Internal Consumption Strengthens Brazil’s Coffee Market Clout

By Marvin G. Perez

Brazil’s coffee growers are enjoying the best of times—almost.

With the country’s economy among the fastest-growing in the world and with demand for its agricultural crops on a tear, Brazilian coffee farmers could see further happy times, especially as global demand for their beans remains strong and world-wide weather woes are encouraging non-traditional buyers of premium coffee to turn to the South Americans to meet their supply needs. Soaring internal demand is also helping the country’s farmers, who can either sell to local industries or abroad, with foreign demand coming from other exporting countries as well as consuming nations.

However, not all growers are benefitting from the coffee price boom and there are labor and currency challenges confronting the sector.

According to local analysts, producers who improved the quality of their coffees over the last few years are enjoying the bonanza, but many are not, as the country’s high quality beans remains limited to about 8–10 percent of the total production. With 24-hour news and information available, farmers are savvy and know when to sell and when to hold back.

“Producers now know what’s happening in the market…they know the prices, they know the premiums, the contests,” says Celso Vegro, professor and researcher at the Sao Paulo-based Institute of Agricultural Economics, IEA.

Events like the Cup of Excellence competition and other local cupping challenges have enabled local producers and buyers to come together, allowing for a more transparent price- discovery mechanism, exposing many growers to the premium sector of the market.

This has put the South American giant in an enviable spot, one where farmers can’t get products to markets fast enough to satisfy the world’s appetite for its crops. Prices are rising and land values are increasing as well, a reflection of a global trend of shrinking arable land and population growth. The rising price of arable land might be one of the biggest factors, as Brazil is the world’s leading producer of sugarcane, orange juice and coffee, and ranks amongst top producers of cotton and soybeans, corn and other raw materials, all of which compete for land.

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