Wairagala Wakabi, Special Correspondent
16 May 2006
Nairobi — Starbucks Coffee Trading Company, the American coffee giant that has more than 11,000 outlets around the world, says it will turn to Africa this year in order to diversify the sources of its coffee.
Rwanda is likely to be the biggest beneficiary. However, Kenya, which has been a key African point of origin for the multinational's Arabica purchases, also stands to earn more from direct sales to Starbucks. The country has recently benefited from a $140,845 investment by the Seattle-based firm to improve quality of coffee processed at two factories in Nyeri.
The biggest growth in purchases will take place in Africa, but purchases from other regions will not be cut, according to Alain Poncelet, managing director of Starbucks. Last year, the group purchased 142 million kilogrammes of coffee from 28 countries, of which 80 per cent came from Latin America, 15 per cent from Asia and five per cent from Africa.
Mr Poncelet told The Public Ledger, an international commodities weekly, that Starbucks' African coffees are mainly produced in Kenya and Ethiopia, but other suppliers such as Rwanda and Burundi are emerging as they raise quality standards.
The official said a key quality issue for Africa is to increase the use of washing to separate coffee beans from other cherries produced by the coffee plant. Due to lack of water, most African farmers use dry methods. The company buys two per cent of the global coffee supply.
In March, Starbucks started selling Rwandan coffees at its American stores. Alfredo Nuno, a green-coffee trader for Starbucks, said Rwandan Blue Bourbon coffee is a superior product that falls under the company's Black Apron Exclusive category of premium coffees.
Ocir-Caf , Rwanda's national coffee marketing agency, says it hopes to boost production from 18,000 to 31,000 tones, while volumes of fully-washed coffee will rise from 1,100 to 6,000 tonnes. Increases in quality and quantity, as well as the new market opened by Starbucks and Green Mountain, another US firm, were all contributing to the bright outlook of the industry.
Leon Haguma, the marketing head at Ocir-Caf , said in 2005 they sold 18,000 tonnes of coffee worth $39 million, of which only 1,100 tonnes were fully washed. The country has been increasing the number of coffee-washing plants in growing areas so as to improve quality and earnings from exports.
On April 11, executives from Starbucks joined United States Agency for International Development officials at the Rwandan embassy in Washington for a celebratory tasting of the latest Starbucks Black Apron Exclusive specialty coffee from Rwanda.
The coffee arrangement with Starbucks was made possible after USAid partnered with Rwanda to upgrade coffee-farming and coffee-processing infrastructure in the country.
Jacqueline Schafer, USAid assistant administrator for the Bureau for Economic Growth, Agriculture and Trade, said USAid had spent $10 million in the past five years to promote and develop the Rwandan coffee industry. As part of its five-year project, it helped Rwandan farmers build and renovate coffee-washing stations, trained them in cupping and tasting techniques, organised co-operatives, furnished financing opportunities and introduced them to US coffee retailers like Starbucks.
But while Rwanda may manage to push big volumes to the US through Starbucks, this will not necessarily be the case with all African coffee growing countries. All of Starbucks' coffee purchases are made through forward supply contracts, thereby bypassing the international coffee futures market.
Last year, 93 per cent of these contracts had "transparency clauses" to ensure that the premium that Starbucks paid was passed on to growers. Mr Poncelet said that, in some African countries like Ethiopia and Kenya, coffee is sold through government auctions, which means that transparency down to the producer level is impossible.
"The key factor in Africa will be transparency, mainly in Kenya," he said, adding that the situation in Ethiopia was improving.
Last November, Starbucks said it planned to start buying coffee beans directly from farmers in Kenya's central region once the Coffee Act, which allows a second trading window, is enacted.
The group is currently carrying out a pilot project in two leading coffee pulping factories, following which other willing coffee factories in Kenya and Tanzania will be involved in the deal. Dub Hay, the company's senior vice president, who recently visited Kenya, said Starbucks has committed $660,000 over the next two years to include Kenyan Arabica coffee in its global coffee sustainability initiative.
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