As Foolish friend Alyce Lomax pointed out yesterday, critics are putting increasing pressure on the coffee king to be a fair trader when it comes to buying beans, especially when buying from East Africa in general and Ethiopia in particular. Trouble is, there's almost nothing Starbucks can do to help small farmers.
After Alyce's article ran, I called EcoLogic Finance, which, for more than five years, has invested donations from Starbucks and which, under its latest dictum, is charged with lending another $1 million to the developing coffee industry in Ethiopia.
Here's the problem. EcoLogic Finance, for as fine an organization as it appears to be, isn't set up to invest in individual farms but rather in cooperatives -- usually on the order of $25,000 to $750,000 per cooperative, a spokesperson confirmed.
What's more, in Ethiopia, cooperatives can be very large. One that has seen investments from EcoLogic sports more than 86,000 members. Another, Oromia, has about 23,000 members (as of August of 2006). What of the small farmers who aren't part of a co-op?
Which brings me back to Starbucks. If partners like EcoLogic Finance, which are specialists in bringing aid to the developing world, can't reach those who need help the most, then how can the retailer reasonably be accused of not doing enough? It's a fair question, but as long as farmers in the developing world are suffering, it won't be asked.
So maybe it's time to ask a new question: How can Starbucks, and Green Mountain, and Peet's (Nasdaq: PEET ) , and the rest, team with governments and the green industry to build more cooperatives so that no one is shut out? Wouldn't that be a win for investors, consumers, and farmers? I'd say so.
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Fool contributor Tim Beyers, who is ranked 1,573 out of more than 23,000 in our Motley Fool CAPS investor-intelligence database, likes his decaf grande latte with a splash of cinnamon. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at his Fool profile. His thoughts on Foolishness and investing may be found in his blog. The Motley Fool's disclosure policy warms the heart like a venti-decaf-no-whip-no-foam-mocchachino.