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Assessment of the

Starbucks Coffee

and Farmer Equity

(C.A.F.E.) Practices

Program

FY08 - FY

Prepared by: Bambi Semroc, Elizabeth Baer, Joanne Sonenshine and Marielle Canter Weikel

March 2012

Table of Contents

List of Figures

Figure 1: Number of Applications Verified Per Year, FY06-FY10 ..............................................................

Figure 2: Number of Applications per Region, FY06-FY10 ......................................................................

Figure 3: Application Approval Status, FY06-FY10 ..................................................................................

Figure 4: Application Approval Status by Percentage of Applications Verified per Region, FY08-FY10...............................................................................................................................

Figure 5: Application Approval Status by Number of Applications Verified per Region, FY08-FY10...............................................................................................................................

Figure 6: C. A. F. E. Practices Purchases as Percentage of Total Starbucks Coffee Purchases, FY08-FY10...............................................................................................................................

Figure 7: C. A. F. E. Practices Purchases according to Farm Size, FY08-FY10 ........................................

Figure 8: C. A. F. E. Practices Purchases According to Approval Status, FY08-FY10 ..............................

Figure 9: Regional C. A. F. E. Practices Purchases by Length of Validity Status, FY08-FY10 ...................

Figure 10: Average Application Scores, FY06-FY10 ..................................................................................

Figure 11: Percentage of Farms Paying More Than the Minimum Wage, by Worker Type (All Farm Sizes), FY08-FY10 .....................................................................................................

Figure 12: Percentage of Total Farms with Riparian Buffer Zones, FY08-FY10 ..........................................

Figure 13: Percentage of Farms Protecting Slopes Between 10%-20%, FY08-FY10 ................................

Figure 14: Percentage of Farms Protecting Slopes of Between 20-30%, FY08-FY10 ................................

Figure 15: Percentage of Farms Protecting Slopes Over 30%, FY08-FY10 ...............................................

Figure 16: Percentage of Farms Using Cover Crops, FY08-FY10 ..............................................................

Figure 17: Percentage of Farms Using Leguminous Trees, FY08-FY10 .....................................................

Figure 18: Proportion of Conservation Hectares by Farm Size, FY08-FY10 ...............................................

Figure 19: Percentage of Farms with 10% or 40% Shade Canopy Cover, FY08-FY10 ..............................

Figure 20: Percentage of Farms with 3% and 5% Set-asides, FY08-FY10 ................................................

Figure 21: PSO Verifications, FY08-FY10 ..................................................................................................

Figure 22: PSOs by Type of Entity, FY09 and FY10 ...................................................................................

Figure 23: Percentage of PSOs Ensuring Each Farm in the Supply Chain Receives a Receipt for Coffee ....................................................................................................................

Figure 24: Percentage of PSOs Providing Farmers with a Written Agreement or Identification Card upon Their Commitment to Comply with the C. A. F. E. Practices ................

Figure 25: Percentage of PSOs Facilitating Distribution of Soil-erosion Controls, FY08-FY10 ....................

Figure 26: Percentage of PSOs Implementing Soil- and Foliar-testing Strategy According to the Timeline .........................................................................................................

Figure 27: Percentage of PSOs with a Shade Management Plan ..............................................................

Figure 28: Percentage of PSOs Creating a List of Wildlife Species Native to the Region and Identified According to the IUCN Red List..........................................................................

Figure 29: Percent of PSOs Not Using Chemicals Listed by the WHO as Type 1A or 1B ...........................

Figure 30: Percentage of PSOs Facilitating Distribution of Non-chemical Controls for Coffee Berry Borer, FY08-FY10 ................................................................................................

Figure 31: Percentage of PSOs Monitoring Farm Performance across 5, 10 and 15% of their Networks, FY08-FY10 ..............................................................................................................

• List of Figures ................................................................................................................................
• List of tables .................................................................................................................................
• Executive summary.......................................................................................................................
• 1. introduction ..........................................................................................................................
• 2. methodology.........................................................................................................................
• 3. global results ......................................................................................................................
  • 3. 1. Applications .............................................................................................................................
    • 3. 1. 1. Growth in Participation ...................................................................................................
    • 3. 1. 2. Application Approval Status .............................................................................................
    • 3. 1. 3. Amount of Coffee Purchased through C. A. F. E. Practices ..............................................
    • 3. 1. 4. Supplier Performance .....................................................................................................
    • 3. 1. 5. Conclusions and Recommendations from Application Analysis ........................................
• 4. Farms ....................................................................................................................................
  • 4. 1. Methodology ............................................................................................................................
    • 4. 1. 1. General Participation .......................................................................................................
  • 4. 2. Social Responsibility – Farms ...................................................................................................
    • 4. 2. 1. Compliance with Zero-tolerance Indicators ......................................................................
    • 4. 2. 2. Compliance with Minimum Labor Standards....................................................................
    • 4. 2. 3. Worker Compensation ............................................................................................................
    • 4. 2. 4. Worker Access to Benefits...............................................................................................
    • 4. 2. 5. Worker Living Conditions .................................................................................................
    • 4. 2. 6. Access to Education ...............................................................................................................
    • 4. 2. 7. Access to Medical Care ...................................................................................................
    • 4. 2. 8. Social Responsibility Conclusions and Recommendations: Farms ...................................
  • 4. 3. Coffee Growing – Environmental Responsibility ........................................................................
    • 4. 3. 1. Water and Soil Resource Conservation ............................................................................
    • 4. 3. 2. Appropriate Chemical Use on Farms ..............................................................................
    • 4. 3. 3. Biodiversity Conservation on Farms and Within the Broader Landscape ..........................
    • 4. 3. 4. Environmental Management Planning on Coffee Farms ...................................................
    • 4. 3. 5. Coffee Growing – Environmental Responsibility Conclusions and Recommendations.......
• 5. Producer support organizations ..........................................................................................
  • 5. 1. PSO Participation Rate.............................................................................................................
  • 5. 2. Management and Tracking Systems.........................................................................................
  • 5. 3. Soil Erosion and Productivity ....................................................................................................
  • 5. 4. Shade Canopy and Wildlife Protection......................................................................................
  • 5. 5. Ecological Pest and Disease Control ........................................................................................
  • 5. 6. Environmental Management and Monitoring .............................................................................
  • 5. 7. PSO Conclusions and Recommendations ................................................................................
• 6. mills ......................................................................................................................................
  • 6. 1. Methodology ............................................................................................................................
  • 6. 2. General Participation Data ........................................................................................................
  • 6. 3. Coffee Processing – Social Responsibility.................................................................................
    • 6. 3. 1. Minimum Labor Standards ..............................................................................................
  • 6. 3. 2. Improved Compensation ..........................................................................................................
    • 6. 3. 3. Worker Benefits ...............................................................................................................
    • 6. 3. 4. Worker Living Conditions ................................................................................................
    • 6. 3. 5. Access to Education........................................................................................................
    • 6. 3. 6. Access to Medical Care ...................................................................................................
  • 6. 4. Wet and Dry Mills - Social Responsibility Conclusions and Recommendations .........................
  • 6. 5. Coffee Processing – Environmental Responsibility ....................................................................
    • 6. 5. 1. Wet Coffee Processing ....................................................................................................
    • 6. 5. 1. 1. Water Conservation .........................................................................................................
    • 6. 5. 1. 2. Waste Management ........................................................................................................
    • 6. 5. 1. 3. Energy Conservation .......................................................................................................
    • 6. 5. 2. Dry Coffee Processing .....................................................................................................
    • 6. 5. 2. 1. Waste Management ........................................................................................................
    • 6. 5. 2. 2. Energy Conservation .......................................................................................................
  • 6. 6. Coffee Processing – Environmental Responsibility Conclusions and Recommendations ...........
• 7. Conclusions and recommendations....................................................................................
  • 7. 1. Applications .............................................................................................................................
  • 7. 2. Farms and Producer Support Organizations .............................................................................
  • 7. 3. Mills .........................................................................................................................................
• 8. Country results ....................................................................................................................
  • 8. 1. Introduction ..............................................................................................................................
  • 8. 2. Methodology ............................................................................................................................
  • 8. 3. Country Dashboards ................................................................................................................
       • Bolivia ......................................................................................................................................
       • Brazil .......................................................................................................................................
       • Colombia .................................................................................................................................
       • Costa Rica ...............................................................................................................................
       • East Timor ...............................................................................................................................
       • El Salvador ...............................................................................................................................
       • Ethiopia ..................................................................................................................................
       • Guatemala .............................................................................................................................
       • Honduras ...............................................................................................................................
       • Indonesia ...............................................................................................................................
       • Kenya ....................................................................................................................................
       • Mexico ...................................................................................................................................
       • Nicaragua ..............................................................................................................................
    • Panama .................................................................................................................................
    • Papua New Guinea ................................................................................................................
    • Peru .....................................................................................................................................
    • Rwanada ...............................................................................................................................
    • Tanzania .................................................................................................................................
    • Zambia...................................................................................................................................
• APPENDiCEs ............................................................................................................................
  • Appendix 1: Glossary of Terms ..............................................................................................................
  • Appendix 2: Global Farm Compliance Rates for C.A.F.E. Practices Indicators ........................................
  • Appendix 3: Global Mill Compliance Rates for C.A.F.E. Practices Indicators ...........................................
  • Appendix 4: Global Producer Support Organization Compliance Rates for C.A.F.E. Practices Indicators ....
  • of Farms, FY08-FY10 ...............................................................................................................
  • FY08-FY10............................................................................................................................... Figure 33: Percentage of PSOs Training > 5, 10and 25% of Small Farms in their Networks,
• Figure 34: Percentage of Mills Providing Paid Sick Leave to Workers, FY08-FY10 ....................................
• Figure 35: Percentage of Mills Offsetting the Costs of Health Services for Workers, FY08-FY10 ................
• Table 1: Verification Period and Eligibility for Purchase Under C. A. F. E. Practices ................................. List of Tables
• Table 2: Applications Re-verified During FY08-FY10 Period ...................................................................
• Table 3: Participation in C. A. F. E. Practices by Region from FY06 to FY10 ...........................................
• Table 4: Change in Approval Status for Applications Re-verified Between FY08 and FY10.....................
• Table 5: Indicator Trends for Re-verified Applications, FY08-FY10 .........................................................
• Table 6: Relative Participation of Small, Medium and Large Farms .........................................................
• Table 7: Number and Type of Farm Workers, by Farm Size and Year, FY08-FY10 ..................................
• Table 8: Zero-tolerance Incidents Among Sampled (Un-extrapolated) Farms, FY08-FY10 ......................
• Table 9: Green Coffee Deductions Due to Zero Tolerance Incidents, FY08-FY10 ...................................
  • FY08-FY10............................................................................................................................... Table 10a: Percentage of Farms Complying with Zero-tolerance Indicators by Farm Size,
  • FY08-FY10............................................................................................................................... Table 10b: Percentage of Farms Complying with Zero-tolerance Indicators by Farm Size,
• Table 11: Workers Paid Above Minimum Wage, FY08-FY10 ....................................................................
• Table 12: Percentage of Farms that Pay of National Legally Mandated Benefits to Workers .....................
• Table 13: Number of Farms Providing Potable Water to Workers .............................................................
  • Secondary Education in Areas with Insufficient Access............................................................. Table 14: Percentage of Medium and Large Farms Providing Primary and
• Table 15: Percentage of Medium and Large Farms Offsetting Health Care Costs for Workers..................
• Table 16: Riparian Buffer Indicator Results, FY08-FY10 ...........................................................................
• Table 17: Percentage of Farms with Buffer Zones Comprised of Native Vegetation, FY08-FY10 ..............
• Table 18: Percentage of Farms Protecting Water Bodies from Agrochemicals, FY08-FY10 ......................
• Table 19: Number of Conservation Hectares Managed by Participating Farms, FY08-FY10 .....................
• Table 20: Number of PSO Verifications per Region, FY08-FY10...............................................................
• Table 21: Number of Participating Mills, FY08-FY10 ................................................................................
  • FY08-FY10............................................................................................................................... Table 22: Number of Workers Employed by Mills Participating in C. A. F. E. Practices,
• Table 23: Incidents of Non-Compliance with Zero-tolerance Indicators ....................................................
• Table 24: Number of Mills with Non-Compliance with Zero-tolerance Indicators ......................................
• Table 25: Mill Compliance Rates for Zero-tolerance Indicators, FY08-FY10 .............................................
• Table 26: Number of Workers Receiving Legally Mandated Minimum Wage, FY08-FY10 .........................
• Table 27: Percentage of Mills Paying Above the Minimum Wage, FY08-FY10 ..........................................
• Table 28: Number of Mill Workers Earning Wages Exceeding the Legal Minimum ....................................
• Table 29: Percentage of Mills Providing Workers Legally Mandated Benefits ............................................
• Table 30: Number of Workers Receiving Paid Sick Leave, FY08-FY10.....................................................
• Table 31: Number of Wet Mills Verified, FY08-FY10 .................................................................................
• Table 32: Number of Dry Mills Verified, FY08-FY10 ..................................................................................
• Table 33a: Farm Key Performance Indicators Used in Dashboard Analysis ................................................
• Table 33b: Mill Key Performance Indicators Used in Dashboard Analysis ...................................................
• Table 33c: PSO Key Performance Indicators Used in Dashboard Analysis .................................................

Executive Summary

Since March 2008, Starbucks and Conservation International have been working to assess the results of the Coffee and Farmer Equity (C. A. F. E. ) Practices program to date, in order to identify where suppliers are performing well and where additional, targeted supplier development initiatives would deliver the greatest benefits. Since the launch of C. A. F. E. Practices in 2004, the hypothesis has been that implementation of the program will result in the increased uptake of improved hiring practices, working conditions, coffee-growing and coffee-processing practices over time, and that this in turn will serve to improve producer livelihoods and conserve the natural habitat necessary to maintain ecosystem services for communities, coffee production and nature conservation. The publication of the FY08 assessment study in March 2011 marked a key milestone along the journey towards greater understanding of strengths and opportunities for the program, but provided only a baseline from which to compare future performance. This report, which looks at performance from FY08 through FY10, is the first that looks at performance over time for applications, farms, Producer Support Organizations (PSOs) and mills participating in the program.

Using the verification reports generated by verifiers for suppliers participating in the program, we can begin identifying trends over the three years to better understand how performance is changing over time, although the population of applications, farms, PSOs and mills undergoing verification varied significantly from year to year. In addition, by analyzing the subset of verification reports for applications that underwent re-verification during this period, we can begin to understand whether or not suppliers remaining in the program are adopting more practices over time and achieving higher approval status and/or application-level scores. Due to only a small number of applications requiring re-verification in FY09 and the relatively small number of new applications in that year, most of the results show FY as disrupting any clear trend over the three years.

Although the population of verifications did vary from year to year, this analysis has identified several areas where performance has been high among suppliers participating in the program, as well as areas where further supplier development efforts may be warranted to enable farms, mills and PSOs to improve performance over time. Key highlights from this analysis include:

Applications

• C. A. F. E. Practices has an extensive geographic reach across three continents and 20 countries, many of which overlap with regions of global biodiversity importance.
• Suppliers achieved higher performance in the program over time. For instance, average application scores for all applications verified increased by 27 percentage points between FY06 and FY10. In addition, of those applications verified twice during the FY08-FY10 period, 30% achieved an improved approval status and 60% saw their total aggregate score improve during the second verification.
• The number of applications receiving a non-compliant status decreased by 92% over the three years and there was a 112% increase in the number achieving strategic status over the past five years. The continued ability of the C. A. F. E. Practices program to detect instances of non-compliance with the zero-tolerance indicators relating to payment of minimum wage and employment of minors under the age of 14 is a compliment to the strength of the verification process.

Farms and Producer Support Organizations

• Small farms of less than 12 hectares continue to make up the vast majority of farms participating in the program. A significant portion of these farms also processed their coffee, far outnumbering the number of wet mills participating in the program.

• Small-farm performance showed a strong correlation to that of PSOs, which points to the importance of these service providers in helping to ensure small-farm networks have access to the resources and training needed to improve performance over time.
• Additional awareness regarding the importance of buffer zones protecting water from agrochemical application is needed for the 19-23% of farms that applied chemicals within 10m of water bodies.
• There is significant opportunity to increase the proportion of medium and large farms with monitoring programs in place related to C. A. F. E. Practices performance, as this was the criteria indicator with the lowest level of compliance.
• There may be a need to target technical assistance and training to medium-sized farms on practices related to the conservation of areas of high ecological value, the protection of waterways from agrochemical runoff, as well as in finding and promoting alternatives to WHO Type 1A and 1B chemicals, where between 8% and 21% of farms were not in compliance over the three-year period.
• Small farms could benefit from additional assistance in the adoption of cover crops and leguminous trees to maintain soil fertility over time, as these farms had significantly lower adoption rates of these practices than medium or large farms.
• PSOs should be encouraged to increasingly provide farmers within their network with a written agreement or identification system upon commitment to comply with C. A. F. E. Practices, as this would help ensure small farms are aware of the program and their own participation within it.
• Ensuring that all mill workers have access to potable water should also be a priority for the program. This would be a major milestone and address the fact that 8-31% of mills verified failed to provide workers with this basic necessity.
• Additional assistance to mills may be necessary to enable further increases in energy efficiency over time, as compliance rates for this indicator were at or below 34% across the three years.

Thus, although there are many areas where applications, farms, PSOs and mills performed well in the program, there are also many opportunities for Starbucks to promote improvements through the program. This is of particular importance as the company works to secure a sustained supply of high-quality, ethically sourced coffee on into the future.

1. Introduction

In 2011, Starbucks Coffee Company and Conservation International (CI) released the first global assessment of the Coffee and Farmer Equity (C. A. F. E. ) Practices program^1 based on verifications that occurred during Starbucks fiscal year 2007 and were eligible for purchase through the program in FY08. The publication of that report represented a significant milestone for the C. A. F. E. Practices program, and for verification and certification systems more broadly, as it was the first comprehensive analysis of verification data completed and made publicly available in an effort to establish a transparent baseline to which future performance of the program would be benchmarked. The objective of that study was to establish a monitoring and evaluation process allowing for an annual assessment of the program that would capture findings, make recommendations for improvement and/or targeting of technical assistance to specific regions, and enable improved public reporting and communications about the program. These assessments would test the hypothesis underpinning the program: that implementation of the program will result in the increased uptake of improved hiring practices, working conditions, coffee-growing and coffee-processing practices over time, and that this in turn will serve to improve producer livelihoods and conserve the natural habitat necessary to maintain ecosystem services for communities, coffee production and nature conservation. By analyzing verification data we can draw conclusions as to whether farms, mills and PSOs are adopting more of the better practices over time. Supplementary studies are needed, however, to determine whether the adoption of these practices has led to enhanced productivity, long-term viability of farms, improved household livelihoods and/or increased environmental conservation in coffee production areas.

This report represents the second global assessment of C. A. F. E. Practices and includes analysis of verifications for Starbucks fiscal years 2009 and 2010. Having three years of data for the program makes possible the inclusion of trend analysis for the first time. The trend analysis looks at changes in levels of participation and adoption of better practices among participating producers during the 2008-2010 time period. This is especially the case where applications (representing farms, mills and producer support organizations) underwent a re-verification during this time period, the subject of which will be the basis for an addendum to this report.

In addition to conducting global assessments of the program, Starbucks and CI have also conducted field surveys in two key sourcing countries – Guatemala and Colombia – to analyze whether participation in the C. A. F. E. Practices program has had an influence on farmer livelihoods, adoption of better practices and environmental conditions in the selected landscapes when compared to farmers who did not participate in the program.^2 These field surveys supplement the global assessment by enabling a deeper understanding of the profile of small-scale coffee producers in these countries and how the program and coffee production more generally affect household livelihoods and the environmental landscape.

(^1) See http://www. conservation. org/sites/celb/Documents/2011. 04. 07_SBUX_CAFE_Results_Assessment_FY08. pdf for a copy of the 2008 report. (^2) These studies are available at http://www. conservation. org/campaigns/starbucks/Pages/CAFE_Practices_Results. aspx.

• Some applications receive validity for multiple years and do not require re-verification until this validity expires;
• In applications undergoing re-verification, sampling of applications containing medium and small farms requires that only 15% of the farms included in the previous sample are re-verified, while 85% of the sample represent previously unsampled farms;
• Applications do not remain static from year to year, as export companies may decide to split or combine applications to increase efficiencies and achieve improved status, or to add farms to expand participation in the program;
• Suppliers (applications) may choose to discontinue participation in the program; and
• New suppliers (applications) may enter into the program in any given year.

Thus, the annual trends reported in this report represent results based on the composition of applications verified in a particular year, unless otherwise noted in the text. The one exception to this is in the analysis of purchasing data where purchases for a given year from C. A. F. E. Practices participants include all active (with a current validity) applications from which Starbucks purchased coffee during the fiscal year, rather than only those applications verified during that year. Analysis of the 268 applications that underwent re-verification during the 2008- period identified that the majority of the re-verifications occurring in FY10 were for applications previously verified in FY08, although these still represent a relatively small proportion of total applications verified in FY10. In addition, the percentage of applications that were re-verified and did not experience a change in the number of farms varied significantly from year to year, with the FY08-FY10 set having the highest rate of consistency at 67%. When the threshold is raised to no more than 50% difference in the number of farms in the application, the percentage for FY08-FY10 increases to 91%. (see table 2. )

Due to the low level of re-verifications taking place and the variation in the farm counts within these applications, this report only looks at these re-verifications at the application level and only those that meet the 50% threshold stated above. Farm and mill-level results from re-verifications for FY08-F10 will be provided as an addendum to this report in the coming months.

Re-verification Period

# of Apps Re-verified

Apps with No Farm Count Variation Apps with Farm Count Variation <50%

% # %

FY08-FY09 27 5 19% 17 63% FY08-FY10 199 134 67% 182 91% FY09-FY10 36 19 53% 28 78%

Table 2: Applications Re-verified During FY08-FY10 Period

The C. A. F. E. Practices program consists of 249 indicators used to assess the social and environmental performance of farms, mills and PSOs in an application. For each of these indicators, verifiers assign a compliant, non-compliant, or not-applicable rating within the VRS database. Because verifiers can mark an indicator as not- applicable for a given farm, mill or PSO, the number of entities reporting on any given indicator can vary greatly and often does. For this reason, the results provided in this report represent only those entities for which the given indicator was deemed applicable by the verifier. Reporting rates for each indicator are provided in the summary tables in the appendices.

This report provides a review of performance against a subset of the 249 indicators in the program based on the monitoring framework developed as part of the FY08 assessment process. The CI team reviewed this framework and updated it to ensure it continued to reflect priorities for the assessment and was sufficiently robust to encompass the trend analysis introduced in the current report.

At the country scale, a subset of indicators forms the basis for a consistent dashboard of select indicators that show performance trends for applications, farms, mills and PSOs. The dashboard includes a set of key performance indicators (KPIs) – selected by CI and Starbucks based on either their high levels of variation from country to country, or their ability to provide important information for management of the program. The KPIs are aggregated for all entities reporting within the country. Each dashboard also includes additional notable trends or other results

unique to that country that are not captured by the KPIs. CI developed country dashboards for each country that had applications verified for FY09 and/or FY10. Although Burundi was included in the FY08 report, no applications underwent verification from that country in either FY09 or FY10, so it is not included.

The C. A. F. E. Practices program employs a stratified random-sampling methodology for applications that include small and/or medium farms guided by the established international standards for group certification (ISEAL Alliance, 2009). In contrast, all large farms participating in the program are included in the sample, with the exception of Brazil, where large farms are also sampled.^4 As a result of the sampling procedures, 3. 9% of the total farms included in applications were sampled in FY08, 1. 7% were sampled in FY09, and 4. 4% were sampled in FY10. In preparing the FY08 report, CI used Access and Excel software to extrapolate verification report data for sampled farms to the population of farms participating in the program noted in the individual applications. Starbucks worked with the VRS service provider to integrate this extrapolation process within that system which resulted in CI receiving extrapolated data for the FY09 and FY10 applications. The only exception to this was for small farms that conducted wet milling as CI continued to calculate these compliance rates. The team used this extrapolated data to determine compliance rates for the indicators included throughout the report. Where possible, the compliance rates were correlated to hectare and worker data collected as part of the verification process to determine the amount of land or number of people, respectively, affected by the adoption of a particular practice.

The presentation of findings begins with the following section of the report on global and regional results. The section begins with a discussion of applications and continues with farms, PSOs and mills. For each type of entity analyzed, a subset of key indicators guides the analysis for that section. The global and regional results are followed by a section that consists of country-level dashboards for each of the 19 countries applying to the program in FY09 and/or FY10. In Section 6 we draw conclusions and make recommendations for moving forward. This is followed by a series of appendices that show global results for each of the indicators included in the analysis.

(^4) Brazil’s coffee industry is unique in the world in that coffee farming happens on very large farms organized into very large networks. Although in other countries, verifiers visit each large farm contained in an application, visiting all large farms in Brazilian applications would be prohibitively expensive and resource-intensive. In order to create a practical approach to verification in the Brazilian context, Starbucks adapted the sampling methodology for large farms in Brazil, according to the sampling method applied to medium-sized farms.

North and Central America have had the most applications verified for any given year since the launch of the C. A. F. E. Practices program. (see Figure 2.) This trend continued in FY10 when 81% (n=500) of the applications verified came from that region and was in line with the 82% from North and Central America in FY08. The only year when this was not the case was FY09 and this was most likely due to the extension of validity or the change in how validity is assigned. Asia and Africa continued to have low numbers of applications verified for any given year and in 2010 represented 4% and 1% of verifications, respectively.

Figure 2: Number of Applications per Region, FY06-FY

The number of countries with coffee producers undergoing verification varies from year to year, but over the course of the past five years for which data is available, coffee producers from 20 countries have participated in the program. (see table 3 ) Across these five years, only five countries had applications undergoing the verification process in every year (Colombia, Costa Rica, El Salvador, Nicaragua and Peru). This is in part due to the program not being launched in Africa and Asia until FY07. Since FY07, 15 of the 20 countries have had at least one application verified each year.

Participating countries continue to overlap significantly with the biodiversity hotspots – the world’s most biologically rich regions that face significant threat. In addition, one country – Papua New Guinea – is a High Biodiversity Wilderness Area due to its high degree of natural forest remaining and high levels of species endemism. This overlap with areas of global biodiversity importance makes the environmental performance of C. A. F. E. Practices applications of particular relevance.

Region FY06 FY07 FY08 FY09 FY Africa 0 38 38 32 5 Asia 0 25 36 14 26 North & Central America 519 557 658 46 500 South America 35 62 72 62 86 Grand Total 554 682 804 154 617

Table 3: Participation in C. A. F. E. Practices by Region from FY06 to FY

Although application numbers can provide some sense of the level of participation in a given year and the number of countries represented, these figures can under- and over-represent changes in participation over time. For instance, some applications may not require re-verification in a given year, which can result in under-representation of applications active in the program in any given year. Thus, although no applications were verified for a given year, that does not mean that the country had no applications eligible for purchase through the C. A. F. E. Practices program for that year. In other cases, suppliers may choose to combine several applications into a single application over time. Over-representation can also occur if suppliers choose to split an application into multiple applications to improve efficiencies and/or achieve a higher approval status.

3. 1. 2. Application Approval Status

• Percentage of applications achieving various approval status categories
• Percentage of small, medium and large farms in applications achieving various approval status categories
• Pounds of coffee deducted from the program due to non-compliance

Starbucks assigns an approval status for each application that has completed the verification process, ranging from non-compliant to strategic. Non-compliant applications are those failing to meet minimum requirements for selling coffee to Starbucks through the C. A. F. E. Practices program. The composition of the application determines the thresholds for non-compliance. For instance, applications that do not undergo sampling (e. g. , those consisting solely of large farms) must meet all zero-tolerance requirements outlined in the program. For those applications in which sampling occurs, at least 50% of the verified farms must meet the zero-tolerance indicators. In some cases applications containing non-compliant farms or mills may be assigned an approval status, but in such cases Starbucks deducts the percentage of coffee produced by these non-compliant farms from the total amount of coffee eligible for sale through the program. The C. A. F. E. Practices scorecard is divided into subject areas and applications must meet these performance levels for each of the subject areas to achieve the given approval status. Verified suppliers meet minimum requirements and achieve a score of less than 60%. Preferred suppliers achieve scores ranging from 60 to 80% in all subject areas and strategic suppliers are those achieving a score of over 80% in all subject areas. In cases where sampling occurs within the application, the combined score of the sampled farms for the subject area (e. g. , farms, wet mills) must meet the threshold.

The percentage of applications achieving higher approval status has increased over the past five years of the program. When looking at the absolute number of applications verified for each of the given years, the number of non-compliant applications dropped by 92% over this time period, declining from 112 in FY06 to only 9 in FY10. Over the same period, the percentage of applications achieving strategic status has increased by 112% as 172 applications achieved this status in FY10 compared to 81 in FY06. Since FY06 was a unique year in which the program was in its early implementation and only active in Latin America, it is worth looking at rates of change in approval status between FY07 and FY10. This also helps control for the difference in the number of applications undergoing verification as the totals were 682 in FY07 and 617 in FY10. Over the four years, the number of applications achieving strategic status increased by 51%, while the percentage failing to achieve an approved status declined by 86%.

Figure 3: Application Approval Status, FY06-FY

When examining approval status by region from FY08 to FY10 based on the percentage of verifications that occurred in each year, we find that most regions saw a decline in the percentage of applications receiving a non-compliant status. (see Figure 3.) The exception to this trend is in Africa where in FY10 the percentage of applications with a non-compliant status actually increased from 12% to 20%. Africa also saw a relative decline in the percentage of applications achieving a strategic and preferred status. In Asia there was also a relative decline in the percentage of applications achieving a strategic status, but an increase in those meeting the preferred status requirements. The

Change in Status (from previous verification to most recent) No. of Apps % of Apps

Improved Status

NC to Verified 3 1% NC to Preferred 1 0% Verified to Preferred 33 14% Verified to Strategic 14 6% Preferred to Strategic 19 8%

Decline in Status

Verified to NC 4 2% Preferred to Verified 8 3% Preferred to NC 1 0% Strategic to Preferred 2 1% Strategic to Verified 9 4% No Change 139 60% Total 233 100%

Table 4: Change in Approval Status for Applications Re-verified Between FY08 and FY

3. 1. 3. Amount of Coffee Purchased through C. A. F. E. Practices

• Pounds of coffee purchased from C. A. F. E. Practices-approved suppliers
• Percentage of coffee purchases from large, medium and small farms
• Percentage of purchases by length of validity status term

The percentage of Starbucks coffee purchased through the C. A. F. E. Practices program has steadily increased over time, rising from 77% in FY08 to reach 84% in FY10. In FY10, Starbucks purchased C. A. F. E. Practices-verified coffee from 15 countries spanning three continents. This is down from 18 countries in FY08.

Figure 6: C. A. F. E. Practices Purchases as Percentage of Total Starbucks Coffee Purchases, FY08-FY

During this same period, there was also a decrease in the percentage of C. A. F. E. Practices purchases made from applications consisting solely of small farms, although small farms were increasingly included in applications with medium and/or large farms. (see Figure 7.) Overall, the program is seeing an increase in the proportion of applications composed of a mix of farm sizes, which makes it difficult to extract trends in purchasing according to farm size. For instance, the percentage of C. A. F. E. purchases by volume from applications consisting of a mixture of small, medium and large farms increased from 3% in FY08 to reach 30% in FY10. Nevertheless, small farms continued to make up a significant portion of purchases in FY10, with at least 30% of purchases coming from applications consisting solely of small farms. During the same period, the proportion of C. A. F. E. Practices

purchases from applications composed solely of large farms increased slightly from 16% in FY08 to 22% in FY10. The data also shows a decline in the percentage of applications verified prior to 2008 for which farm size data was not available due to systems limitations. Thus, the FY10 purchases data represents the first year in which more than 99% of the applications had farm size data.

Figure 7: C. A. F. E. Practices Purchases according to Farm Size, FY08-FY

FY10 also saw an increase in the percentage of C. A. F. E. Practices coffee purchases from applications receiving a verified status. (see Figure 8. ) Of the 77% of C. A. F. E. Practices-approved coffee purchased in 2008, half was from verified suppliers, whereas this increased to 61% in FY10. One revision made to the program in FY09 was the addition of provisional status, which is the status granted prior to the verification process being complete. In FY09, provisional status applications accounted for 6% of C. A. F. E. Practices coffee purchases, and 2% by FY10.

Figure 8: C. A. F. E. Practices Purchases According to Approval Status, FY08-FY