Critically low coffee prices are hurting farmers, and Starbucks is intervening. The company said it would commit $20 million to provide temporary relief to smallholder farmers with whom the company does business.
Coffee prices have tumbled, with the price for Arabica coffee futures falling below $1 per pound this month. In some areas, the cost of production is above the coffee sales price. According to Reuters, in mountainous countries like Colombia where farm owners must pay workers to pick coffee beans rather than relying on mechanized harvesting, the cost of production is above the price farmers are able to get for their beans.
“A majority of the coffee we purchase comes from smallholder farmers and the coffee crisis in Central America related to low prices cannot be ignored,” said Michelle Burns, senior vice president, Global Coffee and Tea.
Starbucks said the fund will go to smallholder farmers in Nicaragua, Guatemala, Mexico and El Salvador to subsidize farmer income during the upcoming harvest season in Central America.
“We have been severely affected by the recent price decline in the futures market. With today’s prices I can’t invest in my farm, in fact, I can barely cover labor costs. With these prices, my farm is just not profitable,” said Pedro Rosales Ubeda, Villa Nueva farm owner in Nicaragua.
Starbucks also expanded its existing 100-million-tree-donation program and will supply 20 million coffee trees as well as technical support and supplies over the next two years to smallholder farmers in Colombia. The seedlings will replace trees that are declining in productivity.