Proof from the NY Times that Starbucks’ much-touted CAFE practices pay below fair trade prices: The Comon Yaj Noc Pic co-op in Mexico gets $1.23 a lb from Starbucks, compared to the now $1.31 fair trade minimum price.
But on its marketing material, Starbucks’ll only report the money that it pays to SOMEONE (usually middlemen), instead of reporting the money that goes to farmer co-ops. Thus, Starbucks’ll brag that it pays an average of $1.42 a lb — and note that’s higher than the fair trade minimum price, without noting that the fair trade minimum price is the price paid to co-ops, NOT middlemen.
So Starbucks’ll point out it pays $1.43 a lb to the Comon Yaj Noc Pic co-op — but that sum goes to a middle trading company called AMSA which takes a cut before it gets to the co-op.
Kudos to the NYT writer for getting the more honest $1.23 number. The writer does tend to elide the differences between fair trade certification, Rainforest Alliance certification, and CAFE practices, often lumping them all together as general coffee certification, without explaining the real differences between the programs in terms of benefits to the farmer co-ops. I’ll have to do a post that sort of rounds up the difference soon –
And a few more coffee notes:
- Ethiopian Coffee Trademarking Initiative gets its own website. Learn more ’bout the effort to give more of the massive profits made from Ethiopian coffee to the Ethiopians who grow the stuff. (via Coffee Politics)
- The Specialty Coffee Association of America conference happens next weekend. I’ll be there on Thursday and Saturday –
- Fair Trade Federation’s conference, Changing Hands: The Work of Fair Trade, happens June 1-3, 2007, in Washington DC.
Hey LA Girl,
I’m a little confused about coffee pricing. I’m working with some students to get our college café to switch from Starbucks to fair trade, organic, shade grown coffee from a farmer’s cooperative in chiapas that is actually cheaper than starbucks, and people have always been asking me why Starbucks doesn’t just purchase directly from cooperatives that are independently certified, since cutting out the importer/exporter/distributer etc. should allow Starbucks to buy coffee cheaper, right? Also, for specialty blends (it seems like ALL of Starbucks coffee is specialty blends now a days), don’t they purchase directly from plantations b/c they need to have very close control over the specifications of the coffee? Thanks!
Comment by Dylan — April 26, 2007 @ 1:11 pm
Siel,
I had the unique, and enviable, opportunity to accompany the NY Times writer, Elisabeth Malkin, throughout her 5 day trip to Chiapas. From that I came away with even more respect for journalists (& photographers) than I already had. To cut the chase, I can assure you that by the end Elisabeth had a much, much more thorough, and nuanced understanding of the coffee trade than was allowed to show in her article (which, by the way, was longer online - 1100 words - than it was in print 980 words).
Basically, she was more than ready, and able, to write a _much_ longer piece that would have laid out both the similarities and difference between the various certification & labeling systems. BUT, as is the way of journalism, she has no control over how much space the paper will make available to her. I’m sure that like all good journalists she would have loved to have more room to share what she had learned. And from our trip I, too, learned alot.
For example, only during the trip did it really come home to me that of all the environmental-focused certification systems (Rainforest, Bird Friendly, organic, and dual certified organic/Fair Trade) only the last - dual organic/Fair Trade coffee _ensures_ the grower of a price premium, let alone a higher guaranteed price. Put it this way, what is the guaranteed premium for any of the others? To my knowledge its zero. Yes, there is usually a premium thanks to market forces, but not always.
By contrast, what is the premium for organic/FT coffee? answer: 20 cents (20 cents over non-organic/FT coffee)
What is the guaranteed floor price for the other systems? None.
What is the guaranteed floor price for organic/FT? $1.51 (or $1.56 from either Equal Exchange or Cooperative Coffees).
As for Dylan’s Q - Starbucks doesn’t buy directly cooperatives because - I surmise - because its too much work. That’s why they typically have no more than 2 designated exporters in each coffee producing country who do this for them. (read the fine print of their C.A.F.E. standards and I think you’ll still find this “2 exporters per country” clause). I assume the attraction is that this simplifies their work. When Elisabeth Malkin and I visited the AMSA officers in Tuxtla Guiterrez it was evident that AMSA was doing a lot, such as keeping tabs on how all the different Starbucks growers were doing according to the C.A.F.E. criteria.
Which lead to another realization/theory of mine: that is that the C.A.F.E. system - combined with the obvious desire of growers to sell into the ever-growing maw of the Starbucks machine - enables Starbucks to largely externalize the cost of better social and environmenta practices onto the growers (even while taking lots of the credit for the results) How? The C.A.F.E.’s point system creates a kind of competition that prompts the growers to invest more and more in social and environmental programs BUT does not match these investment with proportionately higher prices. Let me put it this way, say there are a 100 growers in country X seeking to sell to Starbucks. The C.A.F.E. system pits them all against one another in an admittedly virtuous way where, all else being equal, the one with the best social/environmental practices goes to the front of the line to sell to Starbucks. This creates a kind of “practices arms race”. Which is kind of exciting - EXCEPT that while growers are digging deeper and deeper into their own pockets to get to the front of the C.A.F.E. line the price they stand to get doesn’t necessarily change.
Comment by Rodney North — April 26, 2007 @ 7:43 pm