Fair trade, sustainability and recycling — of money, that is — are the cornerstones of an innovative partnership between Starbucks Coffee Co., Seattle, and the Calvert Foundation, Bethesda, Md.
Starbucks made a $1 million capital investment in the Calvert Foundation in the spring of 2004 to support small Latin American coffee farmers through loans. The investment carried a 2% interest rate and will be due in 2008.
Calvert lent the money to coffee cooperatives in Costa Rica, Mexico and Nicaragua and to EcoLogic Finance Inc., Cambridge, Mass., a non-profit that provides low-interest loans and financial training to small and medium-size farms in developing countries. When the first round of loans was repaid, the assets were recycled into financing for other small coffee growers.
A third round of financing has just started in which Calvert Foundation will make $650,000 in Fair Trade investments in three Peruvian coffee cooperatives. The Fair Trade certification program guarantees that coffee farmers will receive a fair price for their crop while encouraging environmental and social sustainability. More than 670,000 conventional and organic coffee growers participate in the program. Starbucks offers a retail line of Fair Trade certified and organic coffees.
Through constant "recycling" of Starbucks' initial donation, Calvert Foundation has actually provided $2.7 million of financing to small coffee farmers.
"When farmers have access to credit, we believe they are able to negotiate better prices for their crops, build credit histories and improve their lives and that of their families and local communities," said Sue Mecklenberg, Starbuck's vice president of business practices.