COMMODITIES: African and Brazilian Coffee Producers at Odds

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Jan 16 1996 (IPS) - The meeting of the Association of Coffee Producing Countries (ACPC) in London next Tuesday promises heated debate between the leading producers, for while the Africans are prepared to voluntarily reduce exports, the Latin Americans aim to maintain present production levels.

The African position was presented by Guy Alain-Gauze, Minister of Raw Matierials of the Ivory Coast, to a meeting of coffee growers which closed in Brazil, Tuesday.

The delegations from Colombia, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua opposed the statement, defending current retention levels.

“It’s already perfectly balanced,” said Gilson Ximenes, president of the Brazilian National Coffee Growers Council.

He said the meeting represented “a strengthening of the Association of Coffee Producing Countries (ACPC),” as those present ratified the limit of 64 million sacks per year approved last July.

The delegates also agreed to create mechanisms to manage the retention and regulate exports, including audits, to be approved by the 7th ACPC Council.

Ximenes said the aim was to maintain current retention limits, with “greater transparency and credibility,” in efforts to recover international prices of 250 dollars per sack, compared with the current 130.

Those attending Monday’s meeting visited coffee estates in Sao Sebastiao do Paraiso and Patrocino, in the Brazilian state of Minas Gerais.

Ximenes described the aim of the visit as being to show the competitors the “effective scarcity” of coffee in Brazil following the heavy frosts of 1994.

They also paid a visit to Patrocinio, in the acid and semiarid lands of the Brazilian “cerrado.”

Brazil will easily be able to reduce its exports by 10 percent, if the African proposal is approved, said Antonio Araujo e Silva, director of the Varginha Cooperative.

In the last few months, the nation exported less than a million sacks of coffee, as agreed in the ACPC meeting last July. Annual production last year was limited to 12.7 million sacks, nearly 10 million sacks less than normal.

This year the Coffee Grower’s Council predicted a total of 20 million sacks for each of the next four or five years, before returning to the previous 30 million.

Taking into account the Brazilian crop losses and the low stock levels in the consumer countries, the low prices are almost incredible, in contradiction to “all the fundamental market principles,” said Araujo e Silva.

Brazilian coffee producers explained that the world market is dominated by four large companies who manipulate the stock market rates for coffee.

However, Araujo e Silva said this was a “high-risk policy,” for while they can manage reserves and the market to keep prices down, any abnormality, like repeated frosts or pests, could tip the system over.