Starbucks, which opened its first store in Mexico in 2002, has expressed concern about the future supply of top-notch coffee as it moves forward with long-range plans to open 25,000 stores worldwide.
The coffee giant signed a memorandum of understanding with the U.S. Agency for International Development, or USAID, and Washington-based Conservation International on Monday in Mexico City, to provide economic incentives for high-quality coffee growers that minimize their environmental impact.
Starbucks President and CEO Orin Smith said the alliance is partly his company's effort to pass on the "high price" of a cup of coffee to farmers.
"That high price enables us to pay the highest price to the farmers," Smith said.
Under the alliance, Starbucks will pay higher prices to "preferred providers" -- suppliers that can demonstrate that money gets to farmers without being diverted, comply with environmental practices outlined by Conservation International, and meet humanitarian standards of the home country or international authorities.
Smith said the company's goal is to buy 60 percent of its coffee under those standards by 2007.
The humanitarian standards are a component that may not be related directly to the quality of coffee but are important to employees, Smith said.
"Our success depends on the 100,000 young people ... who want to work for a company that they can be proud of," he said.
The agreement reflects the growing power of the premium coffee market and efforts to exploit it for the benefit of small farmers.
The premium market is helping farmers whose livelihoods were devastated by a crisis in overall coffee prices, which reached an inflation-adjusted 100-year low in 2002.
The agreement signed Monday builds on Conservation International's work coffee program in Peru, Colombia and Mexico.
"Farmers' incomes are up. They're already receiving a premium price for well-grown coffee," said Glen Prickett, vice president of Conservation International.
In Mexico, similar strategies have already been tested on a small scale by some local chains -- such as Cafe La Selva -- selling the crops of small, high-quality producers and broadening the taste for premium coffees.
Activists on trade and development issues are pushing the same model worldwide.
In England, the development charity Oxfam announced in May that it is helping open a chain of "fair trade" coffee shops serving up a quality brew that delivers relatively high prices to growers in the developing world.