Brazil’s Coffee Growers, Cashing in on Sustainable Efficiency
Since coffee was first introduced to Brazil in 1727 production would quickly grow to take on major importance. For 175 years Brazil has been the world’s biggest grower and exporter of coffee and in the last few years the booming local coffee culture has made Brazil the second largest consumer after the U.S. as well. Despite two years with severe drought, producers are doing better than many in the market anticipate. And even with a small crop, low prices and the complications of climate change Brazilian growers continue to defy the odds of how to survive with competitive costs, good quality and a quickly expanding share of sustainable coffees.
BY MAJA WALLENGREN
The smallest of six farms owned by the O’Coffee Estate group in the Alta Mogiana region in the northern part of Brazil’s Sao Paulo State, the Fazendinha – the little farm – only has 160 hectareas of coffee. But here, like at the rest of the 1,000 hectares spread out on the other five farms owned by O’Coffee, every bean is produced according to the highest standards for efficiency and most modern of cultivation practices. As most things in Brazil’s coffee industry, it’s hard for visitors to not get impressed by the sheer size and scale of operations.
“This is a 20,000 square meter patio and then we have 1,500 square meters of raised African beds and around 400 square meters of covered patios for our select mircro lots, but we are in the process of expanding that to an area of 4,000 square meters of covered patios to further increase our offers of micro lots,” said Edgard Bressani, the Chief Operating Officer of the O’Coffee Brazilian Estates, which is based just outside the town of Pedregulho in Sao Paulo State.
Despite the high level of mechanization applied throughout the production chain, the coffees here frequently scores between 86 and 88 on the 100-point scale used to grade and evaluate beans used by the specialty industry across the world. And despite the severe drought experienced in Brazil during the last two crop years the new 2015-16 harvest at O’Coffee is looking good.
Row after row of perfectly picked and sorted red and yellow Arabica cherries are stretched out on both the patio and the raised beds for drying. From natural Arabicas, to pulped natural, semi and fully washed beans, O’Coffee offers a long range of different flavor profiles to coffee lovers across the world.
“We have 20 different areas with what we call the flavor development plots, all with different varieties being developed to obtain very specific and custom-made aroma characters,” said Bressani. Thanks to irrigation, the month-long dryspell that hit most of the Brazilian coffee regions in January – when cherries were just entering the crucial state of bean formation – the drought did not cause much damage to the coffees here.
“We are wrapping up the harvest now and we expect to get about 32,000 bags (of 60-kilogram) here this year, it’s about the same as last year,” Bressani told Tea & Coffee Trade Journal during a visit to the estate by the end of July. But he ads that had it not been for irrigation the crop would have suffered negatively, as has been the case in the majority of the coffee regions across Sao Paulo and Southern Minas, two regions which alone produce about half of Brazil’s total coffee harvest.
“Alta Mogiana accounts for up to 50 percent of the coffee production in Sao Paulo state, and most of the producers and farms are speaking of a drop in the harvest of around 20 percent from last year, mostly because of the dryspell in January which caused a lot of small and hollow beans as the lack of rain didn’t allow for the cherries to develop into full-size beans,” he said.
Forecasts for Brazil’s coffee harvest have always been a guessing game. As the world’s undisputed largest producer and exporter – home to as much as 40 percent of total world production in some years – speculation is always ripe. Nothing moves the markets in New York and London with more predictability as any news about changing crop fundamentals in Brazil.
According to Conab, the official agency in charge of crop estimates for Brazil’s Agriculture Ministry, the new 2015-16 harvest is expected to yield 44.25 million 60-kilogram bags. But as always with Brazilian coffee forecasts, figures can be found in a wide range. The current harvest is seen as low as 40 million bags from the most pessimistic growers association and go as high as 51 million bags according to the most optimistic traders.
Most producers and traders, however, agree with the overall projection by Conab that the new harvest appear to be on track for producing about the same, or a little below the last 2014-15 crop, which according to Conab ended at 45.34 million bags. Although many regions in Sao Paulo, Cerrado and Southern Minas are reporting lower crops, other regions have a reversed bi-annual crop cycle with higher production this year. Some coffee farms with large areas renovated two years ago also reported trees to enter the production cycle again in this harvest. That the harvest is delayed is a whole different story as well as is the fact that the majority of Brazilian growers actually are small producers.
“The general perception is that everything in Brazil is mechanized and irrigated and that everything is big, from the average land size to productivity, but we have a lot of small producers too with only between 3, 4 or 6 hectares,” said Moacir Aga Neto, Head of New Business Development at the Cerrado Coffee Growers Federation. Even in the Cerrado region, famous for being home to what are among the world’s most efficient coffee producers with average yields of around 35 bags per hectare, only 30 percent of the growers have access to irrigation. And according to official figures from Brazil’s Agriculture Ministry a full 87 percent of Brazil’s 300,000 producers are actually small growers with less than 10 hectares of land.
“The harvest this year in Cerrado was initially forecast to produce 5.5 million bags, but the drought in January was terrible and we are seing the smallest average bean size ever this year. In addition, the harvest is between 5 and 6 weeks delayed because of the late flowering last year when we went without rain from mid-September until the end of October,” Aga Neto said in an interview at the Federation’s headquarters in the town of Patrocinio, Minas Gerais. Based on the latest harvest figures the Cerrado crop is now expected to end at about 4.5 million bags, he said.
There is no denying that the harvest is late in most of the coffee growing regions. According to figures from the Cooxupe cooperative based in the town of Guaxupe the overall harvest in Cerrado, Southern Minas and Sao Paulo states was 42 percent completed by July 25th while in previous years at this date the harvest was between 51 and 65 percent completed.
“There is no doubt the drought has had an impact and last year the drought resulted in losses of 10 percent for the cooperative but it’s still too early to come up with a definite figure,” said Cooxupe President Carlos Paulino da Costa. With over 11,000 members Cooxupe is the biggest coffee cooperative in the world and accounts for about 12 percent of the total annual harvest in Brazil, or some 5 million bags.
Driving through the state of Minas Gerais where up to 60 percent of Brazil’s coffee is grown is simply said a mind blowing experience to anyone in coffee. On a crop trip stretched across 2,500 kilometers of Brazil’s prime coffee lands from the Cerrado region in the northern most part of Minas Gerais across Sao Paolo state and back in through the coffee belt of Southern Minas, for hundreds of kilometers all visitors see along the road is coffee, coffee and more coffee.
Always on the forefront of innovation in coffee, even smaller producers in Brazil are embarking on selling roast and ground coffee in the local market to increase the value-added earnings from coffee in Brazil’s booming café culture, for which current domestic demand is estimated at about a stunning 21 million bags, according to the London-based International Coffee Organization.
“Brazil continues to see coffee consumption growing by at least 2 percent a year, and despite the slow down reported in early 2014 we may still look at adding up to half a million bags in new consumption a year in Brazil for the time being,” said Carlos Brando, an international consultant who has adviced the ICO and the World Bank on coffee and consumption trends for over a decade.
And despite international prices today at between $1.20 per pound to $1.30/lb and trading at levels close to the lows seen in 2001 and 2002, producers in Brazil still make good money.
“Brazil is competitive because it has a low cost of production and high quality beans, it really is as simple as that,” said Brando, speaking to Tea & Coffee during a visit to Espirito Santo do Pinhal in southern Sao Paolo state, from where he runs the consultancy company P&A International Marketing.
“When we look at the cost of production, Brazilian labor costs are higher than anywhere else in the world and that is why what we face today in terms of labor shortage is being addressed through increasing mechanization, even for small producers growing coffee on steep mountain slopes just like the conditions you see in Central America,” he said.
Watching what in Brazil is known as “mountain coffee” in action, only adds to the admiration for the industrial revolution achieved by Brazil’s coffee industry. Manuevering up and down hill sides with altitudes as high as 1,500 meters, the pickers apply the hand-held mechanized devices simply known as the “little machines” or “little hands” to shake the ripe cherries off the trees.
But contrary to public belief that applying the hand help mechanized pickers in mountain coffee immediately will lead to reduced quality in the final cup results, is one of many common beliefs or myths which Brando rejects as an urban legend in coffee.
“If you are having problems with slopes you address this by changing the spacing of the coffee trees to allow for the pickers to pass through”, he said, adding that terracing is an innovative solution now being investigated to mechanize coffee grown on mountainsides. Brando also said that the key to preserve quality from any kind of mechanical harvesting is through post-harvest processing where farms ensure that all green or other un-fit cherries are separated from the best grade mature cherries.
A few kilometers outside the town of Espirito Santo do Pinhal grower Julio Ragazzo is going through the last lots of coffee from the new harvest, now drying at the patio outside the family property. With 90 hectares sustaining the livelihood of four families – the three brothers in the Ragazzo family plus the parents – the Ragazzos are considered small producers here. Yet even so, the farm is moving toward 100 percent mechanization.
“I started mechanizing the harvesting about five years ago and today we have over 50 percent of the entire production mechanized. There is about 15 hectares of the farm that are too steep to mechanize and I plan to take this out of production and leave it as reserve, because it’s too expensive today to keep areas where you can’t mechanize,” he said. During this harvest, the Ragazzo brothers have introduced there own label under the family name of both roast and ground and whole beans to the local market. And for a coffee produced 100 percent through mechanization, it is hard to believe the result, because mechanization or not, the Ragazzo coffee has a wonderful balance of aroma, body and acidity, with a perfect smooth aftertaste.
From the increasing level of mechanization used not just to keep costs competitive but also to improve on quality through the use of high-tech post-harvest colour sorting of cherries, Brazil continues to move ahead on the way toward an industry maintained by sustainable efficiency. Despite the growing challenge from climate change with increasing dry spells expected to be the norm rather than the exception, few in the industry believe Brazil will not remain the world’s leading power in coffee.
“Brazil is a country of free enterprise and you really see it in coffee, especially when you look at the level of technology and technification applied to coffee growing which has helped make us the most sustainable producer in the world,” said Brando. He said that over 25 million bags can be traced back to either Rainforest Alliance, UTZ Certified and 4C verified coffee, adding: “This makes Brazil the biggest supplier of sustainable coffee and that is a number that only will continue to grow,” he said. It’s hard to argue against this level of efficiency in Brazil and coffee lovers can only hope other countries start to learn from this experience in order to secure the supply chain needed to satify future generations of consumers.
Maja Wallengren has been writing about coffee for more than 20 years from over 45 coffee producing countries across South-East Asia, East and West Africa and across Latin America. She can be reached at: email@example.com or via her blog www.spilling-the-beans.net
This is a very enlightening piece about coffee production in Brazil. It would be very interesting to learn the specifics that drives the low per unit production cost apart from mechanization.Fertilizer application/organic manure for example, light intensity,Soil types, prevalence of diseases,e.t.c.
Am really interested in finding a common ground with the coffee production in SSA.
Thanks so much for your kind comments Patrick, please feel free to write me on my personal email for more details at firstname.lastname@example.org 🙂