Soul Economy

Starbucks announced recently that it is going to “double its purchases to 40 million pounds in 2009, making it  the largest purchaser of Fair Trade Certified coffee in the world”.  And, earlier this year McDonald’s introduced Rainforest Alliance Certified coffee into its McCafe stores.

This started me thinking about about what all of these certifications and programs actually mean for the producer of the coffee?

I will begin with Fair Trade. “Fairtrade is about better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world. By requiring companies to pay sustainable prices (which must never fall lower than the market price), Fair trade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives.” (Source: http://www.fairtrade.org.uk/)

Fair Trade certification pays farmers a minimum, guaranteed price to cover sustainable production and a premium for investment in social, environmental and economic developmental projects. While the certification is not necessarily organic, it does require environmental stewardship. In fact, many of the coffees are now organic and Fair Trade Certified. Fair Trade provides crop pre-financing which is often critical in countries where lending programs are not available or lending authorities are corrupt.

Fair Trade focuses on small-scale farmers and workers.  This is important as around 70% of the world’s coffee farmers are small-scale growers (Source: http://www.fairtrade.org.uk) and the aim of Fair trade is to enable these farmers to achieve economic independence and better standards of living. Also, products such as coffee which are made from a single type of commodity require 100% of ingredients to be sourced from  Fair Trade certified producers (Source: Fair Trade Association of Australia and New Zealand).

Starbucks C.A.F.E. Practices is  “… a set of independently verified socially responsible coffee buying guidelines, was developed to help ensure that high-quality coffee is grown and processed in a socially and environmentally responsible manner, an approach that extends throughout our coffee supply chain. It was also designed to be inclusive of all types of suppliers regardless of their size – from small family farms and cooperatives to large estates – including farms that also mill and process their coffee.”

I contacted Starbucks to better understand the differences between C.A.F.E. Practices and Fair Trade and what the doubling of Fair Trade coffee purchases actually mean in terms of what will be available in Australian stores.

To answer some of my questions, I was directed to an abridged version of their 2007 CSR report, but from this I was unable to ascertain the minimum price paid (in USD per pound) to farmers under C.A.F.E. Practices and Why C.A.F.E. Practices was introduced over simply buying Fair Trade Certified Coffee? The report did outline that “C.A.F.E. Practices encompasses sustainability measures that are defined by a comprehensive set of criteria” and the new scorecard for C.A.F.E. Practices “Version 2.0 includes more than 200 specific indicators, making supplier implementation more straight forward”. Also, that “65% of our coffee purchases were from C.A.F.E.. Practices suppliers in 2007” and they invested $1.5 million in fiscal 2007 in coffee-growing communities.

Unfortunately, their email to me highlighted that “for proprietary/business reasons” they were unable to tell me what % of coffee available in Australian stores is produced under the C.A.F.E. Practices program and what % is Fair Trade certified.

They added that  “in addition to becoming the largest buyer of Fairtrade certified(tm) coffee in the world, we are taking our work with Fair Trade to the next level looking for ways we can work together, such as aligning the verification process for C.A.F.E Practices, our ethical sourcing guidelines for Starbucks(tm) Shared Planet(tm) and Fair Trade certification which we think will support small-scale farmers participate in both systems.”

I was informed by Jagan Lamb, Marketing & Category Manager, Starbucks Coffee Company (Aust) that from 6 January Fair trade Coffee will be brewed and available each day in all Starbucks stores in Australia, not just as a special request. In fact, UK Starbucks and Ireland Starbucks announced on 26 November 2008, “100% of the expresso coffee sold…. in Starbucks stores … will become both Starbucks Shared Plant and Fair Trade Certified by the end of 2009.”  Jagan also informed me that this “this will also be coming to Australia, however the timing for launch of this is still in the works…… launch this program as production increases to be able to support the full global demand for each country.”

In regards to the Rainforest Alliance, the “…coffee is grown on farms where forests are protected, rivers, soils and wildlife conserved; workers are treated with respect, paid decent wages, properly equipped and given access to education and medical care. The Rainforest Alliance seal ensures that experienced inspectors have verified that the farms meet demanding social and environmental standards, and are on a path toward true sustainability.” (Source: http://www.rainforest-alliance.org/)

Essentially, Rainforest Alliance does not set a mandatory minimum price that farmers will be paid. It requires estates and farmers to meet a number of environmental criteria but includes only minimal for worker’s rights, essentially amounting to compliance with national minimum-wage laws  in the producing country.  (Source: http://www.tradeaid.org.nz/) Also, Rainforest Alliance producers are privately-owned coffee estates and large-scale farms. In fact, the The majority of Rainforest Alliance certified producers are plantations (approx. 80%) with the remaining being small farmer groups (Source: http://unite.org.nz/). The Rainforest Alliance label can be used on coffee bags even if only 30% of beans are Rainforest Alliance certified (Source: Ethical Corporation, “Bean Wars”, January 2005).

When deciding which coffee to choose and where to vote with your dollar, think about this information and make your decisions accordingly. When you select Fair Trade you are ensuring farmers are being paid a fair wage and you are helping them to implement much needed investment in economic, social and environmental products of their own choice.

I am pleased to see that larger corporations such as Starbucks are choosing to purchase more ethically, although there is more to do. If the market expands for Fair Trade products then there is more opportunity for farmers. This is needed to help the many small farmers to become sustainable.

At the same time, it is important to monitor the activities of these larger organisations and to push for greater transparency in their operations. It is good to see some level of transparency in the site where you can trace your beans from the farmer to the roaster – see http://www.coffeepath.org/

Unfortunately, there are still some coffee suppliers such as Illy who argue that ethical certification makes consumers pay more for a coffee that is not of quality. They suggest that the time and effort in sourcing quality beans and paying a higher price for quality beans will flow into sustainable and ethical practices. Of course, however, there is no guarantee that this will actually occur. But then there are great examples such as Wild Beans Cafes at BP who have introduced 100% Fairtrade Coffee beans. This will result in the volume of ethically sourced coffee imported into Australia will jump more than 15% over the next year. I trust we will continue to see more of these good news stories!

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