Starbucks will Invest $1 Million U.S. To Improve The E A Coffee

East Africa: Starbucks Plans Sh64m Coffee Centres in Region


Business Daily (Nairobi)
Posted to the web 10 December 2007

Dominique Patton

Global coffee retailer Starbucks is investing more than $1 million (Sh64 million) in two farmer support centres tasked with improving the quality of East African coffees.

The company said it wants to double its purchasing of East African coffee by 2009 and needs to help growers to improve their yields of high quality beans.

Dub Hay, senior vice president of the group's global coffee procurement, says it is currently tough for coffee growers to meet Starbucks' exacting standards.

The company has requirements on quality and price transparency but also evaluates its suppliers based on the social conditions and environmental impact of their farms.

"We're very difficult. It's hard [for growers] because we buy the best of the best, from the top of the mountain," he told Business Daily.

In the last two years, coffee from East Africa has only accounted for six per cent of Starbucks' total coffee supply. Most of the 300 pounds it buys each year are sourced in Latin America, although it has seen a 400 per cent rise in purchasing in Ethiopia between 2002-2006.

The new farmer support centres in Addis Ababa and Kigali, Rwanda, will work with current Starbucks suppliers as well as growers who are aiming to become suppliers to boost this amount further. The Kigali centre will provide support for the whole East Africa region, including Kenya.

Agronomists at the centres will work with local growers on field practices like pruning and fertilising as well as processing techniques.

They will encourage farmers to reduce use of inorganic fertilisers and resort to pulp for mulching and organic fertiliser.

Those who manage to meet Starbucks' high standards will earn more for their beans than selling them on the world market.

Last year, the firm paid an average $1.42 per pound of green beans (across all coffees) significantly higher than the average commodity price of $1.04 per pound. Starbucks is striving to become the world's biggest global coffee brand and has more than tripled its revenues over the past five years to US$9 billion in 2007.

It now has more than 15,000 stores worldwide. The successful chain is also driving demand for premium coffee in other food service outlets including McDonald's.

Mr Hay also wants to build relationships with growers to guarantee long-term sustainability of coffee in East Africa. "We're concerned that production is going down and not up. This is a big problem. We want the coffee to be there in 10 years time."

Kenyan coffee is already a "core coffee" for Starbucks, available in its stores around the world. The firm also wants to make sure coffee from Ethiopia, the birthplace of the beans, "stays around." The farmer support centres should help achieve this aim.

Starbucks opened its first farmer support centre in Costa Rica in 2004 and since then it has seen a 20 per cent increase in yields per hectare and an 80 per cent drop in the use of pesticides.

Costa Rican growers participating in the firm's Coffee and Farmer Equity (CAFE) Practices, sustainable coffee buying guidelines, have also improved their scores.

Higher scores allow them to sell more to the company. "At the end of the day, we want farmers to stay in the business and to earn enough to allow them to take care of their plants and be there the following year."

Speaking from the US after a trip to Rwanda, Mr Hay added that coffee from East Africa is already making strong quality improvements.

In Rwanda, "we're very encouraged by what we've seen in the last five years and there's potential for it to go up even more". The company currently buys half of the premium washed coffee produced by Rwanda. It also buys from Kenya, Ethiopia, Tanzania, Burundi, Zambia and Uganda.

Selling to Starbucks can also help promote lesser known origins. The company runs a "black apron exclusive," promoting limited availability, top quality coffees which included a Rwandan coffee last year.

"Introducing new coffees is very important. We want to be the coffee experts."

Starbucks says it has already spent more than $4 million on projects to help East African coffee farmers improve their communities such as building new schools and bridges.

It has also spent $1 million on a programme to provide farmers with access to low interest loans through the non-profit lender Root Capital.


2007 Business Daily. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here.