Introduction
Currently, Brazil is the leading coffee producer in the world (Santos). Furthermore, it is the second largest consumer of coffee after the United States, and has more than 300,000 coffee farms.
This implies that Brazil enjoys over five million jobs which are generated by coffee production. Brazil is the only coffee producing country where coffee is no longer grown primarily for export as a major source of income, as in all the other coffee producing countries, but rather for internal consumption. While almost 70% of Americans drink coffee regularly, in Brazil, this rate is above 90% increasing.
Brazil offers all the types and qualities of coffee desired by consumers: Arabica and Robusta, natural, pulped naturals and washed coffee, single – origin coffee, an immense number of varietals, custom – made blends, volumes both large and small, and niche products (specialty, organic and certified coffee). This great diversity is the result of cultivation at varying latitudes and in different attitudes, soils, and climates.
Brazilians consume locally many of the best coffees in the world. The Brazilian Coffee Association (ABIC) undertakes many unique and successful campaigns to provide Brazilians with coffee of all kinds, varieties, blends, and types, always with a rigorous control of coffee purity and quality, as well as with the most appropriate and healthy roasting.
ABIC has set up the Coffee Quality Program where consumers have the freedom to choose from three major coffee options: traditional, superior, or gourmet. The PQC is also a program for the education of consumers with regard to coffee consumption; when consumers are better informed, they consume more and seek products with higher added value and a good cost benefit ration.
A major focus is given to the healthy properties of coffee by having medically qualified properties of coffee by having medically qualified professionals to advise the Brazilian coffee industry, something unique and pioneering in the world, making this one important factor for the increasing coffee consumption observed in Brazil over the past fifteen years (Santos).
There is some Brazilian coffee in almost every espresso you drink and in most canned coffee and major roasters’ blends (Talbot). Coffee from Brazil has delighted the world for many years, bringing with it the contagious joy of its people, their colorfulness, their tastes and their smells.
Anyone who experiences the pronounced aroma and characteristics of Brazilian coffee cannot help but fall in love. Brazilian coffee requires a lower initial roasting temperature, since this far healthier than over roasted or very dark roasted coffee. Lots of people prefer a really good natural dry process – more cream, more chocolate, more body, and some fruit note.
Quality of the Brazilian Coffee
There is a great effort being made on behalf of Brazilian coffee as exquisite and distinctive specialty – level coffee. For more than a century, coffee was the country’s most significant export crop, and its image and perception are intimately related. In all parts of Brazil, coffee growing creates jobs, homes and income for around ten million people.
Brazilian coffee is appreciated not just for the aroma and pleasant taste, sweetness and body, but also for the natural processing method employed during the harvesting, which helps preserve the environment. Brazilian coffee is produced in the most appropriate regions and undergoes current drying, processing, and selection procedures, which enables local companies to produce high quality roasted and ground coffee, comparable to the nest in the world (OECD).
Brazil: The supplier
Brazil is the world’s biggest supplier of coffee, accounting for around a quarter of the global market (Bacon, Ernesto and Stephen). Tariffs on coffee are generally low, but there is a significant amount of tariff escalation, with higher rates on roasted coffee than on beans, and some countries applying high rates on instant coffee.
The three main markets are the European Union, the United States and Japan. Unroasted beans enter these markets duty free but roasted coffee pays a 7.5% tariff into the European Union – which contrasts with 0% for ACP counties and 2% for GSP countries – and 10% into Japan. Exports into the United States are exempt from tariffs, but their volume is nevertheless reduced by the benefits provided to farmers in Ecuador, Colombia and Peru under the United States’ anti – drug initiative.
The Rise of Specialty Coffee
The North American specialty coffee market grows 5 – 10 percent each years, and it reached an estimated retail value of $ 7.8 billion by 2001. This rapid growth contrasts to slow demand growth for bulk commercial – grade coffees. Unheard of 30 years ago, the specialty or gourmet market represents 17 percent of US coffee imports by volume and 40% of the retail market by value.
The US purchases 25% of the internationally traded coffee in the world. In 1982, a small number of small scale coffee roasting companies joined together to form the Specialty Coffee association of America (SCAA). The mission of the SCAA is to promote high quality gourmet coffee and sustainability.
Commercial – grade coffees do not have equally strict quality requirements, are commonly sold in tin, cans, and often cost the consumer half the price (Topik and Allen).
In addition to claims to superior taste, specialty coffee companies celebrate the craftsmanship of coffee roasting and preparations; they employ more specialized roasting processes, focus on product freshness and use large marketing expenditures to differentiate their product from bulk commercial grade coffees. The specialty roasters depend on a higher quality coffee bean and are generally willing to pay producers price premiums for better beans (Bacon, Ernesto and Stephen).
Coffee prices are subject to upward spikes in June, July and August due to possible freezes scares in brazil during the winter months in the southern hemisphere (Commodity Research Bureau). The Brazilian coffee crop is harvested in May and extending for several weeks into what are the winter moths in Brazil. A major freeze in Brazil occurs every five years on average.
Demand – the US coffee consumption rose slightly by +3.9% to 22.649 million bags in 2006, mildly below the 4 decade high of 22.8 million bags seen in 2000.
Trade – world coffee exports in 2006 – 07 rose +9.8% bags, which was a 4 decade high. The all time high of 24.549 million bags was posted in 1962. They key counties from which the US imported coffee in 2006 were Brazil which accounted for 28% of US imports, Columbia 12%, Mexico 4% and Guatemala 4% (Commodity Research Bureau).
Economic Relations
It is worth noting the economic relationship between the United States of America and Brazil. What stands out is the fact that United States is ranked as among the top Brazil investors. This has been orchestrated by the signing of the trade agreement by the president of United States and the Brazilian president in 2011. Through this agreement, a framework which will ensure that there is direct trade between the two countries will be enhanced.
For instance, Brazil was ranked as the 18th largest supplier of goods to the United States of America. According to records from the department of trade, in 2010, US imported goods from Brazil which were totaling to $23.9 billion. This was a 19.2% increase as compared to the previous year. Essentially, with this kind of record, polices which have been put in place with regard to trade between these two countries stands out.
From the coffee perspective, the growing demand of coffee from the US has escalated this relationship. Essentially, polices which have been put in place have ensured that the trade relations are enhanced. In addition, the gradual resurgence of the US economy has also increased the demand.
At this point it is worth noting that Brazil was ranked as the 5th largest exporter of agricultural good to the United States. And in this case, coffee was ranked as the top most commodities which were exported to the US. Unroasted coffee which was exported to the United States in 2010 amounted to $1.1 billion. This ensures that the current market by the US is top priority by the Brazilian agricultural sector.
Conclusion
In conclusion, based on the fact that all factors considered, the trade relations between the United States and Brazil are bound to be enhanced, there is a high likelihood that the market of coffee from Brazil is going to increase. In addition, this will be orchestrated by the enhanced production strategies which the Brazilian agricultural sector has put in place to ensure that quality is achieved and maintained.
Works Cited
Bacon, Christopher, Méndez, Ernesto and Stephen Gliessman. Confronting the Coffee Crisis: Fair Trade, Sustainable Livelihoods and Ecosystems in Mexico and Central America. Massacheussets: MIT Press, 2008. Print.
Commodity Research Bureau. The CRB Commodity Yearbook 2007. New York: John Wiley and Sons, 2007. Print.
Organisation for Economic Co-operation and Development (OECD). OECD Review of Agricultural Policies Brazil. New York: OECD Publishing, 2005. Print.
Santos, Roseane M. An Unashamed Defense of Coffee. New York: Xlibris Corporation, 2009. Print.
Talbot, John. Grounds for Agreement: The Political Economy of the Coffee Commodity Chain. New York: Rowman & Littlefield, 2004. Print.
Topik, Steven and Allen Wells. The Second Conquest of Latin America: Coffee, Henequen, and Oil during the Export Boom, 1850-1930. Texas: University of Texas Press, 1998. Print.