Starbucks Coffee and its responsible for sustainable coffee industries
Coffee spreads out the world as a new lifestyle through the globalisation that entirely controlled by capitalism. One of the essential actors who introduce a revolutionary coffee is Starbucks with the contemporary coffee shop concept that interacts people to consume more coffees in its shop. Although thousands of Starbucks Shop affect the demand for coffee productions in over the world that may rise benefits for the prosperity of the company, it is believed that this high-demands affect to the damage of environmental health and inequity among farmers. This essay will examine what action of Starbucks to solve this problem regarding more sustainable coffee production and its impacts on farmers prosperity and environmental improvement in five parts. First, this essay will discuss the brief history of coffee and how its beginning commercialisation. Second, the development of coffee regarding globalisation in the case of Starbucks. Third, this essay will analyse the impacts of Starbucks regarding economic benefits and environmental damage. Fourth, the essay will expand the recent actions of Starbucks to achieve sustainability in coffee production. Then, the final part will discuss action Starbucks related the alternative form of economic market, the impacts of its action, and the expectancy of future`s Starbucks action. The main important finding of this study is Starbucks successfully to create equality among farmers and impose the good farming under its standardisation although Starbucks merely focus on their framework of sustainable development and less to involve another scheme such as Fair Trade.
History of Coffee Production and Its Initial Commercialisation
This is still mysterious and no evidence that claimed who invented coffee for the first time. However, the first evidence that recorded about coffee plant and its bean as a medical purpose is in Arabia by a scientist Abu Bakr Muhammad ibn Zakaria El Razi (852-932), and Pietro Della Valle who travelled to Middle East countries in 1614-1626 found that coffee in the form of drinking (Weinberg and K.Bealer, 2002, p. 3-4). In 1652, coffee arrived in England by Turkey and immediately became a popular commodity to be consumed, then twenty years later first coffee shop was opened in Paris (Crawford, 1852, p.52). It was an initiative that coffee as an industry prospect to develop into a profitable business.
The popularity and high demands of coffee in Europe brought exploitation of coffee industries in their colonised countries; for example, in 1690, Dutch carried coffee seeds from India to Indonesia to be developed so it can be exploited for Dutch needs, and Indonesian coffee has been growing until now to be the third biggest and well-developed Robusta coffee industries in the world whereas the export destination mainly to developed countries, such as United States and European Countries (Crawford, 1852, p. 52; Killeen and Harper, 2016, p. 6; USDA, 2017, p. 3). This might also occur in the two largest coffee producing countries in the world, Brazil and Vietnam. Therefore, the development of coffee which has this same pattern may become the proof that all of the eras of the globalisation coffee are costed by resource exploitation of developing countries where developed countries who control the market and collect more profits rather than the farmers.
From Mcdonalisation to Starbuckisation
The world changed rapidly after the industrialisation era. In that decades, many firms grow easily to duplicate their business to many sides of the world. A business model that may represent phenomenon is Mcdonalisation. It may be caused that McDonald’s is an iconic company in the world that take advantages globalisation to grow to an unprecedented level of prosperity. Ritzer (2002, pp. 2–5) introduces the four crucial principles of this frameworks; there is the minimisation of time production with as high as possibly productivity (efficiency and calculability), and provide homogenised services and applied technology in production (predictable and controlled by non-human technologies). These values describe how many companies duplicate their business effectively in the world to take many profits.
Similar to Mc Donald`s, Starbucks take advantages of globalisation and spread their stores to all over the world in few decades. Starbucks started their first store in 1971 and grew their business significantly from 17.000 stores in 50 countries (2011) raised to 24.000 stores in 70 countries (2018) with sold 30 types of coffees (Starbucks, 2011, p. 1, 2018, p.1). George Ritzer (2008, pp. 2-3) argues that Starbucks is growing rapidly than Mc Donald`s, and he expands the ideas to adopt another similar model, that is Starbuckisation. This represents more about the phenomenon that cultural uniformity that affected to society, however, Starbuckisation still has characteristics of four pillars of Mcdonalisation (Chun and Wong, 2015, p. 1). The characteristic that distinguishes from Mcdonalisation is Starbuckisation grow their business with image branding and create massively a middle-class lifestyle (Ritzer, 2008). This means Starbucks can grow to a country that even does not have a lifestyle to consume coffee through the creation of a new culture to make the market of their products.
On the other hand, the globalisation also may make few firms grow considerably on monopolise the commodity. In the case of coffee, the global value chain actors for coffee is monopolised by a small number of lead companies; the majority is based in Western Europe or North America. This includes firms such as Starbucks, Mondelez, Nestle, Proctor and Gamble, and Tchibo (Neilson, 2013, p. 187). Starbucks` coffee bean mainly is arabica coffee which is exported from Latin America, Africa, and Asian Pacific. However, their signature coffee bean mainly comes from Asian Pacific countries (Pashman, 2018). For instance, one important country that produces Starbucks` coffee bean is Indonesia. Neilson (2013, p. 194) argues Starbucks Coffee Company become a major buyer of Indonesia`s (Northern Sumatra and Sulawesi) arabica coffee bean where it is estimated that the company is responsible for export nearly 50% of production capacity (Neilson, 2013, p. 194). Therefore, the effect of Starbucks is not merely to conquer the billions of consumers, but also monopolise and take control of coffee bean production in developing countries.
Economic and Environmental Impacts
The trading of coffee expands as a valuable market that probably increases steadily in the last few years. Coffee markets forecast in 2018/2019 globally will reach 11.4 million bags higher than the previous year at 171.2 million, while the consumption forecast at 163.2 million bags (USDA, 2018, p. 1). This high demand for coffee reflects it involves the great fund’s transactions. In details, Starbucks reach great of profits approximately 22.39 million U.S. dollars in 2017 or increase more than five times since 2003 (Starbucks, 2017b; Statista, 2017). However, Ritzer (2008, p. 16) critics many markups in some products that cause the price of products are too expensive to create doubled profits for Starbucks. This reflects that coffee may become a potential market to collect great money although the common question is economic benefits that Starbucks take may impact all stakeholders from producers to consumers.
Figure 1. The Average of Coffee Farmers and the Poverty Line in Seven Countries (Fobelets, Rusman and Ruiz, 2017, p. 19)
However, the rise profits of Starbucks unequally with the benefits of coffee farmers. FAO (2015, p. 10) reported in 2015 that among countries that earn money from coffee, they failed to make a coffee trade as an eradication of poverty. In details, in a total of 25 million farmers, only four traders which monopolise 40% of coffee trade to be sold to billions of consumers (Fairtrade, 2015, p. 1). Furthermore, Fobelets, Rusman and Ruiz (2017, p. 19) examine in their sample of seven countries (Figure 1) shows that the majority of coffee farmers in Africa life under the poverty line; for instance, in Uganda, coffee farmers earn $435 yearly or one-fourth from the minimum of the poverty line. It shows that coffee farmers globally still struggle with their life and received improper payment from coffee trading. The benefits of coffee trading tend to be collected for the large firms only.
On the other hand, Starbucks that involve in no small coffee commodity in the world may cause an obstacle to environmental health. Ritzer (2008, p. 16) argue that there is a disadvantage of Starbuckisation that is the irrationality of rationality at Starbucks system which is in producers and consumers part. In the producer’s side, Starbucks standardise high-quality coffee bean to be served that means that the best beans may grow in small quantity or more coffee bean will be wasted. In other words, to fulfil Starbucks demands, the farmers probably need more magnificent lands and using chemical forms to grow coffee crops than the others company that require various quality of the coffee bean. Moreover, it may be worse with the limitation of farmers knowledge that causes the producing of coffee beans probably affects the instability of water, waste, and soil.
In consumers side, Ritzer, (2008, pp. 18–19) explain the term “Starbucks Effect” which refers to change people behaviour to consume more foods and drink while they are mobile. It may cause the increase of food waste including paper and plastic waste; for instance, the waste from a coffee cup that mainly made from paper which only used once. It is related that the growth of consumer class consuming which means more people like to eat in cafés due to their lifestyle, not their needs, that may worsen the production of waste.
Starbucks Action for Sustainable of Coffee Industries
The company know that the needs of coffee bean may be absolute and continuously. Many companies that use the source of coffee bean may involve with the other stakeholders; for instance, farmers that should provide high-quality products with sustainable production. Therefore, since 2002 Starbucks try to continuously conduct social responsibility activity in several goals, while in 2017, the goal of Starbucks responsibility is to make sustainable coffee and greener retail (Starbucks, 2017a, pp. 2–3). There is two crucial actions that Starbucks create which are standardisation of production coffee and development of green store.
Starbucks construct a form of standardisation to set provide both the improvement of quality beans and environment that called by Coffee and Farmer Equity (C.A.F.E). The simple practice of C.A.F.E based on two perspectives which are farmers and production process (Starbucks, 2016). First, Starbucks make sure that all farmers under coffee plantation company to provide sufficient salary, freedom to make a union, housing, education, limits on working hours and overtime wages, safety work, and health insurance. Second, the company should practice surely from managing soil, water, energy, pest, and waste with correct treatment (Starbucks, 2016). These processes considered essential by Starbucks to reach sustainability on coffee supply. It related to the definition of sustainability of coffee that Starbucks adopted which is the model that accommodate social and environmental needs to all stakeholders from farmers to consumers (Starbucks, 2018b). It means the sustainability is not merely the role of producing coffee, but also the farmers as producers have to receive sufficient price to improve their life.
In details, to chart deeply the effect of C.A.F.E this essay determines one sample coffee plantation in South Sumatra, Indonesia. Arifin (2010, p. 69) argues that the farmers in Lampung, South Sumatra have at least two economically advantages from C.A.F.E. First, this scheme implements the transparency price in the market which makes the coffee market fairer. Second, the farmers may receive a premium price from Starbucks if they can satisfy requirements of C.A.F.E values. Moreover, since 2015 Starbucks build Farmers Support Centre (FSC) as an educational institution with the approach of ‘open-source’ to provide information and course in sustainable development (1912Pike, 2016; Starbucks, 2018a). The open-source approach means the free knowledge and facilities will be given by Starbucks to all farmers with reciprocal benefits in the future regarding the higher quality of coffee been yet environmentally friendly. The open source tends to be like the mutual interest between Starbucks and Farmers regarding growing sustainability coffee. These benefits are essential to farmers in Indonesia regarding improving their living standard and developing their knowledge because the farmers in Indonesia commonly come from less-skilled farmers in the lower class.
On the other hand, Starbucks also take responsibility for sustainable development in the part of commercialisation products of coffee in their stores. Starbucks (2017a, pp.8-9) illustrate that they have achieved successfully green stores with LEED (Leadership in Energy and Environmental Design) certified, green cups and packaging, investing in green power, and collaboration with greener partners. These responsible described that this company focus on reducing taste by unfriendly environmental forms such as plastics and reduce the dependence on energy. This action is proven that each stakeholder should take responsibility for achieving sustainable development start from producers to consumers.
Alternative, Impact and Expectancy
However, Starbucks has criticised by the researches and activists that the company has no willingness to provide justice among farmers and more sustainable coffee production in alternative economy markets that is called by Fair Trade. Fair Trade is an independent certification scheme to all farmers and workforce in developing countries to involve and improved the trade through promoting fairer trading and helps farmers from poverty (Fairtrade, 2015, p. 1). Raynolds (2002, p. 404) argues that the movement of Fair-Trade critiques the typical production, trade, and consumption to build more equal linking between consumers that commonly from the global north and the producers that from the global south. Also, Gibson-Graham (2006, p. 79) argues that Fair Trade as an alternative market in order to develop the community economy. Therefore, it is reasonable that Fair Trade attract coffee farmers and traders to join its movement. After the formation in 2000, Fair Trade market products valued at $400 million and increase 30% annually which involved by 8000 producers in 45 countries (Raynolds, 2002, p. 404). In short, Fair Trade may become an initial movement for those who want to release from the capitalist system that unequally distributes benefits to only the rich side.
Starbucks has paid attention to Fair Trade since it expanded in its early years. According to Jafee (2007, p. 131), both Starbucks and Fair Trade movements have mutual goals that are to making sure farmers receive a fair price and sustaining coffee production for their future needs. Consequently, In 2001, Starbucks agreed to buy 1 million pounds of fair trade coffee and increase to 10 million pounds in 2005 and planned to buy 100% fair trade certified coffee in 2010 although in reality Starbucks only buy 8.5% Fair Trade coffee (Jafee, 2007, pp. 200–202; Kessler, 2015). The low contribution of Starbucks in the development of this system can be caused by several perspectives. First, this may because of availability of certified coffee are limited. Neilson (2013, p. 193) statistically explain that the growing of certified products is less than activist expected; for instance, the proportion of certified coffee is only 1% in 2001, increase slowly to 8% in 2015 and 20% in 2015. It reflects that the certified coffee including free trade`s coffee may not be able to fulfil the Starbucks needs. Second, Jafee (2007, p. 203) assumes the reason why Starbucks purchased small quantity coffee from Fair Trade markets due to the establishment of company image. It means Starbucks ‘fraudulently’ only want people to know that they are practising fair-trade, without having the willingness to purchase a significant number of Fair-Trade coffees. Therefore, the dynamics of Fair-Trade products with Starbucks tend to be complex whereas even though Starbucks has a similar aim with Fair Trade but the coffee from this scheme seems not profitable and not interesting to support its business.
Although the effect of Fair Trade may be weak to attract Starbucks to involve in its movement, statistically Starbucks reach several valuable goals on their social responsibility; for instance, 99% coffee bean source successfully bought from friendly environmental techniques under C.A.F.E. program, and the 1.400 green stores successfully build in 16 countries (Starbucks, 2017a, p. 21). In a broader context, the system that established in coffee industries involved by various important stakeholders, not merely the firms. In the further development, this essay suggests Starbucks should expand their responsibility especially to a side of decision makers that local coffee production lives. Ponte (2002, p. 1117) explains that the barrier of domestic trade usually involved by its government, while the international agreement governing international trade. It means the collaboration between Starbucks and Governments that produce coffee become essential to delivering their philosophy on sustainable coffee production.
In short, it is clear coffee is a profitable commodity in the worlds with billions of consumers. This essay has examined that coffee production collects great money for few big monopoly companies, but the globalisation of coffee meets the essential obstacles which are inequality among farmers and environmental damage. Therefore, as one of an essential player in coffee trading, Starbucks has conducted several responsible activities which are C.A.F.E which helps farmers to lift their living standard and make their business activities greener with using fewer plastics and paper and manage alternative energy in their stores. The foremost crucial critic is Starbucks uses less Fair-Trade certified coffee. It may be caused that the conventional trading system still involved in the majority coffee trading system in the world or Starbucks examine the system is unprofitable to support their business. Hence, this essay believes that Starbucks successfully helps sustainability from productions of coffee to consuming a cup of coffee although they need to expand their involvement not only in the line of supply chain, but also collaboration among governments that has control to manage the process of coffee production.
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