Starbucks Asks Industry to Support Fair Trade Initiatives; Critics Say Starbucks Could Do More

Starbucks Asks Industry to Support Fair Trade Initiatives; Critics Say Starbucks Could Do More

While accepting a humanitarian award from Coffee Quality Institute on May 5, Starbucks Coffee Co. president and CEO Orin Smith challenged coffee industry leaders to help facilitate a coffee economy based on sustainable principles. Smith received the industry's first Humanitarian Medal of Merit at the Specialty Coffee Association of America's annual conference in Anaheim, Calif.

Starbucks' Sue Mecklenburg, VP of business practices, says that despite barriers to finding fair trade coffee that meets the company's quality standards, Starbucks is making strides to support fair trade, organic and shade-grown coffee. The company’s latest social responsibility report states that the international coffee seller bought 653,000 pounds of certified fair trade coffee in 2001. (Oakland, Calif.-based TransFair USA is the certifying body.) The report also states that during the 12 to 18 months that began September 2001, Starbucks intends to buy one million pounds of fair-trade-certified coffee.

However Global Exchange, a San Francisco-based international human rights organization, doesn't believe that Starbucks is doing enough. Global Exchange cites figures from Fair Trade Labeling Organizations International --a Germany-based umbrella organization whose members include TransFair USA--showing that 2000 total coffee production by groups on the Fair Trade Coffee Register was 165 million pounds. Equal Exchange, a Canton, Mass.-based roaster, bought 1.77 million pounds of fair-trade-certified coffee in 2001, or more than 2.5 times Starbucks' 2001 purchases, according to a May 2 CBS.MarketWatch.com news story. Equal Exchange reported sales of $7.7 million for FY01; Starbucks' FY01 consolidated net revenues were $2.6 billion.

In Starbucks' defense, Mecklenburg says that there have been barriers to the company's ability to procure high-quality fair-trade coffee. “It always takes a while to build up supply. We're gradually identifying more sources of fair-trade coffee. When you're a large company it does take fairly large supply,” says Mecklenburg. She notes that when Starbucks began serving shade-grown coffee in 1999, the company purchased 75,000 pounds; now Starbucks buys 1.5 million pounds of shade-grown coffee a year. Starbucks has also been serving organic coffee for six years, “but not always in all stores,” Mecklenburg says. Starbucks says it has worked with Washington, D.C.-based Conservation International, a biodiversity conservation organization, since 1998 to protect bio-diverse coffee-growing regions in various countries.

Shade-grown coffee requires fewer pesticides and less water than sun-grown coffee. In addition, sun-grown coffee plantations have been associated with a decline in migratory bird species, according to Environmental Media Services, a Washington-based environmental news organization.

In November 2001, Starbucks introduced a two-year pilot program to encourage sustainable coffee production. The program outlines sourcing guidelines for “a flexible-point system that rewards performance in five sustainability categories and enables vendors to evaluate their capability to qualify as a Starbucks-preferred supplier. The coffee offered by preferred suppliers will be given purchase priority over all other coffee offers received during that particular Starbucks purchasing cycle,” according to a letter the company sent to suppliers. Starbucks has not yet granted preferred-supplier status to any entity, according to CBS.MarketWatch.com. However Starbucks points out that the preferred-supplier process takes time and that there has been significant interest from coffee suppliers; Starbucks has received more than 60 applications to date.

Starbucks bases its preferred-supplier status on economic issues, social conditions, environmental impacts, verification and quality. Suppliers that score 100 percent will receive a $.10/pound premium. The current fair trade-mandated floor price is $1.26/pound for non-organic coffee and $1.41/pound for certified organic coffee, according to CBS.MarketWatch.com.

“The guidelines are a great first step. The program sends a message to the industry to set standards on sourcing, and the principles are complementary to fair trade to help farmers get a decent price,” stated Paul Rice, CEO of TransFair USA, via CBS.MarketWatch.com.

Starbucks is also making other efforts to support coffee farmers and ensure a steady supply of quality coffee, such as entering long-term contracts with suppliers, offering fair trade coffee as the daily brew once a month in most of its stores, and negotiating directly with farmers.

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By Christyne Smiley, associate editor of the Natural Business LOHAS Journal and the LOHAS Journal Weekly. For more information, contact 303-442-8983. LOHAS Journal is a GreenBiz News Affiliate.
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