PROJECT EXECUTIVE SUMMARY

GEF COUNCIL WORK PROGRAM SUBMISSION

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 *Details provided
FINANCING PLANunder(US$) the Financial
Modality and Cost Effectiveness section
GEF PROJECT/COMPONENT
**Total price premiums is 363 M. The
AGENCY’S PROJECT ID: 3083 Project difference is declared12,000,000
as co-financing
GEFSEC PROJECT ID: 2371 PDF A
COUNTRY: Brazil, Colombia, El Salvador, PDF B 640,092
Guatemala, Honduras, Peru PDF C
PROJECT TITLE: Biodiversity Conservation in Sub-Total GEF 12,640,092
Coffee: transforming productive practices in the CO-FINANCING*
coffee sector by increasing market demand for GEF Agency
certified sustainable coffee Government 840,000
GEF AGENCY: UNDP Bilateral 2,400,000
DURATION: 7 years NGOs 7,265,000
GEF FOCAL AREA:      Biodiversity Companies 71,108,497
GEF OPERATIONAL PROGRAM: OP 3&4 Sub-Total Co-financing: 81,613,497
GEF STRATEGIC PRIORITY: BD-2 Total Project Financing: 94,253,589
Pipeline Entry Date: 11 November 2003 FINANCING FOR ASSOCIATED
ESTIMATED STARTING DATE: February 2006 ACTIVITIES IF ANY:
IA FEE: $1,137,608 LEVERAGED RESOURCES:
Producer on-farm investments to implement
sustainable practices: USD 494,000,000
Price premiums paid to farmers in return for
adopting sust. practices: USD 321,441,377**
Company purchases of sustainably grown
coffee: USD 3,723,000,000
Total leveraged financing:
USD 4,538,441,377

CONTRIBUTION TO KEY INDICATORS OF THE BUSINESS PLAN: This project will result in the direct
conservation of 1,500,000 hectares of biodiversity-friendly coffee habitat, up from currently 93,000. It will have
a biodiversity conservation impact across multiple-use 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 per year, with at least 150,000 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.

Record of endorsement on behalf of the Government(s):

Name, Position, Ministry Date:
Brazil: Carlos Costa, General Coordinator for Social Operations. Ministry of Planning, Budget
29 Sept 2005
and Management
Colombia: Oscar Darío Amaya Navas, Vice Minister. Ministry of Environment, Housing and
26 Sept 2005
Territorial Development
El Salvador: Hugo Barrera Guerrero, Minister. Ministry of Environment and Natural Resources 22 Sept. 2005
Guatemala: Juan Mario Dary Fuentes, Minister. Ministry of Environment and Natural
8 July 2005
Resources
Honduras: Patricia Panting, Minister. Ministry of Natural Resources and the Environment 26 Sept. 2005
Peru: Mariano Castro Sanchez-Moreno, Executive Secretary. National Council of Environment

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 Approved on behalf of UNDP. This proposal has been prepared in accordance with GEF policies
and procedures and meets the standards of the GEF Project Review Criteria for work program 1.
inclusion.

Yannick Glemarec Project Contact Person

Deputy Executive Coordinator Andrew Bovarnick
Regional Technical Adviser
Date: September 29, 2005 Tel. and email:1 (212) 906-6379
andrew.bovarnick@undp.org

PROJECT SUMMARY

A) PROJECT RATIONALE

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 value of coffee farms to biodiversity has been known by naturalists, especially birdwatchers, for decades.
In 1932, ornithologist Ludlos 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 one of the most biodiversity friendly crops in the tropics,
equal only to traditional cocoa farms. 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, a total of 2 million
hectares is estimated to be shade-coffee production.

3. According to different sources reviewed, 2 the main global benefits of sustainable shade-coffee production can
be summarized as: (a) Sustainable coffee production maintains a complex ecosystem with diverse resources.
Studies have found that shade-coffee farms often harbor large numbers of tree species, sometimes over 100 on a
single farm. Trees support large numbers of epiphytes, birds, and insects, making shaded farms substantially more
biodiverse than full-sun coffee plantations. (b) Sustainable coffee production provides habitat for restricted-range
endemic species. There are not many conclusive studies 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 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
1
Retail value, ICO August 2002.
2
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

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 landscape. Plantations serve as movement corridors for seasonal migration, dispersal events, facilitation of gene-
flow, 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.

4. 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.

5. 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.

6. Sustainable coffee production does not only benefit wildlife by reducing threats and protecting habitats. The
production form 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 thousand of rural dwellers and maintain the fabric of rural
communities.

7. 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, which promote sustainable and 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

8. This project focuses on the six coffee producing countries in Latin America, which 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 biodiversity in coffee habitat. The countries
are: Brazil, Colombia, El Salvador, Guatemala, Honduras, and Peru.

9. 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 the characteristics of the original ecosystem and, together
with the remaining protected areas, represent some of the best remaining habitat where biological diversity has
been allowed to survive relatively intact. Therefore, conservation of coffee habitat is a top priority.

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 10. 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 which extent the areas had potential for conservation of coffee
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 which produce coffee currently in high demand on international coffee markets. Fairly large
areas were chosen to produce conservation impact 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.

11. The project document provides an overview of the hotspots, which will benefit from this project intervention,
as well as the selected Project Coffee Regions. In addition, Annex X of the project document contains a complete
account of the selection process and criteria for the Project Coffee Regions.

Threats to and Opportunities for Biodiversity-Friendly Coffee Production

12. There are three main factors which directly threaten biodiversity-rich coffee plantation. First is the
transformation of shade-coffee farms into other land use. Second is “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, as well as pollution.
In the following, each main threat is analyzed along with its driving forces.

13. 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. 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. 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.

14. 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. Over the
last 10-15 years, the coffee industry has been pioneers in piloting sustainability measures, and the really big 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 in the project document.

15. 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.

16. 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 certification system Utz Kapeh has very little focus
on biodiversity. The organic movement centers on abandoning agrochemicals, but fails to address social issues.
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 Table B of the Situation Analysis of the project document.

17. 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

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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 systems’ 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.

18. Third-party certification systems give coffee producers and companies credibility which they would not have if
they merely used their own standards and then claimed to follow them. This credibility and the seal which backs it
up can be used to leverage benefits in the market place.

19. As is explained thoroughly in the project document, 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. For a discussion of the considerable leveraging potential of this project
intervention, see Section III of the project document.

20. Rainforest Alliance, an international environmental NGO, has emerged as a key player in the world of
certification, currently certifying 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. In
terms of ecosystem and biodiversity conservation, for example, RAC prohibits the felling of forest habitat for
coffee production or other reasons, and also bans the hunting of threatened or endangered species. It also
encourages the creation of biological corridors to link natural habitats and promotes planting trees in and around
certified coffee farms, in part, to provide habitat extensions for birds and other species. Improvements must be
monitored and verified through third-party certification, giving buyers assurance that risks are minimized and
progress is being made.

Table A: Biodiversity Related Improvements on a Certified Farm

Farm Aspects Common Problems RAC Farms Benefits

Tree Cover (only for No shade trees or only
select crops like coffee scattered shade of a few tree
and cocoa) species. Often exotic species
of little value to wildlife are
used.
Completely deforested or
Forest Conservation with little natural forest.
Existing forest unprotected.
Wildlife Protection Hunting or extraction of
flora and flora common.
Soil Resources No soil conservation
measures, heavy reliance on
chemical fertilizers and
herbicides
Water Resources Excessive water use.
Streams and rivers
contaminated with
processing and domestic
wastewaters and garbage.
Riverbanks and watersheds
deforested
At least 10 native species
and 70 shade trees per
hectare in two strata.
Canopy cover is 40%.
Forests protected. Degraded
and non-agricultural areas
reforested
All natural ecosystems and
their flora and fauna must be
protected.
Soil and fertility
conservation program and
measures implemented.
Abundant use of vegetative
ground cover and natural
fertilizers
Water use is measured and
conservation measures
implemented. All
wastewaters treated before
release to environment.
Riverbanks reforested,
watersheds protected.
 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

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 21. This project attempts to address and reduce threats to biodiversity-friendly coffee production through RAC.
RAC is implemented by a network of local NGOs, the Sustainable Agriculture Network. (See Stakeholder Section
for list of local NGOs that will be involved in this project). RAC is a proven successful tool for biodiversity
conservation that links coffee production and quality with conservation of biodiversity and natural resources,
pollution abatement, worker health and safety and other elements of sustainability. The same, rigorous standards
must apply regardless of the size or type of farm seeking certification. The principles forming the foundation of
RAC must cover the three pillars of sustainability: economy, ecology and ethics. For these reasons, RAC is being
increasingly recognized by farmers and the major actors in the coffee industry, and will be used as main
biodiversity conservation tool for upscaling in this GEF project.

22. The certification system is in great demand from farmers, due to the many sustainability benefits, and due to
possible market access or even premium prices. RAC helps farmers to realize however that sustainability in coffee
is about much more than a possible premium on the coffee market. The certification system is growing, from just
over 6,000 hectares certified three years ago to over 93,000 hectares today. Certified hectares increased by 57,000
in the last year alone. New partnerships with mainstream and key niche players have also been growing, such as
partnerships with Kraft, Procter & Gamble, Caribou Coffee, Gloria Jean’s, UCC in Japan, and others. All of these
companies are increasingly interested in the concept of sustainability and view RAC as a key tool achieving it.

23. Full details on the biodiversity, social and economic benefits of RAC, including the on-farm benefits and the
market potential, are detailed in the Situation Analysis and in and Annex IX of the project document. More details
on the threats to and opportunities for biodiversity-friendly coffee production can be found in Section I, Part I
Situation Analysis of the project document.

24. The conclusions drawn from the situation analysis; and the threats, root causes and barriers analysis, in the
project document can be summarized as follows:

 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
 RAC offers a viable alternative to conversion of traditional biodiversity-friendly production practices on
coffee farms, as well as a way to curb other direct threats to biodiversity on farms
 Coffee farms are audited to guarantee that productive practices are in conformity with the sustainability
standards, according to which the producers must protect the environment while providing social benefits for
farm workers.
 The certification model must be expanded from being a niche product to mainstream in order to create
maximum impact on biodiversity in coffee landscapes. But a series of barriers throughout the coffee supply
chain, from producer to consumer, prevent such an expansion. The GEF will provide incremental support in
order to remove the barriers and allow scaling up the RAC model.
 While demand-side activities will have an impact everywhere the biodiversity-friendly coffee is produced,
the project’s supply-side activities will be concentrated in six countries, particularly in biodiversity-rich
Project Coffee Regions in Brazil, Colombia, Guatemala, Honduras, El Salvador and Peru

Objectives, Outputs/Outcomes, and Activities

25. 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 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. It will work with coffee companies throughout the supply chain, which already source certified
coffee, to deepen their commitment to sustainability in coffee production and help them promote RAC coffee in the
market place; and it will help increase the number of coffee companies which actively engage in the certification

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 system by incorporating certified coffee in their coffee brands. It will work 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. 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.

26. 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. 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.

27. The GEF project will generate USD 81.6 million in co-financing from private companies, multi- and bilateral
donors and NGOs. In addition, the project will leverage USD 321 million from private companies voluntary paying
of premiums in the market for biodiversity-friendly coffee. It will also leverage USD 494 million in investments
from private producers who for their own expense implement sustainable, biodiversity-friendly production
practices on their own farms, because they believe in sustainability, but also to draw benefits in the market place.

28. To protect globally important biodiversity in coffee landscapes, this project will contribute along with other
conservation efforts to achieve:

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

29. The project will document how farm-level conservation measures affect landscape level conservation goals and
examine how coffee farm certification as a conservation tool can achieve maximum landscape level conservation
benefits. Two basic assumptions of this project design are that biodiversity benefits will be greater in biodiversity-
rich areas with relatively intact ecosystems, than in severely degraded areas, and that a higher percentage of
certified production in an area will yield greater benefits than limited coverage. Therefore, the project has chosen to
operate in areas of high biodiversity value, and will actively seek to increase certification activities in these
biodiversity-rich coffee landscapes.

30. As certification potential depends strictly on increased market demand, the project objective is defined as
follows:

Objective: Demand and sales of biodiversity-friendly 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

31. The objective will be achieved through six project outcomes, each designed so it will remove a central barrier
for expansion of the certification system. 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.

32. The six outcomes are as follows:

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Outcome 1: Demand for biodiversity-friendly coffee on international coffee markets has increased (GEF
contribution: USD 3,825,000, Co-financing: USD 9,453,838)

33. 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 system and coffee sustainability. The project will 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. For snapshots of
various partner companies and the marketing they have done with RAC products, please download the PDF file at
http://www.rainforest-alliance.org/gef/cert_promo_campaigns.pdf The project will create joint events with
companies, whereby the company can raise its sustainability profile. The project will design new information
management systems with a view to serving large numbers of clients efficiently.

34. 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. In addition,
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 of the project document.

35. The project will support the design and set-up of a sales tracking and product traceability database, business-to-
business web portal, client relationship management software, and consumer web portal including interactive
maps. It will also support seal management systems and guidance tools. The project will help the elaborate bi-
annually updated marketing plans to incorporate newest trends into strategic planning frameworks. Finally, the
project will work with companies to increase employees’ awareness, motivation and loyalty towards the
certification system in order to broaden and strengthen coffee companies’ commitment to sustainability. ‘

36. Outputs will include the following:

Output 1.1 Existing markets and market segments expanded

Output 1.2 Efficient information management enables scaling up number of certified coffee buyers
Output 1.3 New markets and new companies sell certified coffee.
Output 1.4 Coffee companies made aware of full range of benefits from engaging with certification
Output 1.5 Company employees embrace biodiversity-friendly coffee

Outcome 2: Consumer interest to purchase certified coffee has increased (GEF contribution: USD 1,275,000,
Co-financing: USD 11,725,568)

37. 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. The project will assist companies to maximize their efforts to
reach consumers. Specifically, project will help companies increase the visibility of RAC 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. 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 for journalists and other media people to use in their
work. The project will build partnerships with environmental, development, and other civil society groups that are
respected public opinion leaders. The project will expand activities to convince institutional consumers of the
benefits of implementing sustainable procurement policies. Particular for universities, the project will elaborate a
student toolkit to support student campaigns for sustainable university sourcing policies.

38. 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.

10
 39. Outputs will include:

Output 2.1 Roasters and retailers increase promotion of certified coffee to consumers
Output 2.2 Media in key markets writes stories about the benefits of biodiversity-friendly agriculture
and certification.
Output 2.3 Key stakeholders support biodiversity-friendly agriculture.
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

Outcome 3: National capacities to certify all sizes of coffee farms in biologically rich production
landscapes has increased (GEF contribution: USD 3,200,000, Co-financing: USD
13,431,326)

40. The project must be careful to increase certification activities in response to growing demand. The project will
work in each project country to certify growing amounts of coffee, including building the capacity of producers to
understand certification standards and requirements, building the capacity for technical assistance (extension)
services, and increasing certification audits. Special emphasis will be placed on certify farmers in groups, thereby
making the process less expensive for each individual farmer. The project will provide local farmers with better
access to information about the sustainability standards and about the changes which farmers need to undertake on
their farms to qualify for certification. 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. The project will put a
special emphasis on certification of smallholders. Particularly in Brazil, the project will exclusively work with
small coffee farmers.

41. Outputs will include:

Output 3.1 Producers implement changes required to get certified.

Output 3.2 Biodiversity threats are reduced due to changes implemented by producers involved in
program
Output 3.3 Capacity has been built to manage growth in certification
Output 3.4 Local capacity created for technical extension service in implementation of standards
Output 3.5 A group certification system developed and applied

Outcome 4: Economic sustainability of certified coffee farms has increased (GEF contribution: USD
2,000,000, Co-financing: USD 42,598,623)

42. 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 coffee market and continued
risk of a new coffee crisis. The project will provide opportunities for farmers to share their best practices. The
project will offer the farmer the opportunity to list his product with its characteristics on the 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. 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, and with Ecologic Finance. The project will help determine how
coffee quality-enhancing farm practices can be included in the sustainability standards. Finally, the project will
work to identify current best-practices in sustainable terms of trade, and adopt a series of recommended practices to
be applied throughout the supply chain. 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 funding will only be channeled to increase economic sustainability
of small farmers.

11
 43. Outputs will include:

Output 4.1 Best Management Practices collected and promoted among certified farmers
Output 4.2 Access to markets for certified products improved for certified farmers
Output 4.3 Farmers’ access to financing (particularly for small producers) has been improved through
partnerships with financing institutions and programs
Output 4.4 Coffee quality improvement techniques promoted with producers
Output 4.5 Sustainable terms of trade promoted throughout the supply chain
Output 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 initiatives/threats to
sustainable coffee (GEF contribution: USD 550,000, Co-financing: USD 4,038,142)

44. 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. The project monitor policy trends which can influence the certification
program, and better enable participation in policy dialogue with governments and other policy-formulating entities.
It will also enable effective response to policy threats and opportunities to place the certification program in the
best possible policy environment.

45. 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 biodiversity-friendly coffee to improve the basis of policy-
makers’ decisions.

46. The project will actively involve governments in producer and consumer countries in the work to create
market-based solutions to sustainability in the coffee sector. Governments will be involved in project activities and
appraised of project progress. 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 NGO partners 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.

47. National Coordinators will create local “policy working groups,” incorporating relevant public, private and
research institutions to explore opportunities for effecting change.

48. The following outputs will be achieved:

Output 5.1 Policies implemented and policy threats mitigated in producing countries
Output 5.2 Fiscal incentives implemented by project country governments
Output 5.3 Policies implemented and policy threats mitigated in consuming countries

Outcome 6: Increased learning and adaptive management (GEF contribution: USD 1,150,000, Co-financing,
USD 341,000)

49. 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

12
 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.

50. The project will create a certified coffee impact monitoring system, which is a part of, but not identical to a
project monitoring system. 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.

51. The following outputs will be achieved:

Output 6.1 Monitoring program established in all project countries

Output 6.2 Landscape level planning and monitoring established in two pilot countries
Output 6.3 Adaptive management and strategic planning system established at project and certification
system levels
Output 6.4 Lessons learned and impact data are gathered, documented and disseminated to key internal
and external audiences.
Output 6.5 Multi-stakeholder consultation and involvement at country and international levels secures
inputs in certification program and standard setting process.

52. More detailed on the outputs and outcomes, with details by output, can be found in Section I, Part II Strategy
of the project document.

B) KEY INDICATORS, ASSUMPTIONS AND RISKS (FROM LOGFRAME)

53. A measure for the project’s overall success at the Objective level is that coffee habitat area with high
biodiversity value that is certified 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.

54. The chances of success are conditioned on the following assumptions to hold true: (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 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.

55. 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. An assumption for Outcome 1 is that companies find increased
reason 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.

56. 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. It is
assumed that the 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.

57. 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. 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.

13
 58. 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. 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. It is also assumed that the coffee industry is willing to continue to reward certified sustainable coffee. The
related risk is seen as low

59. Achievement of Outcome 5 (policy threats and opportunities) will be measured by the number of policy
initiatives/threats which have been addressed, 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. The assumption, on which achievement of Outcome 5 depends, is that policy
makers will be willing to engage with this project and its strategic partners in the various countries or markets. The
risk that the assumption will not hold true is seen as medium.

60. 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.

61. 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.

2. COUNTRY OWNERSHIP

A) COUNTRY ELIGIBILITY

62. 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.

B) COUNTRY DRIVENNESS

63. 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.

64. 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.

65. 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). 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.

14
 66. 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.

67. The project will contribute to many national development plans for Small, Micro, and Medium Enterprises,
rural development plans, and coffee sector development plans. Close dialogue will be maintained with government
authorities to ensure coherence with national policies.

68. 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. More information on country drivenness can be found in the
“Design Principle and Strategic Consideration” section of Section I, Part II Strategy of the project document.

3. PROGRAM AND POLICY CONFORMITY

69. The project has been formulated in coherence with guidance from the CBD COP, such as 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. Additional information can be found in the Project Document’s
section on Policy Conformity in Part II: Strategy.

A) FIT TO -GEF OPERATIONAL PROGRAM AND STRATEGIC PRIORITY

70. 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. 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 our 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.

71. In addition, the proposed project is consistent with Strategic Priorities 2 and 4 of the Biodiversity (BD) Focal
Area. With BD-2 “Mainstreaming Biodiversity in Production Landscapes and Sectors” this 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).

B) SUSTAINABILITY

72. 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 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 biodiversity-friendly management. 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.

15
73. 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.

74. 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.

75. 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.

76. 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 a continued interest in financing the institutional infrastructure. It should also be
noted that once a full-fledged system is operating, it doesn’t necessarily cost more to operate even if more
companies join the program.

77. Financial: A fundamental principle of certification, and correspondingly of this project intervention, is that
once sustainability becomes an issues 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 (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

16
 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.

78. 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.

C) REPLICABILITY

79. The approach presented in this project proposal is highly innovative, and important lessons will be generated
with potential for replication at many different levels. 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.

80. The experiences can be replicated within Rainforest Alliance’s 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.

81. Just as coffee certification has been able to apply lessons learned from the more established FSC certification
program, lessons learned in this project will be replicable for other crops which are currently “Rainforest Alliance
Certified.” 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.

82. Experiences can also be replicated outside of RAC 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 the standards, and received guidance from the Rainforest Alliance 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 the Rainforest Alliance.

83. 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. 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. More details on the replicability of this project can be found in the “Design Principle and
Strategic Consideration” section of Section I, Part II Strategy of the project document.

D) STAKEHOLDER INVOLVEMENT

84. 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

17
sustainable coffee to consumers, helping producers in their supply chain to achieve certification, and, ultimately,
purchasing more certified coffee.

85. 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. For snapshots of various companies and the marketing they have done with Rainforest Alliance Certified
products, please download the PDF file at http://www.rainforest-alliance.org/gef/cert_promo_campaigns.pdf

86. Within the project, corporate partners will work in collaboration with the project to develop approaches,
activities and products. 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 implement
the activities within their own companies.

87. 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.

88. Corporate partners will also have an important role as advisors to the project. Representatives for the coffee
advisory board will also be selected from the partners. A bi-annual marketing survey and plan will form an
additional feedback mechanism for corporate stakeholders.

89. 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.

90. 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.

91. 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.

92. 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.

93. 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

18
 Network. These local conservation organizations have local members, local boards of directors, and years of
experience working with local stakeholders.

94. A summary of stakeholders and their potential involvement in the project, as well as the Stakeholder
Involvement Plan can be found in Section IV, Part IV and in Table J of the project document.

E) MONITORING AND EVALUATION

95. 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. The logical framework in Annex
1 provides performance and impact indicators for project implementation along with their corresponding means of
verification. More details on the project’s monitoring and evaluation plan can be found in Section I, Part IV
Monitoring and Evaluation Plan and Budget, and in Table E: Indicative Monitoring and Evaluation Workplan and
Budget and Table F: Key Impact Indicators and Targets.

4. FINANCIAL MODALITY AND COST EFFECTIVENESS

96. 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. 3 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.

97. 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 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.

98. 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.

99. Companies will pay premiums to producers in return for sustainability measures taken on farm, equaling a
payment for environmental services. Assuming the size of this “sustainability differential” is USD 10 cents per
pound of coffee sold4 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 per year by the end of the project

100. 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 non-sustainable products to
3
This is assuming a conservative estimate of the growth rate over the next 7 years, which is significantly below the growth rate
of the last two years.
4
See discussions on this in the Co-financing and Leverage Potential discussion in project document, Section III.

19
 certified sustainable coffee. The value is calculated using the average New York Board of Trade average coffee
price over the last ten years.

101. 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 grow 5, 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.

Co-financing Sources
Name of Co- Amount
Financier (source) Classification Type (US $) Status
Rainforest Alliance Executing agency Grants* 3,800,000 Committed
Rainforest Alliance Executing agency Other 3,625,000 Committed
Kraft Foods private sector Other 38,151,550 Committed
Caribou private sector Other 7,461,427 Committed
UCC Ueshima private sector Other 3,407,707 Committed
Java City private sector Other 1,160,166 Committed
Boyds private sector Other 701,627 Committed
Lavazza private sector Other 814,200 Committed
Proctor & Gamble private sector Other 2,352,721 Committed
Drie Mollen private sector Other 2,114,018 Committed
Diedrichs/Gloria
Jean's private sector Other 986,343 Committed
Colyrut private sector Other 528,157 Committed
DR Wakefield private sector Other 11,914,581 Committed
Awaiting
Government Inst. Governments ** in-kind 840,000 Confirmation
committed in
ISEAL NGO kind 280,000 Committed
SAN Partners NGO Other 3,476,000 Committed
Sub-Total Co-
Financing     81,613,497  
* Includes 2,400,000 from USAID executed in Central America.
** The Government of Brazil will not contribute co-financing to this project

5. INSTITUTIONAL COORDINATION AND SUPPORT

A) CORE COMMITMENTS AND LINKAGES

102. The project is fully consistent with UNDP Country Cooperation Frameworks signed with participating
countries. The CCFs emphasize the crucial role of the private sector in sustainable development efforts, as well as
in environmental management, including the achievement of global environmental benefits. The project also
addresses four of the Millennium Development Goals through the implementation on the farm of the sustainability
standards, and the partnerships developed with the private sector coffee companies, including MDGs 1, 2, 7 and 8.
Finally, the project responds to UNDP mandates in Capacity Development (CD) and Public-Private Partnerships
(PPPs). 

5
See discussion on this in sustainability section of project document.

20
B) CONSULTATION, COORDINATION AND COLLABORATION BETWEEN IAS, AND IAS AND EXAS, IF
APPROPRIATE.

103. 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 the complement other efforts in the best possible way. As most GEF-financed
conservation project will not be able to work with market-based certification tools themselves, the RAC coffee
project will potentially be able to provide valuable complementary inputs to other projects that work in coffee-
growing regions. In particular, the current project will seek formalized collaboration with the following GEF-
financed initiatives:

104. 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.

105. 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 in conservation of biodiversity, 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.

106. 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.

107. 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 system, in particular shade-grown coffee. \

108. 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. The present project will seek to
contribute to the regional WB project by providing expertise and support in coffee certification issues.

C) PROJECT IMPLEMENTATION ARRANGEMENTS

109. 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
(please refer to the Project Document’s section on Implementation Arrangements for details on responsibilities):

General Project Management

110. UNDP is the project’s Implementing Agency. The day-to-day execution oversight will be done by
UNDP/Guatemala. The UNDP/GEF Task Manager will oversee the project’s performance and guide the project
with regard to all aspects of its execution. UNDP programme officers in all project countries will support the
execution of the project activities and facilitate dialogue with government and other stakeholders. UNDP technical
experts will be called on when necessary to provide specialized inputs and guidance. UNDP’s support to the
project will be coordinated by the UNDP/GEF Task Manager.

21
111. Rainforest Alliance is the project’s Executing Agency and responsible for the execution of the project
activities and the achievement of the project objectives. RA will facilitate the work of the project staff and
implement needed changes to ensure growth of the certification program

112. A Project Steering Committee 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.

113. Important day-to-day management decisions will be made by a Project Management Group. 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 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.

114. A Project Coordination Unit is entrusted with execution and oversight of project activities. The PCU will
be based with Rainforest Alliance’s Sustainable Agriculture Division in Costa Rica.

115. A Coffee Sector Advisory Group 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 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

116. More details on the management arrangement can be found in Section IV, Part II of the project document
and in Section I, Part III Management Arrangements.

22
ANNEX A: INCREMENTAL COST ANALYSIS
Cost/Benefit Baseline (B)
Domestic 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
Global Benefits  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 agro-
forested production systems
Costs Baseline:
Outcome 1: Demand USD 14,000,000 Estimated
for biodiversity- investments by 20 exporters,
friendly coffee on importers and roasters in
international coffee promotion and marketing of
markets has sustainable coffee within the
increased coffee supply chain
Total: USD 14,000,000
Alternative (A)
 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
Baseline:
USD 14,000,000
Co-Financing:
USD 1,000,000: USAID (exec. by RA)
USD 1,400,000: Kraft Foods (exec. by RA)
USD 7,078,838: Company investments in
promotion of sustainable coffee
GEF:
23
Increment (A-B)
 Internalization of cost of
environmental degradation
 More stable local production systems
 Better local livelihoods
 Population have better access to
environmental services
 Conservation of biodiversity-friendly,
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 3,825,000
Total: USD 3,825,000
Cost/Benefit Baseline (B) Alternative (A) Increment (A-B)
USD 3,825,000
Total: USD 27,303,838
Outcome 2: Baseline: Baseline: GEF:
Consumer interest to USD 35,000,000 Estimated USD 35,000,000 USD 1,275,000
purchase certified investments by 40 roasters and Co-Financing: Total: USD 1,275,000
coffee increased retailers in promotion and USD 400,000: USAID (exec. by RA)
marketing of sustainable coffee USD 350,000: Rainforest Alliance
Total: USD 35,000,000 USD 10,975,568: Company investments in
marketing of sustainable coffee to
consumers
GEF:
USD 1,275,000
Total: USD 48,000,568
Outcome 3: National Baseline: Baseline: GEF:
capacities to certify USD 7,000,000 Estimated USD 7,000,000 USD 3,200,000
all sizes of coffee investments by five roasters and Co-Financing: Total: USD 3,200,000
farms in biologically exporters annually to provide USD 800,000: USAID (exec. by RA)
rich production financial and technical assistance USD 2,800,000: Rainforest Alliance
landscapes has to farmers in achieving USD 3,360,000: Local NGOs
increased certification. USD 6,471,326: Company financing to
support producers in getting certified
Total: USD 7,000,000 GEF:
USD 3,200,000
Total: USD 23,631,326
Outcome 4: Baseline: Baseline: GEF:
Economic USD 24,000,000 Donor USD 55,000,000 USD 2,000,000
sustainability of development support and technical Co-Financing: Total: USD 2,000,000
certified coffee assistance to farmers USD 200,000: USAID (exec. by RA)
farms has increased Gov’t Institutions: 840,000
USD 16,000,000 NGO USD 41,558,623: Company sustainability
development support for coffee differentials paid to producers above regular
farmers market price (committed in writing):
GEF:
USD 15,000,000 Coffee industry USD 2,000,000
development support and technical Total: USD 99,598,623

24
Cost/Benefit Baseline (B) Alternative (A) Increment (A-B)
assistance for coffee producers

Total: USD 55,000,000

Outcome 5: Baseline: Baseline: GEF:
Increased capacity to USD 1,750,000 USD 1,750,000 USD 550,000
engage policy Total: USD 1,750,000 Co-Financing: Total: USD 550,000
makers in coffee- USD 250,000: Rainforest Alliance
producing and USD 280,000: NGOs (ISEAL Alliance)
consuming countries USD: 3,508,142
in promoting GEF:
sustainable coffee USD 550,000
practices and to Total: USD 6,338,142
monitor and respond
to policy
initiatives/threats to
sustainable coffee.
Outcome 6: Baseline: Baseline: GEF:
Increased learning USD 3,500,000 USD 3,500,000 USD 1,150,000
and adaptive Total: USD 3,500,000 Co-Financing: Total: USD 1,150,000
management. USD 225,000: Rainforest Alliance
USD 116,000: Local NGOs
GEF:
USD 1,150,000
Total: USD 4,991,000
Cost Total Baseline: Baseline: GEF:
USD 116,250,000 USD 116,250,000 USD 12,000,000
Total: USD 116,250,000 Co-Financing: Total: USD 12,000,000
USD 81,613,497
GEF:
USD 12,000,000
Total: USD 197,875,497

25
ANNEX B: 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 Baseline Target Sources of Risks and
verification Assumptions
Project Objective 1. Growth in habitat 93,000 hectares of coffee as of August 10% of area of world coffee Certification Market
Demand and sales of biodiversity- area under sustainable 1, 2005 production, plus conservation records fluctuations will
friendly coffee increases from niche to management on area on certified coffee farms, not severely limit
mainstream product allowing a certified farms or 1,500,000 hectares by year the interest of
significant growth in farms adopting 7. 5% or 750,000 ha by year 4 farmers in
biodiversity-friendly, sustainable getting and
productive practices and showing on- 2. Increased Populations of keystone species on non- Monitoring system established RAC Coffee staying certified
farm BD benefits. populations of keystone certified farms (see monitoring plan for and operating by the end of Impact
species on certified species) year 1. By year 4 documented Monitoring Consumers and
farms show BD increase in keystone species on System companies will
conservation benefits certified farms (see monitoring maintain interest
plan). in sustainability
issues
Outcome 1 1. Volume of 30,000 metric tons per year 10% of total export market, or Client and Companies find
Demand for biodiversity-friendly coffee certified coffee sold 500,000 metric tons per year in products database increased reason
on international coffee markets has year 7. 5% or 250,000 by year report to promote
increased 4 responsible
sourcing policies
Roaster baseline: Roaster targets:
2. Number of roasters Category / Roasted category 2013 Client and
of varying sizes buying size coffee in MT Baseline / size Targets products database
certified coffee A 100k up 0 A 1 report
B 10k- 100k 0 B 5
C 5k to 10k 1 C 5
D 1k to 5k 0 D 25
E 1 to 1000 82 E 300
Total 83 Total 336

Point of Sale baseline (showing

3. Number of outlets company categories of varying sizes): Point of Sale targets: Client and
selling biodiversity- category Number of Baselin category products database
friendly, RAC coffee. / size outlets e / size 2013 report
A 10k up 1 A 6
B 5k to 10k 1 B 10
C 1k to 5k 1
26
 D 100 to 1000 5? C 20
E 1 to 100 80? D 50
Total 88 E 500
Total 586
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 1. Consumers in key Baseline survey to be done in key Within five years after Consumer Consumers
Consumer interest to purchase certified markets increasingly countries by several coffee companies at introduction of certified surveys increasingly find
coffee increased recognize the seal. project inception. products on a market, 20% of conducted every certified products
coffee consumers will 2 years by coffee a credible way
recognize the seal. By the end (retail) for them to
of year 2, project will have companies. support
produced systems and sustainability and
materials to support company conservation of
campaigns BD.

2. Consumers in key Baseline survey to be done in key Within five years, at least 25% Corporations that
markets understand countries by several coffee companies at of consumers who recognize conduct
meaning behind seal. project inception. the seal will be able to identify consumer
meaning behind it. surveys on
sustainability
will share
information with
the project.
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 biodiversity-
friendly agriculture and
certification.
2.3 Key stakeholders support
biodiversity-friendly agriculture.
2.4 Large institutional consumers (such
as Fortune 500 companies, large
27
 universities, government
institutions) have sustainable
procurement policies and source
certified coffee, FSC paper and
other sustainable products

Outcome 3 Number of auditors Number (tbd) of auditors at project start Number of auditors has Auditor training Local
National capacities to certify all sizes of date (in each of the 6 countries and doubled by year 3 and tripled workshop agricultural
coffee farms in biologically rich combined); by year 7 records. technical
production landscapes has increased assistance
RAC has obtained ISO Initial phase of preparation to obtain By year 2, RAC has been ISO ISO accreditation providers are
65 accreditation accreditation 65 accredited willing to receive
training in
Increase in satisfaction Baseline survey will determine Dissatisfaction has been Annual survey. certification
levels with RAC among satisfaction levels among newly reduced by 40% in year 4 and standards and
farmers who are audited certified farmers 67% in year 7 provide technical
for the first time assistance to
producers.
Increased volume of 23% of total certified production comes 30% of total certified Certification
certified coffee from smallholders production comes from records
produced by smallholders in year 7
smallholders. By the end of year 2, group
certification system is fully
developed and auditors trained
in its application
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
3.4 Local capacity created for technical
extension service in
implementation of standards
3.5 A group certification system
developed and applied

Outcome 4 Certified farmers earn Baseline information will be collected In year 3, at least 50% of Benchmark Certified farms
Economic sustainability of certified better prices than during the harvest/sales season in year 1. farmers earn a clearly studies track a will be willing to
coffee farms has increased comparable non- detectable price premium. By representative share price with
certified farmers year 7, 67% of farmers earn a group of farmers project partners.
premium
Baseline information will be collected in Coffee industry
Certified farmers feel year 1 through a study of certified By year 3, 50% of farmers feel Annual surveys is willing to
certification has helped farmers better prepared. By year 7, of certified continue to
improve their ability to 80% of farmers feel better farmers reward certified
survive a future coffee prepared sustainable
28
 crisis 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 1. Number of policy RAC partners have limited influence on By year 6, effective response Periodic reports Policy makers
Increased capacity to engage policy initiatives/threats policy issues. to policy opportunities and from the various will be willing to
makers in coffee-producing and addressed in major threats to facilitate greater policy initiatives; engage with the
consuming countries in promoting coffee producing and demand for RAC coffee. media coverage. project partners
sustainable coffee practices and to coffee consuming in the various
monitor and respond to policy countries; extent of countries/
initiatives/threats to sustainable coffee. . success in addressing markets.
these (high, medium,
low).

2. Policy working During the project inception, current By end of year 2, policy Periodic written
groups formed with levels of policy-level working groups established in reports from
relevant public, private activity/engagement will be determined the 5 project countries and at these groups
and research for each of the 6 countries. least one policy issues stating the
organizations in each of identified as a priority. opinion of group
the 5 project countries members
(over time the priority regarding the
policy issues that have extent to which
been identified and the they feel the
extent to which they’ve group is being
been addressed). effective.
Outputs for Outcome 5
5.1 Policies implemented and policy
threats mitigated in producing
countries
5.2 Fiscal incentives implemented by
project country governments
29
5.3 Policies implemented and policy
threats mitigated in consuming
countries
Outcome 6 1. Systematic Currently only sporadic measure of the By year 2, systematic Decisions taken
Increased learning and adaptive information is available impacts of the certification system information is generated in yearly strategic
management to document the impact annually in each project planning
of certification on country. By year 5, clear exercises
biodiversity and social- evidence has been obtained of
economic conditions. the biodiversity benefits in
coffee

2. Learning enables No widespread or systematic use of By year 2, clear evidence of Yearly reports
improved strategic adaptive management. adaptive management leading from Impact
planning and program to changes in the design and Monitoring
design and implementation of program Program
implementation. activities.
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
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.

30
ANNEX C: RESPONSE TO REVIEWS

I. GUIDANCE FROM THE CBD SECRETARIAT

Response to CBD Secretariat comments

CBD 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.
Response to comment Reference to change in
project document
The Project Document’s section See paragraphs 207-210
of Policy Conformity now better of the UNDP Project
explain how the project has used Document and paragraph
COP guidance in the project 69 of the Executive
design. This includes a reference Summary
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.

II. 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:

31
 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.
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
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.
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
Reference to change in
Response to comment
project document
The activities mentioned in the Rewritten paragraphs
baseline analysis are not planned 177-204 in Project
as a part of the project Document
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 See Project Goal,
described under Part III, and not Objective Outcomes and
under Part II: Strategy. We have Outputs/Activities
sought to explain better how the section in Part II:
planned activities will deliver Strategy. Part III:
stated outputs in the Strategy Management
section. Management Arrangements has been
arrangements have been rewritten.
rewritten and substantially
strengthened in the Management

32
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:
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 We have reformulated outputs as
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
Arrangement section.
The document has generally
been prepared with the
terminology prescribed by
UNDP for GEF projects. We
have, however, 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 Revised text par. 177-204
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 See current paragraph no.
216
Ouput formulations have
suggested been adjusted throughout
Project Strategy and
logical framework
matrix.

III. GEF SECRETARIAT COMMENTS

Response to GEF Secretariat review comments

GEFSEC review comment
Please note total project financing
is now $73.6 M and the GEF
contribution totals 12.64 M. Of
Response to comment
The total project financing has
been increased to a total of 94.3
M upon receipt of additional
Reference to change in
project document
Adjusted numbers on
Executive Summary front
page and throughout the

33
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
Please note that the pages in the
Annex section do not correspond
to the TOC
company co-financing project proposal. Revised
commitments. Company co- paragraph 27 in
financing is now 71.1 M Executive Summary
representing 75% of total
funding. Erroneous formulation
in para. 27 has been corrected.
Numbers referred to leveraged
financing, not co-financing.
Annex numbers have been Please see adjusted Table
adjusted of Contents p. 5 of the
Project Document
34