Coffee giant agrees deal it says will help small producers

1. Wide shot of coffee shop 2. Close up of Starbuck's sign 3. US ambassador to Mexico Tony Garza 4. Briefing 5. Mexican coffee products 6. SOUNDBITE (English) Orin Smith, President of Starbuck's Coffee Co.: "Our dependence upon those farmers who produce very high quality coffee because we made a pact with our customer that we will provide them with very high quality coffee but we will charge a very high price. This is important for us but it is equally important for the farmers, because that high price enables us to pay the farmers the highest price for their coffees of any buyer in the world." 7. Reporters 8. Close up of photographer 9. Wide of signing of pact 10. Mario Monroy looking at organic and fair trade coffees in shop 11.SOUNDBITE (Spanish) Mario Monroy, Mexican Fair Trade campaigner "There is a serious problem here. Starbucks says it buys its coffee for a fair price but it's a lie. Because while it might well pay more than the so-called fair price, it (Starbucks) doesn't actually know who the money is going to. And if you want to pay a fair price, it has to also mean that you are concerned about who the money goes to and making sure the money goes straight to the coffee-growers." 12. Various of Mexican organic coffee products 13. Wide of press conference STORYLINE: The coffee giant, Starbucks, is hoping a deal with Latin American coffee growers will give them a better price for their beans while giving latte lovers a better cup of coffee. Starbucks Coffee Co. is joining the US development agency, USAID and environmental conservationists, Conservation International in an alliance to help ensure the supply of high quality coffee from Latin America. They signed the deal in Mexico City on Monday. Under the agreement, Starbucks will pay higher prices to "preferred providers" - suppliers that can demonstrate that money gets to farmers without being diverted. They will also have to comply with environmental practices outlined by Conservation International, and meet humanitarian standards of the home country or international authorities. 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. Starbucks, which opened its first store in Mexico in 2002, has expressed concern about the supply of top-grade coffee as it moves forward with long-range plans to open 25,000 stores worldwide. The agreement reflects the growing power of the premium coffee market and efforts to exploit it for the benefit of small farmers. Many of those farmers had their livelihoods devastated by a crisis in overall coffee prices, which reached an inflation-adjusted 100-year low in 2002. Fair trade campaigners, however, say they are concerned that the money will not actually filter down to the small producers. Over-cultivation and stagnant demand set the conditions for the crisis, according to USAID, which is helping small and medium-sized producers better process, grade and market their coffee. Fair trade campaigners, however, have concerns about whether the small producers will actually end up getting the "fair price" that is promised. Mexico is the world's fifth-largest coffee producer, but premium coffee shops have only started to appear in the past decade, led by local chains. The new Starbucks have been wildly popular in Mexico City's chic neighbourhoods. USAID, which receives overall foreign policy guidance from US Secretary of State Colin Powell's office, has invested more than US 57 million dollars in coffee projects, including US 35 million dollars in Latin America. You can license this story through AP Archive: http://www.aparchive.com/metadata/youtube/7e535f38a7cf85e086bf275854b632e7 Find out more about AP Archive: http://www.aparchive.com/HowWeWork