Midday Report: Starbucks Buys Coffee Farm in Costa Rica


Produced by Drew Trachtenberg

Starbucks (SBUX) goes into the farming business: The coffee retailer has bought its first farm – a 600-acre property in Costa Rica.

This doesn't mean that baristas will have to pick their own beans, but Starbucks hopes its move into agriculture will benefit the entire coffee-growing business. The Seattle-based chain already offers 55 different varieties of coffee. You can get anything from a basic medium roast to a sun-dried Sumatra Rasuna or a Peppermint Mocha. And now that the company has its own farm, it will be able to develop proprietary coffee varietals, which could lead to new blends. Starbucks will also develop hybrid coffee beans, but it will not use genetic modification techniques. That's part of the company's commitment to ethically source all of its coffee beans by 2015.

Starbucks buys Coffee plantation
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In addition to creating new coffee varieties, Starbucks says it intends to use the new farm as a basis of research that will help coffee farmers around the world. One priority is to investigate a fungus, known as leaf rust, that is devastating crops in Central America and Mexico. It kills coffee leaves by sapping them of nutrients and lowers bean yields. An international trade group estimates the fungus could wipe out 2-1/2 million of those giant bags of coffee this year, and as much as 4-million bags next year.

Starbucks also says its research will focus on finding new methods to grow coffee, on farming techniques that improve coffee production, and on mitigating the impact of climate change. The company says it will share what it learns with other coffee farmers to improve the quality and size of the worldwide harvest.

Starbucks has more than 17,000 coffee shops in 40 countries. So how much coffee does it need to meet our thirst for these coffee brews? It bought 545 million pounds of coffee last year.

And the company's stock has been a winner, even though growth has slowed: It's up just 6 percent over the past year, but it's more than doubled over three years, and it's soared 250 percent over five years.