Nestle to buy 1.2 mln Colombian coffee bags in '11

    * World-wide purchases to total 13.65 mln 60-kg bags

   * Nestle to buy 1.2 million bags in Colombia in 2011 

   Nestle , the world's biggest food maker, expects to buy 1.2 million 60-kg coffee bags from Colombia this year, little changed from 2010, the company said on Thursday.

   Colombia, the world's No. 1 producer of high quality washed Arabica beans, has had two years of lower coffee output due to bad weather, pests and a tree renovation program, but expects a slight recovery of bean output this year.

   "Right now with the conditions we have, I don't think that (purchases) will grow much," said Ricardo Piedrahita, Nestle's supply chain director for Colombia.

   Colombia will provide about 9 percent of the firm's total bean purchases this year, which are expected to total 13.65 million 60-kg bags, Nestle said.

   Colombia's coffee federation said on Thursday that coffee production this year was expected to reach at least 9 million 60-kg bags, the highest level since 2008, as better weather helps flowering. [ID:nN24251937]

   Fiona Kendrick, Nestle's senior vice president of beverages, said the firm expected to purchase 819,000 tonnes of coffee worldwide in 2011, a 5 percent increase from the 780,000 tonnes purchased last year.

   "We obviously look to buy our coffee accordingly to the origins that we require for our needs ... Growth is very good at approximately 5 percent," Kendrick told Reuters on the sidelines of a press conference held in Bogota.

   Climate change affected coffee plantations throughout Colombia in 2010 as abrupt moves from drought to strong rains caused the appearance of roya and other fungi, according to the government's agriculture institute.

   About 300,000 hectares (741,300 acres) of the total 900,000 coffee hectares were hit by roya prompting growers to cut trees planted with the varietal Caturra -- which has high production and good quality but is not resistant to roya -- and replant.

   To support Colombia's growing production and purchases, Nestle along with the coffee federation launched a $3.17 million program to help growers plant trees resistant to pests and apply environmental friendly practices.

   The plan calls to distribute 50 million resistant tree varietals by 2020. This year, they will distribute 4 million castilla trees, a varietal resistant to roya and renovate 727 hectares of coffee land, they said.

   With the plan, Nestle expects to double the amount of coffee it buys directly from farmers and their associations over the next five years, the company said.

   The Andean country produced 8.9 million bags last year and 7.8 million in 2009. In 2008, it produced 11.1 million bags, about its historic annual average

source: https://portal.hpd.global.reuters.com/site/applist.aspx

Starbucks wins Kraft appeal over coffee deal

* Appeals court panel sees no imminent injury to Kraft

   * Starbucks to go ahead with new partner March 1

   * Judges affirm Jan. 28 lower federal court ruling

     NEW YORK, Feb 25 (Reuters) - The final legal obstacle was removed to Starbucks Corp <SBUX.O> ending its coffee distribution agreement on March 1 with Kraft Foods Inc <KFT.N> by a U.S. appeals court ruling on Friday.

   A three-judge panel of the U.S. Court of Appeals for the 2nd Circuit in New York affirmed a lower court ruling of Jan. 28, denying Kraft's request to stop Starbucks from moving ahead with its plan to use a new partner to distribute packaged coffee to supermarkets in North America and Europe.

   The business between the world's largest coffee chain and North America's largest packaged food maker brings in $500 million a year in revenue -- and whether or not Starbucks must pay fair market value to end the deal will be decided in arbitration in the coming months.

   "We conclude that Kraft has failed to show that it faces an actual and imminent risk of injury that cannot be compensated by money damages," said the written ruling by the panel, which heard 20 minutes of oral arguments on Friday.

   The panel said the U.S. District Court "did not abuse its discretion" by denying Kraft a preliminary injunction. "We have considered Kraft's remaining arguments and find them to be without merit."

   Kraft said it would put up a "vigorous defense" of its rights in arbitration.

   "The Second Circuit did not rule on the fundamental issue of whether Starbucks can exit our contract without paying the fair market value, plus a premium," Kraft general counsel Marc Firestone said in a statement. "That question will be decided in arbitration."

   In January's ruling from the bench, Judge Cathy Seibel in White Plains, New York, had noted that Starbucks could end up owing Kraft "a boatload of money" if an arbitrator decided the coffee chain breached a 1998 agreement with Kraft.

   Lawyers for Kraft argued in both courts that it would suffer "irreparable harm" if Starbucks went through with its plan to move distribution to privately held Acosta Inc on March 1.

   Starbucks welcomed the appeals panel's affirmation of the lower court's decision.

   "With yet another failed attempt by Kraft to use any means to further confuse our mutual customers behind us, we now look forward to the smooth transition of the business to Starbucks on March 1," spokesman Alan Hilowitz said in a statement.

   The two companies are in arbitration. Starbucks said Kraft had repeatedly breached the agreement, under which Kraft distributes Starbucks coffee to an estimated 40,000 grocery stores and other retailers in all 50 U.S. states and Canada, as well as in Britain and Europe.

   The cases are Kraft Foods Global Inc v Starbucks Corp, U.S. District Court, Southern District of New York, No. 10-09085 and No. 11-389-cv in the U.S. Court of Appeals for the 2nd Circuit in New York. (Additional reporting by Lisa Baertlein and Martinne Geller; Editing by Bernard Orr and Matthew Lewis)

  source: https://portal.hpd.global.reuters.com/site/applist.aspx