Brasília - The estimate for the 2004/2005 coffee crop is 38,264 million sacks, 32.8% more than the previous harvest of 28,820 million sacks. However, according to the Secretary of Production and Commercialization, Linneu Costa Lima, it is possible that the crop will be smaller than the Ministry of Agriculture's prediction, since the country's production was damaged by the rains in May and June of this year and is liable to be adversely affected by further rainfall in September.

Costa Lima considers it possible that the market will react by raising coffee prices. The average export price per sack, which was US$ 46 in 2002, rose to US$ 56 last year and US$ 74 this year. "The market is reacting. The Brazilian crop is late and may yield less and of poorer quality. If the supply is smaller, the price will have to adjust," Costa Lima affirms.

A survey conducted by the National Supply Company (Conab) demonstrates that there is an equilibrium between supply and demand. Growers are expected to have the crop ready by September 15 and be prepared for the possibility of additional rainfall. So far, according to the Conab, only a small portion of the crop has been harvested, and only 33% has been processed for export. The months of May and June are regarded as the best time to harvest.

According to the Ministry of Agriculture, the Brazilian government is trying to make sufficient funds available for commercialization, so that growers need not make hasty sales to cover harvesting expenses. The government has already allocated US$ 165 million (R$ 500 million) to commercialization, but these resources can only be used when the coffee is ready for export. Another US$ 99 million (R$ 300 million) will be made available to growers as a result of a decision by the National Monetary Council (CMN).

Minas Gerais is the principal coffee-growing state in Brazil, with 18.6 million sacks. Second place belongs to Espírito Santo, with 6.4 million sacks. São Paulo is third, with 5 million sacks.

In the assessment of the Ministry of Agriculture, the market has shown signs of recovery. 13.9 million sacks were exported between January and July of this year, compared with 14.2 million sacks during the same period last year. Although this year's export volume was less, revenues were up US$ 232 million. (US$ 1.29 billion in 2004 versus US$ 798 billion in 2003).

Agência Brasil
Reporter: Nádia Faggiani
Translator: David Silberstein
08/16/2004