Coffee production in Brazil
Encyclopedia
Coffee production in Brazil is responsible for about a third of all coffee
, making Brazil
by far the world's largest producer, a position the country has held for the last 150 years.
In 2007, 2,249,010 metric tonnes
was produced, 80% of it was arabica
(species of coffee). Although Brazil is the world's largest coffee producer, Brazilian firms do not dominate the international coffee industry. The country's domestic coffee market is dominated by two US coffee processors, Sara Lee and Kraft Foods
.
. According to the legend, the government of Brazil was looking for a cut of the coffee market
and sent Lt. Col. Francisco de Melo Palheta to smuggle coffee seeds from French Guiana
, ostensibly to mediate a border dispute. Instead of turning to the fortress-like coffee farms, Palheta used his personal attractions to persuade the First Lady
of French Guiana. Unable to resist his charms, she gave him a bouquet spiked with seedlings at a state farewell dinner before he left for Brazil.
The coffee industry was dependent on slaves
, in the first half of the 19th century 1.5 million slaves were imported to Brazil to fill the needs of slave labor on the coffee plantation in the southeast. As the foreign slave trade was finally abolished in Brazil
1850, the plantation owners instead turned to European immigrants to meet the demand of labor.
The coffee cycle that started in the 1880s ran for more than a century and contributed to the decline of slavery in favor of free labor, and unlike other exports such as brazilwood, sugar and gold, the coffee exports greatly contributed to the industrialization. The growing coffee industry attracted millions of immigrants to the southeast and transformed São Paulo
from a small town to the largest industrial center in the developing world. The city had about 30,000 inhabitants in the 1850s, this number grew from 70,000 in 1890 to 240,000 in 1900. With one million inhabitants in the 1930s São Paulo surpassed Rio de Janeiro
as the country's most populous city and most important industrial center.
.
in the 1930s, when the price plummeted from 22.5 cents per pound in 1929 to 8 cents per pound in 1931. The tax revenues generated by tariffs provided the vast majority of the money used to build roads, ports and communication systems and allowed for Brazil to maintain a positive trade balance.
The southeast plateau between São Paulo and Rio de Janeiro is the site of the Paraíba Valley, the once prosperous but recently abandoned coffee lands. The soil there is red and highly productive, it would go on producing coffee for 30 years, while other soil did not last more than 25 years. It is called in Portuguese (purple soil) because Brazilians heard Italians call it (red soil).
In the 1920s Brazil was a nearly monopolist
of the international coffee market and supplied 80% of the world's coffee. The country's market share has steadily declined since the 1950s as global production has risen. As late as 1960 coffee still accounted for 60% of Brazil's total exports and the country remained dependent on the single crop despite decades of industrialization with support from the government. This number was as high as 90% in some years of the 19th century.
of the coffee market in 1990. Up to this point the industry had simply neglected quality control management because government regulation
s favored scale economies
. As a result coffee processors begun exploring higher quality segments in contrast to the traditionally lower quality.
. The states São Paulo
, Minas Gerais
and Paraná
are the largest producers due to suitable landscapes, climate and rich soil. Most plantations are harvested in the dry seasons of June through September.
Like in other coffee-producing countries, Brazil has a large population involved in the crop. Some 3.5 million people are involved in the industry, mostly in rural areas, which generates seven million indirect and direct jobs. The industry is divided in two distinct groups, ground-roasted coffee and instant coffee
, operating with different structures and competitive patterns. The ground coffee market is highly competitive with over 1000 firms in 2001. In contrast, the instant coffee market is highly concentrated with the four major firms accounting for 75% of the market. Brazil is the only high-volume producer subject to frost. Heavy frosts ruined large harvests in 1975 and 1994. The two 1994 frosts, as well as water shortages in 2001, raised worldwide prices. The Brazilian Coffee Institute controls the price of coffee by regulating the amount grown and sold on the world market.
Notable beans include Bahia and Bourbon Santos.
Although colombian coffee is maybe more famous, brazilian coffee is used in the blend of most notables coffee brands in the world. The italian brand Illy
uses mostly brazilian coffee in its blend.
s on coffee exports are generally low, but higher on processed goods such as instant coffee. Brazil does not benefit from the preferential trade agreements that the most coffee trading is conducted through. For example, Brazilian exporters pay a tariff of 7.5% into the EU, compared to 2% for GSP
countries and 0% for ACP
countries. Exports into the United States are tariff-free, but the United States federal government does support Ecuador
ian, Peru
vian and Colombia
n farmers under the anti-drug initiative.
Coffee
Coffee is a brewed beverage with a dark,init brooo acidic flavor prepared from the roasted seeds of the coffee plant, colloquially called coffee beans. The beans are found in coffee cherries, which grow on trees cultivated in over 70 countries, primarily in equatorial Latin America, Southeast Asia,...
, making Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
by far the world's largest producer, a position the country has held for the last 150 years.
In 2007, 2,249,010 metric tonnes
Tonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
was produced, 80% of it was arabica
Coffea arabica
Coffea arabica is a species of Coffea originally indigenous to the mountains of Yemen in the Arabian Peninsula, hence its name, and also from the southwestern highlands of Ethiopia and southeastern Sudan. It is also known as the "coffee shrub of Arabia", "mountain coffee" or "arabica coffee"...
(species of coffee). Although Brazil is the world's largest coffee producer, Brazilian firms do not dominate the international coffee industry. The country's domestic coffee market is dominated by two US coffee processors, Sara Lee and Kraft Foods
Kraft Foods
Kraft Foods Inc. is an American confectionery, food and beverage conglomerate. It markets many brands in more than 170 countries. 12 of its brands annually earn more than $1 billion worldwide: Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oscar Mayer, Philadelphia, Trident, Tang...
.
History
Coffee seeds had to be planted in the country as the plant is not indigenous to the Americas. The first coffee bush was planted in Brazil in 1727 in the state of ParáPará
Pará is a state in the north of Brazil. It borders the Brazilian states of Amapá, Maranhão, Tocantins, Mato Grosso, Amazonas and Roraima. To the northwest it also borders Guyana and Suriname, and to the northeast it borders the Atlantic Ocean. The capital is Belém.Pará is the most populous state...
. According to the legend, the government of Brazil was looking for a cut of the coffee market
Economics of coffee
Coffee is an important commodity and a popular beverage. Over 2.25 billion cups of coffee are consumed in the world every day. Over 90% of coffee production takes place in developing countries, while consumption happens mainly in the industrialized economies. Worldwide, 25 million small producers...
and sent Lt. Col. Francisco de Melo Palheta to smuggle coffee seeds from French Guiana
French Guiana
French Guiana is an overseas region of France, consisting of a single overseas department located on the northern Atlantic coast of South America. It has borders with two nations, Brazil to the east and south, and Suriname to the west...
, ostensibly to mediate a border dispute. Instead of turning to the fortress-like coffee farms, Palheta used his personal attractions to persuade the First Lady
First Lady
First Lady or First Gentlemanis the unofficial title used in some countries for the spouse of an elected head of state.It is not normally used to refer to the spouse or partner of a prime minister; the husband or wife of the British Prime Minister is usually informally referred to as prime...
of French Guiana. Unable to resist his charms, she gave him a bouquet spiked with seedlings at a state farewell dinner before he left for Brazil.
The coffee industry was dependent on slaves
Slavery
Slavery is a system under which people are treated as property to be bought and sold, and are forced to work. Slaves can be held against their will from the time of their capture, purchase or birth, and deprived of the right to leave, to refuse to work, or to demand compensation...
, in the first half of the 19th century 1.5 million slaves were imported to Brazil to fill the needs of slave labor on the coffee plantation in the southeast. As the foreign slave trade was finally abolished in Brazil
Slavery in Brazil
Slavery in Brazil shaped the country's social structure and ethnic landscape. During the colonial epoch and for over six decades after the 1822 independence, slavery was a mainstay of the Brazilian economy, especially in mining, cotton, and sugar cane production.Brazil obtained an estimated 35% of...
1850, the plantation owners instead turned to European immigrants to meet the demand of labor.
1880s coffee cycle
São Paulo
São Paulo is the largest city in Brazil, the largest city in the southern hemisphere and South America, and the world's seventh largest city by population. The metropolis is anchor to the São Paulo metropolitan area, ranked as the second-most populous metropolitan area in the Americas and among...
from a small town to the largest industrial center in the developing world. The city had about 30,000 inhabitants in the 1850s, this number grew from 70,000 in 1890 to 240,000 in 1900. With one million inhabitants in the 1930s São Paulo surpassed Rio de Janeiro
Rio de Janeiro
Rio de Janeiro , commonly referred to simply as Rio, is the capital city of the State of Rio de Janeiro, the second largest city of Brazil, and the third largest metropolitan area and agglomeration in South America, boasting approximately 6.3 million people within the city proper, making it the 6th...
as the country's most populous city and most important industrial center.
1906 Valorization
The February 1906 "Valorization" is a clear example of the high influence on federal politics the state of São Paulo gained from the coffee production. The large supply of coffee had decreased the price of coffee on the international market and even less money came into the planters' hands. To protect the coffee industry—and the interests of the local coffee elite— the government established a mean for fixing the exchange rate and not allowing it to rise and was to buy abundant harvests and later sell it at the international market at a better opportunity. Once the price went over seven cents per pound, the state would begin to sell its surplus. The scheme sparked a temporary rise in the price and promoted the continued expansion of the coffee production. The valorization scheme was successful from the perspective of the planters and the Brazilian state, but led to a global oversupply and escalated the impact of the inevitable bustBoom and bust
A credit boom-bust cycle is an episode characterized by a sustained increase in several economics indicators followed by a sharp and rapid contraction. Commonly the boom is driven by a rapid expansion of credit to the private sector accompanied with rising prices of commodities and stock market index...
.
Decline in global market share
Revenues from the coffee industry drove the Brazilian economy until the Great DepressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
in the 1930s, when the price plummeted from 22.5 cents per pound in 1929 to 8 cents per pound in 1931. The tax revenues generated by tariffs provided the vast majority of the money used to build roads, ports and communication systems and allowed for Brazil to maintain a positive trade balance.
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
The southeast plateau between São Paulo and Rio de Janeiro is the site of the Paraíba Valley, the once prosperous but recently abandoned coffee lands. The soil there is red and highly productive, it would go on producing coffee for 30 years, while other soil did not last more than 25 years. It is called in Portuguese (purple soil) because Brazilians heard Italians call it (red soil).
In the 1920s Brazil was a nearly monopolist
Natural monopoly
A monopoly describes a situation where all sales in a market are undertaken by a single firm. A natural monopoly by contrast is a condition on the cost-technology of an industry whereby it is most efficient for production to be concentrated in a single form...
of the international coffee market and supplied 80% of the world's coffee. The country's market share has steadily declined since the 1950s as global production has risen. As late as 1960 coffee still accounted for 60% of Brazil's total exports and the country remained dependent on the single crop despite decades of industrialization with support from the government. This number was as high as 90% in some years of the 19th century.
1990s deregulations
Vertical coordination changed in the 1990s following the deregulationDeregulation
Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or simplification of government rules and regulations that constrain the operation of market forces.Deregulation is the removal or...
of the coffee market in 1990. Up to this point the industry had simply neglected quality control management because government regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
s favored scale economies
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
. As a result coffee processors begun exploring higher quality segments in contrast to the traditionally lower quality.
Today
Coffee plantations covers about 27000 km² (10,424.8 sq mi) of the country; of the approximately six billion trees, 74% are arabica and 26% robustaCoffea canephora
Robusta coffee is a variety of coffee which has its origins in central and western sub-Saharan Africa. It is a species of flowering plant in the Rubiaceae family. Though widely known as Coffea robusta, the plant is scientifically identified as Coffea canephora, which has two main varieties -...
. The states São Paulo
São Paulo (state)
São Paulo is a state in Brazil. It is the major industrial and economic powerhouse of the Brazilian economy. Named after Saint Paul, São Paulo has the largest population, industrial complex, and economic production in the country. It is the richest state in Brazil...
, Minas Gerais
Minas Gerais
Minas Gerais is one of the 26 states of Brazil, of which it is the second most populous, the third richest, and the fourth largest in area. Minas Gerais is the Brazilian state with the largest number of Presidents of Brazil, the current one, Dilma Rousseff, being one of them. The capital is the...
and Paraná
Paraná (state)
Paraná is one of the states of Brazil, located in the South of the country, bordered on the north by São Paulo state, on the east by the Atlantic Ocean, on the south by Santa Catarina state and the Misiones Province of Argentina, and on the west by Mato Grosso do Sul and the republic of Paraguay,...
are the largest producers due to suitable landscapes, climate and rich soil. Most plantations are harvested in the dry seasons of June through September.
Like in other coffee-producing countries, Brazil has a large population involved in the crop. Some 3.5 million people are involved in the industry, mostly in rural areas, which generates seven million indirect and direct jobs. The industry is divided in two distinct groups, ground-roasted coffee and instant coffee
Instant coffee
Instant coffee, also called soluble coffee and coffee powder, is a beverage derived from brewed coffee beans. Instant coffee is commercially prepared by either freeze-drying or spray drying, after which it can be rehydrated...
, operating with different structures and competitive patterns. The ground coffee market is highly competitive with over 1000 firms in 2001. In contrast, the instant coffee market is highly concentrated with the four major firms accounting for 75% of the market. Brazil is the only high-volume producer subject to frost. Heavy frosts ruined large harvests in 1975 and 1994. The two 1994 frosts, as well as water shortages in 2001, raised worldwide prices. The Brazilian Coffee Institute controls the price of coffee by regulating the amount grown and sold on the world market.
Notable beans include Bahia and Bourbon Santos.
Although colombian coffee is maybe more famous, brazilian coffee is used in the blend of most notables coffee brands in the world. The italian brand Illy
Illy
illycaffè is a brand of coffee produced in Trieste, Italy.illy produces only one blend in three roast variations: normal, dark roast, and decaffeinated. The blend is packaged as whole beans, pre-ground coffee, E.S.E. pods, or iperEspresso Capsules....
uses mostly brazilian coffee in its blend.
Tariffs
TariffTariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s on coffee exports are generally low, but higher on processed goods such as instant coffee. Brazil does not benefit from the preferential trade agreements that the most coffee trading is conducted through. For example, Brazilian exporters pay a tariff of 7.5% into the EU, compared to 2% for GSP
Generalized System of Preferences
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization ,...
countries and 0% for ACP
ACP-EU Development Cooperation
Development cooperation between the European Union and the countries of the African, Caribbean and Pacific Group of States celebrated its 50th anniversary in 2007. Although bilateral relations have always been and still remain one of the main features of modern development cooperation, it was the...
countries. Exports into the United States are tariff-free, but the United States federal government does support Ecuador
Ecuador
Ecuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
ian, Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
vian and Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
n farmers under the anti-drug initiative.
See also
- Agriculture in BrazilAgriculture in BrazilBrazil is endowed with vast agricultural resources. There are two distinct agricultural areas. The first, composed of the southern one-half to two-thirds of the country, has a semitemperate climate and higher rainfall, the better soils, higher technology and input use, adequate infrastructure, and...
- Café com leiteCafé com leiteCafé com leite was a term that referred to the domination of Brazilian politics under the Old Republic by the landed gentries of São Paulo and Minas Gerais...
, term referring to São Paulo's coffee interests (1889–1930) - Economic history of BrazilEconomic history of BrazilThe economic history of Brazil covers various economic events and traces the changes in the Brazilian economy over the course of the history of Brazil. Portugal, which first colonized the area in the 16th century, enforced a colonial pact with Brazil, an imperial mercantile policy, which drove...
- FazendaFazendaFazendas were coffee plantations that spread into the interior of Brazil between 1840 and 1896. They created major export commodities for Brazilian trade, but also led to intensification of slavery in Brazil.- Creation of fazendas :...
, Brazilian coffee plantations