Wrestling with Starbucks: Conscience, Capital, Cappuccino

Chapter 3: Banking on the Bean

47 Banking on the Bean 3 Back in the 1970s, my husband, a premature caffeinista , talked with Alfred Peet, acknowledged godfather of the high-end coffee business, about the nature of northsouth trade. “Isn’t it true that you can’t grow coffee without cheap labor?” Alec asked. Mr. Peet leaned on the counter and smiled. “No,” he said. “You can’t grow coffee without dirt cheap labor.” This is where the global coffee controversy begins. Forget the mumbo jumbo. Although the history of coffee is intricate and its trading arcane, you need just a few bits of information to get to the nub: 1. Coffee has been traded for more than five hundred years and has always reflected the benefits and injustices of the prevailing level of globalization. 2. Coffee grows in the less developed countries of the global south, where the trade has been dominated by colonial powers and made profitable by the exploited labor of indigenous people of color. In general, poorer countries grow it, and richer countries purchase and consume it. Today, about 80 percent of the world’s coffee comes from the Americas, the remainder from Southeast Asia and Africa. 3. There are two kinds of coffee: robusta, which provides about 35 percent of the total, and arabica. Imagine a caste system for coffee: the lower the altitude at which it grows, the lower the quality, and the lower the price. The major growers of robusta, the lowly and least finicky kind, include Vietnam, Indonesia, Brazil, and Côte d’Ivoire. The lower grades go to transnational corporations and other mass marketers and are often blended with higher-grade beans to produce the taste that Americans once recognized as coffee. Arabica, the higher-caste coffee, grows mostly on small farms in Central America and, in smaller amounts, in parts of Africa and Southeast Asia. Think Sidamo, Sulawesi, and Java. It prospers at altitudes between 1,500 and 6,000 feet. The loftiest and best arabica coffees, technically known as “strictly hard bean,” go to Starbucks and other specialty coffee roasters. 4. Robusta is traded primarily on the London International Financial Futures Exchange. Arabica is traded primarily at the New York Board of Trade on the Coffee, Sugar, and Cocoa Exchange; the coffee part is commonly referred to as the “C market ” or the “New York C.” 5. The U.S. part of the equation is all about purchasing, roasting, and distribution. In what used to be called imperialism, we take raw materials—in this case, coffee beans—from elsewhere at the cheapest possible cost to ourselves. Then we process them, adding value along the way, and sell them for the highest possible price. 6. Except for a small amount of highly publicized coffee from Hawaii and indifferent coffee from Puerto Rico, the United States doesn’t grow coffee. So unlike sugar, rice, or cotton farming, the coffee business doesn’t have lots of trade legislation to protect domestic farmers or restrict imports. This militates against some of the more brutal forms of predatory trade behavior at the expense of poor nations—as when U.S. government subsidies enable cotton growers to dump expensively produced cotton on the world market at prices competitive with the cheaply produced cotton grown in West Africa. Even without blunt instruments of inequity, however, there’s still plenty of room for exploitation. 7. “Fair trade” is an organized attempt to change the equation so that growers and harvesters in poor countries get a larger share of the profits earned by the corporations that roast and resell the beans in richer countries. Fair Trade Certified coffee, administered 48 W R E S T L I N G W I T H S TA R B U C K S internationally by the Fair Trade Labelling Organizations International, and in the United States by its affiliate TransFair USA, ensures that growers get paid a fair minimum price per pound for their beans. But in the past ten years, competing certification systems, with varying priorities, have emerged. Rainforest Alliance has traditionally led with environmental standards, and Starbucks believes its own C.A.F.E. Practices can achieve similar and often better results. Alfred Peet, a confirmed free-trader, would probably hate them all. 8. Although it appears to be everywhere, Starbucks is far from the biggest fish in the coffee pond. The company buys less than 4 percent of the world’s...