Coffee Origins – Is Starbucks the problem?

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Sep 09, 2007

Pulitzer Prize winning journalist, Tom Knudson, published an important story recently in the Sacramento Bee called “Promises and Poverty”. This story highlights the inconsistency between the claims made by coffee companies operating in the coffee growing regions of Ethiopia and what is in fact really going on there. The story focuses on Starbucks’ social mission, but the discoveries and lessons probably apply to almost everyone purchasing green coffee in poor countries.

For some people, “Promises and Poverty” could serve as an “I told you so” about Big Green, and perhaps even feed cynicism around corporations like this. However, the story also speaks to an issue that goes far beyond the intentions of any single company, even one as big and influential as Starbucks. This reading of the story highlights the difficulty large organizations seem to have deploying aid resources effectively. In some cases, their efforts to improve economic conditions can actually lead to serious environmental damage and real cultural harm. “Promises and Poverty” should raise red flags and lead to discussion around whether aid programs are best adminstered by large corporations, governments, or NGO’s. . . or if there is a better way.

While meeting development goals may seem like simply a question of money, UN statistics show that there is rarely a correlation between the total dollars spent in a region and an improvement in conditions. Money alone does not bring economic relief.

An explanation for this is offered up by William Easterly in, “White Man’s Burden”. Easterly argues that for the last fifty years the real constituency for most aid efforts has been not the recipients of aid in the developing world. It has been the donors and sponsors of aid in First World countries. This well-intentioned aid “constituency” is located where the money is. It is in the US, Canada, or Europe, far from the need. It is made up of taxpayers and consumers, including individual coffee drinkers at a local Starbucks store. It is really anyone who is buying a product or paying a tax that promises to deliver a benefit into an undeveloped region of the world, as one of its features or selling points. Unfortunately, the success of these programs has been very poor. Furthermore, up to now the relative success of aid programs like these has been measured in terms of sheer size and scale (translated into total dollars spent)–not effectiveness in delivering goods and services–so good intentions have not been mirrored in good outcomes.

Most people can see how the current approach to delivering benefits to people in undeveloped places could run into problems. For one thing, under this model aid constituencies are blind to the true success or failure of the programs that they are buying. Also the question arises, if you don’t really depend on aid yourself, how do you even know what is appropriate? The answer is you don’t know. And besides, unless you are intimately familiar with the culture and conditions of specific regions, you most likely can be of little help evaluating how effectively aid money is spent anyway. Often times, privately sponsored aid or development programs overlap with publicly funded efforts.

The solution to this conundrum, according to Easterly, is easy to state though perhaps more difficult to carry-out–it is to shift perspective, so that the true constituency for aid and development assistance are those people receiving the aid in market, not the people, organizations, and corporations, who are funding the services. Additionally, the solution also requires expanding the role of the beneficiary to that of a customer, so there is a focus on delivering the right goods and services based on real need and desire.

My hat is off to Tom for a great article–one that should provoke thinking around how to improve our relationship with the people in coffee origin countries.

Eric Perkunder