São Paulo - International prices for coffee have been bad news for Brazilian coffee growers over the last four years. At the moment, prices are dangerously close to production costs. The result is that future coffee production in Brazil is threatened.

According to Oswaldo Henrique Paiva Ribeiro, of the Coffee Council (CNC), "Coffee cropland is down 11%, falling from 2.6 million hectares to 2.3 million hectares in the last two years." He says farmers are turning to other crops, such as soybeans.

Meanwhile the Ministry of Agriculture says that following a weak harvest due to climatic factors (28.8 million sacks), the harvest this year will be much bigger, up 33% to 38.2 million sacks.

Paiva Ribeiro says the CNC has called for the government to provide the sector with so-called option contracts, which guarantee prices, and loans through the Coffee Defense Fund (Funcafé) with annual interest rates of 9.5%. He points out that at the moment the price for a sack of coffee is US$65 to US$66, that there was a small spike in export prices in July ("because nobody had coffee") when it rose to US$74. For the sake of comparison, from 1994 to 2000, a sack of coffee was worth US$140.

Agência Brasil
Reporter: Marcelo Gutierres
Translator: Allen Bennett
08/17/2004