certain resources that can be allocated for programmes and projects, and is accountable to its donors and to its Executive Board for the proper management of these funds and can, in accordance with the UNDP Financial Regulations and Rules, make available such resources for cooperation in the form of a Project; Whereas the NGO, its status being in accordance with national regulations, is committed to the principles of participatory sustainable human development and development cooperation, has demonstrated the capacity needed for the activities involved, in accordance with the UNDP requirements for management; is apolitical and not profit-making; Whereas the NGO and UNDP agree that activities shall be undertaken without discrimination, direct or indirect, because of race, ethnicity, religion or creed, status of nationality or political belief, gender, handicapped status, or any other circumstances; Now, therefore, on the basis of mutual trust and in the spirit of friendly cooperation, the NGO and UNDP have entered into the present Agreement. Article I. Definitions For the purpose of the present Agreement, the following definitions shall apply: (a) "Parties" shall mean the NGO and UNDP; (b) "UNDP" shall mean the United Nations Development Programme, a subsidiary organ of the United Nations, established by the General Assembly of the United Nations; (c) "The NGO" shall mean Rainforest Alliance, Inc., a non-governmental organization that was established in 1987 with headquarters in New York City and with a mission to protect ecosystems and the people and wildlife that live within them by implementing better land-use and business practices for biodiversity conservation and sustainability with a strong Latin American program; (d) "The Agreement" or "the present Agreement" shall mean the present Project Cooperation Agreement and the Project Document, to which the present project cooperation agreement is attached as Section III; (e) "Project" shall mean the activities as described in the Project Document; (f) "Government" shall mean the Government of Guatemala 240 (g) "UNDP resident representative" shall mean the UNDP official in charge of the UNDP office in the country, or the person acting on his/her behalf; (h) "Project Director" shall mean the person appointed by the NGO, in consultation with UNDP and with the approval of the Government coordinating authority, who acts as the overall coordinator of the Project and assumes the primary responsibility for all aspects of it; (i) "Expenditure" shall mean the sum of disbursements made and valid outstanding obligations incurred in respect of goods and services rendered; (j) "To advance" shall mean a transfer of assets, including a payment of cash or a transfer of supplies, the accounting of which must be rendered by the NGO at a later date, as herein agreed upon between the Parties; (k) "Income" shall mean the interest on the Project funds and all revenue derived from the use or sale of capital equipment, and from items purchased with funds provided by UNDP or from revenues generated from Project outputs; (l) "Force majeure" shall mean acts of nature, war (whether declared or not), invasion, revolution, insurrection, or other acts of a similar nature or force; (m) “Project Work Plan” shall mean a schedule of activities, with corresponding time frames and responsibilities, that is based upon the Project Document, deemed necessary to achieve Project results, prepared at the time of approval of the Project, and revised annually. (n) “Project Budget” shall mean the budget set forth in the Project Document. Article II. Objective and Scope of the Present Agreement 1. The present Agreement sets forth the general terms and conditions of the cooperation between the Parties in all aspects of achieving the Project Objectives, as set out in the Project Document (Annex of the present Agreement). 2. The Parties agree to join efforts and to maintain close working relationships, in order to achieve the Objectives of the Project. Article III. Duration of Project Agreement 1. The term of the present Agreement shall commence on xx April 2006 and terminate on xx of April 2013. The Project shall commence and be completed in accordance with the time-frame or schedule set out in the Project Document. 2. Should it become evident to either Party during the implementation of the Project that an extension beyond the expiration date set out in paragraph 1, above, of the present Article, will be necessary to achieve the Objectives of the Project, that Party shall, without delay, inform the other Party, with a view to entering into consultations to agree on a new termination date. Upon agreement on a termination date, the Parties shall conclude an amendment to this effect, in accordance with Article XVII, below. 241 Article IV. General Responsibilities of the Parties 1. The Parties agree to carry out their respective responsibilities in accordance with the provisions of the present Agreement, and to undertake the Project in accordance with UNDP policies and procedures as set out in the UNDP Programming Manual, which forms an integral part of the present Agreement. 2. Each Party shall determine and communicate to the other Party the person (or unit) having the ultimate authority and responsibility for the Project on its behalf. The Project Director shall be appointed by the NGO, in consultation with UNDP and with the approval of the government coordinating authority. 3. The Parties shall keep each other informed of all activities pertaining to the Project and shall consult once every three months or as circumstances arise that may have a bearing on the status of either Party in the country or that may affect the achievement of the Objectives of the Project, with a view to reviewing the Work Plan and Budget of the Project. 4. The Parties shall cooperate with each other in obtaining any licenses and permits required by national laws, where appropriate and necessary for the achievement of the Objectives of the Project. The parties shall also cooperate in the preparation of any reports, statements or disclosures, which are required by national law. 5. The NGO may use the name and emblem of the United Nations or UNDP only in direct connection with the Project, and subject to prior written consent of the UNDP Resident Representative in Guatemala. 6. The activities under the present Agreement are in support of the efforts of the Government, and therefore the NGO will communicate with the Government as necessary. The Project Director will be responsible for day-to-day contacts with the relevant national authorities and UNDP on operational matters during the implementation of the Project. The UNDP Resident Representative will act as the principal channel for communicating with the Government coordinating authority regarding the activities under the Project Cooperation Agreement unless otherwise agreed with the Parties and the Government. 7. The UNDP Resident Representative will facilitate access to information, advisory services, technical and professional support available to UNDP and will assist the NGO to access the advisory services of other United Nations organizations, whenever necessary. 8. The Parties shall cooperate in any public relations or publicity exercises, when the UNDP Resident Representative deems these appropriate or useful. Article V. Personnel Requirements 1. The NGO shall be fully responsible for all services performed by its personnel, agents, employees, or contractors (hereinafter referred to as "Personnel"). 2. The NGO personnel shall not be considered in any respect as being the employees or agents of UNDP. The NGO shall ensure that all relevant national labour laws are observed. 3. UNDP does not accept any liability for claims arising out of the activities performed under the present Agreement, or any claims for death, bodily injury, disability, damage to property or other hazards that may be suffered by NGO personnel as a result of their work pertaining to the project. It is understood that adequate medical and life insurance for NGO personnel, as well as insurance coverage for service-incurred illness, injury, disability or death, is the responsibility of the NGO. 242 4. The NGO shall ensure that its personnel meet the highest standards of qualification and technical and professional competence necessary for the achievement of the Objectives of the Project, and that decisions on employment related to the Project shall be free of discrimination on the basis of race, religion or creed, ethnicity or national origin, gender, handicapped status, or other similar factors. The NGO shall ensure that all personnel are free from any conflicts of interest relative to the Project Activities. Article VI. Terms and Obligations of Personnel The NGO undertakes to be bound by the terms and obligations specified below, and shall accordingly ensure that the personnel performing project-related activities under the present Agreement comply with these obligations: (a) The personnel shall be under the direct charge of the NGO, which functions under the general guidance of UNDP and the Government; (b) Further to subparagraph (a) above, they shall not seek nor accept instructions regarding the activities under the present Agreement from any Government other than the Government of Guatemala or other authority external to UNDP; (c) They shall refrain from any conduct that would adversely reflect on the United Nations and shall not engage in any activity, which is incompatible with the aims and objectives of the United Nations or the mandate of UNDP; (d) Subject to the requirements outlined in the document “UNDP public information disclosure policy”, information that is considered confidential shall not be used without the authorization of UNDP. In any event, such information shall not be used for individual profit. The Project Director may communicate with the media regarding the methods and scientific procedures used by the NGO; however, UNDP clearance is required for the use of the name UNDP in conjunction with Project Activities in accordance with Article IV, paragraph 5, above. This obligation shall not lapse upon termination of the present Agreement unless otherwise agreed between the Parties. Article VII. Supplies, Vehicles and Procurement 1. UNDP shall contribute to the Project the resources indicated in the Budget section of the Project Document. 2. Equipment, non-expendable materials, or other property furnished or financed by UNDP shall remain the property of UNDP and shall be returned to UNDP upon completion of the Project or upon termination of the present Agreement, unless otherwise agreed upon between the Parties, and in consultation with the government coordinating authority. During Project implementation and prior to such return, the NGO shall be responsible for the proper custody, maintenance and care of all equipment. The NGO shall, for the protection of such equipment and materials during implementation of the Project, obtain appropriate insurance in such amounts as may be agreed upon between the Parties and incorporated in the Project Budget. 3. The NGO will place on the supplies, equipment and other materials it furnishes or finances such markings as will be necessary to identify them as being provided by UNDP. 243 4. In cases of damage, theft or other losses of vehicles and other property made available to the NGO, the NGO shall provide UNDP with a comprehensive report, including police report, where appropriate, and any other evidence giving full details of the events leading to the loss of the property. 5. In its procedures for procurement of goods, services or other requirements with funds made available by UNDP as provided for in the Project Budget, the NGO shall ensure that, when placing orders or awarding contracts, it will safeguard the principles of highest quality, economy and efficiency, and that the placing of such orders will be based on an assessment of competitive quotations, bids, or proposals unless otherwise agreed to by UNDP. 6. UNDP shall make every effort to assist the NGO in clearing all equipment and supplies through customs at places of entry into the country where Project activities are to take place. 7. The NGO shall maintain complete and accurate records of equipment, supplies and other property purchased with UNDP funds and shall take periodic physical inventories. The NGO shall provide UNDP annually with the inventory of such equipment, property and non-expendable materials and supplies, and at such time and in such form as UNDP may request. Article VIII. Financial and Operational Arrangements 1. In accordance with the Project Budget, UNDP has allocated and will make available to the NGO funds up to the maximum amount of US$ 12,000,000. The first installment of US$ xxx will be advanced to the NGO within 10 working days following signature of the present Agreement. The second and subsequent installments will be advanced to the NGO quarterly, when a financial report and other agreed-upon documentation, as referenced in Article X, below, for the activities completed have been submitted to and accepted by UNDP as showing satisfactory management and use of UNDP resources. 2. The NGO agrees to utilize the funds and any supplies and equipment provided by UNDP in strict accordance with the Project Document. The NGO shall be authorized to make variations not exceeding 20 per cent on any one line item of the Project Budget provided that the total Budget allocated by UNDP is not exceeded. The NGO shall notify UNDP about any expected variations on the occasion of the quarterly consultations set forth in Article IV, paragraph 3, above. Any variations exceeding 20 per cent on any oneline item that may be necessary for the proper and successful implementation of the Project shall be subject to prior consultations with and approval by UNDP. 3. The NGO further agrees to return within two weeks any unused supplies made available by UNDP at the termination or end of the present Agreement or the completion of the Project. Any unspent funds shall be returned within two months of the termination of the present Agreement or the completion of the Project. 4. UNDP shall not be liable for the payment of any expenses, fees, tolls or any other financial cost not outlined in the Project Work Plan or Project Budget unless UNDP has explicitly agreed in writing to do so prior to the expenditure by the NGO. Article IX. Maintenance of Records 1. The NGO shall keep accurate and up-to-date records and documents in respect of all expenditures incurred with the funds made available by UNDP to ensure that all expenditures are in conformity with the provisions of the Project Work Plan and Project Budget. For each disbursement, proper supporting documentation shall be maintained, including original invoices, bills, and receipts pertinent to the transaction. 244 Any Income, as defined in Article I, paragraph 1 (k), above, arising from the management of the Project shall be promptly disclosed to UNDP. The Income shall be reflected in a revised Project Budget and Work Plan and recorded as accrued income to UNDP unless otherwise agreed between the Parties. 2. Upon completion of the Project/or Termination of the Agreement, the NGO shall maintain the records for a period of at least four years unless otherwise agreed upon between the Parties. Article X. Reporting Requirements 1. The NGO shall provide UNDP and the government coordinating authority with periodic reports on the progress, activities, achievements and results of the Project, as agreed between the Parties. As a minimum, the NGO shall prepare an annual progress report. 2. Financial reporting will be quarterly: (a) The NGO prepares a financial report and submits it to the UNDP Resident Representative no later than 30 days after the end of each quarter, in Spanish. (b) The purpose of the financial report is to request a quarterly advance of funds, to list the disbursements incurred on the Project by budgetary component on a quarterly basis, and to reconcile outstanding advances and foreign exchange loss or gain during the quarter. (c) The financial report has been designed to reflect the transactions of a project on a cash basis. For this reason, unliquidated obligations or commitments should not be reported to UNDP, i.e., the reports should be prepared on a "cash basis", not on an accrual basis, and thus will include only disbursements made by the NGO and not commitments. However, the NGO shall provide an indication when submitting reports as to the level of unliquidated obligations or commitments, for budgetary purposes; (d) The financial report contains information that forms the basis of a periodic financial review and its timely submission is a prerequisite to the continuing funding of the Project. Unless the Financial Report is received, the UNDP Resident Representative will not act upon requests for advances of funds from UNDP; (e) Any refund received by an NGO from a supplier should be reflected on the financial report as a reduction of disbursements on the component to which it relates. 3. Within two months of the completion of the Project or of the termination of the present Agreement, the NGO shall submit a final report on the Project activities and include a final financial report on the use of UNDP funds, as well as an inventory of supplies and equipment. Article XI. Audit Requirements 1. The NGO shall submit to the UNDP Resident Representative in Guatemala a certified annual financial statement on the status of funds advanced by UNDP. The Project will be audited at least once during its lifetime but may be audited annually, as will be reflected in the annual audit plan prepared by UNDP Headquarters (Division of Audit and Performance Review) in consultation with the Parties to the Project. The audit shall be carried out by the auditors of the NGO or by a qualified audit firm, which will produce an audit report and certify the financial statement. 245 2. Notwithstanding the above, UNDP shall have the right, at its own expense, to audit or review such Project-related books and records as it may require and to have access to the books and record of the NGO, as necessary. Article XII. Responsibility for Claims 1. The NGO shall indemnify, hold and save harmless, and defend at its own expense, UNDP, its officials and persons performing services for UNDP, from and against all suits, claims, demands and liability of any nature and kind, including their cost and expenses, arising out of the acts or omissions of the NGO or its employees or persons hired for the management of the present Agreement and the Project. 2. The NGO shall be responsible for, and deal with all claims brought against it by its Personnel, employees, agents or subcontractors. Article XIII. Suspension and Early Termination 1. The Parties hereto recognize that the successful completion and accomplishment of the purposes of a technical cooperation activity are of paramount importance, and that UNDP may find it necessary to terminate the Project, or to modify the arrangements for the management of a Project, should circumstances arise that jeopardize successful completion or the accomplishment of the purposes of the Project. The provisions of the present Article shall apply to any such situation. 2. UNDP shall consult with the NGO if any circumstances arise that, in the judgment of UNDP, interfere or threaten to interfere with the successful completion of the Project or the accomplishment of its purposes. The NGO shall promptly inform UNDP of any such circumstances that might come to its attention. The Parties shall cooperate towards the rectification or elimination of the circumstances in question and shall exert all reasonable efforts to that end, including prompt corrective steps by the NGO, where such circumstances are attributable to it or within its responsibility or control. The Parties shall also cooperate in assessing the consequences of possible termination of the Project on the beneficiaries of the Project. 3. UNDP may at any time after occurrence of the circumstances in question, and after appropriate consultations, suspend the Project by written notice to the NGO, without prejudice to the initiation or continuation of any of the measures envisaged in paragraph 2, above, of the present Article. UNDP may indicate to the NGO the conditions under which it is prepared to authorize management of the Project to resume. 4. If the cause of suspension is not rectified or eliminated within 14 days after UNDP has given notice of suspension to the NGO, UNDP may, by written notice at any time thereafter during the continuation of such cause: (a) terminate the Project; or (b) terminate the management of the Project by the NGO, and entrust its management to another institution. The effective date of termination under the provisions of the present paragraph shall be specified by written notice from UNDP. 5. Subject to paragraph 4 (b), above, of the present Article, the NGO may terminate the present Agreement in cases where a condition has arisen that impedes the NGO from successfully fulfilling its responsibilities under the present Agreement, by providing UNDP with written notice of its intention to terminate the present Agreement at least 30 days prior to the effective date of termination if the Project has a duration of up to six months and at least 60 days prior to the effective date of termination if the Project has a duration of six months or more. 246 6. The NGO may terminate the present Agreement only under point 5, above, of the present Article, after consultations have been held between the NGO and UNDP, with a view to eliminating the impediment, and shall give due consideration to proposals made by UNDP in this respect. 7. Upon receipt of a notice of termination by either Party under the present Article, the Parties shall take immediate steps to terminate activities under the present Agreement, in a prompt and orderly manner, so as to minimize losses and further expenditures. The NGO shall undertake no forward commitments hereunder and shall return to UNDP, within 30 days, all unspent funds, supplies and other property provided by UNDP unless UNDP has agreed otherwise in writing. 8. In the event of any termination by either Party under the present Article, UNDP shall reimburse the NGO only for the costs incurred to manage the project in conformity with the express terms of the present Agreement. Reimbursements to the NGO under this provision, when added to amounts previously remitted to it by UNDP in respect of the Project, shall not exceed the total UNDP allocation for the Project. 9. In the event of transfer of the responsibilities of the NGO for the management of a Project to another institution, the NGO shall cooperate with UNDP and the other institution in the orderly transfer of such responsibilities. Article XIV. Force majeure 1. In the event of and as soon as possible after the occurrence of any cause constituting Force majeure, as defined in Article I, paragraph 1, above, the Party affected by the Force majeure shall give the other Party notice and full particulars in writing of such occurrence if the affected Party is thereby rendered unable, in whole or in part, to perform its obligations or meet its responsibilities under the present Agreement. The Parties shall consult on the appropriate action to be taken, which may include suspension of the present Agreement by UNDP, in accordance with Article XIII, paragraph 3, above, or termination of the Agreement, with either Party giving to the other at least seven days written notice of such termination. 2. In the event that the present Agreement is terminated owing to causes constituting Force Majeure, the provisions of Article XIII, paragraphs 8 and 9, above, shall apply. Article XV. Arbitration The Parties shall try to settle amicably through direct negotiations, any dispute, controversy or claim arising out of or relating to the present Agreement, including breach and termination of the Agreement. If these negotiations are unsuccessful, the matter shall be referred to arbitration in accordance with United Nations Commission on International Trade Law Arbitration Rules. The Parties shall be bound by the arbitration award rendered in accordance with such arbitration, as the final decision on any such dispute, controversy or claim. Article XVI. Privileges and Immunities Nothing in or relating to the present Agreement shall be deemed a waiver, express or implied, of any of the privileges and immunities of the United Nations and UNDP. Article XVII. Amendments 247 The present Agreement or its Annexes may be modified or amended only by written agreement between the Parties. IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, have on behalf of the Parties hereto signed the present Agreement at the place and on the day below written. For the NGO: Signature: For UNDP: _______________________ Signature: ____________________ Name: Tensie Whelan Name: Barbara Pesce-Monteiro Title: Executive Director Title: Resident Representative, a.i. Place: United States of America Place: Guatemala Date: _______________________ Date: _______________________ 248 Part (Annex) XX Signature Page [Note : leave blank until preparing for submission for CEO endorsement] Country: ___________________ UNDAF Outcome(s)/Indicator(s): _____________________________________ (Link to UNDAF outcome., If no UNDAF, leave blank) Expected Outcome(s)/Indicator (s): _____________________________________ (CP outcomes linked t the SRF/MYFF goal and service line) _____________________________________ Expected Output(s)/Indicator(s): _____________________________________ (CP outcomes linked t the SRF/MYFF goal and service line) _____________________________________ Implementing partner: (designated institution/Executing agency) _________________________ Other Partners: _________________________ _________________________ Total budget: Allocated resources: Government Regular Other: o GEF o Donor o Donor In kind contributions Programme Period:_____________ Programme Component:_________ Project Title:_Biodiversity Conservation in Coffee Production_________________ Project ID: Pims 3083 Atlas 00051603 Project Duration: ______________ Management Arrangement: ______ ____________ ____________ ____________ ____________ $12,000,000 _________ _________ _________ Agreed by (Government): _______________________________________________________ Agreed by (Implementing partner/Executing agency):________________________________ Agreed by (UNDP):______________________________________________________________ 249
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