Fair Trade and Starbucks

Fortunately, the issues raised by the Coffee Crisis are being addressed in many ways.  Fair Trade cof­fee sales (and aware­ness) have grown phe­nom­e­nally, from 37 mil­lion pounds in 2001 to 200 mil­lion pounds world­wide in 2009.  Much of that growth occurred in the United States, thanks in large part to TransFair USA.  President and CEO Paul Rice, a relent­less pro­moter and effec­tive speaker, went to great pains not to make ene­mies and to work with any­one, includ­ing large cor­po­ra­tions.  Global Exchange served as an uneasy part­ner in pro­mot­ing Fair Trade beans through boy­cotts and intim­i­da­tion.  It was a good cop-bad cop approach, in which Global Exchange encour­aged con­sumers to pres­sure larger roasters.

In 1999, when the World Trade Organization met in Seattle, pro­tes­tors sin­gled out major cor­po­ra­tions, includ­ing Starbucks.  The com­pany was made out to be a cor­po­rate vil­lain for its fail­ure to sell any Fair Trade Certified cof­fee.  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, about its high-quality cof­fee, and 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 a Starbucks store win­dow in Seattle, then trash­ing the espresso machines.  A few months later, the com­pany signed a licens­ing agree­ment with TransFair USA to sell some Fair Trade beans, though the activists were con­vinced that the company’s action rep­re­sented a token effort to stave off crit­i­cism.
They were prob­a­bly right.  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.  In 2001 the com­pany intro­duced coffee-sourcing guide­lines devel­oped in part­ner­ship with Conservation International.  Why should the com­pany jump through all the Fair Trade hoops and pay ten cents a pound on top of that for cer­ti­fied beans?  Besides, at that time Fair Trade beans fre­quently didn’t mea­sure up to Starbucks’ qual­ity demands.

Ten years later, Starbucks had changed its atti­tude.  In 2009 it dou­bled its pur­chases of Fair Trade beans to 40 mil­lion pounds, mak­ing it the world’s largest buyer of Fair Trade cof­fee.  The com­pany announced with TransFair USA and the Fair Trade Labeling Organization the begin­ning of a three-year pilot project to expand a small-scale farmer loan pro­gram to at least $20 mil­lion by 2015.
The three insti­tu­tions would also explore the cre­ation of a sin­gle audit sys­tem to cer­tify farms qual­i­fy­ing for Fair Trade sta­tus as well as the Starbucks C.A.F.E. Practices ver­i­fi­ca­tion.  According to Paul Rice, “C.A.F.E. Practices is a seri­ous, legit­i­mate sus­tain­abil­ity stan­dard.”  Yet few socially con­scious cof­fee drinkers believed that.  Many were sure that any pri­vate ver­i­fi­ca­tion scheme must be a form of green­wash­ing, an attempt to look good while lack­ing in mean­ing­ful criteria.

There was con­sid­er­able over­lap between C.A.F.E. Practices and Fair Trade cri­te­ria (between the two of them, there were some 400 dif­fer­ent indi­ca­tors).  Small farm­ers who qual­i­fied for both labels com­plained that it was a waste of their time and money to do audits twice each year.  Now, by com­bin­ing both into one some­what longer audit, farm­ers could save about 30 per­cent in time and money.
It appeared to be a win-win-win sit­u­a­tion for all con­cerned, begin­ning with the farm­ers.  For Starbucks, it pro­vided the inde­pen­dent Fair Trade stamp of approval, rec­og­nized widely by the gen­eral pub­lic as a trusted label that meant that 100 per­cent of the beans were grown and traded eth­i­cally.  For TransFair, it pro­vided a poten­tially huge market.

Starbucks exam­ined its sources in 2009 and dis­cov­ered that 85 per­cent of the farm­ers sup­ply­ing their beans owned fam­ily farms with less than 12 hectares of land (about 30 acres).  I had always thought that Fair Trade was lim­ited to small­hold­ers that grow their cof­fee on five hectares or less, but Rice told me that there was some flex­i­bil­ity.  “Fair Trade stan­dards don’t impose 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.”

If a group of small farm­ers who sold to Starbucks didn’t belong to a demo­c­ra­t­i­cally run coöper­a­tive, might the com­pany help them to form one?   This was per­haps the most attrac­tive oppor­tu­nity for the Fair Traders: the chance to extend their move­ment to mil­lions of unor­ga­nized smallholders.

Starbucks also agreed to have its agron­o­mists help launch the Small Farmer Sustainability Initiative to help Fair Trade coop­er­a­tives gain bet­ter access to work­ing cap­i­tal, tech­ni­cal assis­tance and train­ing.  The tech­ni­cal assis­tance com­po­nent grew out of Starbucks Farmer Support Centers, first opened in San Jose, Costa Rica, in 2004.  The com­pany real­ized that it 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.

Yet Starbucks still had a long way to go in com­mu­ni­cat­ing the impor­tance of Fair Trade.  By 2009 Starbucks stores in the U. S. fea­tured only one blend, Café Estima, with the Fair Trade logo.  In the fall of 2009 Starbucks in the United Kingdom switched all of its espresso bev­er­ages to Fair Trade beans and made the com­mit­ment to do so in Europe by March 2010. (The U. K. had over 90 per­cent con­sumer aware­ness of the Fair Trade label, while only 35 per­cent of U.S. con­sumers rec­og­nized the label.)

Too many cer­ti­fi­ca­tions and labels were con­fus­ing – Rainforest Alliance, Organic, Utz Kapeh Good Inside, Bird-Friendly Shade-Grown, and more — and the dif­fer­ent cer­ti­fi­ca­tions had dif­fer­ent objec­tives and stan­dards.  Rainforest Alliance allowed its logo to appear on pack­ages con­tain­ing only 30 per­cent of its beans, for instance.  Utz Kapeh spe­cial­ized in larger farms, requir­ing trans­parency along with envi­ron­men­tal, qual­ity, and social improve­ments, but with­out promis­ing any greater price for the beans.  Some crit­ics dis­missed Utz, which was orig­i­nally spon­sored by Ahold, a large Dutch cof­fee firm, as an inef­fec­tive cor­po­rate fig-leaf.  Yet it really did make a dif­fer­ence in the lives of cof­fee work­ers who would never be cov­ered by the Fair Trade certification.

Excerpted from Uncommon Grounds: The History of Coffee and How It Transformed Our World, by Mark Pendergrast.  Available from Basic Books, a mem­ber of the Perseus Books Group.  Copyright © 2010.

Photo cour­tesy of Judy Mammorella