Coffee's Code Of Conduct -- Starbucks To Adopt Standards For Wages, Work Conditions For Guatemala Workers

In response to pressure from human-rights activists, Starbucks has agreed to adopt a code of conduct that will apply to Guatemalan plantations where it buys just under 2 percent of its coffee.

Starbucks made its intentions known at yesterday's annual meeting at the Four Seasons Olympic, where shareholders were greeted by activists handing out leaflets congratulating Starbucks on being the first major U.S. company to make such a commitment to foreign agricultural workers.

The code of conduct is expected to cover such issues as wages, working conditions and the right to organize labor unions. Human-rights groups, notably the Seattle-based Coalition for Justice for Coffee Workers, have been pushing Starbucks to pressure growers to improve conditions. The group says Guatemalan coffee workers earn $2.50 a day, less than the $7.25 a day the Guatemalan government considers necessary to sustain a rural family of five.

"I'm hoping if a code of conduct can be developed in Guatemala and is successful, it can be expanded to other countries," said Roberta Ray, a labor organizer with the group.

Starbucks Chairman Howard Schultz said the company is dealing with "a very complex situation" and estimated Starbucks would need "at least six months" to understand the issues. He said he didn't know if Starbucks eventually will apply the code of conduct to other countries.

Latin American countries, notably Mexico, Panama, Colombia, and Costa Rica, produce most of the coffee Starbucks buys. But activists say they targeted Guatemala because its working conditions and worker-rights abuses are among the worst in the world.

One problem with a code, Schultz said, is enforcement.

"I don't want to make an agreement I can't live up to," he said.

In other business, Schultz noted that Starbucks just opened its 500th store last weekend - and has added at least nine since then. By 2000, he said, the company plans to have at least 1,500 stores in North America and to be in every major market.

Growth potential, Schultz said, remains huge. Starbucks, he noted, has about 100 stores in California, "a 400-store market."

Schultz also noted that Starbucks is expanding its roasting facilities. In addition to a 305,000-square-foot plant in Kent, the company is opening a 368,000-square-foot facility in York, Penn., this fall.

Shareholders asked whether Starbucks will offer an instant coffee and put a woman on the board of directors.

While the question about instant coffee drew sustained groans, Schultz said it was "potentially a market someday." And he said the company has hired an executive search firm to find female candidates for the board of directors.