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March 2012 C&CI • Brazil • 25

years ago I started to apply all the new technology available. Today I have an aver- age of 70 bags per hectare a year," he explained.

Mr Oliari’s family has 32 hectares dedi- cated to coffee, and over the years, he has become an example for other producers in the region to follow in terms of using the right plant variety, the right planting density and so forth.

The high social impact on coffee has made the local government much more actively involved in promoting projects that help producers become more efficient and enhance their average earnings. And the local government takes the expansion proj- ects, primarily in Robusta, very seriously. "Around a quarter of the coffee in Brazil is produced here, and 40 per cent of rural areas depend on coffee for their survival. We easily have 800,000-1 million people who depend on coffee for their livelihood, so we have a lot of incentive to help com- panies setting up in the area," said Enio Bergoli, Agriculture Minister for Espirito Santo.

"Every day we are seeing a better use of technology. In the next 10-15 years we will get to an average of 60-80 bags per hectare," Mr Bergoli told C&CI.

Shortfalls elsewhere

All of this is, of course, good news for Espirito Santo, but does not make up for the shortfalls elsewhere in Brazil. A tour of the main coffee regions across Southern Minas, including Guaxupe, Varginha, Mogiana, Alfenas and Juruaya, provided a mixed picture of the crop, from trees heavy with fruit as is the case in Espirito Santo to others where yields are pretty average. Moreover, as the peak season for har- vesting cherries approaches, forecasts for the new crop have fallen quickly. "Based on our last crop trip we have lowered our numbers for Southern Minas but Cerrado, Espirito Santo and Bahia are up, and that compensates a bit for the losses in South Minas because of the drought," said John Wolthers, a veteran Santos-based trader at Comexim.

At the lowest end of the scale, Brazil’s Agriculture Ministry’s crop forecasting agency, Conab, has pegged the 2012- 2013 harvest at 50.6 million bags, which includes 37.7 million bags of Arabica and 12.9 million of Robusta. This is up 16 per cent on the 43.5 million bags that Conab estimates Brazil produced in the 2010- 2011 cycle.

Enio Bergoli, Agriculture Minister in Espirito Santo, says ever-greater use is being made of technology

initial projection of 58 million bags. This represents a reduction of 17 per cent on the year-ago figure.

When it comes to estimates of crop size, analysts have long used a rule of thumb that involves taking out the lowest and highest numbers and make an average of the rest. Doing so has generated precise forecasts for years, and most in the indus- try and in trade peg the new harvest at 52- 54 million bags. So, even if it isn’t going to be a record crop, the new one will bring relief to roasters concerned about ongoing supply problems.

John Wolthers: increased production in Espirito Santo has compensated for other areas

Large, but not a record harvest "I agree with the Conab figures and don’t

think the crop will be any larger, rather the harvest will come in between 48 million and 50 million bags because of the many prob- lems with the weather," Luiz Suplicy Hafers, who is director of the coffee department at the Brazilian Rural Society, or SRB, explained.

Comexim believes the new crop will come in at around 55.8 million bags, but has revised its numbers downward from an initial projection of 58 million bags. This represents a reduction of 17 per cent on the year-ago figure

At the other end of the scale you have private exporters who still believe that Brazil will produce 55-56 million bags, although Mr Wolthers recognizes that the new harvest is "not going to be the mother of all crops" that everybody initially thought. Comexim believes the new crop will come in at around 55.8 million bags, but has revised its numbers downward from an

The new areas of cultivation in Espirito Santo will also help ease pressure on sup- plies, but it won’t be nearly enough to meet demand for around 13 million bags which are expected to be required in the next five years to meet growing worldwide demand. Most in the industry believe that all of the new coffee coming out of Espirito Santo will go towards satisfying Brazilians’ own thirst for ‘cafezinho,’ with demand in the domestic market growing at 3-4 per cent a year.

Domestic market

still growing "Every day, we see the number of cups consumed increase. The ‘café da manha’, or morning coffee, is still very important to Brazilians, but people are also drinking coffee in bars and restaurants, and at all other times of the day," said Nathan Herskowicz, Executive Director of the Brazilian Coffee Industry Association, ABIC.

ABIC has forecast that domestic demand will surge to 20.4 million bags this year, closing in on the US, where annual consumption is pegged at 22 million bags in 2012, based on current average growth. "Brazilians continue to drink more cof- fee, and a conservative estimate is that consumption in Brazil will grow at least 5 per cent per year over the next few years," Mr Herszkowicz told C&CI.

By 2011 Brazilians were drinking 19.7 million bags of coffee, and with most growth seen in 21-29 age-group the rate of growth is expected to continue for at least another 5-10 years. According to a UN study, a total of 28 million people in Brazil joined the ‘middle class’ in the years 1990 to 2007, opening up a massive consumer market, and nobody in Brazil doubts that the coffee boom is only just getting started. ■ C&CI

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