4C Annual Report 2010 by 4C Association

SOWING CHANGE

2010

Annual Report

The 4C Association is the multi-stakeholder organization that brings together actors that are genuinely committed to addressing the sustainability issues of the coffee sector in a pre-competitive manner. The members of the 4C Association include coffee farmers (both big and small), traders (importers and exporters), industry players (coffee roasters and retailers) and civil society (non-governmental organizations, standard setting initiatives and trade unions). Members also include individuals committed to the Associationâ&#x20AC;&#x2122;s aims. This global community works together to improve the economic, social and environmental conditions of those who make their living from coffee.

Message from the executive BOARD Sowing change The year 2010 saw big changes for the coffee sector in general and for the 4C Association in particular. Key developments for the Association and its partners included efforts to help farmers step up to other standards so as to make sustainability accessible to the vast majority of them; multi-stakeholder dialogue on gender, pesticide use and climate change as well as the kick-off of ground-breaking projects, such as the 4C Tool Library. Moreover, the Association undertook a major strategic revision process to 01 define a new business model. When the 4C project was first initiated, the coffee sector was in the midst of a crisis due to the oversupply of coffee in the market coupled with the consequent plummeting of prices. As a result, different stakeholders such as coffee producers, traders, roasters and NGOs united to address the sustainability challenges facing the sector. Together they sowed the seeds for the development of the 4C Code of Conduct and the 4C system.

Nearly a decade later, the challenges facing the coffee sector 02 have shifted considerably. For the year 2010, three key issues characterized the international coffee scene: news of tight supply and high demand on the market causing a significant 05 rise in coffee prices; increasing domestic demand in various coffee-producing countries as well as the continued effects of climate change on the predictability, quality and seasonality of coffee supplies. Even at its formation, the 4C Association recognized that only the united efforts of all stakeholders along the supply In view of changing circumstances, the 4C Association had chain would make it possible to meet sustainability chalto adapt its modus operandi. The Associationâ&#x20AC;&#x2122;s approach was lenges in the sector. Now more than ever, the Association as still largely determined by the context of its starting phase. the multi-stakeholder dialogue platform can play a key role in Back then, much effort went into building a supply of 4C building a sustainable coffee world. Compliant Coffee, training producers in the application of the 4C baseline sustainability standard and broadening the The 4C Association is today sowing the seeds of change that network of partners and members. will make it possible to grow a sustainable coffee future. We congratulate all 4C Members and units, the Council, TechniTo align itself with the current context of the coffee market, cal Committee and the Secretariat on staying on track in this the 4C Association started developing a new focus and endeavour. We look forward to this new phase and encourdirection in 2010. It embarked on defining a new business age you to continue uniting your efforts so as to enhance model which was approved by the 4C Council during its 8th sustainability practices in the mainstream coffee sector. meeting in February 2011. With this new business model, the Association will now switch to a demand-driven approach. It will focus on activities that serve membersâ&#x20AC;&#x2122; common interests and create a favourable framework for buyers and sellers to better connect along the 4C supply chain. The decision to Diego Pizano Salazar Roel Vaessen adopt a new business model required a significant amount of thought and commitment of those members actively involved Patrick Leheup in the development of the Association. Major roasters have also expressed their commitment to the new model. In the Albrecht Schwarzkopf end, this courageous move was only possible because of the Hein Jan van Hilten strong backup and support of members.

Diego Pizano Salazar, President of the 4C Association and Chairperson of the Executive Board Albrecht Schwarzkopf, Vice President of the 4C Association Roel Vaessen, Treasurer of the 4C Association Patrick Leheup, Chairperson of the Technical Committee Hein Jan van Hilten, Chairperson of the Mediation Board

01 02 03 04 05

4C Association | Annual Report 2010 â&#x20AC;&#x201C; Table of Contents

SOWING CHANGE 01

Message from the Executive Board

TABLE of CONTENTS

02-03

Message from the Executive Director

A demand-driven approach

04-07

A demand-driven approach

STEPPING UP

08-15

STEPPING UP

platform FOR Pre-competitive Collaboration

16-19

platform FOR Pre-competitive Collaboration

Working together to find solutions

20-24

Working together to find solutions

25 Profit & Loss Account 2010

26-27

Profit & Loss Account 2010

List of Members

28-29

List of Members

Thank You!

30-31

Thank You!

Directory & Imprint

VERIFICATION

4C Association | Annual Report 2010 – MESSAGE FROM THE EXECUTIVE DIRECTOR

Message from the executive Director Uniting efforts for a sustainable future Several voluntary standards have developed in the past decade in answer to the growing need for solutions to sustainability challenges. Examples can be found across all fields - be it cocoa, palm oil, cotton, tea or many other agricultural and horticultural, forest and textile products. These cases prove that solutions 01 to complex sustainability issues are better addressed in multi-stakeholder and pre-competitive platforms engaging all those that are affected by the issues at stake. Some ten years ago, the 4C project was initiated to be the platform for mainstream sustainability in the coffee sector. Nearly a decade later, the 4C Association also has to adapt itself to new circumstances in the coffee world to meet the demands of its stakeholders. Coffee actors are currently confronted with many pressing issues such as climate change, lack of attractiveness of coffee growing for the youth, old coffee trees and competition for access to finance to name but a few. There are no easy answers to such challenges. What is clear is that when many minds are willing to cooperate, finding realistic solutions becomes easier. In this role, in 2010 the 4C Association organized Sustainability Forums in Brazil, Colombia and Guatemala to promote dialogue and exchange in these regions. Through its pre-competitive approach, the 4C Association also continued to recognize the efforts of other sustainability standards towards improved conditions for coffee farmers. A key indicator of collaboration was a joint event in Brazil organized by the 4C Association, IMAFLORA, Rainforest Alliance, Fairtrade International and IAC in November 2010.

Similarly, in the new coffee market context, the year 2010 proved that it was time for the 4C Association to adapt its working processes to achieve its long-term sustainability goals. Therefore at its 7th Meeting in June 2010, the 4C Council decided to set up a task force to revise the Association’s business model. The task force presented its results to the 8th Council which consequently approved the new business model. Even as I write this message, the 4C Association is at a turning point. It has just kicked off the implementation process of the new model which will conclude at the end of 2011. Meanwhile, 4C Membership grew by 18 new members in 2010 resulting in a membership of 148 as of December 2010. 4C Compliant Coffee supplies reached 8 million bags (bags of 60 kg) by the end of 2010. A major challenge of 2010 was that the available supply of 4C Compliant Coffee did not match existing demand leading to understandable frustration among members. This issue remains of high priority for the 4C Association with improvement scenarios already worked out in the new business model. It is the diversity of stakeholders, members and partners as well as their commitment which make the 4C Association’s approach unique. Their united efforts have made it possible to define a new business model and move into a new and exciting phase. I thank all the 4C Members and partners for their cooperation and support, especially those that committed their time, knowledge and in many instances also made financial contributions to make the change possible. I look forward to continued cooperation in the coming years.

Melanie Rutten-Sülz

01 Melanie Rutten-Sülz, Executive Director of the 4C Association

4C Association | Annual Report 2010 – A Demand-Driven approach

A Demand-Driven Approach Switching to a demand-driven approach

2009 more than 8% of all the green coffee exported worldwide adhered to a credible claim of sustainability through The year 2010 will be remembered in the coffee sector as one verification or certification. There is reason to believe that of scarcity: the year in which many companies struggled to the figure for 2010 can significantly increase through growfind the sufficient amounts in the right qualities and origins to ing demand and large companies’ recent commitments. For make their blends. But 2010 will also be remembered as the instance, Kraft Foods announced in May 2011 that it will move year when major companies fully embraced the concept of towards 100% sustainably sourced beans for all its European sustainability and took concrete steps to make a difference. In brands for 2015. To reach this ambitious target, Kraft will August 2010, Nestlé announced the launch of the NESCAFÉ considerably increase its sourcing of 4C Compliant Coffee and Plan, in partnership with the 4C Association and the Rainforalso certified coffee from other recognized sustainability standest Alliance. A few ards. This commitment months later, Sara Lee “The journey towards a sustainable future has many steps and requires builds on the company’s committed to tripling continuous re-appraisal to stay on course. The standards that form the long-standing collaboraits purchases of UTZ 4C Code of Conduct represent a positive next step for the whole coffee tion with the Rainforest CERTIFIED Good Inside Alliance. industry to adopt sustainable practices. Therefore Kraft Foods will be coffee within the next considerably increasing its purchases of sustainable coffee which meets five years. Starbucks It would have been at least the standards held within the 4C Code of Conduct” started serving only difficult to imagine — Hubert Weber, President, Coffee, Kraft Foods Europe — Fairtrade certified cofthis scenario only one fee in all its espressodecade ago. Back then, based beverages in an oversupply of coffee Europe in March 2010. led to the plummeting of international coffee prices, pushing millions of coffee farmers into poverty. Such engagements are echoed in the International Trade Center’s 2010 Sustainable Coffee Report, which states that in The 4C project was initiated precisely in response to this crisis. Its goal was to bring sustainability into the mainstream and enable as many farmers as possible to implement sustainable production practices. Therefore, the 4C Association adopted a supply-driven approach during its starting phase. The young Association steadily built up a supply of 4C Compliant Coffee, trained producers in the application of the 4C baseline sustainability standard and broadened its network of partners and members. The approach was a successful one resulting in great availability of 4C Compliant Coffee in the market today and 67 licensed 4C Units in 17 countries. 01

Record-keeping of 4C Compliant Coffee at FNC unit, Colombia: The 4C 01 Association now moves from a supply-driven to a demand-driven approach

4C Association | Annual Report 2010 – A Demand-driven approach

However, this success met with some challenges for both producers and buyers. On the one hand, producers invested a considerable amount of time and effort to comply with the Code, pass 4C Verification and produce 4C Compliant Coffee. And yet this coffee did not always meet the specific purchasing requirements of traders and buyers in the system. For instance in the coffee year 2009/2010, the purchases of 4C Compliant Coffee amounted to 386,000 bags, while the production potential of 4C Units reached over 8 million bags. Naturally, such a gap created a no-win situation for all involved. The 4C Association therefore began to discuss a new working approach. As per the mandate of the 7th Council in June, the Association formed a task force with members’ representatives to define a new strategic direction. The task force began its work in November 2010 and results were approved during the 8th Council Meeting in February in Tanzania. Through a new business model, the focus of the Association will now become demand-driven. The emphasis will now be on activities to serve members’ common interests and creating a favourable framework for buyers and sellers to better connect along the 4C supply chain. The purchasing commitments of 4C buying members, some already publically announced such as the NESCAFÉ Plan, Kraft Foods or Coop’s and Tchibo’s purchasing initiatives, add momentum to these efforts.

To create a coffee world in which sustainability is the norm, it is imperative that all actors involved cooperate, especially sustainability initiatives and standards. Therefore, the 4C Association will strengthen its role as a pre-competitive initiative and actively promote all sustainability standards. Additionally, it will encourage its members to continuously improve their performance and step up from the 4C baseline to more demanding schemes. Such an approach provides an efficient way to manage supply chains. It also allows buyers more flexibility in reaching their specific sustainability goals by combining coffee that meets the requirements of different standards in their product range. To reduce the burden of multiple audits and maximize benefits for farmers, the standards and systems of the 4C Association and the Rainforest Alliance were benchmarked in 2008. Since then, both organizations have extended their cooperation to help farmers to step up from the 4C baseline to the SAN Standard and obtain Rainforest Alliance certification. In September 2010, the two initiatives started partnering with Nestlé on the NESCAFÉ Plan. Also in 2010, the 4C Association strengthened its collaboration with other standards. In November, it co-organized a Symposium on Sustainable Coffee Production in Poços de Caldas, Brazil, with Imaflora/ Rainforest Alliance, Fairtrade International and the Instituto Agronômico de Campinas (IAC). Other collaborators were Certifica Mina and UTZ CERTIFIED.

Moving towards a sustainable coffee world by promoting all sustainability standards In 2009, approximately 8%1 of all the green coffee exported worldwide had been sustainably produced. While this figure is promising, the sector is still far from reaching that critical mass. 1

Source: International Trade Center’s 2010 Sustainable Coffee Report 02

In the mainstream sector, consumers can choose coffee products from various brands, origins, and with different sustainability attributes

4C Association | Annual Report 2010 – A Demand-driven approach

The NESCAFÉ Plan – a major step to broadening the sustainability impact by making a difference in the mainstream coffee sector At the end of August 2010, Nestlé CEO, Paul Bulcke, to farmers in a number of countries, including Mexico, announced in Mexico the NESCAFÉ Plan, an ambitious Thailand, the Philippines and Indonesia. international coffee initiative creating shared value throughout the coffee supply chain from farmers to One of the main problems currently faced in the coffee consumers. The NESCAFÉ plan will extend technical assector is an ageing tree population. In addition, the sistance and agronomy services, provide expert advice on younger generations are predominantly migrating to sustainable farming urban areas seeking practices, and post employment in the “Nestlé is a 4C Founding Member and we believe that 4C is a very harvest treatment cities as they see a lack necessary stepping stone towards long-term sustainability. To address techniques to over of economic incentives the mainstream, as 4C Association does in its principles and in its ap10,000 coffee farmto grow coffee. The proach, is the right first step in this journey.” ers per year. Farmers NESCAFÉ Plan aims to — Nicolas Huillet, Project Leader NESCAFÉ Plan — will also receive 220 address these issues by million high yielding, further encouraging the more disease and renovation of coffee drought resistant coffee plantlets by 2020 to help them plantations and providing adequate access to trainrejuvenate their plantations, increase their yields and ing for farmers. Additionally, it will be key for Nestlé to improve livelihoods. Over the past ten years, Nestlé has make coffee growing an attractive proposition for future already distributed 16 million of these coffee plantlets generations. With this Plan, Nestlé is assuring 4C Compliance by 2015 for all coffee purchased through their Farmer Connect/ Direct Procurement network. This amounts to approximately 180,000 tons of green coffee per year, benefiting over 170,000 farmers and their families. In the coming months and years, an increasing number

Distribution of high yielding plantlets in Puebla, Mexico 01

4C Association | Annual Report 2010 – A Demand-driven approach

of Nestlé suppliers will continue to create 4C Units working in accordance with the principles of the 4C Code of Conduct. As part of this extensive journey accompanying these suppliers on this expedition, the Nestlé agronomists have already started training farmers in agricultural practices that comply with the Code.

The NESCAFÉ Plan will positively impact the coffee sector by reaffirming the 4C Code as the baseline sustainability standard and turn sustainability mainstream from farmers to consumers. In fact, farmers in the project may use the Code as an instrument to step up to the certification standard of the Rainforest Alliance (SAN Standards). In addition, Nestlé With a special will source 90,000 “Nestlé fully supports the 4C Association. It is important that as an industry, focus on the set tonnes of coffee in coffee has a forum that allows producers, trade, roasters and civil society to up and manageline with the interexpress their needs and desires on sustainability. The 4C Code of Conduct ment of 4C Units, nationally recogis an important outcome as it shows the outside world that these are the the 4C Association nized sustainability standards that the coffee world is working towards. Nestlé as one of the provided informastandards of the founding members of the 4C Association and a company committed to sustion regarding its Rainforest Alliance tainable agricultural development fully supports the new business model to system to Nestlé and the Sustainensure the long-term viability of the 4C Association.” staff and partners able Agriculture involved in the Network (SAN) by — NESCAFÉ Plan team — Plan’s implemen2020. tation. The first training session was held in Mexico in November 2010 with a total of 26 participants, including Nestlé representatives, several coffee mills, and NGOs. At the beginning of December, 15 participants took part in a second training in Vietnam. These included representatives from Nestlé’s Farmer Connect/Direct Procurement markets of China, Vietnam, Indonesia, Thailand, Ivory Coast, Philippines and India, as well as representatives from the Rainforest Alliance.

Training on 4C system, December 2010, Vietnam: Participants included Nestlé procurement countries‘ representatives and Rainforest Alliance representatives

4C Association | Annual Report 2010 â&#x20AC;&#x201C; STEPPING-UP

Stepping-UP Enabling producers to advance in the sustainability journey A variety of voluntary social and environmental standards in agriculture have been developed during the past 20 years. Governments have been or become involved in some of them, most obviously in organic agriculture and the related labelling. However, most social and environmental standards have been developed by non-governmental organizations such as Fairtrade International, Social Accountability International (SA-8000 standard) or the SAN/Rainforest Alliance Standards. For the coffee sector, the 4C Association, founded in 2006, is the youngest standard setting initiative. Sustainability standards offer producers opportunities for increased market access or even price premiums in some instances. Their application also helps to protect the natural environment and create a positive economic and social impact for the local communities involved. However, farmers often lack access to information, know-how and training on the application of sustainable agricultural practices. Moreover, compliance with standards often has economic implications for producers as they need to make investments to fulfill the requirements. It can also prove to be time consuming because it requires changes in the way they work. The 4C Code of Conduct, as a baseline standard, provides farmers with a first step in their sustainability journey and allows for progressive improvements, easing farmersâ&#x20AC;&#x2122; compliance efforts. Moreover, farmers receive support from the members of the 4C Association along the supply chain. After complying with the 4C Code, farmers are in a better position to further improve their performance to meet the compliance criteria

of more demanding standards. The 4C Association is already working with the Rainforest Alliance on this approach. The practicability of the 4C Code of Conduct in this respect was demonstrated through a pilot exercise in 2010, in El Salvador. Through the pilot, in cooperation with the SalvaNATURA Foundation, 132 farmers stepped up from the baseline 4C Code of Conduct to SAN Standards. As the exercise was a successful one, discussions are currently underway to do similar projects with other sustainability schemes. The new business model reaffirms the ambition of the 4C Association to collaborate with and actively promote other standards to achieve broader impact for coffee farmers.

Field training exercise, Vietnam, June 2010: Applying the 4C Code can enable 01 farmers to step up to more demanding standards with time

4C Association | Annual Report 2010 – STEPPING-UP

“The 4C Code of Conduct provided us with a solid basis to step up from the 4C baseline standard to the SAN Standards. We already had an advanced awareness of the importance and value of implementing environmental and social friendly practices. For instance, awareness had been raised about the need to protect the natural resources, provide better treatment for workers as well as equal salaries and more.” — Engineer Próspero Trejo, coffee farmer and Managing Director of Cooperative Ciudad Barrios, 4C Member in El Salvador —

CONTINUOUS IMPROVEMENT TOWARDS SUSTAINABILITY

Stepping up with the 4C Association

Advanced Performance Compliance with more demanding sustainability standards 1

4C Verification as preparation for certification

BASELINE PERFORMANCE

Average yellow

Implementation of the 4C Code of Conduct

NO COMPLIANCE WITH SUSTAINABILITY STANDARDS

Entrance into the 4C system Eradication of Unacceptable Practices

UNACCEPTABLE PRACTICES 1

Any other sustainability scheme (also with a national or regional scope) whose standards prove to be more demanding than those of the 4C Association and that recognizes the 4C Code of Conduct as the baseline

4C Association | Annual Report 2010 – STEPPING-UP

Pilot project in El Salvador: 132 farmers step up from the 4C baseline standard to SAN Standards It was during a seminar organized by Christian Initiative Romero (CIR) in Munster, Germany, in September 2007 when Engineer Próspero Trejo, learnt for the first time about the 4C Code of Conduct. Mr. Trejo is a coffee farmer and Managing Director of the Cooperative Ciudad Barrios in El Salvador. When he returned to his country, Mr. Trejo decided to introduce his fellow members to the sustainability approach of the 4C system. In September 2009, his cooperative began the process of forming a 4C Unit and starting the implementation of the 4C Code of Conduct. In February 2010, Ciudad Barrios received a license to sell 4C Compliant Coffee with a 4C Unit made up of 256 business partners.

“Compliance with the 4C Code gives us more credibility, greater acceptance of our product and the ability to make more business in the future since the buyers have the assurance that we comply with baseline sustainability criteria,” explains Mr. Trejo.

After successfully passing 4C Verification, 132 famers in the 4C Unit were prepared to undertake the additional efforts of complying with the SAN Standards of the Rainforest Alliance. From September to December 2010, these farmers received technical support from SalvaNATURA to step up from the 4C baseline standard to the SAN Standard. SalvaNATURA carried out several diagnoses at farm level before the stepping-up process kicked off. The analyses demonstrated that major progress had already been made in sustainability practices as a result of implementing the 4C Code. Significant improvements could be seen in terms of, for example, better quality of drinking water, safer working conditions and workers’ health as well as more gender equality in the payment of wages. After four months of hard work, the efforts of the farmers paid off when they passed the Rainforest Alliance certification audit. Thanks to the certificate they obtained, they are now able to sell their coffee as Rainforest Alliance certified, opening new marketing opportunities for their product.

Members of the Cooperative Ciudad Barrios hold up signs on 01 environmental protection to be displayed on the farms Engineer Próspero Trejo of the Cooperative Ciudad Barrios in El Salvador. 02 The Cooperative successfully stepped up to RA certification from 4C compliance

4C Association | Annual Report 2010 – STEPPING-UP

4C Units delivered over 1,500 trainings in 2010 By the end of 2010, there were 67 4C Units in 17 counVietnam. Trainers who participate in these sessions can tries. This represents a total of over 280,000 farmers and further disseminate their knowledge on the 4C concept workers who are working in accordance with the 4C to farmers and workers in their respective 4C Units. To Code of Conduct. But farmers and workers are not alone improve efficiency and serve the specific needs of those in in their efforts. The 4C Units’ Managing Entities provide the 4C system, the Association will from now on provide them with trainings and advice all year around. In 2010, training services as demanded by individual members. This over 1,500 trainings were reported by the 4C Units (see goes in line with the demand driven approach of the newly map on next page). These trainings covered a wide range approved 4C business model. of issues such as good agricultural practices, environmental protection, labour safety and safe use of “Since I started working in the framework of the 4C project, I have received pesticides. Some are technical assistance from CISA Exportadora to improve the quality of my also specifically aimed production, as well as advice on wet processing systems. During the 2009 -2010 at familiarizing farmers harvest, we were able to treat the wastewater from the coffee beans’ fermentawith the 4C system and tion and wet processing. The wastewater was stored in wastewater tanks deits Code of Conduct. To veloped with technical support from CISA. In previous harvests, the wastewater support the 4C Units in was discharged directly into the stream that passes through the farm.” their training efforts, the — Arnulfo Chavarría González, coffee farmer at CISA Exportadora 4C Unit, Nicaragua — 4C Association organized eight Trainingof-Trainers workshops on the implementation of the 4C Code in 2010. Training sessions were organized in Brazil, Colombia, Guatemala, Kenya, Mexico, Uganda and

“At the beginning we did not have an idea of the work coffee involved, we basically harvested the coffee as it came and not much emphasis was given to quality and all the benefits. Attending training sessions enabled the farmers in this 4C Unit to realize their production potential and how to manage resources efficiently. Women are also becoming more involved. At the beginning only men participated in the trainings, now women farmers have their own farms and they can work them independently as they have learned how to take care of them.” — Minerva Pérez Gonzalez, farmer, 4C Unit Agroindustrias Unidas de Mexico S.A. de C.V. — 03

CATI´s technicians receive training on 4C Code of Conduct in July 2010 to disseminate knowledge among Sao Paulo farmers

Name of 4C Unit

Country

Number of Number of workshops/ farmers and trainings workers trained

Cocatrel

Brazil

1,240

Cocapec

Brazil

Est. 1,300

Cooparaíso

Brazil

202

5,500

Stockler

Brazil

141

Federación Nacional de Cafeteros de Colombia (FNC)

Colombia

668

20, 045

Beneficios Volcafe CR

Costa Rica

1,639

Borgonovo Pohl

El Salvador

Coex

El Salvador

Est. 90

Exportadora El Volcan, S.A. de C.V.

El Salvador

378

Sertinsa NKG

Guatemala

417

WaeltiShoenfeld Exportadores de Café

Guatemala

359

Agapeco

Honduras

Est. 400

Exportadora California NKG

Mexico

PROMIZAP

Mexico

CISA

Nicaragua

126

Exp. Atlantic 1 and Exp. Atlantic 2 (part of ECOM group)

Nicaragua

331

Pueblos en Acción Communitaria (PAC)

Nicaragua

766

These trainings refer to sessions organized by the 4C Units themselves in contrast to Training-of-Trainers (TOTs) workshops organized directly by the 4C Association (see page 17). These trainings are aimed at providing farmers with information and skills on sustainable coffee production. They cover a wide range of issues such as good agricultural and harvesting practices, environmental protection, labour safety and safe use of pesticides, as well as quality management and market orientation. Some

Trainings & by 4C

are also specifically aimed at familiarizing farmers with the 4C system and its Code of Conduct. Note: This is not a comprehensive list from all 4C Units. it only includes those 4C Units that shared their information regarding trainings. The countries coloured in orange are those in which 4C Units are located. The 4C Association would like to thank those 4C Units that provided the information above.

Workshops Units

Name of 4C Unit

Country

Number of Number of workshops/ farmers and trainings workers trained

Tropical Farm Management (Rothfos)

Kenya

120

Ibero (Uganda) Bigasa

Uganda

1,647

Kyagalani Coffee Ltd. (Volcafé)

Uganda

2,200

Coffee Management Sercices Ltd. (Volcafé)

Kenya

2,000

Kofinaf

Kenya

250

Rwacof Exports SARL (Sucafina SA)

Rwanda

1,200

Name of 4C Unit

Country

Number of Number of workshops/ farmers and trainings workers trained

Atlantic Commodities (ECOM Group)

Vietnam

1,050

Ea Kmat

Vietnam

240

Vinacafe BMT (Vinacafe BMT)

Vietnam

700

Thai Hoa Lam Dong (Thai Hoa Company)

Vietnam

740

Olam Lam Dong

Vietnam

680

Dakman BMT (Volcafé)

Vietnam

775

Mercafe Co. Ltd.

Vietnam

194

Nedcoffee Vietnam

Vietnam

800

Neumann Gruppe Vietnam Ltd.

Vietnam

270

Nestlé Thailand

Thailand

1,350

Nestlé VN (Nestlé Group)

Vietnam

1,279

4C Association | Annual Report 2010 – STEPPING-UP

4C Tool Library: easy access to a steadily growing number of resources One of the major challenges facing coffee farmers in the switch to sustainable practices is the lack of information to guide them through the process. To overcome this challenge, the 4C Association launched the 4C Tool Library in June 2010.

internet resources. 4C Members, coffee farmers in the 4C Units and other business partners have quick and easy access to the Tool Library through a personal login system. The Tool Library is a collaborative effort between the 4C Secretariat, 4C Members and partner organizations. All have made their resources available to benefit coffee farmers, workers and other business partners of 4C Units. Members are strongly encouraged to continue sharing their training materials with the Association. Their contributions will make it possible to continuously enlarge this important source of information for the benefit of all members.

The library is currently an online collection of 262 documents related to the 10 Unacceptable Practices and the 28 Principles of the 4C Code of Conduct. The tools include training documents on good agricultural and management practices as well as on social, ecological and economic sustainability. The training material consists mostly of manuals, handbooks, useful brochures and booklets, material such as posters and flyers, as well as key

“ICCRI highly appreciates the efforts of the 4C Association in making the mainstream coffee sector a sustainable one and looks forward to continued partnership in this area, also in terms of training activities and project implementation. The new Tool Library is a major asset to this goal and ICCRI will support its development with suitable tools in Indonesian.” — Dr. Teguh Wahyudi, Indonesian Coffee and Cocoa Research Institute (ICCRI) —

The 4C Tool Library is currently an online collection of 262 documents on 01 coffee and sustainable production and processing practices An agricultural extensionist conducts a training session with the 02 help of a manual developed by FNC, Colombia, now in the Tool Library

4C Association | Annual Report 2010 – STEPPING-UP

An Illustrated Guide to explain the 4C Code of Conduct The 4C Code of Conduct is the key tool of the 4C Aslimited literacy, the 4C Technical Committee developed an sociation to help producers take their first steps in the Illustrated Guide in 2010. The Guide includes full colour implementation of economic, social and environmental illustrations depicting each of the 10 Unacceptable Pracsustainability practices. It is fundamental that farmers and tices and 28 Code Principles. The Guide was produced in those working with them understand correctly what the English and then translated into Portuguese, Spanish and Code’s principles Vietnamese. It was stand for. This is widely distributed “The Illustrated Guide combines the two main characteristics that are not always easy, among 4C Members needed to effectively spread awareness about good practices. It is dyespecially for those and their units in namic and didactic at the same time - definitely an excellent tool.” farmers who have no the different coffee — Humberto Chacur , EISA/ECOM 4C Unit, Brazil — previous experience producing regions. with sustainability The Illustrated Guide concepts as it is often the case with most farmers entering as well as other 4C information materials can be translated the 4C system. In an effort to make the 4C Code of Coninto other languages if there is a demand from members. duct more accessible, to those who are illiterate or have

03 04

The Illustrated Guide is a new information tool on the 4C Code with full colour illustrations in a simple, accessible language. A farmer at a workshop on climate change organised by GIZ in Kenya, flips through the new Illustrated Guide

4C Association | Annual Report 2010 â&#x20AC;&#x201C; Platform for pre-competitive collaboration

A pre-competitive platform

Strengthening the platform for pre-competitive collaboration

Over 40 stakeholders attended the 4C forums in Guatemala and Brazil and over 30 in Colombia. The Sustainability Forum in Colombia was organized in cooperation with the National Federation of Coffee Growers of Colombia (FederaciĂłn Nacional de Cafeteros de Colombia - FNC). This forum was innovative in the sense that it brought together key stakeholders from different coffee producing countries, including Brazil, Colombia, Honduras, Kenya, Mexico and Peru. Participants presented perspectives from their own communities bringing new ideas to the table.

In 2010, the coffee market was characterized by the increasing shortage of coffee supplies. This situation of scarcity was only made worse by challenges such as an ageing tree population, lack of interest in coffee farming by the younger generation, climate change, competition from other commodities for land use and access to financing among others.

Following the successful exchanges in 2010, the Association organized the first African Coffee Sustainability Forum in Arusha, Tanzania in February 2011. The event was organized in collaboration with the Eastern African Fine Coffees Association (EAFCA) on the backdrop of the Annual Africa Fine Coffee Conference and Exhibition. With over 120 participants, this was the largest 4C forum to date.

Challenges like these make it more important to find long-lasting solutions to issues facing the coffee sector. A pre-competitive platform to jointly address such common challenges is needed now more than ever. Under its new business model, the 4C Association will expand the scope of its activities to continue to fulfil this essential role.

Sustainability Forums: building synergies in the coffee regions Throughout 2010, the 4C Association organized Sustainability Forums in Brazil, Colombia and Guatemala. The forums brought together the key stakeholder representatives from producersâ&#x20AC;&#x2122; organizations, trade and industry, NGOs, trade unions, government and sustainability initiatives in these regions. As such, the forums represented unique opportunities to discuss sustainable coffee production and exchange lessons learned and best practices. 01

Participants at the Sustainability Forum in Guatemala, February 2010 01

4C Association | Annual Report 2010 – Platform for pre-competitive collaboration

These forums lay groundwork to achieve one of the major ambitions of the 4C Association under its new business model: to become THE platform to address challenges in the mainstream coffee sector in a pre-competitive manner.

“The forum offered a unique opportunity to bring farmers, exporters and industry together, talking to other actors in the coffee sector, learning from them and sharing experiences. It is the first time that we have such an exchange platform in Brazil. The very open and constructive atmosphere was inspiring and I look forward to continuing with this exchange. The 4C Association can play a key role in bringing us all together to advance sustainability in the Brazilian coffee industry.” — Milene Pereira from Tres Corações, 4C Trade and Industry Member from Brazil on the occasion of the first Brazilian Sustainability Forum —

explained how the 4C Code of Conduct is implemented in practice. Through this cooperation MARD continues to work towards making the 4C Code of Conduct the baseline for all coffee production in Vietnam. Moreover, with MARD’s support, more farmers can learn the correct application of fertilizers and best practices such as water management, balance of inputs application and soil fertility improvement. The ultimate goal is to help farmers raise income by improving efficiency, hereby increasing the coffee yield and its quality. Based on an initiative proposed in the World Economic Forum, a Public Private Partnership was initiated in Vietnam. The “PPP Coffee Project” in sustainable coffee development is co-chaired by MARD and Nestlé, a 4C Member. The PPP brings together national and international companies in Vietnam’s private sector, international organisations such as the 4C Association and Rainforest Alliance, farmer and coffee associations, traders and

Cooperating with the government to enhance sustainability in the Vietnamese coffee sector Throughout 2010, the 4C Association continued its fruitful cooperation with Vietnam’s Ministry of Agriculture and Rural Development (MARD), the provincial Departments of Agriculture and Rural Development (DARD) as well as the Vietnam Coffee and Cocoa Association (VICOFA). Together they organized a series of information workshops for farmers on sustainable coffee production. The workshops were held in coffee regions of the Dak Lak, Gia Lai, Dak Nong and Lam Dong provinces. In the framework of these trainings, 4C Technical Coordinator, Mr. Ngoc Sy Do,

4C Technical Coordinator, Mr. Ngoc Sy Do, facilitates an 4C information workshop organized in cooperation with the Department of Agriculture and Rural Development in Dak Lak Province, Vietnam, July 2010

4C Association | Annual Report 2010 – Platform for pre-competitive collaboration

processors as well as local government bodies (MARD, IPSARD, WASI). A series of multi-stakeholder meetings were held in which participants sought to identify the major challenges to the sustainable development of the coffee industry in Vietnam. They also worked on a key strategic approach for sustainable development based on the 4C Code and stepping up to the Rainforest Alliance standard in the long run. Members of a task force set up to drive the PPP have now agreed on the implementation of two pilot projects in 2011 in Dak Lak and Lam Dong provinces. The partners aim to scale up these successful pilots for the international and national scopes.

with the collaboration of Certifica Minas and UTZ CERTIFIED Foundation as well as other important players in the Brazilian coffee sector. Participants in the symposium discussed common challenges to good agricultural practices and farm management and how to enhance cooperation among the different standards. The organization of the joint symposium was the result of the increasing dialogue taking place between the different standards setting initiatives. With its new business model, the 4C Association aims to further strengthen this cooperation. The Association will increasingly promote all sustainability standards among coffee buyers and producers alike.

“The 4C Association can facilitate improvement by helping farmers improve their value chain. The farmers need support in organising themselves into farmer groups in which they can learn to share experiences on sustainable coffee production, exchange resources, as well as acquire access to credit and market information.”

With its baseline Code of Conduct, the 4C Association provides the first step towards sustainability for coffee farmers who have no previous experience with any standard or certification. This is especially relevant because these farmers still constitute the vast majority of coffee producers worldwide. The 4C Code of Conduct acts as a tool for them to step up to more demanding standards

— Mr. Huynh Quoc Thich, Head of Cropping Section, Department of Agriculture and Rural Development, Dak Lak, Vietnam —

Strengthening ties with other sustainability standards All sustainability initiatives recognize that closer collaboration is needed to get a significantly larger part of coffee production on the road towards sustainability. An indicator of this enhanced cooperation was the organization of a Symposium on Sustainable Coffee Production in November 2010 in Poços de Caldas, Brazil. The event was organized by the 4C Association, Imaflora/Rainforest Alliance, Fairtrade International and the Instituto Agronômico de Campinas (IAC). The event also counted 01

International Civil Society Workshop, Hamburg, May 2010: 01 The 4C Association will actively promote other standards to achieve sector compliance to at least baseline sustainability

4C Association | Annual Report 2010 – Platform for pre-competitive collaboration

such as the SAN Standards. The usability of this approach has been confirmed by the positive results of the pilot project “Stepping up from the 4C baseline to SAN Standards” that was carried out with smallholder coffee farmers in El Salvador between August and December 2010 (see page 10). The Association is currently in dialogue with other standard initiatives to carry out similar “stepping up” exercises in further coffee producing regions.

Laying the groundwork for a sustainable coffee sector in Indonesia During 2010, the 4C Association continued to strengthen its long-standing cooperation with the Indonesian Coffee and Cocoa Research Institute (ICCRI). In this regard, the 4C Association participated and held a presentation in the Coffee Symposium (Kopi Symposium) organized by ICCRI in October 2010. The Association also participated in the International Conference on Coffee Science organized by the Association for Science and Information

02 03

on Coffee (ASIC) in Bali in October 2010. Both events provided the Association with an excellent opportunity to present the 4C sustainability approach and build new contacts with relevant stakeholders in the Indonesian coffee sector. Likewise, the year 2011 will be decisive to lay the groundwork of the 4C Association in this Asian country. As a result of the preparation activities undertaken in 2010, Kraft Foods and the ECOM Group have recently initiated a project in partnership with the 4C Association in the regency of West Lampung, South Sumatra. The project, which has a life cycle of 13 months, is aimed at enhancing sustainable coffee production in the region. As part of the plan, some 300 coffee farmers will be organized into a 4C Unit under PT IndoCafCo (ECOM). The farmers will receive training to help them improve sustainable practices and once they are ready, the 4C Unit can apply for 4C Verification. At a second stage, the project plans on bringing farmers from the 4C baseline standard to the SAN Standards level. To ensure the overall organisation of activities, the 4C Association has hired a coordinator for Indonesia, Ms. Melanie Landthaler, who is based in the country.

Visitors to the International Conference on Coffee Science in Indonesia, October 2010, at the 4C booth A farmer in Lampung, Indonesia, gestures with a working knife: Through a new partnership project, sustainable production in the province can be enhanced

4C Association | Annual Report 2010 – WORKING TOGETHER TO FIND SOLUTIONS

WORKING TOGETHER TO FIND SOLUTIONS Cooperating to meet sustainability challenges in the coffee sector

producers on required adaptation and mitigation steps based on a set of principles and practices in line with the 4C Code’s continuous improvement concept.

The 4C Association in 2010 actively sought out synergies with other organisations to address various issues affecting the coffee sector, such as climate change, optimising gender-based benefits of coffee production and trade, and dealing with the challenges of pesticide use.

n In partnership with the Sustainable Food Lab, the Sustainable Agriculture Initiative and Unilever, project partners are developing a coffee specific Green House Gas (GHG) calculator. First tests have been carried out with the Baragwi Cooperative, the Sangana PPP pilot group. The finalized GHG-calculator will make it possible to measure gas emissions from soils or processing in wet mills. Such a tool provides a credible way for coffee producers to prove their efforts on GHG mitigation.

A collaborative effort to combat effects of climate change

n Training modules for coffee producers have been developed based on experiences from the AdappCC project (Adaptation to Climate Change) carried out in Latin America. One such module is an on-farm carbon monitoring manual to be available in the 4C Tool Library on completion (please also refer to page 14). GIZ, Sangana Commodities Limited and Cafédirect UK have developed a training manual for coffee organizations and extension services called Climate Change and Coffee. It contains information on adaptation strategies for smallholders, mitigation opportunities and more.

The negative effects of climate change include unpredictable and erratic rains, and changes in pest and disease patterns. These affect the productivity and quality of the crops. Unfortunately, it is the people least prepared to cope with climate change that are affected most. These are smallholders who produce the bulk of the world’s coffee but often lack the necessary resources and/or knowledge to meet the challenges of a changing global climate. In 2008, the German Technical Cooperation Agency - GTZ (now part of the Deutsche Gesellschaft für Internationale Zusammenarbeit - GIZ) and Sangana Commodities (Ecom Group) began a three-year Public Private Partnership (PPP) in Kenya. The objective of this pilot project was to investigate new ways to support farmers in combating and adapting to climate change. The 4C Association and the World Bank were initial project partners and were joined by the Rainforest Alliance, Efico and Tchibo GmbH at a later stage.

Results to date n First version of a proposed additional module to the 4C Code

of Conduct developed, taking into account climate change issues. After project end in September 2011, the module will guide

Kerstin Linne, Sangana PPP Project Manager, facilitates a workshop 01 on climate change in Ruiru, Kenya, November 2010

4C Association | Annual Report 2010 – WORKING TOGETHER TO FIND SOLUTIONS

While the Sangana pilot project will end in September 2011, the benefits are lasting. The findings and tools that were developed in the framework of the project are replicable in other coffee producing regions and can help other farmers that are equally struggling to cope with climate change.

goal to steer the 4C Association’s engagement with regard to climate change and accompany projects such as the Sangana PPP by providing input and guidance. The working group also will be involved in the development process of a sector wide methodology for the calculation of GHG emissions for green coffee. It will also guide plans for a possible benchmarking of the SAN climate module with the add-on 4C climate module currently being developed.

4C Working Group on Climate Change At its 7th Meeting in Hamburg, the 4C Council approved the Technical Committee’s recommendation to address climate change on a strategic level and put it on the Association’s agenda. Furthermore, it was agreed to form a working group on the topic as a subgroup of the Technical Committee. The working group on climate change is made up of coffee producer representatives, roasters and traders, civil society, as well as major research institutes and project implementers in the field. The group, which first met in December 2010, set a

“Deforestation, erosion, poor farming practices, pests and diseases - the Baragwi Farmers’ Cooperative Society Ltd (BFCS) identified these as climate vulnerabilities and changing weather patterns as a climate risk. BFCS is now equipping itself against such risks by implementing the voluntary Climate Code. For example, the group set up a team to monitor weather forecasts and land use changes and keep in touch with regional research institutions on more suitable coffee varieties.” — Kerstin Linne, Sangana PPP Project Manager (GIZ) —

Field training participant observes the measuring of water usage using a drum, Eakmat Co. Ltd, Vietnam: Farmers need to adapt agricultural behaviour now to meet tomorrow‘s climate challenges 03 Climate change affects the predictability, quality and seasonality of coffee supplies: all actors along the value chain must therefore prepare for such shifts

4C Association | Annual Report 2010 – WORKING TOGETHER TO FIND SOLUTIONS

4C Working Group on Pesticides Coffee consumers may worry that pesticide use during coffee production could have adverse effects on them. On the contrary, pesticide use poses human and livestock health risks to communities in producing countries as well as to natural resources in these countries. And yet producers themselves often lack knowledge of possible substitute remedies and do not have the incentive to stop using these dangerous chemicals.

As a first step, the working group has developed a comparison table for the 4C Red List and other sustainability standards relevant to coffee. The Red List is a compilation of all pesticides that need to be phased out to achieve the recommended level of best practices per the 4C Code of Conduct. The table provides an overview of which pesticides are prohibited and restricted or phased out under which standard and is a helpful tool for 4C Units’ improvement efforts. The finalised tool will be published in June 2011.

In close cooperation with the 4C Member, Pesticide “Phasing out the use of hazardous pesticides in coffee produc- There has been an ongoAction Network (PAN UK), a ing debate over the use of tion is a complicated matter. Coffee farmers are not always working group on pesticides the insecticide endosulfan adequately informed on the effects of pesticide use or on was formed within the in the last years. Only now alternatives to their use. The Working Group on Pesticides, framework of the 4C Techni- would like to bridge this information gap so that 4C Units can in 2011 have parties to the cal Committee. The group advise farmers on lowering pesticide use as much as possible Stockholm Convention on collects information and Persistent Organic Poland, in any case, of respecting the 4C Code.” provides coffee producers lutants agreed to classify — Patrick Leheup, Chairperson of the Technical Committee — with tools and guidance on it as a banned pesticide. how to tackle pesticide use The Working Group has challenges efficiently. Members of the working group inprepared a briefing paper on the subject which will guide clude representatives from major roasters, traders, research the preparation of a phase out timescale for endosulfan’s institutes and civil society organizations. use by 4C Units.

Sorting used pesticide containers at the Expocaccer 4C Unit, Brazil: 01 Ensuring proper waste management is key to improving sustainability practices in the coffee sector

4C Association | Annual Report 2010 – WORKING TOGETHER TO FIND SOLUTIONS

A woman’s cup of coffee: gender empowerment along the supply chain A woman’s cup of coffee is often hard-earned and for women employed in the coffee sector, the significant role they play remains unrecognised in many cases. In fact the International Trade Centre (ITC) has noted that there is hardly any available data on the role of women in the coffee sector. Organisations such as the ITC, the Global Standards Initiative (made of Solidaridad, Hivos, Oxfam Novib, and the Royal Tropical Institute – KIT) or the International Women’s Coffee Alliance (IWCA) have made significant contributions to raising the cloak of silence over womens’ role in the coffee sector. They steer efforts to enable women to draw more benefits out of coffee. The 4C Association as the sector’s multi-stakeholder platform can play a pivotal role in keeping gender empowerment on the sustainability agenda through continued collaboration with key players like these.

Indeed in 2010, the 4C Association engaged with the Global Standards Initiative to assess women’s role in coffee and discuss ways in which standards can incorporate gender into their work. Information is being collected through case studies, research and participatory workshops. The 4C Association is supporting the development of one such study, “Gender in Certified Coffee Chains,” the final version of which is set to be published later in 2011. Also, in November 2010, the Association supported the organisation of a workshop in Nairobi, Kenya, on “Gender and Certification in East Africa.” As next steps, the different partners need to develop performance indicators for gender and also provide auditors with tools for assessing gender equity amongst producer groups.

“We currently face a significant challenge in the dissemination of knowledge. It is common that men are regarded as coffee growers but who works on the farm? It is the women. When you call a meeting, who turns up? It’s the men. But at the end of the meeting they go to the shopping center not back home to pass their knowledge on.” — Dr. Joseph Kimemia, Coffee Research Foundation, Kenya —

Spreading harvested cherries out to dry in the Lampung Barat province, South Sumatra, in Indonesia 03 Jerida Sinange, Environment and Certification Officer at Neumann Kaffee Gruppe, Kenya, speaking at the 1st African Coffee Sustainability Forum in Tanzania, February 2011

4C Association | Annual Report 2010 — WORKING TOGETHER TO FIND SOLUTIONS

Redesigning coffee harvesting bags to improve workers´ health The International Ergonomics Association (IEA), in collaboraof Washington and UNAN-León visited different farms in tion with the National University of Nicaragua (UNAN-León) the coffee-growing region around Jalapa, Nicaragua from initiated the project “Redesign of Coffee Harvesting Baskets December 13-18. PAC organised the contact to the farmers to Reduce Risk of Injury.” The project partners aim to create and dealt with the logistics of this phase. a safer, more productive work environment by reducing the risk of back and shoulder The project team compared injuries among coffee har“When the 4C Secretariat approached us to participate in this the newly designed bag to vesters. The 4C Association the existing sample (bamproject we did not really know what to expect. Now that we supported the development boo baskets) to determine have witnessed the testing phase we realize that this project of a new, user-friendly could be a milestone for improving working conditions in coffee the appropriate bag modiharvesting bag by creating fications. They interviewed worldwide!” a collaborative structure 20 workers during this time — Jorge Armando Rivera, Pueblos en Accion Comunitaria (PAC) — with its regional office in and carried out tests with Nicaragua and its members them using the old and the in the region, as well as a financial contribution to the first new harvesting bag methods. phase of the project. In a second phase, the project partners will evaluate the imFor the first phase, farms affiliated to the 4C Member Puebproved bags and assess enhancements in productivity during los en Accion Comunitaria (PAC) in Nicaragua were involved harvesting season 2011/2012. Production on a larger scale in the piloting of the prototype and field testing of the redecan commence once the final testing of the prototype has signed coffee bags. A professional team from the University been done.

First field testing phase, Coffee Harvesting Bag Project, Nicaragua: 01 The old bag (left) was compared with the new ergonomically improved one (right)

4C Association | Annual Report 2010 — VERIFICATION

VERIFICATION 2010 marked a three-year implementation milestone for the 4C Association with the first wave of re-verifications. Three 4C Units in Vietnam underwent re-verification and their licenses were renewed. Many improvements were observed in these 4C Units. On the other hand 4C Units faced the problem of farmers leaving the units as there was not much demand for the coffee they produced. Linked to the three-year milestone, the Executive Board endorsed the move to analyse the Association’s verification system. The system analysis is being carried out by an independent accreditation company, Accreditation Services International (ASI). The analysis will:

(2) Diagnose the compliance level of the 4C verification system against ISEAL Alliance requirements. This would bring the 4C Association closer to full membership in ISEAL, the global association for social and environmental standards. The System Analysis exercise started in October 2010 with an assessment at the 4C Secretariat in Bonn. The assessment was followed up by field witness audits in several countries to observe how 4C Verification is carried out in reality. 4C Verifiers were also evaluated on two levels – in terms of their performance in the office as well as performance in the field. The system analysis will be concluded in 2011. A summary report of the verification analysis will be shared with 4C Members and made publicly available as well.

(1) Identify improvement opportunities for the 4C verification system and

Overview on 4C Verified Units (AS OF DECEMBER 2010) Region

Countries Brazil

No. of 4C Units

Production Potentials

No. of Business partners

(in 60-Kg BAGS)

(farmers and others)

No. of workers

No. of ha

(permanenT + temporary;

(UNDER COFFEE

farm + factory)

CULTIVATION)

1,971,000

2,610

25,655

126,000

Colombia

3,232,000

38,480

63,533

142,000

Vietnam

1,494,000

16,251

6,205

28,000

Africa

Uganda, Kenya, Ethiopia, Rwanda, Tanzania

121,000

7,287

41,180

11,000

Asia

Papua New Guinea, Indonesia, Thailand

83,000

3,111

2,213

7,000

El Salvador,

63,000

347

20,165

6,000

Costa Rica, Honduras, Nicaragua, Guatemala, Mexico

1,145,000

4,688

55,805

36,000

8,109,000

72,774

214,756

356,000

Central America + Mexico

Total

4C Association | Annual Report 2010 — Profit and loss account 2010

profit and loss account 2010 The financial year 2010 closed with a net loss of EUR 344.052. This sum was balanced by reserves collected in the previous years, in line with the budget approved at the 6th Council Meeting. Public funding, in particular budget support from GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) ended in June 2010. Later on, GIZ on behalf of BMZ (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) provided EUR 50,000 for the 4C Association to hire a consultancy firm to support the Business Model Task Force. Both the balance sheet and the profit and loss statement reveal non-serviced membership contributions: The year 2010 brought an increase of open invoices by EUR 205,000, while older receivables had to be written off as uncollectable to the amount of EUR 114,000 (hence, the net increase in the balance sheet was EUR 91,000).

Expenditure The following are the distinct features of 4C expenditures in 2010 in comparison to 2009: Administration expenses decreased by EUR 190,000. Salary, travel and meeting costs of the Executive Director were re-assigned to “Governance.” IT and office expenses were assigned to the respective departments to improve controlling. Accordingly, Governance and Membership costs increased, which is also caused by the fact that write-offs of uncollectable membership fees amounting to EUR 114,000 were counted among the expenses of this department. Verification expenses rose by EUR 50,000 for additional service and travel costs incurred as a result of first re-verifications and system verification. Support Services, in line with decisions of the 4C Council, were raised by roughly EUR 190,000.

New compliance policy on membership fees Consequently, 4C Governance decided on a new payment compliance policy on membership fees, and introduced new restrictions. The Association is already enforcing the new policy and through it, is aiming at ensuring a sound financial basis for the 4C Secretariat. Similarly, the measures are meant to establish fair operating conditions, especially for those engaged members that assume their responsibilities and regularly pay their fees.

Towards budget 2011 The 4C Association in 2010 embarked on defining a new business model which was approved by the 4C Council during its 8th meeting in February 2011. The Association has to secure the necessary funds to switch to the new model. During this process, a great number of 4C Members provided an extra financial contribution, reaffirming their commitment to the Association’s goals and allowing for a smooth transition phase during 2011. Key changes are foreseen in the budget 2011 owing to the demand-driven approach of the new business model. Membership contributions can no longer be made in-kind and therefore will not appear in budget 2011 income calculations. In terms of expenditure, ongoing re-verifications will feature prominently in 2011 calculations.

CafeControl verifier team interviewing a farmer during re-verification at 01 Neumann Kaffe Gruppe Vietnam‘s 4C Unit. Re-verification costs will feature prominently in the 4C Association 2011 budget.

4C Association | Annual Report 2010 — Profit and loss account 2010

Profit & loss account 2010 Income

2010

2009

€

Expenditure

2010

2009

€

Membership fees

821,697

841,046

Administration

392,140

583,787

Members‘ Contributions to Support Services

380,183

399,039

Governance

324,567

107,305

Members’ In-Kind contributions to Support Services

201,666

273,300

Communication

193,481

179,024

Public & other funding

109,842

119,097

Verification

168,057

118,359

Interest & other income

34,904

32,272

Support

814,099

625,475

Thereof Services in Fulfillment of In-Kind Contributions

120,913

144,150

Loss for the Year

Total income

344,052

1,892,344

1,664,754

Net income for the year

Total expenses

50,804

1,892,344

1,664,754

BALANCE 2010 Assets

2010

2009

€

Property & Liabilities

Fixed assets

232,521

221,423

Intangible assets

141,341

144,076

Equity as of 1 January

II.

Tangible assets

91,180

77,347

II.

Operational Result

Current assets

414,302

780,966

Receivables and other assets

309,386

198,183

II.

Cash

104,916

582,783

Total assets

646,823

1,002,390

Association property

2010

2009

€

537,037

881,089

830,285

-344,052

50,804

Accruals

38,644

51,744

Liabilities

71,142

69,556

Liabilities to banks

II.

Payables

59,950

41,232

III.

Other liabilities

11,192

28,324

646,823

1,002,390

Total property & liabilities

4C Association | Annual Report 2010 — List of members

Producers Associação de Cafés Especiais do Norte do Pioneiro do Paraná (ACENPP), Brazil

Kagera Cooperative Union Ltd, Tanzania

Bali Exotic Beans, Indonesia

La Esperanza Coffee Farm, Colombia

Busaanyi Farm, Uganda

Mukasa Estates Ltd., Uganda

Bukonzo Joint Cooperative, Uganda Capebe, Brazil Cocaes Ltda., Brazil

Mzuzu Coffee Planters Cooperative, Malawi

C.A. Wille Handels- und Verwaltungsgesellschaft mbH, Germany Cafeco, Mexico Coex Coffee International, United States Comexim Ltda., Brazil Coop, Switzerland DEK GmbH, Germany

Conaprocam, Cameroon

Nsangi Coffee Farmers Association, Uganda

Cooperativa Agrícola Industrial Victoria R.L., Costa Rica

Pueblos en Acción Comunitaria, Nicaragua

Cooperativa Cuzcachapa de R.L., El Salvador

Rumah Tani, Indonesia

EKAF Industria Nazionale del Caffe, Italy

Satemwa Tea Estates Ltd., Malawi

Elias International, The Netherlands

Sociedad Cooperativa de Cafetaleros de Ciudad Barrios de R.L. (CAFECIBA), El Salvador

Exportadora de Café Guaxupé, Brazil

SOPROCPCAM, Cameroon

HACO AG, Switzerland

Tade GG Highland Forest Coffee Producer PLC, Ethiopia

Hornig Kaffee, Austria

Cooperativa Regional de Cafeicultores de Guaxupé (Cooxupé), Brazil

Union Régionale Victoire (UIREVI), Ivory Coast

Instantina, Austria

Cooperativa Regional dos Cafeicultores de São Sebastião do Paraiso Ltda. (COOPARAISO), Brazil

Zambia Coffee Growers’ Association, Zambia

Cooperativa de Cafeicultores e Agropecuaristas (COCAPEC), Brazil Cooperativa dos Cafeicultores da Zona de Três Pontas (Cocatrel), Brazil Cooperativa dos Cafeiculturos do Sul do Estado do Espírito Santo (CAFESUL), Brazil

Ecom Agroindustrial Corp Ltd, Switzerland EFICO S.A., Belgium

Fichaux Industries, France Finlays Beverages, United Kingdom

Icona Café, Spain J. Th. Douqué’s Koffie BV, The Netherlands Julius Meinl, Austria Kraft Foods Global Inc., United States

Eakmat Limited Company for Consulting Investment in Agriculture and Forestry Development (Eakmat CO., Ltd), Vietnam

Trade & Industry ALDI NORD, Germany

Lanço - Comércio de Matérias Primas, Portugal

El Saitillal S.A de CV, El Salvador

ALDI SÜD, Germany

Lidl Stiftung & Co. KG, Germany

Cooperativa dos Cafeicultores do Cerrado Ltda., Brazil

Aliments Messidor inc. FASRS Aux Milles Grains, Canada

Exportadora El Volcán, El Salvador

Alois Dallmayr Kaffee OHG (including Azul Kaffee GmbH & Co. KG, Heimbs Kaffee GmbH & Co. KG), Germany

Fairview Estate Limited, Kenya Federación de Cooperativas Agrícolas de Productores de Café de Guatemala (Fedecocagua), Guatemala

KOFINAF Company Ltd., Kenya

Armajaro Trading Limited, United Kingdom

Krüger GmbH & Co.KG, Germany

Löfbergs Lila AB, Sweden Louis Dreyfus Commodities, Switzerland Melitta, Germany Mercon Coffee Corp., United Kingdom Nedcoffee B.V., The Netherlands Nestlé SA, Switzerland

Federación Nacional de Cafeteros de Colombia (FNC), Colombia

Bernhard Rothfos GmbH for and on behalf of Neumann Kaffee Gruppe, Germany

R.J. Baiardi Café, Brazil

Finca el Platanillo, Guatemala

Beyers Koffie, Belgium

Röstfein Kaffee GmbH, Germany

Olam International Limited, Singapore

4C Association | Annual Report 2010 — List of members

Rombouts N.V., Belgium

Markus Fischer, Costa Rica

SAS Koffie N.V., Belgium

Ada Hartmann, Switzerland

Saza Coffee Co. Ltd., Japan

Hein Jan van Hilten, South Africa

Stoiköff Coffee Company, Canada

Andrew Hetzel, South Africa

Flanders International Cooperation Agency (FICA), Belgium

Strauss Commodities AG, Switzerland

Patrick Leheup, Switzerland

German Coffee Association, Germany

SUCAFINA SA, Switzerland

Diego Pizano-Salazar, Colombia

Norwegian Coffee Association, Norway

Tchibo GmbH, Germany

Erwin R. Roetert Steenbruggen, The Netherlands

NUCAFE National Union of Coffee Agribusinesses and Farm Enterprises, Uganda

The Roastery, United States Touton S.A., France Tres Corações, Brazil United Coffee, The Netherlands VOLCAFE, Switzerland

Morten Scholer, Switzerland Bernardo van Raij, Brazil Sri Saroso, Indonesia Carsten Schmitz-Hoffmann, Germany Albrecht Schwarzkopf, Germany Roel Vaessen, The Netherlands

Civil Society

Joppe Vanhorick, The Netherlands

Christliche Initiative Romero e.V. (CIR), Germany

Annemieke Wijn, Germany

Federal German Ministry for Economic Cooperation and Development (BMZ), Germany

Réseau Ivorien Agriculture Durable (RIAD), Ivory Coast Swiss Coffee Trade Association, Switzerland Unión de Cooperativas de Cafetaleros de R.L. (UCAFES), El Salvador Vietnamese Coffee and Cocoa Association (VICOFA), Vietnam

Robert Waggwa Nsibirwa, Uganda

IUF, Switzerland Fairtrade Organisation Kenya, Kenya Fundación Nacional para el Desarrollo (FUNDE), El Salvador

Associate Members

North Sumatra Coffee Forum, Indonesia

Asociación Nacional de Café (Anacafe), Guatemala

Oxfam International, represented by Oxfam Novib, The Netherlands Pesticide Action Network UK, United Kingdom Rainforest Alliance, United States

Individual Members Jacques Aboule, Ivory Coast Louis Ban-Koffi, Ivory Coast David Eugenio Cantú Cantú, Mexico Appukuttan Nair Damodaran, India Heidi Feldt, Germany

Associação Brasileira da Industria de Café, Brazil Asociación Mexicana de la Cadena Productiva del Café A.C. (AMECAFÉ), Mexico

4C Members as of 1st June 2011

British Coffee Association, United Kingdom

Note: Founding Members are highlighted in Orange

Café Africa, Switzerland

Note that the number of 4C Members has slightly decreased in comparison with the previous year. Due to the application of the recently approved 4C Policy on Membership fee Payment Compliance, those members with outstanding membership fees were excluded from 4C membership in May 2011.

Consejo Salvadoreño de Café, El Salvador Conselho Nacional do Café, Brazil Eastern African Fine Coffees Association (EAFCA), Uganda European Coffee Federation, The Netherlands

Total number of members: 134

4C Association | Annual Report 2010 — Thank you

Thank YOU! The 4C Association thanks its generous partners and donors for supporting its efforts to increase sustainability in the mainstream coffee sector: The 4C Association expresses its gratitude to partners of the Sangana PPP and Baragwi Cooperative Society as the project’s pilot group, for collaboration on combating climate change. Thanks also go to the Global Standards Initiative (Hivos, Oxfam Novib, Solidaridad and KIT) for joint efforts to address the subject of gender along the coffee supply chain.

(DakLak, Dak Nong, Gia Lai and Lam Dong provinces), 4C Association could organise several workshops on sustainable coffee production in Vietnam in 2010. The Association thanks Cooperativa Ciudad Barrios, the Rainforest Alliance and SalvaNATURA for collaborating in a first stepping up exercise in El Salvador. Participating farmers advanced from the 4C compliance level to Sustainable Agriculture Network (SAN) and Rainforest Alliance Certification within the project (see page 10).

Furthermore, the 4C Association thanks GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) for its continuous support throughout 2010. GIZ on behalf of BMZ (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) provided financial support to the 4C Association in the development of its new business model.

The 4C Secretariat on behalf of the ASI assessment team would like to thank the 4C Units in Colombia (FNC), Vietnam (Neumann Gruppe Vietnam) and Uganda (Mt. Elgon Washed Arabica Project of Kyagalanyi), as well as different 4C Verifiers (Bio Latina, CafeControl and Ceres/Ugocert) for their great support offered to the team during the witness audits.

The 4C Association thanks the Crop Production Department of the Ministry of Agriculture and Rural Development (MARD), Vietnam, for its efforts in the framework of MARD’s strategy on sustainability. Together with regional Departments of Agriculture and Rural Development

Getting familiar with the 4C Code during a verifier 01 training workshop in Patrocinio, Brazil Participants at the climate change workshop organized 02 by GIZ in Ruiru, Kenya, November 2010

4C Association | Annual Report 2010 — Thank you

The 4C Association also thanks the following partners for cooperation with 4C Support Services in organising training activities and Sustainability Fora as well as providing assistance in logistical matters on various occasions in 2009/2010:

• • • • • • • • • • • • • • • • • • • • •

Asociación Nacional del Café (ANACAFE), Guatemala Africa Coffee Academy, Uganda Coffee Board of Kenya Coffee development Fund (CODF), Kenya Centre National de Recherche Agronomique (CNRA), Ivory Coast Coffee Association of Malawi (CAMAL), Malawi Coffee Research Foundation (CRF), Kenya Eastern African Coffee Association (EAFCA), Uganda Empresa de Assistência Técnica e Extensão Rural do Estado do Paraná (EMATER-PR), Brazil Federación Nacional de Cafeteros de Colombia (FNC), Colombia German Coffee Association (Deutscher Kaffeeverband – DKV), Germany The Global Standards Initiative Indonesian Coffee and Cocoa Research Institute (ICCRI), Indonesia Instituto Agronômico de Campinas (IAC), Brazil Instituto Totum, Brazil International Trade Center (ITC), Geneva International Women in coffee Alliance (IWCA), Africa Chapter Jimma Agriculutral Research Center (EIAR), Ethiopia Kenya Coffee Producers and Traders Association (KCPTA), Kenya National Union of Coffee and Agribusinesses (NUCAFE), Uganda Ramacafe, Nicaragua

• • • • • • • • • • •

Root Capital (Africa) SalvaNATURA Fundación Ecológica, El Salvador Serviço Brasileiro de Apoio às Micro e Pequenas Empresas (SEBRAE-PR), Brazil Serviço Nacional de Aprendizagem, Senar-PR, Brazil Tanzania Coffee Association (TCA), Tanzania Tanzania Coffee Research Institute (TACRI), Tanzania Tanzania Coffee Board (TCB), Tanzania Uganda Coffee Development Authority (UCDA), Uganda Uganda Coffee Trade Federation (UCTF), Uganda USAID-ATEP, Ethiopia USAID LEAD, Uganda

To all cooperation partners of the 4C Association, past and present, and the untold many around the world who generously support the Association in its endeavours - Thank you!

Appreciation of service The 4C Association says a special thank you to its former Office Manager, Marion Baak Due to ongoing restructuring at the 4C Secretariat as a result of the switch to the new business model, the team has had to say good bye to their appreciated colleague Marion Baak. Marion Baak joined the Secretariat shortly after the founding of the 4C Association and supported its establishment with great dedication. The 4C Association thanks Marion Baak for her contribution and commitment in the four years she has been with the Secretariat and wishes her all the best in her new endeavours. Ms. Baak will greatly be missed as a colleague and person.

Directory Executive Board

4C Secretariat (as per 1st June 2011)

President Diego Pizano Salazar, Federación Nacional de Cafeteros de Colombia (FNC), Colombia

Executive Director Melanie Rutten-Sülz

Vice President Albrecht Schwarzkopf, Christliche Initiative Romero (CIR), Germany

Support Manager Co-Financing Lars Kahnert

Treasurer Roel Vaessen, European Coffee Federation (ECF), The Netherlands

Coordinator Brazil Luis Flavio Nascimento de Andrade

Director Support Services Annette Pensel Director Operations Christian Osterhaus Communications Manager Verónica Pérez Sueiro Communications Officer Linda Besigiroha Coordinator Central America Alina Amador Coordinator East Africa George Watene Coordinator Indonesia Melanie Landthaler Management Assistant Angela Stölzle

Mediation Board

FINANCE Officer Thomas Müller-Bardey

Chairperson Hein Jan van Hilten, South Africa

IT & OPERATIONS Manager Vasilios Kotitsas Partnership Coordinator Andrea Brüstle Support Coordinator Gabriele Schmidt

Technical Committee

Technical Coordinator Vietnam Do Ngoc Sy

Chairperson Patrick Leheup, Switzerland

Verification Manager Cao Thanh Van GIZ Advisor to the 4C Association Dr. Eberhard Krain

Imprint Publisher

Editors

PHOTOGRAPHY (Page - Photo Number)

4C Association Adenauerallee 108 53113 Bonn Germany

Verónica Pérez Sueiro Linda Besigiroha

David Bonila (4-01, 14-02, back cover) Claire Hogg (front cover, 21-03) Steve Russel (24-01) Jeremy Stephenson (23-03) Nestlé 8 (6-01) 4C Association (All other pictures)

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Responsible for content Melanie Rutten-Sülz

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4C Secretariat Adenauerallee 108 53113 Bonn, Germany PHONE +49 (0) 228 850 50 0 FAX +49 (0) 228 850 50 20 EMAIL info@4c-coffeeassociation.org

4C Office Brazil Rua Dona Margarida de Campos, n. 77, sala 4 Edificio Tropical, Taquaral 13076-240 Campinas – SP, Brazil PHONE +55 (19) 9319 8100 EMAIL brazil@4c-coffeeassociation.org

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4C Representation foR Central America Currently based in Bonn, Germany c/o Adenauerallee 108 53113 Bonn Germany PHONE +49 (0) 228 850 50 0 FAX +49 (0) 228 850 50 EMAIL ca@4c-coffeeassociation.org

4C Office VIETNAM No. 28, Y Bih Aleo street, Buon Ma Thuot city, DakLak Province, VN PHONE +84 (500) 3977579 EMAIL ngocsy.do@4c-coffeeassociation.org

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