Brazil Takes Action to Help Coffee Farmers

Brazil Takes Action to Help Coffee Farmers

A recent announcement from the Brazilian government could have a huge impact on the coffee trade and anyone looking to start a coffee export business in Brazil. The nation is seeking ways to prop up the cost of coffee to help farmers realize better profits and reduce their debt.

Currently, the futures market in the US has bags of coffee listed lower than the cost of production, which is a huge problem for farmers. For every pound that is produced, farmers end up losing money, which is not a sustainable practice. As the world’s largest coffee producer, it would seem as though the farmers have the power to move the markets, but unfortunately, that is not the case, due to the family-owned structure of most farms. Unlike large corporations, these farmers lack the political position and financing to sustain operations when prices dip below production costs.

Brazil took some steps over the summer to increase the price of coffee, which has some short-term impacts, but did little to solve the problem long-term. Now there are some innovative solutions, such as allowing farmers to pay off debts with crops instead of cash. This will enable the government to stockpile product, while giving farmers the opportunity to barter for equipment and other needed items.

Coffee is big business in Brazil, and the government realizes that taking steps to help farmers get through this pricing slump will help to ensure the nation’s position at the top of the industry for years to come.