Brazil buying coffee beans? Escândalo!

Drought may force Vietnam imports

BRAZILIANS have had to endure a lot of late, between the recession, the impeachment and the never-ending stream of national scandals.

But importing coffee beans? In Brazil, the commodity king of the world?

The idea hasn’t been well received, especially among those in the rolling hills of the southeast who have made the country the No 1 coffee producer.

“They want to kill us,” said Antonio Joaquim de Souza Neto, a secondgeneration farmer in Espírito Santo state.

Sure, some in the region had been hit hard by years of drought, but still, he said, there was plenty of supply to go around. “We won’t allow this coffee to enter the country.”

The bean in question is the robusta. While growers of arabica — the variety roasted for drip java coffee and favoured by Starbucks — have received plenty of rainfall following last year’s record harvest, robusta farmthe ers, farther to the east, weren’t as fortunate. Many went for months seeing nothing but clear skies.

Robusta is used predominantly to make the instant coffee that Nestlé and others mill in Brazilian factories and export across the world. And it’s those companies that, amid concern the drought would wreck this year’s harvest, successfully pressed the agriculture ministry to let them buy raw material from low-cost Vietnam.

That set off such a storm of protest from farmers that President Michel Temer temporarily shelved the import plan the day after it was announced in February. He hasn’t indicated what his final decision will be, although people familiar with the matter said last week that his administration was leaning towards allowing the Vietnamese beans in.

The two sides are still in talks with government, which has its hands full with seemingly bigger problems. Several top advisers to Temer have been sidelined by Operation Carwash and other corruption probes that have taken down political and business leaders.

Temer is struggling to put his economic recovery plans to work; street protests erupted over his public pension reform bill that would require Brazilians to work longer.

“It’s a shame for the country to waste time on this when it has so many problems,” said Evair Vieira de Melo, a congressman from Espírito Santo state and an ally of robusta farmers in the lower house.

“For months, I’ve been holding meetings in ministries to try to fix this nonsensical idea of Brazil importing coffee.”

Temer has called for greater openness in trade to make Brazil more competitive — and that idea, at least, has some fans.

As it is, Brazil’s protectionist policies put its instant-coffee makers at a disadvantage to foreign competitors that could buy beans from any country they chose, said Pedro Guimarães, commercial director at Companhia Cacique de Café Solúvel, a São Paulo-based maker of instant coffee.

According to Guimarães, “the Brazilian robusta crop will be weak this year for the third straight season. Scarcity will remain a problem.”

That’s not so, according to the robusta forces.

“We have inventories and we guarantee that we will deliver the coffee demanded [at the same prices offered by Vietnam],” said De Melo, the legislator from Espirito Santo, the country’s top robusta-growing state.

There’s no telling yet which side has it right.

Last year, robusta output fell to a 12-year low of 8 million 60kg bags. The government forecast for this year: production will be as much as 21% higher, but still well below the annual average in 2010.

The government briefly tried to go the import route for robusta last year too, authorising some purchases from Peru for use in special blends. The growers won that round easily. The decision was reversed within days. — Bloomberg

For months, I’ve been holding meetings in ministries to try to fix this nonsensical idea of Brazil importing coffee