It is no surprise that the world’s largest coffee shop chain, Starbucks, spends a considerable amount of money on coffee beans. But just how much does Starbucks spend? The answer to this question can open the door to understanding the larger implications for the commercial coffee industry as a whole. Starbucks does not release exact figures, but estimates suggest that the popular coffee chain spends billions every year on coffee beans.
Overview of Starbucks’s Coffee Buying
Starbucks is one of the biggest buyers of coffee beans in the world. According to the company’s sustainability report, they purchased over 11 million bags of beans in the 2019 fiscal year. This means that Starbucks spent an estimated $8 billion on just beans alone. As per the stats, coffee beans account for around 25% of the chain’s total supply chain costs.
Starbucks is also one of the few coffee chains that purchases a substantial amount of coffee directly from farmers. The company works within a Farmer Support Center in regions with coffee farms. This center works with various cooperatives, farmers, and organizations in the region to ensure that the farmers are producing and selling quality coffee beans at fair prices. According to the company, it has purchased coffee beans from more than 15,000 farming communities spread across 30 countries in Latin America and Africa.
Contributors To The Price of Coffee Beans
The price of coffee beans is largely determined by several factors. The two most significant factors are production cost and demand. Very few coffee chains, including Starbucks, are willing to pay farmers five to eight times the commodity rate for top-grade coffee beans. This practice has led many small-scale coffee farmers to abandon their farms and instead focus on cultivating crops that have higher returns such as cocoa and bananas.
Rob Ector, a senior portfolio manager at the Sustainable Food Lab, noted that “when demand increases, prices rise, and when supply chains break, the price will shoot even higher.” This has been the case in recent years, as the demand for coffee beans has been steadily increasing. This high demand is one of the main reasons why coffee companies are willing to pay higher prices for beans.
Environmental Impact
The coffee industry is one of the highest emitters of greenhouse gases in the world. The production of coffee beans is an incredibly water-intensive process, and the beans themselves contribute to the destruction of rainforests due to land being cleared for coffee plantations. Starbucks is one of the only coffee companies that has taken steps to reduce their impact on the environment and to make coffee production more sustainable.
For example, they have committed to minimizing their water usage and have partnered with conservation groups to reduce deforestation in coffee-producing regions. Starbucks is also investing heavily in energy-efficient roasting plants and sustainable farming practices, including agroforestry, which helps farmers to produce more coffee with a smaller environmental footprint.
Economic Impact
The amount of money that Starbucks spends on coffee beans has an enormous economic impact on coffee-producing countries and communities. Coffee is the second most traded commodity in the world, and nearly 25 million people rely on coffee farming for their livelihoods.
By purchasing coffee beans at higher rates, Starbucks is helping to lift small scale farmers out of poverty. The company is also investing in business development programs in coffee-producing countries to help farmers increase their yields and profits. For example, they are providing technical guidance to farmers on better agricultural techniques, such as water and soil management.
Alternate Land Use Practices
Though Starbucks is helping to reduce poverty and protect the environment, their investment in coffee beans has led to some unintended consequences. The demand for coffee beans has led to deforestation and land conversion, as more and more farmers turn to coffee production to make a living.
As such, there is a need for alternative land use practices that are more sustainable and still allow farmers to make a living. These could include organic farming, agroforestry, and integrated farming systems. Such practices can help reduce deforestation, lessen the environmental impact of coffee production, and help farmers generate more income from their crops.
Do Consumers Care?
While Starbucks is making strides to produce sustainable and ethical coffee, many consumers are unaware of the company’s efforts. Despite Starbucks’s investment in sustainable farming practices and its commitment to purchasing beans at higher rates, many consumers are still unaware of the company’s actions.
Consumers should be more aware of the ethical and environmental implications of their coffee purchases. By educating customers about the ethical sourcing of coffee beans and the environmental benefits of sustainable farming practices, companies can encourage customers to make more responsible purchases.
Implications For Businesses and Governments
The amount that Starbucks spends on coffee beans has far-reaching implications for the global coffee industry, as well as for business and governments. The pressure to purchase coffee beans at higher rates is putting pressure on other coffee companies to follow suit, and governments to develop policies to ensure that farmers are producing ethically sourced and sustainable products.
The high demand for coffee beans has also been a boon for the global economy. By investing in coffee beans, Starbucks is helping the economies in coffee-producing countries, as well as increasing the overall demand for coffee. This has led to growth and increased profitability in the industry.
The Role of Fair Trade and Organic Certification
The coffee industry has been slow to adopt fair trade and organic practices, with only a small percentage of the world’s coffee being certified as organic or fair trade. Fair trade and organic certification are important for ensuring that coffee is ethically sourced and produced in a sustainable manner. Starbucks has been one of the first companies to adopt fair trade and organic certification for their products, and has taken steps to ensure that its coffee beans are ethically sourced and produced.
However, the company’s commitment to sustainable farming practices and ethical sourcing of coffee beans is only part of the solution. There is still much work to be done, from governments and businesses, to ensure that all coffee is ethically sourced and sustainably produced.
Conclusion
It is clear that the amount of money Starbucks spends on coffee beans has enormous impacts, both good and bad. While it has helped to lift millions of people out of poverty and reduce the company’s environmental footprint, it has also led to deforestation and land conversion in coffee-producing countries. As such, it is important for Starbucks to continue investing in sustainable farming practices and ethical sourcing of coffee beans. At the same time, governments and businesses should take steps to ensure that all coffee is produced in an ethical and sustainable manner.
