Ethically sourcing our cocoa.
Saying cocoa is an important ingredient in many of our products might be an understatement. Cocoa is contained in some of our most popular beverages, such as our Caffè Mochas and Mocha Frappuccino® blended coffees.
Just like coffee, our approach to cocoa buying is designed to ensure a long-term supply of high-quality, ethically sourced cocoa while contributing positively to the environment and to cocoa-farming communities. To achieve this, in 2007, we launched a two-year pilot using a set of responsible buying guidelines that we call Cocoa Practices, modeled after our guidelines for ethical coffee sourcing.
Cocoa Practices are our set of buying guidelines for growing, processing and trading cocoa in ways that are more environmentally sound and socially responsible. Cocoa Practices are meant to promote equitable relationships with farmers, workers and their communities.
The guidelines and corresponding scorecard contain more than 200 specific indicators designed to address the issues facing cocoa farmers, especially small-scale farmers in West Africa. Suppliers, farmers, processors and exporters who participate in Cocoa Practices must comply with the required indicators and demonstrate best practices, all of which are subject to independent verification.
About cocoa
| Approximately five million farmers around the world depend on cocoa for their livelihoods. Ninety percent of them are smallholder farmers, growing cocoa on less than 25 acres (10 hectares) of land.* |
| A combination of low and volatile commodity prices, lack of credit, and pests and disease challenges have made cocoa farming unpredictable for many of the families who depend on this crop for their livelihoods. At the same time, cocoa farmers cultivate in some of the most biodiverse regions on the planet, and their stewardship of these areas is vital. |
| Worldwide cocoa production for the 2007/2008 crop year was eight billion pounds (four billion kilograms). Most of this was produced in West Africa. |
| In fiscal 2008, Starbucks purchased 26 million pounds (12 million kilograms) of processed cocoa from our suppliers in five countries, but primarily from the Cote d'Ivoire in West Africa. Of that, eight million pounds – or 30 percent - was bought through suppliers participating in Starbucks Cocoa Practices, exceeding our projected goal of 28 percent. The cocoa will be used into fiscal 2009. |
| * International Cocoa Organization and Conservation International |
Reaching out to cocoa communities – social investments and loans for farmers.
In 2008, Starbucks joined the ECHOES (Empowering Cocoa Households with Opportunities and Education Solutions) Alliance, a joint project with USAID, the World Cocoa Foundation, and the non-profit development organizations International Foundation for Education and Self Help and Winrock International. ECHOES aims to help improve education and the quality of life for young people in cocoa farming communities in West Africa.
Our support of ECHOES helps to integrate basic education (reading, writing and math) and livelihood education (farming and business skills) through teacher training and agriculture education. The ECHOES alliance also funds scholarships that support micro-enterprise development for families in cocoa-growing communities in Cote d'Ivoire. This program supports families by funding three years of a child's education while making it possible for their mothers to use two years' worth of funds to earn increased income by adding capital to her own small businesses.
Knowing that farmers also need reliable and affordable loans to get through the growing season, we've been working with Root Capital since 2004 to provide capital for farmer loan programs. Over the years, we've provided $12.5 million in funding for use in coffee and cocoa communities, including the $1.7 million Root Capital loaned to seven cocoa farming cooperatives during 2008.
What we've been doing.
After first introducing Cocoa Practices in 2007, we focused on working with our suppliers to implement the program and help farmer cooperatives meet our criteria. We've also been using this pilot period to test our approach and work through problems as they arise.
We began by enlisting the help of TechnoServe, an international non-governmental organization (NGO), to conduct an independent audit to assess our suppliers' ability to source responsibly produced cocoa that could be traced to back to the farm.
They found, just as we have in coffee communities, that farmers needed training materials and cooperatives needed better financial management systems. Processes were also required to ensure that participating farmers were getting their fair share of any price premiums paid.
In 2008, we invested in developing third-party inspection capacity for Cocoa Practices verifications in West Africa. We contracted with Scientific Certification Systems (SCS) to select, train, and oversee independent verification organizations with local inspectors who could evaluate the performance of farms, cooperatives, and suppliers' against the Cocoa Practices guidelines.
By the end of fiscal 2008, approved verifiers had completed evaluations of thousands of farms in Cote d'Ivoire against Starbucks Cocoa Practices guidelines. SCS also completed a verifier training in the region, and performed shadow audits in the field and on cocoa farms in Cote d'Ivoire in 2008.
By the end of fiscal 2008, one of our key suppliers had completed the verification process to become our first Cocoa Practices–approved supplier, using one of the two independent third-party verifiers we had identified for this purpose.
While Starbucks is not a major purchaser of cocoa beans, the company's efforts in promoting sustainable and responsible cocoa production has been welcomed by the industry. In 2008 Starbucks disseminated the Cocoa Practices evaluation guidelines to members of the World Cocoa Foundation, prospective suppliers, certification entities such as Utz Certified, and retailers like Wal-mart. The World Cocoa Foundation, of which Starbucks is a member, recently launched an initiative to define cocoa sustainability.
Hurdles.
Identifying and training local verification organizations in the Cote d'Ivoire with the capacity to conduct farm inspections against our Cocoa Practices guidelines has been a challenge. In 2008, only two organizations were approved by SCS to conduct inspections in the region, although at least five organizations received formal training. This challenge reflects the complexity of the social and environmental circumstances in the cocoa sector and the diverse expertise and staff required to evaluate supply chains in West Africa.
Cooperatives verified in 2008 demonstrated ongoing challenges in disseminating information to farmers, providing training to farmer members, and ensuring transparent financial management systems and internal control systems.
What we're working on.
We're committed to improving the Cocoa Practices Guidelines and increasing our purchases of responsibly grown cocoa. Specifically we plan to:
- Increase cocoa purchases from verified and approved Cocoa Practices suppliers to 35 percent in 2009.
- Continue support the ECHOES Alliance project through $200,000 over three years.
- Update the criteria in Cocoa Practices based on feedback from verifiers, suppliers and the program auditor.
- Collaborate with the World Cocoa Foundation and the Bill and Melinda Gates Foundation to support a West Africa Cocoa Farming Communities Livelihoods Improvement program.
