Starbucks Coffee in Mexico, New Controversy


By Jim Canson and David Brooks

La Jornada
August 24, 2002

When Starbucks Coffee International opens its first coffee shops in Mexico City, at the end of this summer, the huge chain will offer, along with the imported coffee, shade grown coffee, produced in the biosphere reserve El Triunfo, in Chiapas; some critics in the United States, although, state that the enterprise should sell in México nothing other than Mexican products.

This transnational coffee corporation, with its headquarters in Seattle, buys almost 1% of the coffee produced throughout the world. In February Starbucks announced the creation of an enterprise with Alsea SA de CV to open its coffee shops all over Mexico. The corporative describes itself as the biggest enterprise of "specialty coffees" in the world, with more than 5,000 shops in North America, Europe, Middle East and the Pacific river basin.

The Starbucks coffee shops that will open in Mexico at the end of August will be the first of 20 that will be installed within the next two years; this would be the first phase of what Starbucks calls "the Latin-American experience". "Because Mexico is one of the countries of Latin America where we get our coffee from, we are excited to present the experience of this important market", explained the president of the corporative, Peter Maslen, when announcing the strategy.

In the United States that "experience" includes offering a wide range of coffees, from different mixtures and origins, varieties of roasting to go and more than a dozen kinds of coffees: cappuccino, express, etc., the prices vary between one and four dollars a cup.

A variation of what Starbucks sells is the "shade grown -- Mexico", certified as organic and produced by more or less 700 campesinos in six cooperatives in El Triunfo, according to the official story. This coffee is produced as part of a project partially financed by Starbucks and planned by the USA environmental organization "Conservation International" that has the intention of stopping the forest destruction and promoting coffee growing through practices that conserve the land and the water.

"Conservation International" states that the campesinos of this program get a higher price (60% higher) for their product than the one they could get in the local markets. Since the program was installed, in 1998, according to this organization, the coffee lands conserved as forest has increased by 220% and the Mexican exportations of this kind of coffee increased in a 50% in comparison with the year before.

Representatives of "Conservation International" praise the success of the project and indicate that Starbucks has committed itself to widening the purchase of shade grown coffee in other countries in Latin America, Asia and Africa.

The critics of this campaign, like Deborah James, director of fair trade of the US based NGO, Global Exchange, states that Starbucks is not trying enough. It was estimated that the world coffee production would increase in a 10.8% in the next harvest cycle (2002-2003) to reach 124 million bags (64Kg each). As a result, there will be more products in the global market, so the prices for the producers will lower once more.

The fall of these prices in the international market, as La Jornada has reported, had provoked an increasing crisis among the Mexican peasants and other countries, and had deteriorated even more the rural economies, forcing more people to immigrate to the United States.

"Starbucks will reiterate that it is behaving well (with the peasants)", says James to La Jornada. "But the producers hadn't had any benefits". Although the price paid to them in Mexico and other countries has fallen quickly, the Starbucks utilities continue rising.

James praised Starbucks for its decision of focusing in the shadow grown coffee from Chiapas and in another one known as "fair trade coffee"; for this kind of coffee the producers get a minimum price -- that's more than the triple of what they would normally get -, but James asks herself why Starbucks doesn't buy more of this product. "One pays one or three dollars for a cup of coffee in the United States, that's more than what the producers make in one day", she said.

Starbucks buys more than 100 million pounds of coffee a year, but according to James, last year the enterprise was willing to only buy a million pounds of "fair trade coffee". Smaller enterprises, like Equal Exchange, are buying more than 1.5 million pounds of this kind of coffee.

"Our main objective is that the campesinos that are producing this coffee -- use it not only as an alimentary product, it is a drug -- but to benefit themselves", said James. "If Starbucks is about to widen its presence in a country that is a coffee producer, it should commit itself to sell nothing more than the coffee that is produced by the campesinos of that country, whom will get a fair price for their work. And the only way to guarantee this is that the entire product is certified as fair trade coffee".

This statement, answers Starbucks, ignores the difference between the kinds of coffee available in the international markets. The coffee price has very low levels (43 cents per pound) but the coffee bought by Starbucks is from the specialized market, where the prices are much higher. "Starbucks pays an average of 1.20 per pound, for all the coffee that we buy, with a fixed price, that's a 70% of what we buy", explained Sue Mecklenburg, vice president of Corporative Social Responsibility of Starbucks, in an interview with La Jornada.

This amount of money is similar to the prices that the Fair Trade Certified Coffee system pays to its producers. Starbucks also sells Fair Trade Certified Coffee, but Mecklenburg pointed that the movement for the fair trade coffee only represents 1% of the coffee producers in the world, and that in fact Starbucks pays a higher price to a wider group of producers in the whole world. Starbucks, she said, has developed its own coffee certification system that offers economical incentives to the producers and the cooperatives that fulfill the transparency rules, respect for the environment, etc.

"We are aware that Mexico is a big coffee producer. We have been in Mexico for a long time and we are excited to be there with a retail shop", said Mecklenburg.

Starbucks buys coffee from about 20 countries, and Mecklenburg said that instead of focusing on only selling Mexican coffee in the few stores that will open in Mexico, the benefits for the Mexican producers come from the availability of their coffee in thousands of Starbucks coffee shops in the United States, Canada and other five countries.

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