Is a coffee-bean supply crisis brewing for Starbucks Corp.?

Expanding rapidly, the coffee retailer averages three new stores a day.
SEATTLE (AP) -- The coffee urns at Starbucks Corp. aren't likely to run dry anytime soon, but the company is worried that its brisk growth could create a big problem: finding enough high-quality beans to satisfy increasing demand for its lattes and macchiatos.
The Seattle-based coffee retailer is rapidly expanding, opening more than three stores a day and planning to more than triple the number it operates to around 25,000 worldwide.
"Clearly we're concerned, at our company growth rate, that there's going to be enough high quality, Starbucks-quality coffee available," said Willard "Dub" Hay, the company's senior vice president for coffee.
It's not that Starbucks is using up all the world's coffee; the company said it buys only around 2 percent of the coffee produced. But Starbucks is a major buyer of high-quality coffee, and there is much less of that to go around.
To get the beans it wants, Starbucks has always been willing to pay extra -- currently, an average of $1.20 per pound. That's as much as twice the market rate, said Ted Lingle, executive director for the Specialty Coffee Association, a trade group.
Helping farmers
But, as its needs increase, Starbucks is learning that paying more won't guarantee it all the beans it needs. To really solve its future supply problems, Starbucks said it needs to help farmers grow better coffee.
So the company has opened what it calls a farmer support office in Costa Rica, one of the world's biggest coffee producers.
"There's a lot of specialty coffee out there," said Peter Torrebiarte, the Costa Rica office's general manager. "It's just a matter of finding it."
Beginning with the office in Costa Rica, Starbucks hopes to eventually employ a fleet of agronomists, or specialists who deal with crop production and soil management. Armed with laptops and four-wheel drive vehicles, they will search the region for potential suppliers and help farmers who want to grow coffee for Starbucks get their crops up to par.
Starbucks also is revamping a program, called CAFE Practices, that rewards coffee suppliers who make environmental improvements. The concern is that the coffee farms won't be able to continue producing high-quality coffee in years to come if they don't reduce agrochemical use, conserve energy and otherwise improve how they treat the land coffee is farmed on.
Worker treatment
Starbucks also wants farms to treat workers better, paying them more and giving them access to housing, water and sanitary facilities, and to stop using child labor.
"You can't have a sustainable [farm] if you're mistreating workers and mistreating the environment," Hay said.
Starbucks will pay 5 cents more per pound for one year to suppliers who meet 80 percent of its social and environmental criteria. Suppliers can receive two more one-year price increases if they make other big improvements.
The company has been targeted by social and environmental activists who complain about everything from its growing worldwide pervasiveness to its coffee-buying practices. Although some activists have applauded the company's recent efforts, others still criticize the CAFE Practices program for not going far enough to help farms survive.
"What we would like to see Starbucks do is really use its power to transform the industry," said Melissa Schweisguth of the activist group Global Exchange. It wants Starbucks to buy more coffee under what are called Fair Trade guidelines, which promote better wages and working conditions and ask buyers to pay a minimum of $1.26 per pound of coffee.
Starbucks said it is already a large purchaser of Fair Trade coffee, but that there isn't enough that meets its quality standards.