The FINANCIAL — Starbucks Coffee Company on June 22 announced an additional commitment of $30 million as part of its Global Farmer Fund program, one aspect of the company’s comprehensive ethical sourcing initiatives that help ensure the sustainability of the specialty coffee industry.
This investment is the continuation of an initial $20 million commitment made in 2008, and distributed in collaboration with leading lending organizations such as Root Capital and the Fairtrade Access Fund. To date, this financing has impacted more than 62 cooperatives in 8 countries benefitting more than 40,000 farmers, according to Starbucks.
“In 2015, we have achieved a number of milestones across our ethical sourcing initiatives but we know that the work isn’t done. This new investment demonstrates how we remain steadfast in our support of farmers around the world,” said Craig Russell, executive vice president of Global Coffee for Starbucks. “By providing access to capital, farmers have the ability to make strategic investments in their infrastructure, offering the stability they need to manage ongoing complexities so that there is a future for them and the industry.”
Starbucks first farmer loan investment was in 2000 with Root Capital (formerly known as Ecologic Enterprise Venture) for a project in the El Triunfo Biosphere Reserve in Chiapas, Mexico. This work helped establish a revolving line of credit focused largely on short-term financing for farmer cooperatives. Today, farmer financing has evolved to include medium and long term investments in order to help provide the necessary stability to manage climate variables by supporting agronomy, restoration and infrastructure improvements. This work directly influences coffee quality, sustainability and overall profitability for the entire specialty coffee industry.
The $50 million Global Farmer Fund aligns to Starbucks global sourcing strategy which includes purchasing coffee from more than 30 countries worldwide and offered to customers in single origin, blend and small-lot programs and beverages. Later this week, the first allocation from the Global Farmer Fund will be announced as part of a collaborative effort led by the IFC and other organizations.
In 2015 Starbucks verified 99% of its coffee as ethically sourced. For over 15 years, Starbucks has worked with Conservation International to design a rigorous set of methods to ensure environmental and social best practices are used in growing and processing coffee. To date, more than a million farmers and workers on four continents have benefited by participating in Coffee and Farmer Equity (C.A.F.E) Practices. In addition, Starbucks ethical sourcing program includes a network of six farmer support centers around the world (Rwanda, Tanzania, Colombia, China, Costa Rica and Ethiopia) as well as the purchase of a farm in Costa Rica acting as a global agronomy center.
What others are saying about Starbucks commitment to coffee farmers
“Starbucks has always understood the importance of investing in coffee farmers offering access to credit and financial management training. Farmers who receive loans from Root Capital are able to increase their livelihoods and become more reliable and resilient suppliers by improving environmental protection, crop yields, and product quality; thereby becoming more reliable and resilient suppliers. Together, we will make an even greater difference in the lives of coffee farmers and their families across Africa, Asia and Latin America.” – William Fulbright Foote, Founder and CEO of Root Capital.
“Traditionally smallholder coffee farmers depend on a single payment at the end of the harvest season to cover their expenses for an entire year. They are most often viewed as too high risk or lack access to any conventional loan facilities, and are captive to a cycle of sustained poverty. In order to break this cycle, these producers need to be able to make investments in their farms, households and communities that will deliver long-term benefits. Such investments require credit, and buyers who are willing to extend credit and share risk with farmers are not only stabilizing their own supply chains but contributing to the resiliency of coffee production globally.” – Richard Rhinehart, Executive Director SCAA Specialty Coffee Association of America.
“Starbucks ability to achieve the milestone of ninety nine percent of its coffee being ethically sourced is a reflection of their ability to bring the right people and organizations together in support of a common goal of sustainability. Only through a collective approach that provides farmers with access to information, tools and financing will we be able to transition coffee – the most widely traded tropical agricultural commodity on Earth – to becoming the first sustainably produced commodity.” – Dr. M. Sanjayan, Executive Vice President, Senior Scientist for Conservation International.
“Longer term investments are a necessary ingredient in the recipe for sustainability.When well-managed, such funding can make a difference in the resilience and effectiveness of farmers and their co-ops or organizations. Starbucks’ expanded investment demonstrates a commitment to shared value and a shared responsibility for sustainable coffee.” – Daniele Giovannucci President COSA Committee on Sustainability Assessment.
“Positive change in coffee communities takes time, persistence, and hard work. One of the greatest obstacles to change faced by most coffee farmers is access to financing, to support needed improvements on their farms and within their cooperatives. Farmers need financing to improve their productivity: from purchasing needed inputs to renovating their farms with high-quality rust-resistant coffee plants. Cooperatives need financing to protect and maximize coffee quality through proficient milling, and to support their trading operations. When available, most financing is often limited to short-term loans. Big changes with big impact demand mid- and longer-term investments that enable farmers and cooperatives to improve their coffee quality and earnings, so they can reinvest in their operations. Mid- and long-term financing is the key to support these investments that will ultimately improve coffee quality and the quality of life for coffee farming families now and well into the future. This commitment to insuring adequate financing is a cornerstone of Lutheran World Relief’s work with coffee growing communities around the world.” – Rick Peyser Senior Relationship Manager, Coffee & Cocoa. Lutheran World Relief.
“The lack of access to loans is one of the reasons many coffee farmers in low income countries are struggling to earn a basic living and feed their families. USAID, through the U.S. Government’s Feed the Future initiative, is proud to partner with companies like Starbucks to help ensure small-holder farmers are able to continue producing high quality coffee while reducing poverty in their households and communities.” – Pam Fessenden, Office Director for Markets, Partnerships and Innovation in USAID’s Bureau for Food Security.
“Given Finance Alliance for Sustainable Trade’s (FAST) work linking coffee farmers with sources of finance, we are acutely aware that the biggest problem facing small coffee farmers today is the lack of available capital at the right scale, time frame, and terms. FAST commends Starbucks for recognizing the need for new approaches to this situation and establishing the Global Farmer Fund as a pragmatic solution to the mid- and long-term finance needs of its suppliers. We look forward to collaborating with Starbucks to make this a viable model that increases the socio-economic impacts of the coffee industry around the world.” – Noemi Perez, President and CEO Finance Alliance For Sustainable Trade.