Starbucks has dramatically increased the number of long-term contracts it signs with developing-country coffee growers in an attempt to provide them with a more secure living.
The US coffee shop chain says the move, part of its social responsibility programme, has meant that purchases of coffee negotiated on three-to-five year contracts rose from three per cent of its supply in 2001 to 36 per cent last year.
Coffee companies have been criticized in recent years for adding to uncertainty among farmers by insisting on short-term contracts.
Starbucks says longer contracts enable growers to plan ahead while allowing the company to buy coffee ‘at predictable prices over multiple crop years’.
Starbucks, which turned over $3.3billion (£2bn) in 2002, gave loan guarantees for $500,000 to 896 Mexican coffee farmers in the same year to help with production and harvest costs. It did this through two groups: Ecologic Enterprise Ventures, a non-profit organization providing crop finance to smallholder coffee farmers in Latin America, and Conservation International.
Last year it introduced coffee sourcing guidelines to support sustainable production. The guidelines offer financial incentives and ‘preferred supplier’ status to farmers who meet environmental, social and economic criteria. Suppliers have to submit an application to the programme outlining their sustainability measures, which are then verified by an independent auditor.
By the end of 2002, Starbucks had received more than 50 applications to the programme, which is running as a pilot until the end of this year.
Starbucks is also introducing a code of conduct for suppliers this year on issues such as human rights and working conditions. The company says that compliance with the code will be taken into account when suppliers are selected.
Starbucks increased the amount of business it does with minority and women-owned suppliers by 38 per cent to more than $69million from 2001 to 2002, according to its second CSR report, the first it has had verified.
