WITH A GLOBAL COMPANY
The Case of STARBUCKS Shade Grown
Mexico Coffee
Edward Millard
Senior Advisor, Sustainable Landscapes
Conservation International
January 19, 2006
PRESENTATION OVERVIEW
1. The Partnership between Starbucks, Conservation
International and Chiapas Coffee Farmers
2. Value Chain Analysis
3. Interventions and Results
4. Impacts
- Power
- Learning
- Benefits
- Scaling Up
1. THE PARTNERSHIP: OBJECTIVES
Create social and environmental sustainability in
Starbucks supply chain
Improve benefits for Chiapas coffee farmers
Conserve natural resources
Learn what works and apply learning to other regions
1.THE PARTNERSHIP: CONTEXT
73,000 smallholders producing one third of
Mexico’s coffee
Live close to poverty line
Coffee only source of cash income
Project focused on farms located near to protected areas 2.VALUE CHAIN ANALYSIS: INDUSTRY STRUCTURE
International Market
Importers / Roasters
Quality Testing, roasting and sale
Importing, Roasting and Packing
Exporters
Purchase of coffee or fulfillment of export service contract
Payment and Export
Quality testing and milling
Extension
Service
Providers
Processors
Quality Control and Milling
Weighing and storage of parchment coffee.
Training and Evaluation
Producers
Financial
Services
Institutions
Credit to farmers
Production and Processing
Production and first stage processing by cooperatives
Training and evaluation of
Conservation Coffee Best Practices
Credit and government subsidies
2. VALUE CHAIN ANALYSIS
CONSTRAINTS
End Markets
Low price; no market presence
Enabling Environment
Entrepreneurial under-development
Horizontal Linkages
Cooperatives lack buying capacity
Vertical Linkages
Mistrust between cooperatives and traders Supporting Markets
Few service providers
Firm Level Upgrading
Farmers inexperienced in business
Power
Farmers unable to control main factors affecting their income
Learning
Concept of Conservation Coffee new
Benefits
Low price + little power = low income
2. VALUE CHAIN ANALYSIS
OPPORTUNITIES
End Markets
Growth of specialty coffee market
Enabling Environment Interest of reserve authorities
Horizontal Linkages
Investment to strengthen cooperatives
Vertical Linkages
Market power of lead firm
Supporting Markets
Firm Level Upgrading
Power
Learning
Benefits
Partners committed to sharing learning
3. INTERVENTIONS AND RESULTS
End Markets
Brand growth: 1998
2000
2002
2 containers
14 containers
44 containers
Starbucks designed sustainability program to leverage impact in its supply chain
Starbucks committed to buy 60% of all its coffee under C.A.F.E. Practices by 2007
3. INTERVENTIONS AND RESULTS
Inter-firm cooperation- Horizontal Linkages
Tradition of cooperatives in Chiapas
Cooperatives inefficient: members dispersed, officers rotated
CI unable to strengthen cooperatives sufficiently
3. INTERVENTIONS AND RESULTS
Inter-firm cooperation- Vertical Linkages
2003: Starbucks asked cooperatives to export through AMSA
Purchasing contracts stated prices paid throughout value chain