This past weekend, I had an encounter at an independent coffee shop that has unfortunately sprouted a new batch of questions about Starbucks and their Fair Trade claims. During a short visit to Santa Barbara, my wife and I were holed up at Finestra Cafe for a slew of meetings (it’s our favorite “remote” office when we are in Santa Barbara — free WiFi, excellent coffee [FT+], the best baked goods around, and a great atmosphere), soaking up the java and having a great time.

During one of my return trips to the counter to top off our mugs, I struck up a conversation about Fair Trade Coffee with the cashier. I knew all of their beans were Fair Trade, and mentioned that they should make it more obvious — there aren’t any signs, labels or slight innuendoes that their beans are ethical. I only knew because I had asked during a previous visit, and I was convinced that other patrons might like to know as well.

As all conversations about coffee shops and Fair Trade seem to go lately (at least for me), we ended up steering the conversation toward Starbucks and the Starbucks Challenge. I made some crack about the bag of FT beans they keep stashed in the back of the storeroom, thinking I was being funny, but quickly lost my sense of humor. It turns out that the cashier had previously been an employee of Starbucks and had some insight regarding my sarcastic quaff. He made some lavish claim about how all of Starbucks coffee is actually Fair Trade…and then proceed to mutter about how odd Howard Schultz is as a person. I was a bit taken aback, but resigned myself to thinking that this individual, while pleasant and well-intentioned, probably had no idea what he was talking about.

So I thought…

Yesterday evening, I took my case to a friend who happens to be a manager at Starbucks. Still skeptical about the claims, I nonetheless wanted to hear the truth. Sure enough, all of Starbucks beans are Fair Trade-ish, depending on how loose of a definition you want to use. The main point she stressed is that all of the beans they purchase are procured at price that is essentially a Fair Trade rate for that producer. The kicker is that they are only NOT Fair Trade beans because the producer has not taken the steps to become a certified FT producer. My friend mentioned that the certification process is expensive, and were all of the producers that Starbucks buys from certified, they could actually claim that all of their beans afford the Fair Trade moniker.

Hmm.

So I’ve been chewing on this all night and into the morning and understandably have a few things bouncing around my mind. While I am fairly cautious of large corporations, I also think it is important to know the truth, and then proceed accordingly:

1. If these claims are true (one former, and one existing Starbucks’ employee) why have we not seen more about this side of the story yet? Is it out there but just not as readily available?
2. Let’s assume they are true — is the Challenge then about pointing out how poorly trained Starbucks employees are to handle the Fair Trade issue?
3. And if Starbucks cares enough to spend the extra money on the beans, even though they can’t claim that they are truly Fair Trade, why not pony up the extra cash and help these producers receive their certification? (Perhaps they can use some of the $millions that are left over from Ethos sales past the $10 million mark, eh?)

Here’s a portion from Starbucks’ policy titled “Starbucks, Fair Trade, and Coffee Social Responsibility” [PDF] to consider:

“Starbucks is committed to paying fair prices for all of our coffee. We do that to ensure that farmers make a profit and to encourage future production of high quality coffee. 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 Certified coffee is one part of a larger effort by Starbucks to be socially responsible in our relationships with coffee farmers and communities 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.

“Starbucks provides financing that helps coffee farmers invest in their farms and hold their beans for sale at times of favorable market prices. 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.”

Okay. Now check out Starbucks: Fairly Deceptive Claims.

This is a complicated scenario and it is difficult to know what the real truth is without doing some detailed hands-on research. Nonetheless, it is very important to talk about and explore as the implications, one way or another, are pretty substantial.

TAGS: Starbucks Challenge | starbuckschallenge | Starbucks | Fair Trade | Free Trade | Coffee | CSR

This entry was posted on Wednesday, November 23rd, 2005 at 9:58 am and is filed under Business Ethics, Corporate Social Responsibility, Social Enterprise. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.