Tim Hortons Partnership Program

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Fair Coffee ? or Fair Washing ? 

Since 2005 Tim Horton's has been providing Partnership blend coffee, it is a direct trade model dictated and run solely by Tim Horton's.  

Transcript of interview with Don Schroeder, CEO of Tim Hortons, on the subject of fair trade coffee.

http://www.theglobeandmail.com/report-on-business/transcript-tim-hortons-and-fair-trade/article565483/

KARL MOORE: This is Karl Moore of the Desautels Faculty of Management at McGill University, Talking Management for The Globe and Mail. Today, I am delighted to speak to Don Schroeder, who is the CEO of one of Canada’s great iconic brands, Tim Hortons.

Good afternoon, Don.

DON SCHROEDER: Good afternoon.

KM: Don, one thing that people are thinking about is fair-trade coffee. A lot of consumers want to go and buy that. What is your view of Fair Trade and how has Tim Hortons taken a different perspective on that?

DS: Fair trade has been around for a long time and we get a lot of inquiries from customers asking, “Why don’t you sell fair trade coffee?” We looked at it and we came to the conclusion that, although the goals of fair trade are commendable, it really hasn’t worked the way everyone had hoped over the years.

So we developed our own sustainable coffee program and coffee partnership program and what we have done is go and work directly with the farmers in the countries where we access our coffee, and we have been actively involved with them and helping them at the grassroots level, but very much hands on. We don’t believe in writing cheques and walking away; [rather], we have developed a plan where we go in and our goal is to help the farmers grow more coffee, grow better coffee, and then help them to get in the market at the best time, for the best price, even if they don’t sell it to Tim Hortons. They could sell it to Starbucks, they could sell it to whomever, but it’s all about educating them about the coffee business; that every pound of coffee has a market and that you are entitled to a premium if you grow better coffee.

So, long term, it is in everyone’s best interest that these small coffee farmers be successful and want to stay on the farm. In 2000, a lot of those farmers, when the price of coffee reached record-low levels, were abandoning the farms and they were going into the city looking for alternate ways of supporting their family. So projects like this are designed to keep them on the farm, to help them improve their lot in life for them and for their families and I think our coffee project is doing that. One of the key tests of that is when I went back, two years into the program, talking to the president of the co-op and asked them: “What do they see as the real benefit so far in this program?” and he said they are becoming businessmen. I think that says that it is sustainable, that they will be able to continue on, even after our term of support in the project expires – they will be on their own but they will have those skills to continue on.

KM: So you think the coffee you sell at Tim Hortons is as ethical as the coffee that we might buy as fair trade coffee?

DS: Oh, absolutely. We work with our coffee suppliers very much in terms of what we expect in terms of the sourcing, and so on. At this stage, the amount of coffee that is available to us through the project areas is very small but in terms of the benefits to the farmers, it’s there, whether they sell it to us or to someone else. My long-term goal with it would be that this type of initiative not be a Tim Hortons initiative but it becomes an industry initiative and that we could thereby touch a lot more of these farmers who really do need our assistance.

KM: This has been Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail.

AFTERTHOUGHT: I recently asked a McGill MBA student to reflect with me on the interview with Don Schroeder as part of a course they are taking on the role of the CEO. Téo Blackburn joined me this week.

When it came time to tackle the issue of fair trade – which, let’s face it, no coffee giant can avoid – Tim Hortons reached down and out. Distinguished by a unique franchise model that sees significant corporate start-up investment in a franchisee and active sustained support throughout its operation, Tim Hortons has long relied on economic incentives to drive community and business development via its intermediaries. Thus, to our minds, the Tim Hortons’ Coffee Partnership redefines the “community” in which Tim Hortons is active, and is simply a logical and consistent extension of the incentives-based dynamic of Tim Hortons franchise model, up the supply chain.

Working with local coffee-growers’ organizations, Tim Hortons provides resources to small farmers in Brazil, Colombia and Guatemala aimed at helping them become better business men and women. The partnership is twofold: providing training and financial resources to small farmers and support to local coffee-growers’ organizations that co-operate with export companies to ensure stable and lucrative trade for coffee-growers. Success is measured in higher yields and better-quality coffee, which result in higher prices for farmers. Farmers benefiting from the Coffee Partnership are free to sell to any buyer, including Tim Hortons’ direct competitors. This part we particularly liked; the freedom to sell anywhere they wanted.

Is the result, as CEO Don Schroeder suggests, just as good as certified fair trade? Fair trade is a market-based approach aimed at creating better trading conditions for agricultural producers in developing countries in which the trade of major crops – coffee, tea, cocoa, sugar, bananas – is characterized by a gross inequality of bargaining power. The Coffee Partnership leverages the same market forces as fair trade: higher prices paid directly to marginalized producers are deemed to trickle down into their communities and promote community development. Provided that tangibly higher prices result, the Tim Hortons approach has the added potential to decrease coffee growers’ reliance on the often volatile coffee industry by providing them with transferable skills. Frankly, we like their approach but would need to hear from firms that have adopted the fair trade approach. Tim Hortons approach seems a good fit with their business approach. Perhaps it is a matter of “Horses for Courses” – that is, different approaches for different firms, depending on their particular strengths and corporate culture.

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My Reflection

This is an appealing case; however the danger of putting the ethical sourcing program in the hands of the purchasing corporation is that it leaves little room for accountability. Is this truly the case ? we have no way of knowing. The strongest advantages of prescribing fair trade certification is that you are relinquishing your control to third party auditing. This process prevents corruption, exploitation, and fair-washing (creating the illusion of fair trade.) Furthermore we have to look at fair trade as a mainstream tool for consumer control. Without a tested measurable system in place we as consumers can't possibly monitor all of these "ethical direct sourcing" campaigns simply because we do not have the time or money to literally travel to these co-ops and see what is really going on.  

 

Counter Point

Mark Abbot of Fair Trade Vancouver bring a strong counter point to the table for consideration: 

"Here's a copy of the email I just sent to the McGill professor who conducted the interview (Karl Moore):

Hi Karl, 

I would like to draw your attention to another side of the story relating to your recent video interview of Tim Horton’s CEO Don Schroeder in which he claims that Tim Horton's coffee is as ethical as Fair Trade coffee.   

I believe that this comment is a classic example of Fair-Washing for the following reasons and would welcome the opportunity to comment on Mr. Schroeder's statement: 

  1. Scale of Impact – the farmer projects that he refers to represent a small percentage of their coffee supply, but the message is carefully delivered in a way that makes the public believe that all Tim Horton’s coffee is as fair as Fair Trade certified coffee.
  2. Verifiability – he offers no information that can be easily verified and there is no third-party auditor in place to monitor their claims.  This is especially concerning with Tim Horton’s when one considers the misleading nature of this interview and their history of deflecting and misleading communication regarding the topic of Fair Trade.
  3. Accuracy of Claims – although their claims are  impossible to verify, in my opinion it is extremely unlikely that the average cup of Tim Horton’s coffee is ‘as ethical as fair trade coffee.’

 We (Fair Trade Vancouver) would like to publicly challenge Tim Horton’s to improve their transparency and provide better backup of their claims. 

  • What percentage of your overall coffee supply comes through your pilot projects? (based on rough estimates with available information, it is less than 10%)
  • What are the details of your projects, how do you monitor and evaluate them, and will you share your evaluation reports?
  • With the absence of 3rd party auditors, what do you currently have in place to allow the public to verify your claims?

Independent third party certification bodies such as TransFair Canada are needed precisely because of the tendency of companies to make big and unsubstantiated insinuations in order to pacify their customers.  Although we truly hope that Tim Horton’s claims and intentions are good, our suspicions continue to brew – as should yours!

The interview and full transcript can be viewed here: http://www.theglobeandmail.com/report-on-business/transcript-tim-hortons-and-fair-trade/article1899167/

I look forward to discussing this matter with you.  I can be reached on my cell phone (604-787-7794) at any time.

Regards,

Mark"


Advocate! 


Inquire about Partnership coffee via Tim Horton's corporate office. Messaging and inquiring about the coffee sends a strong message to this company and over time it will encourage the company to continue in this progressive direction. 
http://www.timhortons.com/ca/en/inquiries.html