(Bloomberg) -- Starbucks Corp. is buying two new research farms that will test everything from drones to microbes as it seeks to make coffee more resilient to climate change, which has already constricted availability and driven up prices.
A farm in Costa Rica will look at solutions including how technology can help growers. In Guatemala — a key supply region — Starbucks will replicate the challenges facing the small farms that make up 97% of its supply chain. Both locations will also study new coffee varieties as climate change shifts where the crop can thrive.
Bolstering the coffee industry’s climate resilience has taken on fresh urgency this year, as extreme dryness in Brazil sent prices for the arabica beans favored by Starbucks to the highest since 2011 in September. Rising temperatures are leading to issues such as droughts and coffee-leaf rust, a disease caused by a fungus, that are compromising the availability, quality and taste of coffee, while jeopardizing farmers’ livelihoods.
“If we don’t build resilience today, the reality is the availability of coffee will continue going down,” said Roberto Vega, vice president of coffee agronomy at Starbucks.
Packaged-goods companies such as JM Smucker Co., maker of Folgers, and smaller chains have raised prices in part due to bad weather. Starbucks locks in prices for green coffee as much as 18 months in advance, so it’s more insulated from the fluctuations, at least for now.
Starbucks aims to help farmers become more productive and profitable while ensuring crops can withstand the impact of global warming. The chain buys about 3% of the world’s coffee and works with more than 450,000 farms.
In 2013, Starbucks bought its first company-operated farm, Hacienda Alsacia, in Costa Rica to study disease- and climate-resistant coffee varietals. It also sought to develop methods it could share with farmers in its supply chain.
Its new Costa Rica location will trial using technologies such as mechanization and drones that apply agrochemicals including fertilizers and pesticides, which today most growers do by hand. The use of machines in coffee farming is more common in Brazil than elsewhere, including in other parts of Latin America where farms are struggling to find workers.
In Guatemala, Starbucks purchased a farm that’s in rough shape to gain insight into soil and productivity restoration, Vega said. The chain will work to improve the soil’s biome with microorganisms, cover crops or other alternatives, while seeking to optimize water use, fertilizer, and pest control.
Both farms also give Starbucks the chance to test hybrid coffee varietals under several elevations and soil conditions. For example, Hacienda Alsacia has elevations of 1,300 to 1,500 meters (roughly 4,200 to 4,900 feet), while the new Costa Rica farm is at 1,400 to 1,700 meters.
“The fact that we have a good hybrid that is working well in one region under certain climatic and soil conditions doesn’t mean that we are going have the same performance in another region,” Vega said. “You need to validate that.”
Starbucks eventually plans to open test farms in Africa and Asia, according to a spokesperson. The company has 10 support centers around the world where agronomists work with farmers on research and best practices.
--With assistance from Ilena Peng.
©2024 Bloomberg L.P.
