Edward Mil Lard

8/7/2019 Edward Mil Lard

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LINKING FARMERS TO MARKETS

Increasing Profitability for Farmers Supplying to the

International Coffee Market by Improving Supply

Chain Management, including Traceability.

Edward Millard

Senior Advisor, Sustainable Landscapes

Conservation InternationalWashington, D.C.


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PRESENTATION OVERVIEW

1. The Partnership between Starbucks, ConservationInternational, Mexican Coffee Farmers and USAID

2. Value Chain Analysis

3. Interventions and Results

4. Impacts


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1. THE PARTNERSHIP: OBJECTIVES

Create social and environmental sustainability in

Starbucks supply chain

Improve benefits for Mexican coffee farmers

Conserve natural resources

Learn what works and applylearning to other regions


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73,000 smallholders

producing one third ofMexicos coffee

Live close to poverty line

Project farms located near

to protected areas

CI and farmers developed

Conservation Coffee Best

Practices

1. THE PARTNERSHIP: CONTEXT


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2. VALUE CHAIN ANALYSIS: CONSTRAINTS

End Markets Low price; no market presence

Enabling Environment Entrepreneurial under-development

Inter-firm Linkages Mistrust between cooperatives and

traders

Service Markets Few service providers

Upgrading capacity Farmers inexperienced in business


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2. VALUE CHAIN ANALYSIS: OPPORTUNITIES

End Markets Growth of specialty coffee market

Enabling Environment Interest of reserve authorities

Inter-firm Linkages Market power of lead firm

Service Markets

Upgrading capacity


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3. INTERVENTIONS AND RESULTS

Brand growth: 1998 2 containers

2000 14 containers

2002 44 containers

Starbucks designed sustainability program

to leverage impact in its supply chain

Starbucks committed to buy 60% of all its

coffee under C.A.F.E. Practices by 2007

End Markets


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2003: Starbucks asked cooperatives to export through AMSA

Purchasing contracts stated prices paid throughout value chain

In 2003/4 harvest, farmers earned more selling through AMSA

Inter-firm cooperation

Extract from Purchasing Contract

Precio de compraventa EX Works Tuxtla certificado orgnico

Venta Starbucks (cts/lb) A 143

Costo Amsa (usd/qq) B 25,25

Costo Amsa (cts/lb) C 24,90

Precio Compra (cts/lb) D= A-C 118,10

Precio Compra (usd/kg) E 2,60


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Independent extension agentscertified by Secretary of Education

Fee paying system introduced fortechnical assistance

Starbucks opened Farmer SupportCenter 2003

Service Markets Business Development Services


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CI partnered with Ecologic 2001 to

begin credit fund

Starbucks invested $2.5 million for

coffee credit

US$2 million invested - 99% repaid

Service Markets- Financial Services


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4. IMPACTS : CHANGES IN POWER

Transparency: introduced in

value chain by lead firm

Trust: built by inter-firm linkages

Innovation: farmers

owned brand attributes

Scale: 5,000 farmers in six

countries


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Farmers gained access to information,

technology and capital from partners

Starbucks provided market, supportservices and knowledge for upgrading

CI provided technical innovation andtrained partner firms

USAID created capacity to build model

End market growth enabled Starbucksto drive incentives through value chain

4. IMPACTS: LEARNING


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Household indicators improved

Local service providersentered market

Natural resources conserved

4. IMPACTS: BENEFITS

Edward Mil Lard

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