Greg, the LA-based certified financial planner with a green mission I wrote about last month, has got the conversation rolling with Starbucks again.

A lil background: Starbucks reps said that all of Starbucks coffee is fairly traded in a speech at the SRI in the Rockies conference last September. Afterwards, Greg talked to Mary Ellen, one of the reps and a manager of investor relations at Starbucks, to let her know that the “fairly traded” thing was a “characterization that many of my colleagues and I found a bit misleading and opaque…”

Mary Ellen welcomed Greg’s comments, Greg said, and was very receptive to the idea of working together toward a less confusing message regarding Starbucks’ relationship to fair trade.

Then, these conference organizers were instrumental in getting Krystala, one of the SRI in the Rockies conference organizers, to ask Mary Ellen for a detailed explanation of her statement that all Starbucks coffee is “fairly traded.”

Below’s Starbucks’ official response, in its entirety — The bolds are mine. I think TransFair USA employees will find it especially interesting, even though TFUSA’s never mentioned in the letter.

Starbucks was also kind enough to participate in a conference call with Mary Ellen, Sue (SVP of Corporate Responsibility), and Andy (who was at the USFT conference) of Starbucks, along with Greg and I. That took place yesterday morning — which I’ll write about tomorrow.

Update, 2/24/06: Part II is here.
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October 14, 2005

Dear Krystala,

It was a pleasure for both Naida and me to participate in the SRI in the Rockies conference this year. At Starbucks, we greatly value the dialogue that results from engagement with our stakeholders. I appreciate your follow-up and the opportunity to provide additional background on my comments and Starbucks CSR efforts in regard to coffee purchasing.

First, I would like to apologize if some conference participants felt mislead by my statement that all of our coffee is fairly traded. It is unequivocally our goal that all of our coffee is fairly traded, but we are not there yet. Our coffee buying guidelines that we call C.A.F.E. Practices (Coffee and Farmer Equity Practices) require economic transparency and we have included in all of our contracts the requirement for financial transparency to the producer level. But, the reality is that we do not have that confidence for 100% of our purchases, including some purchases of Fair Trade Certifiedâ„¢ coffee.

I would also like to comment on the confusion that was expressed about the words Fair Trade Certified™ and fairly traded. We do not agree that “fairly traded” implies Fair Trade Certification. Starbucks is very careful in using the words Fair Trade Certified™ only when describing coffee that has been certified by one of the Fair Trade national initiatives that are members of FLO, the International Fair Trade Labeling Organization. Trading fairly extends well beyond buying products that are Fair Trade Certified™. We acknowledge that companies such as Equal Exchange are committed to buying only from Fair Trade Certified™ sources, and we recognize and applaud the significant contribution they have made to the growth of the Fair Trade movement in the United States. As you mention in your email, Starbucks, however, does not buy only from Fair Trade Certified™ farmers.

It is important to note that we and the Fair Trade Certified™ movement share common goals — to ensure farmers receive a fair price for their coffee and to strengthen their farms for the future. Purchasing Fair Trade Certified™ coffee helps us achieve these goals with one important group — small-scale coffee farmers that are part of the Fair Trade registry. In 2004 Starbucks purchased approximately 25 percent of all Fair Trade Certified™ coffee imported into the United States, which we believe makes us North America’s largest purchaser.

The Fair Trade system includes approximately three percent of the world’s coffee farmers. As a result, there are many farmers from small-, medium- and large-scale farms who are not a part of the Fair Trade Certification system that also want to sell to Starbucks. For us, whether a farmer is part of the Fair Trade system or not, we seek to apply the same principles — paying premium prices that can result in profit for farmers and care for the social and environmental needs of the area. To this end, we have developed an integrated approach to building mutually beneficial relationships with coffee farmers and their communities. This approach includes paying premium prices, investing in social projects in coffee communities, purchasing certified and conservation coffees, providing technical assistance and agricultural expertise through the Starbucks Farmer Support Center in Costa Rica and providing coffee farmers access to affordable credit. Because there is such a shortage of credit for small-scale farmers, Starbucks has committed funds to three organizations – the Calvert Foundation, EcoLogic Finance and the Verde Venture Fund – to provide pre- and post-harvest financing. Most of these loans are made to Fair Trade farmers to finance contracts with Starbucks, as well as other Fair Trade coffee buyers.

Additionally, Starbucks has developed a set of socially responsible buying practices in collaboration with Conservation International called C.A.F.E. Practices as mentioned above. These guidelines are designed to protect the environment, help ensure fair prices, promote social development in coffee communities and protect the rights of workers’ who pick coffee and do not have family farms. By 2007, Starbucks expects to purchase the majority of our coffee under C.A.F.E. Practices.

While we are proud of the manner in which we seek to purchase all of our coffee, we understand some consumers prefer to purchase coffee with the Fair Trade Certifiedâ„¢ label. To this end, we have implemented a policy allowing customers to request Fair Trade Certifiedâ„¢ coffee by the cup throughout the year in all Starbucks Company-operated stores in North America. We are working to ensure each barista understands this policy. Additionally, this month we have introduced a new Fair Trade Certifiedâ„¢ coffee to our line-up, Cafe Estima – a blend of Latin American and East African coffees. Looking forward, Starbucks plans to highlight Fair Trade Certifiedâ„¢ coffee as “Coffee of the Week” on at least a quarterly basis.

I appreciated the opportunity to speak at the conference and apologize for any confusion that my comments may have caused. I hope this letter helps clarify Starbucks efforts to purchase coffee in a socially responsible manner. For more in-depth information on the various components of our integrated approach, I invite conference participants to read Starbucks CSR report at http://www.starbucks.com/aboutus/csrannualreport.asp. I am happy to answer any additional questions you may have and look forward to continued meaningful dialogue regarding Starbucks coffee purchasing efforts.

Sincerely,
Mary Ellen
manager, Investor Relations
Starbucks Coffee Company

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