Starbucks to support loans to Colombian coffee farmers

The Seattle-based global coffee chain is proving $2m to an Inter-American Development Bank program providing loans to female smallholder coffee farmers in the South American nation.

Starbucks Coffee Company announced Monday that it will contribute $2 million to a Inter-American Development Bank (IDB) program designed to provide loans to female smallholder coffee farmers in Colombia.

The IDB also plans to contribute $2 million to the program, which will come from its Multilateral Investment Fund and be used to provide loans to 2,000 women-led smallholder coffee growers located in the northern Colombian departments of Chocó and Antioquia.

“By partnering with organizations like USAID and IDB, as well as the Colombian government and the FNC [Colombian Coffee Growers Federation], we can be even more intentional about ensuring that young men and women get more advanced technology and financial assistance to create a future for their families for generations to come,” Starbucks director of  ethical sourcing programs Kelly Goodejohn said in the statement.

Alejandro Escobar, lead operations and investment officer for the IDB’s MIF, told Agri Investor that while Starbucks has provided short-term loans to suppliers before, their participation in the Colombia loan program marks the company’s first experiment with a longer-term supplier credit scheme, which he said could serve as a model for similar programs elsewhere in the future.

Under the program, IDB and Starbucks have provided local private coffee cooperative Cooperandes with a $4 million loan that carries a 6 percent annual interest rate on an eight-year term. The loan contains covenants that govern the cooperative’s overall debt and information-sharing practices as well as a requirement that participating farmers follow the C.A.F.E. Practices Program best practices Starbucks established together with Conservation International, Escobar said.

Capital from the Cooperandes facility to will support loans averaging $2,500 with a two-year grace period to 2,000 female farmers, according to Escobar, who will likely use it to renovate equipment and operations on their farms.

Starbucks said the collaboration with IDB was part of the company’s ongoing efforts to ensure its coffee is ethically-sourced and will draw resources from the Starbucks Farmer Support Center the company opened in Colombia in 2012.

In the same statement, Starbucks said that it would also increase its existing support to a US Agency for International Development program providing agronomy technology training to young coffee farmers in post-conflict zones of Colombia.