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Brazil has a long history of producing coffee for the international market, dating as far back as independence from Portuguese colonial rule in 1822. A large share of the new government’s revenues were derived from the tariffs and import duties of international trade; thus the newly independent government of Brazil was eager to find an export crop suitable to replace sugarcane, a market which collapsed due to foreign competition (Wolf 1982).

Coffee originally entered Brazil in 1727 from French Guiana (it may have reached Brazil as early as the 1600s but was of no importance commer-cially at this time), and by 1770 it had spread through northern Brazil to the southeastern states of Rio de Janeiro and Minas Gerais. Coffee thrived in these mountainous areas, as the temperature, heavy rainfall, and a distinctive dry season provided near-optimum conditions for its growth (Burns 1993; Dean 1997). With the Portuguese traders supplying adequate slave labour from Africa to work the labour-intensive plantations, coffee became Brazil’s largest agricultural export (Wolf 1982). By the middle of the nineteenth century, coffee production was booming in Brazil. At the end of the 1800s, Brazil supplied three-quarters of the world’s coffee, with the bulk of production going to the United States (Burns 1993; Dean 1997).

As the US economy grew, coffee exports steadily increased and Brazil’s national economy shared in this progress. Coffee was an important catalyst for the rapid growth of the Brazilian economy, and exports of the crop continued to rise annually. By 1860 Brazil was exporting more goods than it imported, and by 1890 coffee exports represented nearly 65% of Brazil’s total export market. As a result, a burgeoning export trade network was estab-lished and by the turn of the twentieth century the US was Brazil’s major trading partner (Burns 1993).

Today, no other country in the world produces more coffee than Brazil, which exported nearly 23 million bags2 in 2005 – considerably more than the world’s second and third largest exporters, Vietnam (12 million bags in 2005) and Colombia (just under 10 million bags in 2005) (ICO 2006). Brazil exports the majority of its coffee to the US and Germany. These countries have traditionally had less discrim-inating tastes and import the relatively lower-quality Brazilian Arabica coffees. Robusta and higher-quality Arabica coffees are produced in other countries throughout South and Central America, as well as in Africa and Asia (ICO et al. 2000; Ponte 2002). The demand for cheap Arabica coffee allowed Brazil to corner the US market success-fully, and later the German market, while out-competing other coffee-producing nations.


The historical importance and influence of coffee served to protect and insulate the industry within Brazil, even through modern periods of substantial economic restructuring. Coffee was exempt from many of the export-penalising measures of Brazil’s ISI period, and the coffee export tax established in the 1970s was largely used to fund the state-run Brazilian Coffee Institute (IBC). The IBC, until its abolition in the 1990s, acted on behalf of coffee producers, enacting guidelines to maintain favour-able international prices and to control surpluses (Helfand and de Rezende 2004).
The export-promoting period of the late 1960s and 1970s meant a wealth of credits and subsidies available to coffee growers, as well as significant state-financed research on high-yielding trees, disease-resistant varieties, and agronomic measures designed to increase plantation efficiency and yields3 (Graham et al. 1987). Following structural reforms and the ushering in of market liberalisa-tion, the government continued to provide limited support to coffee growers. Today, the Agricultural Ministry of Brazil makes loans available to coffee farmers through the Banco do Brasil – the nation’s largest bank, with a history of conservative lending policies strongly favouring the production of coffee and little else (Le Breton 2000).

Coinciding with Brazilian neoliberal reform, the 1980s initiated a period of structural change for the world coffee market. In 1989 severe price drops occurred when the International Coffee Agreement (ICA) price control clause was suspended. Without mandates for price controls, coffee prices dropped dramatically. Major coffee-producing nations like Brazil were unable to agree on export quotas, which, through the withholding of coffee reserve stocks, had in the past helped to sustain artificially high prices on the world market. Following the collapse of the ICA, country after country flooded the market with coffee reserves which pushed prices lower and lower. As a result of this market flooding and a lack of increased demand in the United States and Europe, the price of coffee plummeted (Daviron and Ponte 2005).

The world market price for coffee reached all-time lows in the year between 2003 and 2004, averaging approximately 50 US cents per pound, a significant decrease from average prices of 120 US cents per pound in the 1980s (ICO 2006; Figure 2). Today, the world coffee market is dauntingly oversupplied. Perhaps more importantly, market liberalisation, deregulation and globalisation have allowed corpo-rate interests to gain a greater share of coffee’s global export revenues – meaning less profit and less power for producers, particularly small-scale producers (for a detailed discussion on this process, see Talbot 1997; Ponte 2002).

Additionally, demand for coffee in consumer nations is changing. In the US, Brazil’s primary coffee importer, consumers are increasingly turning to high-quality specialty coffees, yet Brazil predom-inately supplies lower-quality beans4 (ICO et al. 2000; Ponte 2002). Despite decreased demand, Brazil’s coffee production has continued to increase. Astoundingly, Brazil increased total coffee production by more than 50% between 1989 and 2004 (Jarvis 2005; ICO 2006). One reason for the increase can be attributed to a bout of high coffee prices in the mid 1990s, which encouraged increased production. The subsequent harvests from trees planted during this prosperous time are often referred to as the ‘Brazilian monster crop’ on the world market.

In response to the global coffee crisis, the Inter-national Coffee Organization (ICO) has suggested a number of ways in which coffee-producing nations can cope with declining returns. Along with attempts to increase the global consumption of coffee, and thereby create new markets (including campaigns to encourage the traditionally tea-drinking Chinese to consume coffee), the ICO also promotes agricul-tural diversification in coffee-producing nations. Yet, diversification may be difficult in many areas of Brazil due to specific environmental, socio-economic and political conditions that continue to favour the production of coffee as a major export commodity. We explore these conditions in the following sections with a discussion of coffee production at regional and local scales.
 
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