Global Issues
BRAZIL: Green Beans to Go, Roast Coffee Grounded
For over a century and a half, Brazil has led the world in green coffee bean production and exports, without ever achieving similar success with processed beans. Some of the internal and external hurdles reflect the dilemma of reliance on agricultural commodities for export revenue.
The Brazilian roasting industry has once again asked the government to lift restrictions on imports of coffee, something it has long demanded, because it wants to blend local beans with coffee beans from abroad in order to increase foreign sales of roasted coffee.
But everything indicates that the request will again be denied, because of opposing pressure from coffee growers, who outweigh coffee industrialists in both number and political clout.
Large consumer markets 'have changed a great deal in the last 10 years, and now require blends with coffee from different places of origin,' like Ethiopia, Kenya or Central America, Nathan Herszkowicz, head of the Brazilian Coffee Industry Association (ABIC), told IPS.
The shift in demand is due to preferences for particular flavours and aromas, the reputation for quality enjoyed by coffee beans from specific countries, and environmental and social concerns among consumers, he said.
Markets have been identified that would allow Brazil to increase exports of its roasted coffee five-fold over the next two years, if it is blended with beans from other countries, he said, predicting that export revenues would climb from 35.6 million dollars in 2008 to between 150 million and 180 million dollars a year.
But that would still be a drop in the ocean compared to exports of green coffee beans, which brought in over 4.1 billion dollars last year.
The imports required are equivalent to only one-third of the desired export volume of processed beans, that is, some 200,000 60-kg bags, compared to total production of 51 million bags in the 2008/2009 period, Herszkowicz said.
The danger of introducing new coffee pests and diseases in Brazil through imported coffee is the first hurdle. A risk analysis being undertaken by the Agriculture Ministry's agricultural protection service is essential, and may take a while, the head of ABIC acknowledged.
But 'the sanitation question is the easiest' to solve, compared with the problem of the lack of a level playing field because Brazil has stricter environmental and labour laws than elsewhere, said lawmaker Carlos Melles, chairman of the parliamentary coffee caucus and leader of a coffee-growers' cooperative in the state of Minas Gerais.
Brazil has no need to import coffee from abroad, because it produces 'every type of coffee in the world,' and can satisfy the most varied tastes with its own blends, he told IPS. And Brazil has developed quality varieties that meet the standards of the most discerning markets, he added.
'If I were agriculture minister, I would not take the crazy step of opening the borders to imports,' he stated.
But he said he would be willing to discuss aspects that affect the coffee processing industry in Brazil, such as the role of transnational corporations that have taken over a large share of roasting in this country, or the overvalued real (the local currency), which makes local products more expensive.
The industry wants to import coffee now 'for economic reasons' and not because it really needs to blend local with foreign varieties, said José Luis Rufino, a coffee researcher at the state Brazilian Agricultural Research Corporation (EMBRAPA), which has played a decisive role in boosting Brazil's agricultural production.
The motive is the lower price of imported coffee, which is cheaper than domestic beans because of the exchange rate, said the agronomist and economics expert, who is also co-author of the recently published book 'Mercados Interno e Externo do Café Brasileiro' (Domestic and Foreign Markets for Brazilian Coffee).
It is not the lack of imported coffee in the blend that makes it difficult for the Brazilian roasting industry to export, but its 'lack of competitiveness in marketing and advertising,' he argued. For example, 'it has not managed to create a quality brand image like that of Colombian coffee,' he said.
The resources Brazil spends on promoting its coffee abroad are 'derisory,' and it is now hard to compete with European industry, which has accumulated '100 years of know-how' and is also protected by tariff barriers, Rufino said.
In fact, Brazilian roasters have traditionally focused on the domestic market, which absorbs an average of 40 percent of the country's coffee output, said Herszkowicz.
However, coffee is the only product for which imports are totally banned, and Brazil is the only major producer to prohibit them, thus preventing its roasting industry from competing on an equal footing, he said.
The present situation is forcing some Brazilian companies to open branches abroad, 'exporting jobs and income,' he complained. For example, one firm has a plant in the United States to process blends of beans from Brazil and other countries, he said.
In addition to being the world's largest producer and exporter of coffee, Brazil is the second largest consumer market, and will overtake the United States for first place in a few years' time. Domestic demand has grown steadily since ABIC adopted a quality control programme 20 years ago, which awards its Purity Seal to qualifying companies.
Improvements in the quality of roasted, ground and packaged coffee has raised consumption per person in Brazil close to the level reached in the 1960s, when it was 5.9 kgs a year. In 1985 consumption had fallen to less than half that, but by 2008 it was back up to 5.64 kgs per person.
Higher quality also opened the way to export markets for roasted coffee, ground or unground. Small quantities were sold abroad during the 1990s, before exports grew rapidly in volume from 2001, although they are still a very low proportion of total coffee exports, which include green beans and instant coffee.
Coffee, which took the place of sugar as Brazil's main export product in the 19th century, powered the rise of industry in this country, and is now an example of the difficulties faced by developing countries in overcoming their dependence on agro-exports.
Industrial inefficiency is just one problem. Another is the barriers put up by rich economies, which allow tariff-free imports of commodities, but levy hefty duties on manufactured goods. As a result, European countries like Germany and Italy have become the biggest exporters of roasted coffee, made from green beans imported from countries in the developing South.
One exception is instant coffee, of which Brazil has become the largest exporter. But it is losing market share internationally, because Europe charges a nine percent import tariff, while exempting competitors like Ecuador and Colombia in order to support their fight against cocaine production.
Last year, Brazil exported 26.1 million bags of green coffee beans, the equivalent of 3.2 million bags of instant coffee, and 132,070 bags of roasted beans.
© Inter Press Service (2009) — All Rights Reserved. Original source: Inter Press Service