Starbucks And Nestlé Investigated For Labor Violations In Chinese Coffee Farms – CoffeeTalk

China Labor Watch, a New York-based human rights group, has found that coffee farms in Starbucks and Nestlé’s supply chains in China are not meeting their ethical standards, often using children as workers, excessive hours, and lax safety standards to meet their targets. The investigation, covering 26 farms that form part of the Starbucks and Nestlé supply chains, is the latest example of the challenges that big international companies face in monitoring labor standards in China. Both companies have said they have strict rules to prevent the kinds of labor violations being alleged, and both companies pledged to investigate further.

China Labor Watch sent undercover researchers three times over multiple months this year to conduct dozens of interviews on farms in the lush mountains surrounding Pu’er city, traditionally a tea-producing region of southern Yunnan province that now produces about half of China’s homegrown coffee beans. Although China accounts for less than 1% of global coffee output, Yunnan officials have been encouraging local farmers to turn from tea to coffee crops to fuel the nation’s fast-growing — and lucrative — caffeine habit.

Chinese people drink far less coffee than in other big economies — an average of 17 cups per person each year, versus around 400 in the United States. But it is still a $40 billion industry and one that grew 17 percent in 2023. Starbucks alone now operates 7,600 stores across China, and Nestlé’s coffee-in-a-can drinks can be found in almost any Chinese convenience store and its Nespresso machines in a growing number of middle-class homes.

Starbucks has been investing in coffee farms in Yunnan since 2010 with strong support from the local government. Certified farms like XinRui in Pu’er City are expected to meet the company’s high standards for ethical sourcing. China Labor Watch found evidence of what they called labor injustices that directly violated the companies’ claims to ensure ethical sourcing and robust health and safety standards.

Both Starbucks and Nestlé certify farms to ensure workers have labor contracts and are paid above national minimum wage. Starbucks’ C.A.F.E standards also promise medical care and zero tolerance for child labor. However, China Labor Watch found malpractice mostly on “ghost farms,” often family-run plots of land that informally supply the larger estates that have been certified by Starbucks or Nestlé. Farmworkers are paid according to weight picked, meaning they often work from dawn to dusk, 7 days a week, during harvest to earn as much as possible during peak season.

Nestlé said farms must comply fully with local laws and Nestlé’s responsible sourcing requirements, as enforced by unannounced visits and third-party monitoring. Other labor-related NGOs have previously accused Starbucks of not living up to its own standards in supply chains in countries including Brazil and Kenya, while Nestlé has investigated similar accusations in Brazil and about cocoa farms in Ivory Coast.

Starbucks and Nestlé, global coffee giants, have been pioneers in China’s growing cafe culture, ensuring their coffee is sourced responsibly. Nestlé was among the first international brands to challenge China’s tea preference and introduced professional coffee farming to Yunnan in the 1980s through a joint initiative with the United Nations Development Program. Starbucks’ arrival in 1999 marked a turning point as China’s nouveau riche began to embrace coffee. The Seattle-based chain has been investing in coffee farms in Yunnan since 2010, with strong support from the local government.

Authorities in Yunnan have seized on coffee as a way to lure international investment and create prosperity in poor villages. By 2021, there were more than 1 million farmers in the province managing about 215,000 acres (87,000 hectares) of plantations. Starbucks has trained over 36,000 of these farmers, and in 2022 announced a donation of $2.5 million to support the local industry.

The increasing scrutiny multinationals operating in China face to demonstrate that their local supply chains are free of labor violations and human rights abuses. China Labor Watch reported malpractice mostly on “ghost farms,” family-run plots of land that informally supply larger estates certified by Starbucks or Nestlé. American companies have scrambled to perform due diligence on complicated supply chains after the US banned imports from Xinjiang, China’s biggest producer of cotton and refined silicon. Chinese authorities have become increasingly wary of international efforts to scrutinize suppliers, accusing the US and Europe of using corporate social responsibility as a political tool to undercut Chinese industries.

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