Starbucks' Claim of Innocence Regarding Sweatshop Coffee--
Truth or Corporate Propaganda?

Comment by Ronnie Cummins, National Director of the Organic Consumers Association

In an article 8/28/01 (enclosed below) from the Seattle Post, Starbucks CEO Orin Smith claims that his company has always paid at least $1.25 per pound to the "roasters" or middlemen who supply his company with coffee--thereby creating the impression that Starbucks is not sourcing "sweatshop" coffee. It would be nice to be able to believe this. Unfortunately there can be no proof (apart from Third Party certification provided by Fair Trade or Organic certifiers) that companies like Starbucks are paying a "fair price" for their coffee--unless the company is willing to submit to Third Party monitoring and certification, which so far Starbucks has refused to do.

Second of all, claiming to pay a fair price to roasters or middlemen (who are called "coyotes," due to their voracious greed, in Latin America) does not guarantee that this fair price is being paid to the small farmers who bring their coffee beans to the roaster or middleman, nor to the exploited coffee pickers and child laborers who are paid starvation wages on the coffee plantations. Starbucks recently admitted (4/22/01) in the Chicago Tribune that their roaster or middleman in Guatemala would not even tell them the location of the farms that are producing the coffee that they buy from that country. How can Starbucks then claim innocence from the ruthless exploitation and child labor practices which are routine in that country? Fair Trade certification (as well as some international organic certification) guarantees that a fair price and a liveable wage is being paid to the workers, not to the coyotes and the avaricious middlemen, in countries like Mexico and Guatemala.

Starbucks recently admitted on National Public Radio that Fair Trade coffee constitutes only one tenth of one percent of their total sales, and only recently started offering (6/01) certified organic coffee (in bulk bean form ony) at all. One of the demands of the OCA is that Starbucks start to brew Fair Trade coffee at least one day a week as its "coffee of the day" in all of its cafes. In response Starbucks continues to make the preposterous claim that there's not enough quality Fair Trade coffee available for them to be able to do this. Statements like this make it impossible to believe almost anything that corporations like Starbucks have to say. Therefore the Organic Consumers Association Frankenbuck$ campaign will continue, until Starbucks agree in principle to meet all of our demands--including an end to their sourcing of sweatshop coffee.

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Seattle Post-Intelligencer

Coffee glut, feudal traditions combine to starve communities

Tuesday, August 28, 2001

By Niko Price, Associated Press

LOS MILAGROS, Nicaragua -- Even when they lost their jobs and their bosses destroyed their only food, the peasants stayed in the homes their families had occupied for generations. But when the babies began to get sick and the adults were weak with hunger, they finally left, setting out on foot through mountains so high they were gazing down at the clouds.

They walked for three days. And when they reached the nearest city, Matagalpa, the tattered group set up camp in a municipal park, many sleeping in the open without so much as a blanket for protection. There they waited for someone -- anyone -- to help.

"It's not easy to grab your sick children and get on the move," said Jose Angel Perez, 35. "But when the kids start clinging to you and saying, 'Daddy, I want food,' you have to do something." The events that sparked the hunger and homelessness of the people of Los Milagros -- "the miracles" in Spanish -- were unwittingly set off more than a decade ago by bankers in Washington and politicians in Paris.

In an effort to help Vietnamese peasants develop a new cash crop, both the World Bank and the French government invested heavily in the Asian country's coffee industry. The industry flourished, and Vietnam is now the world's second-largest coffee producer, after Brazil. But Vietnam's success has come at the expense of the world's coffee industry, sending prices plummeting from Congo to Colombia, Ethiopia to Ecuador, Indonesia to the Ivory Coast.

The price In 1996, the wholesale price for unroasted Arabica coffee, a high grade of coffee, and the only kind produced in Nicaragua, sold for $3 per pound. Yesterday, the same beans were wholesaling for 51 cents per pound. Vietnam and Brazil grow mostly the lower quality Robusta coffee, which has prompted a glut of cheaper beans on the market, more attractive to bargain-hunting canned coffee producers.

Despite our seeming fixation with lattes and espressos, demand for coffee hasn't increased significantly in the United States since the 1960s. The United States accounts for about 20 percent of the worldwide coffee consumption. More Americans are opting for soft drinks and juices.

However, supply has jumped because of new production in Vietnam, and mechanization in Brazil that has increased yields.

The price for Fair Trade certified coffee, which guarantees farmers who belong to certain cooperatives a fair price for their Arabica beans is $1.26 per pound.

Gourmet or specialty coffee, such as the kind sold by Starbucks, Tully's or Seattle's Best Coffee is made from Arabica beans. Coffee sold in cans at the supermarket is, here and in other countries, usually a blend of Robusta with some Arabica, and occasionally low-quality broken or unripened beans. The glut of Robusta beans has meant that once-profitable coffee growers are unable to keep operating their farms. One of those was Los Milagros, a 500-acre estate of lush coffee fields perched high atop a mountain in central Nicaragua.

In August 2000, the company that owned Los Milagros stopped paying workers their daily wages -- $1.48 for men, $1.11 for women and 55 cents for children -- saying it simply had no money. Many of the peasants came from families that had worked the fields of Los Milagros for three generations or more and had nowhere to go. They kept working in exchange for a daily meal of rice and beans and the promise of pay when things got better."We ate little and took the rest home for our children," said Justo Cesar Mendoza, 28.

But in November, the company defaulted on the mortgage, and Nicaragua's private Finance Bank repossessed the plantation just as workers were harvesting the last of the 2000 crop. The bank sent in administrators with a new mission: to spend only 42 cents on the production of each pound of Arabica. The on-site administrator, Jaime Ortiz, said even that would be operating at a loss, but stopping production would lower the value of the plantation the bank was trying to sell.

According to Mendoza, Ortiz rounded them up one morning and told 15 of them they would remain on the job. The rest, he said -- 480 people, between the workers and their families -- would have to leave.

Back in Matagalpa, others told the same story as Mendoza.All knew key facts about the plantation -- for example, the name of a resident's wife or a description of Ortiz -- that proved they had lived there. Workers who remained at Los Milagros also confirmed the firings, though they became quiet when Ortiz showed up.Eduardo Fernandez, legal adviser to the repossession branch of the Finance Bank, also denied the homeless group came from Los Milagros.

"We haven't fired anyone, not in the sense that we told them to leave," he said in a telephone interview. "The bank isn't interested in bad publicity, so if we can give work to the people we do it with pleasure." Asked about the workers' version of events, Fernandez said: "I know the idiosyncrasies of Nicaraguans. People like to feel like victims, and if a foreigner shows up, they invent anything to tell them." What can be done? The plight of coffee farmers in Central America is well known to specialty coffee roasters, who typically pay more for beans than the $1.26 Fair Trade price in order to assure that a high quality coffee farm will still be in business a year from now.

About 8 percent of the coffee produced worldwide each year is bought by specialty coffee roasters.

What can coffee drinkers do to reduce the guilt per cup of coffee? It depends who you ask. "As consumers, Fair Trade is a powerful response. We need to educate and build demand for coffee that helps farmers survive," said Rice from TransFair. Mike Ferguson, spokesman for the Specialty Coffee Association of America, based in Long Beach, Calif., had another suggestion: "It would be great if people would stop drinking canned coffee," said Ferguson.

In the United States, Nestle, Folgers and Maxwell House control about 60 percent of the coffee market in the United States."These companies are aggressively going after the cheapest coffee on the market. These coffees, instead of being dumped, are being brought to market," said Rice.

Starbucks, the leading roaster and seller of specialty coffee, buys about 1 percent of the world coffee supply. "It is a very serious situation, and is the tip of the iceberg in Central America, East Africa and Indonesia," said Starbucks President Orin Smith.

Starbucks typically enters into long-term contracts with farms and plantations that produce top quality coffee, paying farmers as much as $1.45 per pound and entering into long-term contracts, hoping to guarantee a supply of coffee and continued operation of the farm.

But Smith said some farmers hesitate to enter into long-term agreements, still optimistic that the days $3 per pound coffee will return. The coffee price soared in the mid-1990s when frost ruined fields in Brazil. "We are interested in a long-term supply, not in the lowest price, we have never paid below $1.25 per pound, that isn't the issue for us," Smith said.

"If every coffee roaster paid $1.25 a pound for coffee, it would be better," he said. "You wouldn't be able to buy canned coffee for the price you are paying for it now, but workers in Third World countries would be in a better situation." The downturn Those who have spent time with coffee workers in Nicaragua, talking to farmers and plantation owners, walking the farms, have no doubt that the tales of Los Milagros are true.

Paul Rice of TransFair USA, an organization that certifies Fair Trade coffee, assuring consumers that the farmers who grew the beans have been paid a fair price, recently returned from the region. "There were 4,000 farm worker who had come down from the big farms. They hadn't been paid salaries since February," Rice said. "It was a dramatic scene, all these coffee workers camped out with their families and children." Rice said some of the farmers had worked on the plantations for 30 years. "It provided a window on how profound this current downturn is, it is the worst that anyone has seen," Rice said.

Thousands more Nicaraguans from coffee plantations across the country have made similar exoduses, and the highways of the countryside are lined with black tarps strung up by the new homeless.

In many of the camps of coffee refugees, there is talk of moving to the park in front of the presidential palace in Managua, to pressure President Arnoldo Aleman to help them. Aleman responded last month by offering to bus the people back to their homes, where he said he would give them jobs building roads and bridges. Few jobs have been created.

He also pushed a law through Congress creating a 300-day grace period before banks can foreclose on the homes of debt-ridden coffee workers, but that is little consolation to the people of Los Milagros, who live in a litter-strewn park in Matagalpa and beg for rotten vegetables.

A few charitable groups have given donations of rice, beans or crackers, but during a recent visit, nobody had brought anything in five days.

Mendoza's 2-year-old daughter, Reina Epifania, sat atop an empty burlap sack, crying and coughing in weak spurts. Mendoza took her to a public clinic, where a doctor said she had parasites and anemia, but Mendoza can't afford to buy medicine the doctor prescribed. "What can I do with a prescription if it's only paper?" he said. "She can't eat paper."