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Oxfam Rips Into Starbucks

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As Starbucks Rips Off Coffee Farmers

No war has ever been fought over the control of coffee plantations—at least, not yet. While oil remains the most valuable legally traded commodity on Earth, coffee comes in second. As the price of gasoline skyrockets and consumers half-heartedly threaten to “dump the pump,” coffee is quietly increasing in cost. According to the International Coffee Organization, the average one-pound bag of coffee was valued at 62.15 cents in 2004. By October 2006, the cost had reached 95.53 cents per pound.

Starbucks is at the top of the game in this market, with revenues of $2 billion for the last quarter. Unlike many other globally dominant franchises, Starbucks has actually managed to maintain a respectable public profile. They consistently rank highly in Fortune Magazine’s “100 Best Companies to Work For,” due in large part to their health insurance and tuition reimbursements for committed employees.

However, those further back in the coffee production process may not be faring so well under Starbucks. Oxfam, an international human rights advocacy group, is bringing attention to Starbucks’ attempts to maintain its profit margins at the expense of the nations producing the coffee.

Back in 2002, Oxfam and Starbucks appeared to be getting along just fine. Indeed, the President of Oxfam America, Raymond C. Offenheiser stated that “[Oxfam] commends Starbucks… for their willingness to join us in this original and ground-breaking partnership that will help change the way these farmers participate in the global specialty coffee market.” Specialties such as Fair Trade coffee, which purports to provide a “fair” wage for those working on coffee plantations.

However, last month saw the end of Oxfam’s happy relationship with Starbucks, and the beginning of a battle of press releases. Oxfam was the first to strike, sending out a press-release criticizing Starbucks for its “indefensible behavior” in opposing plans by the Ethiopian government to trademark three distinctive strains of coffee bean. Oxfam stated that by trademarking the Sidamo, Harar and Yirgacheffe coffee names, Ethiopian farmers could earn an extra $88 million dollars each year. But, “Starbucks prompted protests against the applications to be filed with the US Patent and Trademark Office (USPTO). The USPTO has denied Ethiopia’s applications for Sidamo and Harar, creating serious obstacles for its project.”

Starbucks retaliated with a press release of their own, and printouts of the statement tacked over pleas to purchase middle-of-the-road CDs at the cash register. Claiming that “Oxfam is misleading the public and must end its campaign against Starbucks,” the company stated “we share the goal of benefiting the Ethiopian coffee farmer; however, Oxfam’s position deflects focus away from the farmer,” presumably by bringing attention to the need to increase the pay awarded to those who produce the coffee itself.

Meanwhile, Oxfam’s original support of Starbucks seems somewhat flawed, as does the fair trade market itself. The Financial Times claimed earlier this year that fair trade coffee companies are themselves allegedly defrauding their workers, as well as the consumers. Fair trade coffee is sold, often at a higher price, with the assurance that workers are paid a reasonable price for their work and product. Under Peruvian law, workers are entitled to 15 soles (around $5) after room and board is deducted, for each working day. The Financial Times visited 5 fair trade coffee farms in Peru, and found that 4 of the 5 paid only 66% of the legal minimum wage that fair trade organizations are supposed to enforce, while only one farm paid 80% of the required wage.

Furthermore, the coffee advertised as “fair trade” may not even be from fair trade-certified farms. One board member of a Peruvian fair trade-certified coffee producer told the Financial Times, “No certifier can guarantee they will purchase 100% of a co-operative’s production, so how can they guarantee that every bag will be produced according to their standards?”

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