Starbucks is adding a new ingredient to take “bean to cup” transparency to the next level: traceability technology.
As a continuation of its ethical sourcing commitment, Starbucks will launch a pilot program with select coffee farmers in Costa Rica, Colombia and Rwanda to develop next-level data technology to log and share real-time information along the journey of coffee beans with the aim of driving positive impact to smallholder farmers within its supply chain.
“Over the next two years, we will look to demonstrate how technology and innovative data platforms can give coffee farmers even more financial empowerment,” said Kevin Johnson, chief executive officer at Starbucks, who will discuss the announcement on stage at the 2018 Annual Meeting of Shareholders in Seattle today. “We’ll leverage an open-source approach to share what we learn with the rest of the world.”
Traceability technology could have profound implications for connecting coffee drinkers to the farmers who grow it, said Arthur Karuletwa, director of traceability at Starbucks.
“This could be a seismic change in an industry that hasn’t had much innovation in the way coffee moves across borders and oceans,” he said. “At the same time, I’ve met farmers who have very little by way of possessions, but they have a mobile phone. Digital has become the economic engine of this century, and traceability preserves the most valuable assets we have as human beings – our identity.”
Building on 99 percent ethically sourced coffee
In 2015, Starbucks announced it had reached an industry milestone of 99 percent ethically sourced coffee, consciously leaving the remaining 1 percent to allow for discovery and work in new origins. Any company can claim to source sustainably, and many do. But since its beginning, Starbucks has known the names of the farmers within its supply chain, including the more than 380,000 farms it worked with last year alone, Karuletwa said. The ability to incorporate technology into this process means the potential to connect directly with tens of thousands of sustainable coffee farmers, and the possibility of financial inclusion for these farmers, he said.
In late 2015, Starbucks and Conservation International announced the Sustainable Coffee Challenge at the U.N. climate negotiations in Paris as a call to action to make coffee the world’s first sustainably sourced agricultural product.
Since then, more than 90 members across the industry have joined the Challenge to focus on the future of sustainable coffee, including roasters, retailers, governments and non-governmental organizations.
“Starbucks deserves a massive amount of credit for driving innovation in sustainable coffee,” said Dr. M. Sanjayan, chief executive officer of Conservation International. “In two decades of collaboration, they have consistently adopted new approaches to increase transparency and effectiveness, and so it is no surprise that they are driving forward with this new technology. The promise of connecting coffee farmers to coffee drinkers is an extraordinary leap in transparency and accountability, and it speaks volumes about Starbucks commitment to creating a product that is good for people and for the planet.”
With its technology pilot program in Costa Rica, Rwanda and Colombia, Starbucks hopes to develop and demonstrate over the next two years how technology and innovative data platforms can give coffee farmers even more financial independence and confidence. Conservation International will measure the impact of traceability to understand the benefits farmers will receive from this technology. True to their open-source philosophy, Starbucks plans to share this system and what it learns openly.
Starbucks has already invested more than $100 million to support coffee communities, improve farmer livelihoods, and ensure a long-term supply of high-quality coffee, including as part of Coffee and Farmer Equity (C.A.F.E.) practices as well as farmer support centers, farmer loans and a commitment to provide 100 million healthy, disease-resistant coffee trees to farmers most impacted by climate change.
Ambassador Bill Kayonga, chief executive officer of Rwanda's National Agricultural Export Development Board (NAEB), said the traceability pilot is right in line with the vision of the Rwandan coffee sector.
“Traceability builds value for farmers and is transforming the coffee sector in Rwanda, which in turn strengthens the country as a whole,” Kayonga said.
Ronald Peters, executive director of the Costa Rican Coffee Institute (ICAFE), said supply chain transparency and fair wages for coffee farmers have always been important in Costa Rica, and that “working with Starbucks is like working with a friend” on the path to reach the ultimate goal in a world of coffee traceability and sustainability.
“For many years, Costa Rica has had a great relationship with Starbucks. We share the same values and goals in looking to improve the livelihoods of our coffee sector by ensuring the source of our amazing coffee with a sense of sustainability,” Peters said. “Many years ago, our controls and transactions were all done by paper, and today we are even talking about blockchain technology. This shows us that, more than being at the front of every technological advancement, having the information and being flexible and adaptable are important.”
Juan Esteban Orduz, president of the Colombian Coffee Growers Federation in North America, said he’s looking forward to what’s ahead.
“The Colombian Coffee Growers Federation and Starbucks share the same vision to support coffee farmers and ensure they have the tools needed to be successful. Projects like these are going to make traceability a reality. We look forward to the results of the pilot and seeing how farmers in Colombia can benefit.”
Ambassador Camilo Reyes, Colombian Ambassador to the U.S., said traceability technology will have both a personal and economic impact for farmers.
"Coffee has always stimulated economic growth and transformation in Colombia -- and with the Starbucks coffee ‘bean-to-cup’ traceability pilot project, it can do even more for our country,” he said. “By giving Colombian farmers and the Colombian Coffee Growers Federation (FNC) a face in the marketplace, this project will help empower farmers and their families and provide a boost to local communities and our economy. We always knew little coffee beans packed a big punch – and now we will have the ability to track their boldness, thanks to Starbucks.”
A bridge from farmers to customers
Today’s announcement represents the technology-enriched next step of work Starbucks has been doing for years to help sustainable coffee farmers establish individual identities, to give customers more transparency and to promote a higher level of accountability, Karuletwa said.
“A coffee farmer once told me, ‘These things you do for our coffee are not just about the preservation of a product, they are a preservation of us,’” Karuletwa said.
Karuletwa speaks poetically of coffee and the time he’s spent with coffee farmers in the space he calls “the first 10 feet.”
“To me, traceability of a global product such as coffee – one that has so much human depth and magnitude – is almost like taking an unedited photograph of ourselves. It’s an image that includes all that ails us, but more importantly, all that sustains us,” he said.
Apart from the transparency that traceability technology will provide at scale in relation to sustainability, Karuletwa also has a vision of using the technology to create an “authentic, seamless, dynamic” one-to-one connection between farmers across the globe and someone drinking coffee at, say, a Starbucks in Seattle or Shanghai.
“Coffee producers continue to embrace tools that equip them to be more sustainable in an ever-changing environment,” said Jean Nkunzimana of the MISOZI Coffee Cooperative in Rwanda. “From unpredictable climate changes to commodity price volatility, farmers continue to face multiple challenges in a global marketplace. With identity being the foundation of traceability, farmers have been able to leverage the value of being identified to create a credit history of the value of their production, as well as an acknowledgment of their self-worth.”
That connection to farmers is at the heart of the pilot, said Karuletwa.
“Elevation, process, entomology, soil composition, terroir, nutrients, rainfall – it carries little meaning if I’m not also talking about the rest of what makes the coffee possible, and that’s the people,” Karuletwa said. “The taste of coffee eventually disappears off the palette, but what never leaves you are the stories of a people and the places. My hope is that this project will create familiarity between farmers and customers and enhance empathy, a commodity we have great need of today.”