June 29th, 2010
Starbucks Sourcing Problems: Trying to Find a way to Protect the Environment while maintaining a high quality coffee bean
Starbucks Coffee Corporation is facing some strategic decisions on its current policy with regard to partnering with NGOs. Starbucks has a long history of social involvement. “CSR originated in 1994 as the Environmental Affairs Department with a budget of $50,000; by 2002, the 14-member department had a budget of 6 million. (Austin & Reavis, 2004) Recently Starbucks completed a six year, $450,000 project with Conservation International; an NGO that's mission “is to conserve the earth's natural heritage and it's global biodiversity, as well as to demonstrate that human societies are able to live harmoniously with nature. (Austin & Reavis, 2004) At the time CI had a staff of 776, overseeing projects in more than 30 countries on four continents. Roughly two thirds of CI's staff worked in the field and 90% were citizens of those countries. (Austin & Reavis, 2004) Working with CI on the Chiapas Project, dedicated to working with coffee farmers to stop the destruction of rain-forests by farming and to promote shade-grown coffee which is sustainable, Starbucks has learned that it needs a clearer policy with regards to partnering with other NGOs in the future. Several challenges arose when Starbucks was working with CI on the Chiapas Project, and they both learned valuable lessons. Starbucks needs to consider how valuable the Starbucks-CI alliance had been and what it future might be. Is the approach sustainable? What should be the ongoing strategy for shade-grown coffee? Next, how should new coffee purchasing guidelines be implemented? How should Starbucks and CI approach other roasters to adopt the sourcing guidelines? Finally, how should Starbucks address the Fair Trade movement?
When CI identified coffee as an important commodity affecting biodiversity, it launched a pilot conservation coffee program in 1996 organized around three co-operatives, located in the buffer zone of the El Triunfo Reserve in Chiapas, Mexico. (Austin & Reavis, 2004) CI Created this project to promote and preserve the pristine rain and cloud forests as well as shade-grown coffee. In 1997 CI convinced Starbucks that partnering with them in the Chiapas Project would not only promote conservation and shade-grown coffee, but also produce a high quality coffee bean; a bean that was shade-grown, sun-dried, and met Starbucks high quality standards. This alliance has proven to be successful. Since 1998, the coffee growing land incorporated into the project has increased by 220%, signaling that farmers had changed their practices. Starbucks was able to purchase 1.5 million pounds of Coffee from the Chiapas cooperatives by 2002. An outside consultant doing a independent review of the CI project concluded that farmers' environmental knowledge and awareness had increased significantly, as had conservation and organized farming practices (Austin & Reavis, 2004) However conducive for Starbucks as a learning process and beneficial to CI and the El Triunfo Reserve, as well as the farmers and the cooperatives, the Chiapas project requires a vast infusion of capital and resources to operate. Capital in terms of time, resources, expertise, and field trainers. Austin and Reavis state,“CI had a team of 3 full-time and several part-time “extentionists” who visited every farm and monitored progress. CI provided training courses in the villages of the farmers, co-op managers, and technicians on quality control, organic farming methods, tree planting, and pulping methods. CI operates a training center and nursery where it grows a wide variety of trees that gives away free to cooperative members and coffee trees that it sold for a nominal fee. The center also produced an organic fertilizer which it sold at 1/3 the price of equivalent of chemical fertilizers.” ( 2004) with all the resources, funds,...