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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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3. INTERVENTIONS AND RESULTS
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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3. INTERVENTIONS AND RESULTS
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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3. INTERVENTIONS AND RESULTS
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
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