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Starbucks and Fair Trade join forces in historic agreement: as one of the most popular roaster/retailer chains, Starbucks is trying to put their power to good use.


A lot has changed in ten years. Today, Starbucks is the largest U.S. purchaser of Fair Trade coffee (certified by TransFair USA and the Fair Trade Labeling Organization, FLO), estimating that it will buy 40 million pounds in 2009, and it has recently announced a joint venture in which a single audit system will certify farms as qualifying for Fair Trade status via FLO-CERT as well as the Starbucks Coffee and Farmer Equity (C.A.F.E.) Practices verification.

Back in 1999, when the World Trade Organization met in Seattle, protestors singled out Starbucks Coffee Company, with headquarters in the city, as a corporate villain for its failure to sell any Fair Trade Certified coffee whatsoever. The company provided the perfect target--a high-profile, seemingly ubiquitous presence with its Starbucks outlets and readily-identifiable mermaid logo. Extremely image-conscious, Starbucks executives bragged about the company's commitment to its employees (called "partners"), about its high-quality coffee, about its social values as expressed through major donations to charities such as CARE.

On national television in late 1999, viewers witnessed protestors throwing rocks through Starbucks store windows in Seattle, then trashing the espresso machines. A few months later in response, the company quickly signed a licensing agreement with TransFair USA making a deal to sell some Fair Trade beans, though the activists were convinced that the company's action represented a token effort to stave off criticism, not a real commitment to Fair Trade. Starbucks already prided itself on paying well for the best beans it could find, and the farmers from whom it bought generally made a decent living and treated their workers relatively well. Why should the company jump through all the Fair Trade hoops and pay ten cents a pound on top of that for certified roasted beans? Besides, at that time Fair Trade beans frequently didn't measure up to Starbucks' quality demands. Thus the company's attitude was: How much do we have to buy to keep the activists at bay?

In 2001, Starbucks initiated C.A.F.E. Practices, its own rigorous verification system. Farms that met the environmental, social and quality demands could count on a sustained relationship with Starbucks in years to come as well as receiving top dollar for their beans. As of 2008, 77% of all coffee purchased by Starbucks met the C.A.F.E. Practices standards, and the company hopes to buy 100% of its coffee from such verified farms by the year 2015.

According to TransFair USA CEO Paul Rice, "C.A.F.E. Practices is a serious, legitimate sustainability standard model with tremendous depth and credibility." Yet few socially conscious coffee drinkers believe that. Many think that any private verification scheme touted by a corporation must be a form of greenwashing, merely an attempt to look good while lacking in meaningful criteria. Starbucks hasn't helped itself, doing a particularly poor job of explaining the complex C.A.EE. Practices. The criteria are not even available on the company website and you have to look hard even to find a reference to it. The 57-page C.A.F.E. Practices document is on the third-party Scientific Certification Systems website: fierAndInspectorOperationsManualV4.3_e nglish_051209.pdf.

The detailed Fair Trade criteria are not that easy to locate either, though the TransFair USA website ( summarizes them as demanding fair prices (a minimum set above the coffee exchange level, currently $1.351 per pound for conventional green beans and $1.551 for Fair Trade organic beans), along with safe working conditions, empowerment through cooperatives, health concerns, environmental conservation and land stewardship and other matters.

In fact, there is substantial overlap between C.A.EE. Practices and Fair Trade criteria (between the two of them, there are some 400 different indicators). Their social responsibility items are similar. However, the Starbucks standard verification features a quality component that is missing from Fair Trade (though Fair Trade beans have improved dramatically and have won many awards) and has additional environmental demands, while the Fair Trade coffee standard is limited to small family farmers who display the need for democratically run cooperatives and direct trade, which C.A.F.E. Practices does not cover.

Small farmers who qualify for both labels have been complaining for several years that it is a waste of their valuable rime and money to jump through the same hoops twice each year. It costs around $20 per farmer for either process. Now, by combining both into one somewhat longer audit, farmers will save about 30% on both time and money. It appears to be a win-win-win situation for all concerned, beginning with the farmers. For Starbucks, it will provide the politically correct independent Fair Trade stamp of approval, recognized widely by the general public as a trusted label that means that 100% of the beans were grown and traded ethically. For TransFair, it provides a potentially huge market.

A few years ago, Paul Rice of TransFair USA suggested expanding Fair Trade criteria to include coffee estates that, like large Fair Trade tea and banana estates, paid and treated their workers exceptionally well, involved them in decision-making and met other important social criteria. There were howls of protest from smallholders who thought that including estates would threaten their share of the small market, and TransFair retreated quickly. Today Rice emphasizes that, "estate beans are not on the table right now. Starbucks hasn't asked for it, and we haven't offered it. There is a way to expand our collaboration without touching the big estates."

Starbucks recently examined its sources closely and discovered, as executive Dub Hay noted, that 85% of the farmers supplying their beans own family farms with less than 12 hectares of land (about 30 acres). I had always thought that Fair Trade was limited to those smallholders who grow their coffee on five hectares or less, but Rice told me recently that there is some flexibility. "Fair Trade standards don't impose. We don't have a hard and fast ceiling on land holdings. In our model, it is more about poverty and the relation to hired labor. If you farm 12 hectares with your family and five sons, that's OK, that's different from a large estate farmer with hired labor. FLO standards allow coops with a mix of small and medium-size farms as long as a majority of the members are smallholders. It's a FLO decision, but they are at the table with me to redefine the land size criteria."

So Starbucks and the Fair Trade movement are now in a process of exploring further partnership possibilities: accommodation and discussion are currently taking place on both sides of the table. If a group of small farmers who sell to Starbucks source doesn't belong to a democratically run cooperative, might the company help them to form one? The answer is probably yes. This is perhaps the most attractive opportunity for the Fair Traders: the chance to extend their movement to millions of unorganized smallholders.

A few years ago, TransFair modified its hard and fast 10 cents a roasted pound fee so that there is now a sliding scale from a minimal five cents a pound up to 10 cents, depending on the amount or percentage of Fair Trade beans a company purchases. Rice won't say what Starbucks pays, but he did say that no one currently pays as little as a nickel a pound.

"This initiative is less about the Starbucks verification and our certification," Rice says, "than about how to unify our efforts," Rice says. C.A.F.E. Practices and Fair Trade may possibly become a single system at some point, that's our aspiration. If we are able to meld our systems and they shoot for 100% Fair Trade as they are shooting now for 100% C.A.F.E. Practices, can you imagine the impact that will have for farmers around the world?"

The melding of standards and audits is not the only joint venture, however. Starbucks, FLO and TransFair USA are joining forces to launch a small-scale farmer development initiative aimed at helping small farmer organizations gain better access to working capital, technical assistance and training. A key component is the Starbucks loan program that, working through Root Capital, Verde Ventures and Calvert Foundation, that should grow to at least $20 million by 2015, based on Starbucks commitments. The technical assistance component program grows out of Starbucks Farmer Support Centers, first opened in San Jose, Costa Rica, in 2004. Starbucks executive and agronomist Peter Torrebiarte, who oversees the support centers (now also in Guatemala, Ethiopia and Rwanda), explains that the company realized that it couldn't simply write prescriptions with C.A.F.E. Practices and expect compliance. Starbucks needed to teach farmers to cup their own roasted beans and to figure out how to modify their growing and processing practices to produce higher quality coffee. FLO and TransFair both have expertise and staff involved in coop management training, another program focus.

The new joint venture, which expands Starbucks credit and training support the work of these Starbucks centers to Fair Trade farmers, is called the Small Farmer Sustainability Support Initiative, to be tested first in a three-year pilot program. In June, Starbucks CEO Howard Schultz flew for the third time to Rwanda, meeting with President Kagame and coffee farmers, in part to jump-start the Starbucks-Fair Trade partnership joint ventures.

Starbucks itself still has a long way to go in communicating the importance of Fair Trade. It currently features only one blend, Card Estima, with the Fair Trade logo. It has recently created a blanket designation called SharedOne Planet to subsume all of its environmental and social efforts, but when I recently visited the Starbucks outlet on the first floor of company headquarters in Seattle, the assistant manager couldn't tell me exactly what C.A.F.E. Practices or Fair Trade meant.

Costco sells huge amounts of Starbucks-roasted Fair Trade beans under its Kirkland label, but the Starbucks name logo is not very prominently displayed. Walmart and Sam's Club recently began to carry Starbucks-branded Fair Trade beans, including Cafe Estima and single origin beans from Peru and Colombia Timor. In the Fall of 2009, Starbucks in the UK will switch all of its espresso beverages to Fair Trade beans--a huge move in a country with over 90% consumer awareness of the Fair Trade labelwhose consumers have valued Fair Trade beans more than those in the U.S. (By comparison, only 35% of U.S. consumers recognize the Fair Trade label, although awareness is growing quickly.)

The Starbucks-Fair Trade joint venture may signal a new direction for the coffee industry, especially if they can successfully meld. As everyone knows, there are too many certifications and labels that become confusing and overwhelming for consumers--Rainforest Alliance, organic, Utz Kapeh, Bird-Friendly, Shade-Grown and more. Wouldn't it be nice if this marked the beginning of merged but stringent labeling criteria? That is unlikely to happen quickly, however, with turf lines so clearly drawn. Many activists have criticized Rainforest Alliance for allowing its logo to appear on packages containing only 30% of its beans, and Utz Kapeh specializes in larger farms. Still, this is an innovative move in the right direction.
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Title Annotation:Certified Starbucks
Comment:Starbucks and Fair Trade join forces in historic agreement: as one of the most popular roaster/retailer chains, Starbucks is trying to put their power to good use.(Certified Starbucks)
Author:Pendergrast, Mark
Publication:Tea & Coffee Trade Journal
Date:Sep 1, 2009
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