Corporate implementation of certification and its impact on cocoa producers in Indonesia

Motivation

Despite the growing reliance on voluntary sustainability standards (VSS) to increase sustainability in food supply chains, their effectiveness in delivering benefits to smallholders varies across contexts. VSS are implemented through certification schemes which are operated by producers, cooperatives, or processing companies, and heterogeneity in these schemes influences outcomes, but to what degree and how remains poorly understood.

Purpose

We investigate how the implementation of Rainforest Alliance (RA) and Cocoa Life (CL) certification of cocoa producers in South Sulawesi, Indonesia, varies across four different multinational companies, three with RA certification and one with CL certification. We examine the effects of differential implementation of corporate certification schemes on cocoa production and returns to farmers.

Approach and methods

We use qualitative data from 46 key informant interviews and four focus group discussions with certified producers to describe differences in the implementation of VSS in four corporate certification schemes. We use quantitative survey data from 598 smallholder cocoa producers to estimate overall and scheme-specific effects of certification on cocoa production and producer returns. We deploy inverse probability weighted regression adjustments to correct for selection bias.

Findings

Service delivery related to the implementation of certification by the four companies varied considerably, especially in the payment of premiums, training, provision of material support, and access to company-associated collectors (not all certified beans were sold to company collectors). CL certification had no significant impact on production and returns; however, RA certification was associated with higher cocoa yield, price, income, and returns to land—although not evenly for the three corporate schemes that implement RA certification. The observed increases in yields and prices were achieved through different channels in different schemes. Price increases depended above all on the sale of certified beans to collectors associated with the company, rather than to independent traders.

Policy implications

Food processing and distribution companies which operate corporate-driven certification schemes are largely responsible for the effective implementation of VSS. Improving the transparency and accountability of companies in certified supply chains is essential for fully realizing the aims of VSS. Variations in how certification is operationalized deserve more attention in future research.