Premium Annex

What is this document about?

This annex includes additional binding content related to the implementation of the requirements in the Premium Chapter of the Rainforest Alliance Standards. This document includes:

• Additional details on which actors are responsible for payment of the premiums.

• Additional details on the payment terms for premium.

• Additional details on implementation of the premium requirements in special situations.

• Additional details on premium reporting in the traceability platform.

When and how to use this document?

This document offers Certificate Holders additional information on implementing the Rainforest Alliance Standards. Certification Bodies can also use it to understand the implementation requirements.  

Changes in update from v1.2 to v1.3

1. Introduction

Implementing premium requirements varies by sector due to the differing global supply chain dynamics for Rainforest Alliance Certified commodities. This annex provides this sector-specific content.

Premium: The responsible entity pays the premium as a monetary payment in addition to the market price, quality premiums, or other differentials.

2. Implementation of requirements

2.1 Responsibilities on Agreements and Payments

The applicability of the premium requirements varies by sector. The table below indicates which Supply Chain Certificate Holder (CH) is responsible for complying with the requirements:

_{Table 1: Overview of responsible entities to comply with requirements for the payment of premium.}

Note: Entities working with multiple crops may have different responsibilities for premium payments, depending on their role in each supply chain and the payment responsibilities for the relevant sector.

2.2 Requirement 3.1.1: Reporting the Premium

- First buyer and Importer approach

• When entering a sales transaction, farm CHs must indicate the premium amounts agreed in the contract or signed agreement in the “premium agreed” field of the transaction details. Premium amounts agreed in local currencies are converted and recorded in either € or US$.

• The first buyer must confirm the agreed premium amounts by confirming the overall transaction. If the amount entered by the farm CH differs from what was agreed upon, the first buyer can reject the sales transaction and request the farm CH to correct it.

For bananas and other fresh fruits: The agreed premium between the farm CH and the first buyer is recorded on the platform. If the importer is not the first buyer, the premium agreed with suppliers is recorded outside the Rainforest Alliance traceability platform.

- Brand owner approach

• When redeeming certified volume from the Rainforest Alliance traceability platform, the brand owner indicates the premium amount they commit and confirms to pay in the platform. For foodservice and retail brands, these actions are performed by the private label manufacturer (packer), unless the foodservice or retail brand takes over the commitment, payment of premium, and the redeeming of volumes.

2.3 Requirement 3.1.1: Minimum Amounts

The Rainforest Alliance has defined a minimum premium amount for cocoa. This means the premium amount agreed between the first buyer and farm CH must at least reach this amount.

_{Table 2: Minimum premium in cocoa}

2.4 Requirement 3.1.2: Contracts or Signed Agreements for Premium

In all crops except for tea, groups and individually certified farms must have clear contractual agreements specifying the premium amount and other terms.

First Buyer Approach (coffee, cocoa, processed fruits and coconut oil, nuts, herbs & spices, other crops)

First buyers must negotiate premium amounts with farm certificate holders. The supply chain CH will include the agreed premium in contracts or signed agreements with farm CHs.

Importer Approach (bananas and fresh fruits)

Importers must negotiate and agree on the premium amount with the supplier. The agreed premium amounts are included in the contracts.

If the importer is not directly purchasing the certified volume from the farm CH, the supply chain CH in the country of origin (first buyers/exporters, etc.) must include the negotiated premium amount in contracts or signed agreements with the farm CH. The supply chain CH that contracts directly with the farm CH must transfer the premium amounts to the farm CH.

Brand owner approach (tea)

Brand owners must commit to the premium amount by volume they will pay. Payments to farm CHs will be made via the Rainforest Alliance payment facility, with an invoice sent to the brand owner. For foodservice and retail brands, these requirements are facilitated by their private label manufacturer (packer) who will redeem the volumes and commit to premium amounts.

Farm CHs purchasing certified products from other farms

A farm CH who purchases certified products from other farm CHs is considered the first buyer for the volumes purchased. For crops where the first buyer is responsible for premium payments (see table 1), these CHs must make premium payments for the volumes purchased as Rainforest Alliance Certified.

2.5 Timeframes for payment of Premium

The Rainforest Alliance has defined specific timeframes for the payment of the premium per sector, as set out in the table below:

_{Table 3: Timeframe for premium payment}

3. Farm Responsibilities on Premium

Requirement 3.1.3: Distribution of Premium to Group Members

Farm CHs must maintain complete and accurate evidence of all premium payments made to each group member, including amounts received. These records must be updated at least annually. The evidence must show that the total premium payments to group members equal the percentage of the premium received from the buyer(s), allocated for distribution. At a minimum, this should be 40% of the total premium received from the buyer(s). Only transaction and tax-related costs can be deducted from the total premium received, and evidence of such deductions must be provided. This means farm CHs must have an adequate accounting system in place to:

• Record premium payments separately from the product price and quality premiums or other premiums.

• Record amounts and dates of payments made to each group member linked to volume of product delivered to the group.

• Provide group members with information on the agreed amount of premium (by volume), and timelines and methods for payment.

• Provide each group member with information on the premium paid to them.

Requirement 3.1.4: Premium in Large and Individual Farm CHs

Large farms and Individual CHs must keep accurate records of how they have spent the premium received. This should include:

• The total amounts received based on the total volumes sold

• The percentage of the total premium received used to benefit producers and/or workers

Certificate Holders are not required to report this information but should have the records available upon request by Certification Bodies, their agents and/or the Rainforest Alliance.

4. Transparency

The Rainforest Alliance is dedicated to supply chain transparency. Tea farm certificate holders are informed of the brand owner or packer who has committed and paid the premium amount(s) with each payment.

Other information

Date of first publication of this document (v 1.0): July 1^st,2022.

The Rainforest Alliance retains the rights to review, approve, deny, or revoke these allowances for specific Certificate Holders and on a case-by-case basis.

Documents indicated as “binding” must be complied with for certification. Documents indicated as “non-binding” provide non-mandatory information to help readers understand and implement requirements and other binding content.

Translation Disclaimer

For any question related to the precise meaning of the information in a translation, consult the official English version for clarification. Any errors or differences in meaning due to translation are not binding and have no effect for auditing or certification purposes.

Reproduction, modification, distribution, or republication of this content is strictly forbidden without prior written consent from Rainforest Alliance.

More information?

For help in obtaining a Rainforest Alliance certificate reach out to our Customer Success team at customersuccess@ra.org.

For more information about Rainforest Alliance, visit http://www.rainforest-alliance.org contact info@ra.org or the Rainforest Alliance Amsterdam Office, De Ruijterkade 6, 1013AA Amsterdam, The Netherlands.