Loans for farmers – a better future for farmers and their communities.
See how farmer loans are making a difference for a coffee-growing community in Tanzania.
We know our long-term success is linked to the success of the thousands of farmers who grow our coffee.
One way we make sure we have a sustainable supply of high-quality coffee is by investing in the future of our coffee farmers and their communities through alternative loan programs. These provide farmers with access to loans that the commercial or traditional lending sector is unable to serve. Starbucks has already committed $12.5 million to a variety of farmer loan funds. Now, as part of the Starbucks™ Shared Planet™ commitment to ethical sourcing, we plan to nearly double our investment in these kinds of programs to $20 million by 2015.
Why it’s important.
During the growing and harvest cycles, many coffee farmers dip into their modest reserves to cover expenses until they can sell their crops. Some farmers may even experience a cash shortage, prompting them to sell their crops early—and for less—to local buyers. Alternatively, farmers will sometimes borrow money at exorbitant local interest rates until they can sell their crops. This cuts into their profits and sets up a similar scenario for the next year.
Starbucks provides funding to organizations that make loans to coffee growers, which will help them sell their crops at the best time to get the right price. The loans also help farmers to invest in their farms and make capital improvements.
Our commitments include:
- $7 million loaned to Root Capital
- $4.5 million committed to Verde Ventures
- $1 million loaned to Calvert Foundation
In turn, these organizations provide trade credit to cooperatives and farmers who need access to financing for pre-harvest activities, improvements to farms or equipment, or export financing.
One story of success.
Since 2004, Starbucks has provided $2.5 million in loans to Verde Ventures, an investment fund managed by Conservation International (CI). In fiscal 2008, Starbucks made an additional $2 million commitment to Verde Ventures.
Verde Ventures was able to use this money to provide pre- and post-harvest loans and capital improvement financing to farmers located near key biodiversity areas in Mexico. The investments benefited 379 farmers managing 7,300 acres (3,000 hectares) of land.
In terms of financing power, the initial $2 million from Starbucks actually translated into much more than $2 million worth of loans in terms of financing power. As the loans are repaid, the money becomes available for new loans. Since our original commitment in 2004, a total of more than $7 million worth of loans have been issued, repaid and rotated to coffee growers. In that time, these cumulative investments have directly benefited more than 7,600 farmers and 51,000 acres (20,000 hectares) of land.
Where we’re investing.
Our total commitment to these financing organizations is $12.5 million.
(See chart below.)
