Brewing a greener cuppa joe at Starbucks and Thanksgiving Coffee

The Gunther Report

Brewing a greener cuppa joe at Starbucks and Thanksgiving Coffee

Aside from being in the coffee trade, Starbucks and Thanksgiving Coffee would appear to have little in common.

Seattle-based Starbucks is a FORTUNE 500 company (2011 revenues: $11.7 billion) that sells its brews all over the world, pursues global dominance (its latest outpost is Helsinki) and owns an iconic brand. The company bought about 428 million pounds of coffee last year.

Thanksgiving Coffee is a family-owned, artisan roaster that sells most of its coffee to grocers, specialty stores and restaurants near its home base in Mendocino County, CA, where the other popular crop is often smoked. Thanksgiving bought about 500,000 pounds of coffee last year.

Yet the big coffee company and the little one share a couple of important goals.

First, they want to win the trust of their customers and, of course, their own employees. One way to do that is by showing them that their coffee is ethically sourced. Starbucks talks about responsibly grown coffee, citing its Coffee and Farmer Equity (CAFE) Practices, a set of social, economic, environmental and quality guidelines. Thanksgiving's slogan is "Not Just a Cup, but a Just Cup." Reputation matters, whether you are big or small.

But, even if reputation didn't matter (and to most customers, it probably doesn't), Starbucks and Thanksgiving need to devote their attention to the social and environmental practices of their growers, upon whom they depend for a reliable supply of high-quality coffee. If their coffee farmers run into trouble -- because of low coffee prices, poor environmental practices or climate change -- Starbucks and Thanksgiving will struggle, too.

The other day, I wrote about the Fair Trade movement and its efforts to improve the lives of coffee growers. (See my blog post, A Schism over Fair Trade.) About 9 percent of the coffee sold by Starbucks in the U.S. is certified as Fair Trade; all of Thanksgiving's coffee is Fair Trade certified. Today, I'll dig a bit deeper into the ways Starbucks and Thanksgiving work with growers.

By way of background, coffee, as you may know, is the most widely traded agricultural commodity in the tropics, providing a livelihood to tends of millions of farmers. (Brazil and Vietnam are the largest exporters, followed by Colombia, Ethiopia and Indonesia.) Historically, the relationship between buyers and growers has been transactional; prices paid to farmers sometimes didn't cover their costs, forcing them into cycles of debt and poverty. Cheap, low-grade coffee known as robusta is still traded as global commodity, with wildly fluctuating prices, sometimes less than $1 a pound.

At Starbucks, I spoke by phone with Ben Packard, vice president of global responsibility, and Kelly Goodejohn, director of ethical sourcing. (Disclosure: Ben is a friend, and we're both members of the board of Net Impact.) They told me that Starbucks has worked with Conservation International, a global nonprofit, since 1998 on coffee buying; together they launched CAFE practices in 2004. Their relationship isn't arms-length; Starbucks pays CI for its advice and consulting services. Starbucks has pledged to have 100 percent of its coffee "ethically sourced," either by meeting the CAFE practices standards, or by being certified as Fair Trade or Organic, by 2015. In 2011, about 86 percent was certified.

The CAFE practices program has 249 (!) indicators to measure growers' social and environmental performance -- everything from the wages and benefits they provide to their use of pesticides and water. They are classified in three categories: Verified, Preferred and Strategic. "The goal is continuous improvement," Ben told me.

Farmers that perform well enough to enter the program are rewarded with higher prices, technical support and, in some cases, loans. Starbucks paid an average price of $1.56 per pound for our premium green (unroasted) coffee in 2010.

Since 2008, Starbucks and CI have monitored and evaluated the program to see what difference it is making on the ground. "Almost all the indicators are moving in the right direction," Kelly said. Between 2008 and 2010, about 30 percent of the farms that were certified moved up a category. About 99 per cent did not convert any natural forest to farmland. The added income made a difference, too.

"More CAFE practices farmers sent their children to secondary school," Kelly said. Not everything was working as well as it should. Between 19 and 23 percent of farms applied chemicals within 10 meters of bodies of water. Between 8 and 31 percent of mills failed to provide their workers with clean drinking water.

Justin Ward and Bambi Semroc, who oversee the program for CI, concurred that most of the findings were positive. What makes the Starbucks program a standout, Justin said, is the company's willingness to measure impact and be open about what it has found. You can download the 153-page report here.

At Thanksgiving Coffee, I spoke over Skype with Ben Corey-Moran, the president and director of coffee, about the company's work helping farmers in Rwanda adapt to climate change. Climate change is a worry for growers: A peer-reviewed study reports that higher temperatures are already allowing a pest known as coffee borer beetle to spread further in East Africa, threatening livelihoods, and a coffee journal, Fresh Cup, devoted a recent issue to climate change threats and adaptation.

Ben told me that Thanksgiving is very focused on its growers. "We envision ourselves as the bridge that connects coffee lovers with farmers on the other side of the world," he said. "How can every transaction, how can every pound of coffee we buy and sell be sourced in a way that restores the environment and benefits the farmers?"

Thanksgiving Coffee was invited to work in Rwanda in 2004 by USAID, which was helping rebuild the Rwandan coffee industry. The company, to its surprise, found fruit that was literally dying on the vine. "I'd never seen a crop fail before it had actually been harvested," Ben said. Farmers told him that summers were drier than they had been. "We've always know that weather affects our business. Climate change makes that weather more extreme," he said.

The solution was fairly obvious. Coffee is best grown under a shade canopy. In Rwanda, it was being grown in the open sun. So Thanksgiving Coffee, with the help of a Dutch nonprofit named Progreso and a Rwandan NGO called, Redi, began a tree-planting project, to create a forest canopy.

Together they financed the construction of seedling nurseries, hired agronomists and brought information technology to the Dukunde Kawa cooperative, which has about 1,800 farmer-owners. Tree planting does more than cool the coffee as it ripens; it helps protect topsoil, buffers the impact of rain and allows the soil to retain more moisture during dry periods. "We can't change the weather, but maybe we can change the way the farms withstand the weather," Ben said. For an investment of less than $40,000, the farmers and their allies planted about 300,000 trees.

Neither Starbucks' CAFE practices nor Thanksgiving's Rwanda work (which just won an award from the specialty coffee association) are charity projects. But they're not business as usual either. They require a long-term horizon and an expansive view of the firm's responsibility. They aim to turn what had been transactions between the buyers and growers of coffee into durable, win-win relationships.

Photos courtesy of Starbucks and Thanksgiving Coffee.