Why is coffee so expensive and how far can it go?

Since last year, coffee prices in Brazil, the world’s largest producer, have reached unimaginable levels. By 2021, fried and ground beans have grown by more than 50%.

Although the fluctuations in the price charged for the product in the last two months have been somewhat offset, it has been on a very high basis. In short, the drink, a cultural symbol of the country, is extremely expensive for a large part of the population.

But why are the nations that produce and sell the most coffee on the planet so expensive in their domestic markets?

According to Rodrigo Casado, a number of factors influence the scenario in Paranানায়, from the Pioneer commercialization and agrarian reform co-operatives (Coanp) in Norte. Almost all of them have a common denominator: how ProductsCoffee is entirely subject to fluctuations in international conditions and, therefore, market speculation.

“Like most beans in Brazil, coffee has become a commodity and has ultimately been influenced by markets, speculators, stock exchanges and even non-coffee producing countries. Today, we have less coffee in the hands of producers and more in the hands of middlemen, exporters, MerchantsCompanies that run the logistics and commercialization of coffee worldwide, “he said.

Deep excavation: Brazil and scarcity: What do the historical moments of famine teach us?

The change in the exchange rate with the appreciation of the dollar is included in the explanation of the price increase. The list also includes the climatic conditions that reached last year’s harvest, with snow and drought in areas such as Paran,, Minas Gerais and Sao Paulo.

However, according to Rodrigo Casado, the problem does not arise in production. “The so-called free market – the story of the middleman who finished the stockpile, imagining how to make money with it – snatched coffee from the producer, even at a lower price last year, he stockpiled and today he is executing the contract,” he said. ..

“The person who bought it, kept it and is now selling it at a better price. It is not a producer. This effect is not reflected in everyday coffee, which is in production, in family farming, which is the main coffee producer in the country today,” he added.

To reduce the risk of such significant price fluctuations, Cassado points out that there is a lack of internal control.

“It simply came to our notice then Products, And the government has no control. The farmer can no longer control the product. You will buy taxable inputs in dollars based on dollars and you will sell them in Brazil. Since our currency has been devalued against the dollar due to a lack of government control, this is one of the main reasons for the impact. “

Symbolism

The effects of rising coffee prices are far from merely representing economic problems. In Brazil, it is the second most widely accepted beverage after water.

The country has been producing coffee since the 17th century and its economy was based on grain until the 1920s. Over the next decade, due to the 1929 crisis in the United States, exports declined significantly and the product began to remain in the 1920s. Domestic market ..

To stimulate consumption and try to recover losses, the government has created agencies to manage inventory, sales and production. The strategy also includes advertising campaigns to stimulate use among the population.

Also read: The area planted with beans, rice and cassava in 2022 is the lowest in 45 years

In less than a century, the importance of coffee was no longer simply linked to Brazil’s economic activity and began to incorporate human passion for the drink. Today, only the population of the United States drinks more coffee than the Brazilian family.

So much symbolism means that a price increase that makes the product inaccessible is also a serious blow to the country’s gastronomic culture.

“Brazilians drink coffee every day. We usually joke that, while not a basic basket product, it is a basic necessity product. And, in fact, for some niches, coffee has become a luxury product today,” Cassado warns.

Cassado noted that the situation could get worse. Expected production may not meet demand. Prices may skyrocket again due to low supply of goods.

“The market is said to produce 60 million to 62 million bags. Most pessimists say we are going to produce about 54 million to 55 million. If we look at the number of exports, there will be a shortage of coffee. If we export. Up to 40 million and 25 million.” Consuming up to millions, this account already lacks millions of bags of coffee. “

Changing the situation depends directly on the political will and the initiative of the people. There is a lack of measures to ensure that producers’ costs are fair. The abolition of the grain inventory control system in Brazil directly affects the lack of control over prices.

“We have no more stock in Konab (National Supply Company). The product today is purely and simply at the mercy of the market. And we know that the market has economic interests. The social interests of the market are very low. The market moves on to profitability, in return you have to make a profit. Who works by paying the bill, because in the end it is that weight for him ”, concludes Casado.

Edit: Rodrigo Durao Coelho

.

Leave a Comment

Your email address will not be published.