Starbucks’ CAFE practices, part I
Ask Starbucks about fair trade, and the mermaid will claim it shares “common goals” (1st line, PDF) as the fair trade movement.
Then, Starbucks will launch into a long, confusing statement about CAFE practices (lower down on above PDF).
What’s CAFE practices? Basically, it’s Starbucks’ own certification program of sorts — which the mermaid’s been pushing much more strongly than fair trade cerfication. Read Cindy of Starbucks’ description in her response to the Starbucks Challenge:
“We are currently working to analyze the information received from C.A.F.E. Practices so that we will be able to make purchasing decisions based on farmers receiving an equitable share of the price we pay. Starbucks plans to increase the amount of coffee we purchase under C.A.F.E. Practices so by 2007, we expect to purchase 225 million lbs of C.A.F.E. Practices verified coffees.”
So how do CAFE practices compare to fair trade certification? Well, to find out, get ready to slog through a 25-page PDF and research an entirely new system of certification that’s been created by Starbucks, for Starbucks.
Believe me — It ain’t fun. But slog through it I did, to find out that CAFE practices makes NO MINIMUM PRICE GUARANTEE for coffee farmers. CAFE practices are basically designed for large plantations, and it merely requires that workers are paid the greater of the “minimul legal wage or a wage that is consistent with local industry standards.”
Which makes me wonder — What if those “local industry standards” are super low?
Now I’m not the only skeptical person. When Starbucks had stakeholders provide their feedback on CAFE practices (then called “Preferred Supplier Program” or PSP) in Feb. 2004, the very first concern listed on the stakeholders’ “Summary of Recommendations” (PDF) was: “How is equity determined?”
In fact, stakeholders made a suggestion to “Establish ‘floor prices’ at least equal to cost of production under the PSP or ‘price bands’ set by region.”
Starbucks chose not to take that recommendation.
Question Starbucks about CAFE practices, and the mermaid will say that 1. Starbucks went so far as to solicit feedback from its stakeholders about the program, and that 2. CAFE practices is independently audited by SCS.
#2 is perhaps why the results of #1 was made avaliable online. But aside from changing the name of the program — from PSP to CAFE practices — I’ve been hard-pressed to find any changes made as a result of the 17-pages of recommendations that stakeholders took the time to make.
Which is really the concern that Helen DaSilva of Oxfam America named when I spoke to her about CAFE practices late last year. Helen voiced her concerns with certification programs that’re developed internally within a company.
Her main concern: “We can’t have it be top-down,” when the people whom the program would impact daily don’t have a say on the criteria. Helen argued that a meaningful certification means a “system that’s transparent that people can monitor.”
Sadly, Starbucks has been successful in convincing many consumers that CAFE practices is as good as, if not better than, fair trade certification — Or, at the very least, that Starbucks is doing a damn good job in terms of social responsibility (ital phrase is an update intended to clarify what I meant here; see comments for more details). See Adventures in Ethical Consumerism, for ex, where Beev exudes: “I really respect the fact that Starbucks are phasing in accountability measures for all their coffee sourcing, and at the same time putting pressure on the whole industry to follow suit.” (my comment on that’s pending approval)
And this top-down “certification program” isn’t the only problem with CAFE practices. That post to come later, cuz this is getting too long –
Update, 2/12/06: Part II’s here.
Are you referring to me when you say “Starbucks has been successful in convincing many consumers that CAFE practices is as good as, if not better than, fair trade certification”?
If so, I think you misrepresent my views.
Comment by beev — February 11, 2006 @ 3:46 pm
Oops — Wasn’t referring to you (I don’t think you even mention CAFE in your post, do you?) but my text clearly makes it seem like I am. Putting in an edit now — Sorry ’bout that, and thanks for pointing it out.
Comment by Siel — February 11, 2006 @ 3:57 pm
Having glanced through those PDFs, it looks to me like the C.A.F.E. system is actually pretty good. Obviously it’s not going to please all of the people all of the time, though I’m very encouraged to see that Starbucks stakeholders are actively engaging with the issues.
Some more quotes from that first PDF:
“Purchasing Fair Trade Certified coffee is one of a number of ways Starbucks seeks to ensure coffee farmers are treated fairly in their business relationships with us. Additional steps include paying substantial premiums for all coffee purchases, long term contracts and affordable credit for farmers, direct purchasing, investing in social projects in coffee communities, and C.A.F. E. Practices buying guidelines.”
“Starbucks pays premium prices that are substantially over and above the prevailing commodity-grade coffee prices. In fiscal 2003, when prices for commercial-grade arabica coffee ranged from $0.55-$0.70 per pound, Starbucks paid an average of $1.20 per pound for all of our coffee.”
“Fair Trade certification is limited to small-scale farmers organized in cooperatives, and currently represents less than 3% of the world’s coffee farmers. Because of our size and quality requirements, Starbucks buys coffee from small, medium, and large scale farms. We pay premium prices for all coffee. We use coffee purchasing guidelines, called C.A.F.E. Practices, which give preference to farmers who score high in measurements of economic fairness, socially responsible working conditions, and progressive environmental practices.”
“This year alone, Starbucks provided $1 million for financing through the Calvert Foundation, giving 10,000 Fair Trade coffee farmers access to affordable credit. In addition, Starbucks provided another $2.5 million to Conservation International’s Verde Ventures, making similar financing available to additional farmers in Central and South America.”
Assuming all the stuff above is true, these are the kind of things I think Starbucks deserves credit for.
Incidentally, some of the passages in the “Summary of Recommendations” document are absolutely fascinating, especially the Q & A section at the end.
Comment by beev — February 11, 2006 @ 5:56 pm
Dude, you quoted like half the sheet! Anyway — Yes, in general, press releases and company fact sheets sound pretty damn cool, cuz they often don’t reveal the whole truth. The most deceptive part is when it says “Starbucks paid an average of $1.20 per pound for all of our coffee” — because a lot of that money goes to middlemen.
Meaning that for a lot of Starbucks’ coffee, FARMERS didn’t see anything close to $1.20. Starbucks, as it admitted in its letter to the Starbucks Challenge, doesn’t yet have transparency clauses for 41% of its coffee, meaning they have no idea what farmers get.
Now while I might agree that hey, at least they’re moving it the right direction, the statement above — especially in the context of a statement about fair trade — makes it seem like all Starbucks farmers are already getting a damn good deal, when that’s v. far from the truth. Starbucks also trains its baristas to say that all their coffee’s “fairly traded” — another half-lie.
If Starbucks were simply honest and open about where they are, I’d be more on their side. The same goes for Starbucks’ pointing fingers at fair trade certification’s limited reach, which I talked about here.
Meaning — One can’t assume that “all the stuff above” is true.
Comment by Siel — February 11, 2006 @ 9:19 pm
Siel, I think you should write a book about this. Go visit the farms, find out what’s actually happening on the ground, point out all the ways in which Starbucks is (illegally) misleading us, and reach an audience far larger than the lefty blogging community. You will be the next Naomi Klein.
Comment by beev — February 12, 2006 @ 3:43 am
I agree with beev, Siel–you should write a book!
Comment by Jasmin — February 12, 2006 @ 3:14 pm
Um, thanks guys :) There are a couple books due to come about about Starbucks and FT in general later this year, I think. Not by me, just to be clear :) It’ll be interesting to see what the effect’ll be –
Comment by Siel — February 13, 2006 @ 8:32 pm
Ah, here’s the Part I. Somehow I still get the feeling that everyone WANTS Starbucks to be the “evil corporation, capable of no good”, so we may be overlooking some “good” in this system.
While it is generally agreed upon that companies’ own codes of conduct are somehow less legitimate that NGO certification schemes, I must repeat that Starbucks has hired a third-party verifier. SCS doesn’t make the rules, but they oversee the verification process (i.e. they find and “accredit” verifiers from organisations in the producing countries). How is this any less legitimate (in terms of ensuring compliance and integrity of the standards) than the FLO certification process?
Another thing to point out in favour of company-based codes of conduct is that Starbucks sources from a whole range of farm sizes and supply chain configurations. Fair Trade standards are only geared towards farms of a certain size in a “cooperative” configuration - best suited to coops in Latin America. Even a farm that employs one single worker is ineligible for Fair Trade certification - Starbucks sources from many medium-sized and large plantations, so they could never use Fair Trade certification on all their suppliers, even if they wanted to (which I think we can all agree, they don’t want to). Developing their own code of conduct based on the size and needs of their “myriad” of suppliers makes sense in that no previously existing certification scheme would work to verify the standards they want to verify. I think that “slogging through the documents” has definately revealed that Starbucks and their partners have done a lot of work since the Pilot Program to make the standards relevant and appropriate to farms of all sizes.
Also, you will notice that C.A.F.E practices have a heavy emphasis on environmental standards - this is partly due to the origins of the code in the partnership with Conservation International. Fair Trade certification, to the best of my knowledge, doesn’t place this kind of emphasis on environmental standards.
To your earlier comment that there are not enough “disqualifiers” in the code (i.e. there are not many standards that disqualify a producer from “passing the test”), you will also have read that part of being a preferred supplier is the expectation of improving your score from year to year. This means that these farmers can be ‘in the club’ even though they’re not perfect, but membership in the club means working toward improving. This doesn’t totally make up for the lack of ‘disqualifiers’, but in my opinion, might be more effective in the long run in getting more farmers on board and helping them to improve gradually.
I agree that the best way to find out if the program actually achieves its goal of improving farmer livelihoods is to actually visit these C.A.F.E. farms and compare them to other cerfied farms (organic, Fair Trade, Rainforest Alliance, etc).
One more thing: as we all know, let’s not forget Starbucks has a real stake in making their C.A.F.E. program succeed - they have stated publicly their goals for 60% participation by 2007. They have invested a lot of time, money and PR into this effort. They are under intense scrutiny by NGOs and also by the rest of the coffee industry, to see if the program is a success. Is this easier than “just buying Fair Trade”? I’ll leave that up to those of you who think sourcing 300 million pounds of Fair Trade coffee per year is easy.
All sarcasm aside, I think we all have to acknowledge that the question of standards in the coffee industry is complex. It’s not good to be too tunnel-visioned about one set of standards to the exclusion of all others. I don’t know where ’standards’ in the coffee industry are headed in the future (will one set of standards win out over another? Will it be Fair Trade or Organic? Rainforest Alliance or Utz Kapeh? Will the entire industry adopt the “4C” code? Will it be up to each company to adopt its own Supplier Code?)… but it will sure be a wild ride!
Comment by Liz — July 19, 2006 @ 3:57 pm
But Liz — Who SETS the standards is of paramount importance! Yes, it’s great that they’re getting 3rd party verification, but Starbucks could do that for anything — it doesn’t make the standards themselves any stronger!
Fair trade has VERY STRONG environmental standards — and those standards are MANDATORY, not optional. Fair trade also offers a financial incentive for organic certification, which is why about 80% of fair trade coffee in the US is also organic certified. If you’re not aware of this, then you may wanna slog through the FLO documents, not just Starbucks’ docs.
I appreciate the viewpoint you’re bringing here, as someone who’s done a lotta research on Starbucks. But my main concern is that Starbucks is promoting standards that are socio-environmentally weaker than fair trade — yet the mermaid’s marketing it as something that does MORE than fair trade — a strategy that seems to have convinced you, at least in terms of the environmental issues.
Yes, fair trade certification for coffee only allows for fair trade co-ops — something many Starbucks peeps name as an excuse for not doing more fair trade. But my point is — if Starbucks was employing CAFE practices, but also working to up its fair trade commitment, there’d be no backlash against Starbucks from fair trade activists.
The fact remains that the vast majority of coffee in the world is grown by small-scale growers. By further supporting fair trade, Starbucks could make a bigger difference in the lives of more coffee farmers (hopefully before they’re forced off their land, selling their plots to large estates). That’s not to say worker conditions on estates don’t matter — but I hope you can understand many activists’ frustration at Starbucks portraying this as an either-or issue.
After all, serious activists know that an immediate 100% conversion to fair trade is literally not possible for Starbucks at this point. But that’s not what we’re asking from Starbucks. We’re currently asking for a 5% minimum (a far cry from 100%), considering that the mermaid’s already been on the fair trade roster for 6 years.
That 5% is hardly a lot to ask, considering all the positive press Starbucks has gotten due to its alleged “commitment to fair trade” it announces all over its press releases. We’re just asking Starbucks to do the minimum to walk its talk.
Comment by Siel — July 19, 2006 @ 10:59 pm
As a business student nearing graduation, I am presently writing numerous reports about Starbucks for my classwork. I am wondering if all of these protests and “Fair Trade” outcries are being directed at Farmer Bros., Green Mountain Coffee, Peets Coffee, Diedrich, Caribou, et al? Or is all of this dialogue simply taking aim at the Big Dog (Starbucks), in hopes that other companies and, for that matter, other governments, will follow suit and join in the crusade to ensure that more currency flows all the way down to each individual farmer throughout the world? Or does this just concern Ethiopian farmers right now?
This kind of pressure (and press) seems socially responsible on the surface, but it loses its credibility when its directed only toward the largest company and not all companies at the same time. In other words, the stock value of the other competitors isn’t harmed as long as the protests attack Starbucks and leave everyone else alone. If the unfair trade practices exist within the Industry, then the protests should be directed against the Industry…not just the largest company within the Industry. I happen to believe that either all companies are innocent or they are all guilty.
What do you think?
Also, I do agree that if this entire issue is to be credible over the long-term, somebody needs to get out and investigate what happens to all of the money as it flows from the U.S. market and out to the farmers. I would like to know the percentage of funds that are siphoned off by governments and middlemen, who specifically these intermediaries are by name, and what percent of each dollar actually is placed into the creased, wrinkled hands of the poor farmer. I am seeking more fact, and less emotion.
Comment by Jim — February 25, 2007 @ 11:49 am
Hey Jim — I agree that just attacking the “big dog” because they’re big seems thoughtless. That said, I think that the reason Starbucks often meets with activist ire isn’t simply because it’s big. The main reason Starbucks comes under heat from fair trade activists is because 1) it has not made anything near a significant commitment to fair trade, despite the fact that 2) it consistently uses its small percentage of fair trade purchases to greenwash its image as a whole.
No other company meets those 2 criteria. Some never really use fair trade / sustainable issues to improve their image (Peets, Farmers Bros, etc). Others actually make consistent strides toward improving fair trade commitments (Green Mountain, etc). Among larger companies, Starbucks talks the talk without walking the walk. Diedrich stores were bought up by Starbucks, BTW.
Also — Starbucks is not the biggest coffee company, so if size is all activists cared about, they wouldn’t go after Starbucks. Kraft, Nestle, P&G and Sara Lee are the “big four” — much bigger than Starbucks.
Comment by Siel — February 25, 2007 @ 10:54 pm
Siel
When you compare apples with apples and look at sales from coffee-related operations, I doubt if Kraft, P&G, and Nestle compare as “domestic” competitors; it’s like comaparing GE with Nortel Networks because they both produce electronic products for retail sale.
Secondly, the other companies cited (FB, GM, etc.) pale in comparison to the operating revenues with which to “contribute” to anything. For example, today’s operating income for Farmer Bros. is ($2,965M), Diedrich is ($9,029M), and Caribou is ($4,062M) - all losses. Nothing there to support Fair Trade of anything.
Diedrich (as of this morning) trades under the symbol DDRX and has none of Starbucks executives listed anywhere on its insider list. Where do you find the information suggesting Starbucks owns Diedrich?
Sara Lee is a food products corporation that sells coffee under the “Superior Coffee” label. That, I believe, is a wholesale distributorship, not retail sales to the consumer.
Green Mountain has operating income of $18M compared with $800M for Starbucks.
Now really, Siel, who do you think is doing more for Fair Trade? If Green Mountain contributes 5% of EBITDA to Fair Trade and Starbucks contributes 1%. who’s doing more good? The $8M from Starbucks or the $900K from Green Mountain?
Oh, but if you want to play activist, you shout “Lookie, lookie, Starbucks contributes a far less percentage of their operating revenues than does company A, B, or C.
Again…get away from the emotion and engage this audience with supportable data.
Comment by Jim — February 26, 2007 @ 11:06 am
Now really, Jim — Please at least take the time to read my response accurately before spouting off. I didn’t say Starbucks owns Diedrich; I said Diedrich stores were bought up by Starbucks.
In terms of the big 4 — I mentioned these because together, they control 70-80% of the coffee sold in the US. That doesn’t mean I’m unaware that these are more diversified companies; I was simply pointing out that in terms of size and clout within the coffee biz, Starbucks — which I believe makes up 1-2% of the coffee trade — is not the biggest.
Yes, I agree that Starbucks’ decisions, simply due to its size, have bigger impacts than those of smaller companies. But I’m bothered by your willingness to “lower the bar,” in a way, for bigger companies, simply because their tiny decisions may have bigger impacts due to scale. The bigger the company, the less % of socio-environmental consciousness needed?
Comment by Siel — February 26, 2007 @ 12:14 pm