Wednesday, April 2nd, 2008
In 1993, a representative from a U.S. company called Starbucks visited Rodrigo Vargas’ coffee farms in the highlands of central Costa Rica.
Vargas remembers chatting with her, giving her a tour of his coffee fields that covered the green hillsides in a checkerboard pattern and the mills that churned out millions of pounds of dried coffee a year. She took samples and said goodbye.
“I had never heard of (Starbucks) before in my life,” Vargas recalls as he smokes a cigar and drinks a cup of coffee. He had just given a speech about the future of coffee in Costa Rica at an international conference in the country’s capital of San Jose, about 15 miles south of his farm.
Vargas is one of the hundreds of farmers _ large and small _ in Costa Rica who have benefited from Starbucks’ arrival after an influx of cheap beans from Brazil and Vietnam saturated the market and sent prices tumbling in the late 1990s, creating a crisis for coffee growers.
As Starbucks’ presence grew in Costa Rica, Vargas’ relationship with the Seattle specialty coffee-shop chain tightened. He replaced 25 percent of his coffee plants with better breeds of arabica beans to keep up with Starbucks’ growing demand and quality standards.
By 1998, he sold 1.2 million pounds of coffee to Starbucks. In 2002, Vargas visited Seattle, met Chairman Howard Schultz and sat courtside at a then-Schultz-owned Seattle SuperSonics basketball game.
This year, Vargas will sell 70 percent of the more than 7 million pounds of beans harvested on his farms to the company.
“Starbucks saved the coffee industry in Costa Rica,” Vargas says.
Farming-family tradition
Vargas’ company, Santa Eduviges, is one of the largest single-family owned operations in Costa Rica with 32 farms, totaling more than 3,900 acres of coffee fields spread out on the hillsides of the active Poas Volcano.
At the height of the season in December, 3,000 workers from Nicaragua, Panama and Costa Rica harvest the coffee cherries. Coffee grows well in these humid, cloudy conditions and rich volcanic soil. In 1879, Vargas’ great-grandfather planted the man-sized, dark-green plants along with other crops. A generation later, the family’s focus shifted solely to coffee.
Vargas, 52, lives in a house surrounded by coffee fields. His home used to be a coffee mill. The patio where he built a basketball court for his daughters was the site where processed beans dried under the sun. His brother, sisters, daughters and several nephews work at Santa Eduviges.
Times have changed since Vargas’ great-grandfather grew coffee.
Santa Eduviges uses global-positioning systems to pinpoint altitude (an important factor determining the quality of beans), hires agronomists and partners with other companies to research better fertilizers or agrochemicals to battle deadly fungi.
During the crisis a decade ago, when the price set in New York for a bag of coffee was about $60 (even sinking as low as $38), Starbucks was paying more than $100, Vargas says. The gap between the price set in New York and what Starbucks pays has shrunk since the industry recuperated from the crisis, but when it comes to bulk purchases Starbucks remains king.
Costa Rica’s coffee growers continue to benefit from Starbucks’ emergence as a global company and the way it’s made gourmet coffee fashionable among other companies, such as McDonald’s and Dunkin Donuts, worldwide.
The Seattle company buys about 15 percent of the roughly 235.2 million pounds of coffee produced in Costa Rica, according to Ronald Peters, executive director of the Costa Rican Coffee Institute (ICAFE), a government regulatory agency. Starbucks does not release purchase figures for any country.
But Starbucks’ influence in Costa Rica has gone beyond volume and prices.
With its strict guidelines, Starbucks pushes producers to concentrate on quality instead of volume and prefers to buy coffee from farms certified under its environmental and social-standards program introduced in 2003. Those standards are known as CAFE Practices, which stands for Coffee and Farmer Equity Practices.
“Starbucks forced Costa Rica to go back to its roots of producing high-quality coffee,” Peters says.
For its part, Starbucks has opened a Farm Support Center outside of Costa Rica‘s capital to manage operations in Latin America and aid farmers. It houses agronomists who research ways to maintain healthy coffee plants; a healthy plant can yield coffee for up 25 years. The center also administers CAFE Practices for the region.
Starbucks “brought real knowledge of the production of coffee,” Vargas says. “It was the first company that paid attention all the way down to the plant. It brought security to the coffee (market).”
Not everyone is a fan
Much like his boss, Yeiner Chacon’s life revolves around coffee. As head agronomist for Santa Eduviges, he knows coffee. He’s a fan of CAFE Practices, but he no longer deals with the certifiers who visit the farms.
“I almost killed the last guy,” Chacon says half-jokingly. But his attitude reflects the disagreements farmers have with the standards.
Developed in coalition with environmental agencies during an era when accountability was making headlines, CAFE Practices’ biggest challenge was acceptance by farmers.
Chacon, though, objects to its broad guidelines. He points out CAFE Practices require shade trees, which he says are detrimental at Santa Eduviges because of the fungus that thrives in the humidity in the area.
“They shouldn’t come over like they are the police,” Chacon says. Starbucks should learn “how not to frustrate.”
Other producers have more concerns. Thomas Nottebohm, a farmer from Guatemala, says programs like CAFE Practices and Rainforest Alliance are politically driven.
And while he says standards are good, farmers have to pay a couple of hundred dollars to buy shade trees, fix waterways and implement anti-erosion methods.
Yet, Starbucks does not guarantee that it will buy coffee from a CAFE Practices-certified farm, Nottebohm says.
“My concern is that someday they will stop buying, and all the efforts will be for nothing,” Nottebohm says.
Changing ways
Ricardo Zuniga, the chief agronomist with Costa Rica‘s second-biggest coffee cooperative, CoopeTarrazu, recalls how farmers had a hard time doing away with agrochemicals used during the crisis to force the coffee plants to yield more cherries.
The strain on the plant during one season would lower the yield the next, and farmers would buy even more fertilizer.
Farmers also didn’t pay attention to soil preservation or want to uproot lower-quality plants.
But eventually, farmers began to see the benefits of the program.
“The plants are healthier; they produce better,” says Oscar Andres Quiros, a CoopeTarrazu member.
Peter Torrebiarte, Starbucks’ point man in Latin America, says any farm certified by Cafe Practices meets other certification-program standards, including those of Rainforest Alliance, which companies such as food conglomerate Nestle use.
Certification benefits
Moreover, farmers don’t have to sell exclusively to Starbucks. But a Starbucks certification opens more markets for them, Torrebiarte says.
He also says that in the long run, farmers save money if they maintain their farms under the Starbucks standards.
Healthy coffee plants grown with environmentally friendly fertilizers and good soil-conservation practices will yield beans for years, saving producers the cost of buying expensive man-made fertilizers.
The standards aren’t new, Torrebiarte says, but rather a return to the way coffee used to be grown, except with more technical advances.
Starbucks developed the point-based system, Torrebiarte says, in an attempt to include all types of farming.
“We try to be flexible,” he says.
The number of farms under the CAFE Practices program is growing. Nearly all of the farms that Starbucks buys from in Costa Rica are certified.
Starbucks’ goal in 2007 was to purchase 225 million pounds of coffee cherries from certified producers. In 2006, the company bought 155 million pounds of certified coffee.
Starbucks, with its massive demand and obsession with quality, changed the way Costa Rica sold coffee to the U.S.
What was the quality of coffee the U.S. used to buy?
“Crap,” says Juan Gerardo Astua, coffee master for Vargas.
But now, consumption of gourmet coffee is widespread.
“I hope Starbucks recognizes the efforts by the producers,” Vargas says as he pointed to a row of cabins in front of his house.
He meant the worker conditions, including housing with electricity and potable water, as one of the many aspects his company has worked hard to improve, even before Starbucks was on the scene.
“That’s not seen everywhere,” Vargas says.
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