Starbucks paid more for coffee in 2007

Starbucks paid an average price of $1.43 a pound for coffee in fiscal 2007, according to its corporate social responsibility report released today.

That's a penny higher than the year before and 15 cents above its average price in 2005, according to reports from earlier years. From 2002 through 2004, it paid $1.20 a pound.

Although coffee prices have risen, the cost of milk and whipped cream have had a bigger financial impact on Starbucks. Last summer, skyrocketing dairy costs led the company to raise prices an average of nine cents a cup, which followed a nickel increase the year before.

Most coffee trades in the commodities markets, but Starbucks pays higher prices mostly through contracts it negotiates for higher quality beans.

The commodity price for coffee on the New York Board of Trade during Starbucks' last fiscal year, which ended Sept. 30, was $1 to $1.35 a pound. In September, prices surged because of bad weather that led to concerns about the harvest in Brazil, the world's largest producer of arabica coffee.

Starbucks said in a securities filing last year that if the commodity price for coffee continued to rise this year, that would probably increase the amount it pays for coffee.

Starbucks bought 352 million pounds of coffee in fiscal 2007, according to its report. That's up from 294 million pounds in 2006.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com