Brazil: Increase in coffee exports lowers price

by Mario Osava

Rio De Janeiro, Jun 10 -- Brazil exported 1.5 million bags of coffee in May - so much coffee that it prevented the international market price from rising above record lows.

The average price of coffee last month was $106.01 per 60 kg bag - despite the fact that May is traditionally the highest coffee trading month in anticipation of the new harvest in July. Just two years, a bag of Brazilian coffee fetched $208.96, according to exporters.

Brazil, the world's largest coffee producer, has exported 8,654,881 bags of coffee so far this calendar year, double the export figure for the same period last year. But profits went up only 13.3% due to a 43.1% fall in prices for the period, according to export associations.

Low international prices are the result of Brazil's excessive supply on the market, say other coffee-exporting countries. Brazil exported 19.6 million bags during the coffee-growing year, beginning last July. By the end of the standard coffee-growing year (the end of June), exports could reach record 21 million bags but the international Association of Coffee Producing Countries has authorised only 15 million bags for Brazil's export quota this year.

Brazil's previous record was for the 1991-1992 coffee-growing year when 20.2 million bags were exported.

The Brazilian Association and the Brazilian Federation of Coffee Exporters, which are in the process of combining offices, respond to their critics in other exporting countries saying that Brazil has limited itself to recovering its traditional portion of the world market.

Brazil has recovered its portion of the international market at an historic high of 27%, after sitting at 21% for several years. Brazil's coffee exporters argue that their increased exports have not translated into higher coffee reserves in importing countries.

Meanwhile, production in other countries has fallen as a result of various disasters: Hurricane Mitch in Central America, earthquakes in Colombia, and climatic problems coupled with an economic crisis in Asia.

Brazil will have difficulty maintaining its current volume of coffee exports. The total harvest for the coming coffee-growing year is expected to be 24 million bags, according to experts, compared to 35 million last year.

With Brazil's national coffee consumption at 12.5 million bags, and the equivalent of 2 million bags exported as instant coffee, the government will have to turn to its reserves to meet the demand.

Brazil's coffee export associations hope to export 18 million bags of coffee beans in the next coffee-growing year (July 1999 through June 2000). To meet the goal they will have to come up with 8.5 million more bags in the next coffee harvest. (IPS)

The above article by the Inter Press Service appeared in the South-North Development Monitor (SUNS).