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Beans / March 19, 2018
Drought hurt harvests of beans used to mill instant-coffee
'They want to kill us, ' farmer says of government plan
Brazilians have had to endure a lot of late, between the recession, the impeachment and the never-ending stream of national scandals.
But importing coffee beans? In Brazil, the commodity king of the world?
The idea hasn't been well received, especially among those in the rolling hills of the southeast who have made the country the No. 1 coffee producer for years. "They want to kill us, " says Antonio Joaquim de Souza Neto, a second-generation farmer in Espirito Santo state. Sure, some in the region have been hit hard by years of drought, but still, he says, there's plenty of supply to go around. "We won't allow this coffee to enter the country."
A worker gathers harvested coffee cherries at a plantation in the Minas Gerais state, Brazil.
Photographer: Patricia Monteiro/Bloomberg
The bean in question is the robusta. While growers of arabica - the variety roasted for drip java and favored by Starbucks Corp. - have gotten plenty of rainfall following last year's record harvest, robusta farmers, farther to the east, weren't as fortunate. Many went months seeing nothing but clear skies.
Robusta is used predominantly to make the instant coffee that Nestle SA and others mill in Brazilian factories and export across the world. And it's those companies that, amid concern the drought would wreck this year's harvest, successfully pressed the Agriculture Ministry to let them buy some raw material from low-cost Vietnam.
Storm of Protest
That set off such a storm of protest from farmers that President Michel Temer temporarily shelved the import plan the day after it was announced in February. He hasn't indicated what his final decision will be, and which powerful lobby he'll end up alienating, though people familiar with the matter said last week that his administration was leaning toward allowing the Vietnamese beans in.
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The two sides are still in talks with the government, which has its hands full with seemingly bigger problems. Several top advisers to Temer, who replaced Dilma Rousseff last year when she was impeached, have been sidelined by Operation Carwash and other corruption probes that have taken down political and business leaders. More than 40 countries temporarily banned or curbed beef and poultry exports last month after allegations government officials took bribes to approve sales of contaminated products. Temer is struggling to put his economic-recovery plans to work; street protests erupted over his public-pension reform bill that would require Brazilians to work longer.
A worker dumps harvested coffee cherries in a truck at a plantation in the Minas Gerais state, Brazil.
"It's a shame for the country to waste time on this when it has so many problems, " says Evair Vieira de Melo, a congressman from Espirito Santo state and an ally of robusta farmers in the lower house. "For months, I've been holding meetings in ministries to try to fix this nonsensical idea of Brazil importing coffee."
Temer has called for greater openness in trade to make Brazil more competitive - and that idea, at least, has some fans.
As it is, Brazil's protectionist policies put its instant-coffee makers at a disadvantage to foreign competitors that can buy beans from any country they choose, says Pedro Guimaraes, commercial director at Cia. Cacique de Cafe Soluvel, a Sao Paulo-based maker of instant coffee.
According to Guimaraes, Brazil's robusta farmers won't be able to deliver what's needed from the harvest in May. "The Brazilian robusta crop will be weak this year for the third straight season, " Guimaraes says. "Scarcity will remain a problem."
That's not so, according to the robusta forces. "We have inventories and we guarantee that we will deliver the coffee demanded" at the same prices offered by Vietnam, says de Melo, the lawmaker from Espirito Santo, the country's top robusta-growing state.
There's no telling yet which side has it right. Last year, robusta output fell to 12-year low of 8 million 60-kg bags. The government forecast for this year: production will be as much as 21 percent higher, though still well below the annual average back in 2010.
Source: www.bloomberg.com
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