7th Consultative Forum on Coffee Sector Finance
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1 BRAZILIAN COFFEE PRODUCTION: OVERCOMING THE CHALLENGES OF SUSTAINABILITY 7th Consultative Forum on Coffee Sector Finance 27 September 2017 Silas Brasileiro Executive President
2 HARVESTED AREA: 1.9 million ha PRODUCTION: 51.4 million bags PRODUCTIVITY: 27 bags/ha Sources: BSCA; Conab.
3 Quality: Positive Evolution Brazil s range of climate and landscapes lends itself to the production of unique specialty coffees. Brazil s growth in specialty coffees: 15% year over year since 1999; 2% growth rate - normal coffee market st Cup of Excellence 2021 Brazil s specialty coffee market should reach $8.8 billion 16 million bags 2018 Brazil 1 st specialty coffee producer (10 11 million bags) 2016 Brazil sold 8 million bags of special coffee: 35.5% of global demand 1991 Brazilian Specialty Coffee Association - BSCA 1989 Extintion of IBC Free Market 1959 Frost - State incentives - Technological Investment (Cerrado Mineiro) Source: BSCA.
4 Substantial Productivity Increase SEASON 1996/97: + 100% Production: 25 M. bags - 35% Area: 2.9 M. ha Productivity: 500 kg/ha + 225% SEASON 2016/17: Production: 51,4 M. bags Area: 1.9 M. ha Productivity: kg/ha Sources: FAO; Conab.
5 Consequence: Environmental Sustainability Source: EMBRAPA - Strategic Territorial Intelligence Group (GITE)
6 Main Reasons Behind Productivity Increase Varieties Smart use of inputs Highest % FOB Price to Farmer Research & Technology Efficient Supply Chain Training & Extension Services Farmer Organization Good Agricultural Practices Cooperatives: Integrated Solution for Coffee Farmers
7 1. Research & Technology: Brazilian Research Consortium Coordinated by Embrapa Café; More than 50 education, research and technology transfer institutions; 12 Brazilian States; 92 Research Projects; 496 Plans of Action in progress; More than 1,000 researchers and technitians involved. Source: Embrapa Café
8 Applied Research on Coffee Supply Chain Problems Plans of Action by Subject Improving technology transfer processes 68 Resistence to biotic and abiotic stresses 209 Solutions Solutions for for increased increased costs costs of of labor labour and and labor labour shortage shortages 11 Quality Quality and and marketing Marketing for for profitability Profitability 114 Sustainability Highland Coffee of mountain Production coffee Sustainability production 94 Source: Embrapa Café
9 Research & Technology: Some Examples Coffee Breeding COFFEE GENOME: More than 33,000 expression genes identified: Applied biotechnology in progress to improve: Coffee Quality Resilience to Climate Change Resistence to Pests and Diseases NEW HYBRID COFFEE VARIETIES: New technologies in less time - clones with desirable agronomic features: High productivity; High quality; High vigor; Resistance to leaf rust; Shorter orthotropic internode length.
10 Coffee Quality CONTROLLED DROUGHT STRESS: higher sucrose and lipids concentrations in cherries positive precursors of quality. Environment Sustainability BRACHIARIA BETWEEN COFFEE : improved water and nutrients absorption; improved soil quality; enhanced carbono sequestring capacity. Economic Sustainability CYCLIC PRUNING PROGRAM : increased average productivity and reduced labor costs. Source: Embrapa Café
11 2. State Governments Training & Extension Services Number of Technicians Working With Coffee Producers Support small producers in 5 states Estimated Budget: USD 70 Millions 240 Technicians 90 Technicians 153 Technicians 33 Technicians 73 Technicians Source: P&A Marketing
12 Training & Extension Services: Some Highlights MINAS GERAIS Sustainability Initiative of the Minas Gerais Government (SEAPA IMA EMATER) - focus on good production practices and socio-environmental responsibility in coffee production; coffee farms certified in 2016; Lower cost to farmers and international recognition UTZ is as partner. Incentive to Quality: Annual Contest in Minas Gerais Productivity in bags/ha '
13 Training & Extension Services: Some Highlights In the last 2 decades Espirito Santo State went through a revolution: expressive growth of Arabica production and became the main Brazilian producer of conilon (robusta). Prominent role of Incaper: developing, transferring and assisting farms (specially small ones) to adopt new technologies. ESPÍRITO SANTO Climate Change: knowledge and technology to increase drought resilience 14,78 Productivity in bags/ha 29,56 22,81 *mulching, irrigation, fertilizer and pests management; pruning; etc.
14 Training & Extension Services: Some Highlights Paraná Coffee Project: 3,900 small coffee farmers assisted : productivity, quality, marketing and organization. Quality: 90% of the cupping centers are managed by EMATER PARANÁ GCP 18,3 Productivity in bags/ha 27.49
15 Training & Extension Services: Some Highlights RONDÔNIA Revitalization of Coffee Areas in Rondônia: Emater transfers and assists farms to adopt new technologies (certified clonal seedlings and good practices). Technician visits each grower 10 times per year. New conilon clonal varieties developed by Embrapa have high performance potencial 100 bags/ha Productivity in bags/ha '
16 Training & Extension Services: Some Highlights 00 Productivity in bags/ha
17 3. Farmers Organization Coffee Cooperatives 90 Coffee Cooperatives in Brazil; Small farmers have the same market and technology access than the bigger ones Integrated Solution: inputs, equipment and services; Gross Income: + US$ 3 billion Source: OCB
18 Coffee Cooperatives: Assisting Farmers Day By Day Credit Access: Cooperative Banks facilitate access to financing for farmers. Main Credit Sources for Coffee Production ( : + US$ 11 billion) Pronaf 12% Pronamp 11% Commercial Banks 47% Other Credit Lines Available (BNDES): Inovagro: technological innovations and management improvement; Moderagro: Quality and Sustainability (e.g.: technology for coffee drying). Funcafé 30% Moderinfra: sustainable irrigation. Source: Banco Central do Brasil
19 Coffee Cooperatives: Assisting Farmers Day By Day Access to Agricultural Inputs: In Brazil, cooperatives are the main distribution channel for lime, fertilizers, agrochemicals and seeds. Types of Negotiation Fertilizers: 52% Barter 14% Agrochemicals: 51% Seeds: 47% Source: Fiesp/Icagro (2nd and 4th Quarters 2016) Forward (payment days) 26% Spot (payment until 180 days) 60%
20 Coffee Cooperatives: Assisting Farmers Day By Day Technical Advice: Team of agronomists and technicitians: guidance for a more sustainable coffee production; access to technology. Economies of scale: More advantageous conditions due to greater purchase and sales volumes. Post-harvest Processing: Drying, Cleaning, Grading and Storage. Market: Facilitate access to: (i) domestic and international markets and (ii) risk management instruments (hedge). Adding Value: Investment in coffee industrialization and Incentive for the production of specialty coffees.
21 4. Efficient Coffee Supply Chain Source: Centro de Excelência do Café; Prof. José Luís Rufino Single- Serve Institutional market Coffee Shops
22 4. Efficient Coffee Supply Chain Open Market + Efficient Organization from Research to Export Harbor Farmers receive, on average, 85% of FOB Price
23 Final Remarks Although efficient management of the coffee sector and increase in productivity are essential to achieve economic sustainability, the price paid for the bag of coffee is of utmost importance for income security. It is essential that production growth be linked to increased consumption to avoid excess supply thatmay bringdown globalcoffee prices. Prices have not increased in spite of three years of consecutive deficits in global coffee supply. ICO data shows that global coffee consumption decreased by 0,3% in Is it advisable to encourage expansion of production in this scenario?
24 /ConselhoNacionalDoCafe Thank You! Website:
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