The coffee market has seen a sharp rise in the entire world. This can be clear by the fact that its production has doubled in the past 30 years. Brazil has continued to be one of the largest producers of coffee in the world.
In 2016, it marked a historic rise of 18.8% in its production from the previous year. Further, it contributed around one-third of the total coffee production in the world in the year 2018.
Status of Brazil in the world market
Brazil has proved itself to be the largest exporter of coffee in the world. As per the International Coffee Organization, Brazil contributed 29% of the total exports of the world in 2016. However, the percentage of the world market that it holds has not grown much. In 1990, it held around 29% of the entire market of the world. Whereas, in 2016, this percentage increased to only 36%.
On the other hand, Vietnam has emerged to become an important player in the world coffee market in recent years. In 1990, it had only 1% of the coffee export share in the world. However, in 2016, it exported 23% of the total coffee exports of the world.
History of coffee in Brazil
Coffee got introduced in Brazil in 1727 in northern its northern part. In the first quarter of the 19th century, Brazil started reporting an increase in economic growth due to the rise in the coffee market. Further, in the second half of the century, it became the commodity in Brazil with the highest export. In its initial growth as a coffee market, laborers were mainly slaves from Africa. However, with the abolition of slavery, the use of slaves was restricted.
After the 1990s, the International Coffee Agreement ended. Further, the Brazilian coffee Institute dissolved. As a result, the coffee market in Brazil suffered. The prices fell and producers experienced a fall in their income. However, it also introduced them to the free market.
Production of Coffee in Brazil
Among the 26 states of Brazil, 15 produce coffee. The total area under coffee production in the country is around 2.2 million hectares which are cultivated by 287 thousand growers. Its production requires heavy rainfall as well as the dry season. The country provides these factors along with appropriate temperatures for its growth. Further, other reasons behind its large-scale production are the availability of land, labor, and water at a lower cost. Most of the countries in South America produce Arabica. However, this country produces Robusta as well as Arabica coffee. While Robusta is of low quality, Arabica is of higher quality. It consumes around 40% of its production within the country. Whereas, it exports the rest of it.
In Brazil, coffee harvesting takes place during the dry season of the year. This is the period when fruits are ripe enough to be picked. Unlike other countries, it uses the dry process for the processing of coffee.
Frosts: A unique problem for Brazil
Frosts are dangerous for coffee production. The milder frosts are white frosts whereas dark frosts are heavier. While the former destroys a year’s harvest the latter may damage the entire coffee tree. Among the major producers of coffee, Brazil is the only one that has to face this problem.
Where the dark frosts destroy the tree, it may take three to four years for the new tree to give fruits. Brazil witnesses such dark frosts every 5-6 years. Due to the dominance of this country in the world market, these frosts affect the demand and supply of coffee around the globe. For example, a harsh frost in 1994 affected more than half of the harvest of the country. As a result, the price of coffee increased in the entire world market the next year.
Countries that primarily Import Coffee from Brazil
In recent years, the demand for coffee has reported a rise not only in traditional markets. Many tea-dominant countries like South Korea and Japan also Import Coffee from Brazil on a large scale. In recent years, Brazil has experienced a rise in the demand for Arabica and a fall in the demand for Robusta. This is a positive sign for Brazil’s coffee market as the arabica coffee sells at a premium price.
Although the country is a leading producer in the world market, its production focuses more on quantity than quality. As a result, the coffee is characterized as of low quality. However, it has seen growth in recent years in the production of high-quality coffee.