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Green Mountain to buy more coffee despite fungal attack

A Green Mountain Coffee single-serve K-Cup is pictured in New York, May 3, 2012. REUTERS/Brendan McDermid

By David Alire Garcia

SALINITAS, El Salvador (Reuters) - Green Mountain Coffee Roasters Inc, the world's biggest fair-trade coffee buyer, expects to purchase about a fifth more coffee during the new fiscal year, up from 180 million pounds last year, said a top company buyer.

Green Mountain (GMCR) coffee buyer Stacy Bocscor said the spread of the fungus roya in Central America has yet to dent the company's buying habits, which are up more than seven fold from 25 million pounds sold in 2006.

"I believe we're looking at about 20 percent growth," Bocscor told Reuters on the sidelines of the Let's Talk Roya conference in Salinitas, El Salvador.

The worst outbreak of leaf rust fungus since it reached Central America in 1976 is ravaging the region's plantations, slashing output in 2012/13, and is likely to dog the region for several years.

Green Mountain, which makes the Keurig brewing system and the K-Cups that go with it, is the leader in the small-but-growing U.S. market for single-serve coffee.

Fair trade coffee that guarantees producers a higher price comprised about 55 million pounds of the coffee purchased by Green Mountain during the past fiscal year, which ended in September.

While a third of the company's fair-trade coffee last year was sourced from Central American farmers, Bocscor said it is too soon to know if the region's current 2013/2014 season will produce and sell the same volume as last season due to roya.

"We definitely have a lot of partners that are struggling with this, and we're struggling with them," she said.

Bocscor said Green Mountain, which started as a small Vermont coffee company, focuses on long-term contractual relationship with coffee farmers and cooperatives and is not inclined to walk away even as some of the producers that supply its coffee have been hit hard by roya.

"Why would I want to walk away from all that effort," she said, noting the more than 80 cooperatives across Central American and Mexico that provide the company's coffee. Some of these contractual relationships are more than two decades old.

"The last thing I want to do is start over," she said.

While many in the industry speculate that coffee from Brazil, the world's largest arabica producer, is being smuggled into Colombia where the government subsidizes coffee, Bocscor said she has yet to see any proof.

"There's no evidence from my supply chain that has happened," she said.

While roya, also known as coffee leaf rust, has prompted dire predictions of falling yields on low prices, Bocscor notes that the industry has a long history of overcoming difficulties.

"The industry has survived crisis after crisis for years, and we are still drinking coffee," she said. "If anything, it's a testament to how the coffee industry is a survivor."

(Reporting by David Alire Garcia; Editing by Simon Gardner and Leslie Gevirtz)