From Rio to Sao Paulo, Hopes are High in Brazil for an Abundant Harvest

It’s not a random coincidence that Brazil dominates the global coffee industry—each region on its own is bigger than most other coffee-growing nations in the world. The largest producer and exporter in the world and the second-largest consumer after the US, the Brazilian coffee industry has survived every change and challenge it has faced since coffee was introduced here 289 years ago. Hopes are high for at least a modest recovery with the 2016-17 harvest from the previous season’s drought-impacted crop.

It’s mid-May and it is harvest time in Brazil. Home to over two million hectares of coffee and producing between 30 and 40 percent of the world’s entire coffee output in any given year, there is no denying Brazil’s global leadership when it comes to coffee. As the 2016-17 harvest starts, coffee activity is everywhere across the Brazilian coffee lands, from picking in the fields to drying. From natural cherries to de-pulped honey processed or fully washed, beans from the new harvest are stretched out on hundreds of thousands of square meters of either huge patios for bigger commercial lots or drying on raised African beds for specially selected micro lots. As the harvest activity fills the air with the sweet and pungent smell of coffee in varying stages of fermentation, hopes are high for a bigger harvest after 2015-16, which ended as one of the smallest in the last 10 years after drought cut yields short.

“So far the new harvest here in the Alta Mogiana region is looking good and Sao Paulo as a state is expected to get a much better harvest this year,” said Edgard Bressani, CEO of the O’Coffee Estate Group in Pedregulho, in the northwestern corner of the state. The Brazilian Agriculture Ministry’s crop forecasting agency, Conab, has pegged the new harvest in Sao Paulo to yield 5.462 million bags, up from the 4.064 million bags produced last year. This compares with the total national harvest for Brazil, which Conab said is expected to reach 49.7 million bags, up from last year’s crop of 43.2 million bags.

Analysts, local producers and agronomists, however, are quick to point out that those in the market who expect a bumper crop, will be disappointed. The Robusta crop, known as Conilon in Brazil, has suffered severe drought damage for the third consecutive year going over 100 days without rains that cut short average yields and also led to a significantly reduced bean size. The Arabica harvest, meanwhile, is expected to produce a good recovery from last year but continues to suffer from the negative effects of prolonged periods of drought in both 2014 and 2015.

“As soon as the market hears people talking about a good crop in Brazil [it is assumed] that Brazil will have a record harvest but this is not the case. A lot of people are going to be disappointed when they realize that these big numbers many people are talking about won’t materialize,” said Sergio D’Alessandro, independent analyst and consultant in Brazil’s biggest coffee state of Minas Gerais, which is home to between 60 and 65 percent of the entire national production. “We will have a good Arabica crop this year, and after last year’s terrible crop that’s a relief to the growers, but we are not going to see a crop as big as what everybody in the market wants to believe,” he told Tea & Coffee Trade Journal during a recent visit, adding, “This is both because the Conilon crop again is suffering from drought, and even in most of the Arabica regions, we are seeing the effects of the drought which limited the branch growth on trees and reduced the trees’ production potential by between 10 and 15 percent.”

Coffee’s Contribution to Brazil

The actual crop size aside, the vast coffee lands of Brazil have it all, from scores of tiny producers with just one to three hectares of land growing coffee in a highly artisanal family structure mostly relying of manual harvesting, to many of the world’s biggest farms covering thousands of hectares of plain lands all harvested by gigantic 12- to 14-foot tall monster harvesting machines.

Coffee was first smuggled into Brazil in 1727 by the Portuguese envoy Francisco de Melo Palheta, who legend famously tells, seduced the wife of the governor in then French Guinea in order to get access to a bunch of sacred little seedlings. After which coffee would soon be planted across Brazil with the early boom concentrated in the southern coffee belt of Rio de Janeiro, Parana and Sao Paulo. Coffee production quickly became the key source of cash for Brazilian governments and spurred the initial industrial growth and development of Brazil.

“The money earned from coffee exports was one of the most important sources of revenues of Brazil and directly aided all the main changes and developments in the country’s social and economic structure and the communities that were founded across the new centres of coffee production,” said Carlos Brando. Long acclaimed analyst and international consultant in coffee, Brando was for over 20 years the international head of Brazil’s world leading coffee-machinery maker Pinhalense, based in the town of Espirito Santo do Pinhal. To date, coffee still dominates the town in all aspects of life. In the central square, a life size bronze statue of a coffee picker stands tall in the middle of the plaza and in a symbolic gesture to the importance of coffee of the town, surrounded by real coffee trees, the “Palacio do Café”–the Coffee Palace –towers over the little square in the town of some 42,000 in the southeastern part of Sao Paulo.

“We call him Big-Foot,” laughed Brando, pointing to the gigantic feet of the coffee picker on the bronze statue. “When the artist made him, the statue was so heavy that he had to make the feet bigger in order to accommodate the weight so it could stand on its own,” he said.

Travelling some 5,500 kilometers by road through the coffee lands of Minas Gerais and Sao Paulo serves as a constant reminder of Brazil’s unique place in coffee history and the contribution of coffee through out most of the last 300 years from the early development to industrialization, and to the modernization of Brazil as we know it today. Town after town, from tiny hamlets of just 500 houses to towns of up to 100,000 inhabitants or more, coffee is at the root of the development.

“Our office was built here in 1927. The church, the theatre, this entire town was started by coffee and the first Brazilian Cardinal was born here,” said Brando, pointing to a grand old house dating back to colonial days, adding, “Pinhal, back then, was one of the biggest coffee municipalities in Brazil. From 1960 to the 1970s over two million bags, 15 percent of the total exports, were from Pinhal. It was because all of this trade that the town started to produce the machinery that led to the foundation of Pinhalense,” he said, adding that Pinhalense today holds a global market share of 70 percent.

Rise of the Coffee Barons

By the mid 1820s Brazil had already cemented its place as the world’s largest exporter and by the 1840s extended that to become the world’s biggest coffee grower as well, home to 40 percent of total global output and with coffee accounting for 75 percent of Brazil’s foreign currency earnings.

The rise of coffee in the Brazilian economy coincided with the rise of nobility in Brazil and that brought about what by the 1850s became known as Brazil’s “coffee barons,” a title that could either be awarded through large scale investments or purchased by rich land owners. It wouldn’t be long before the coffee barons would be part of the Brazilian elite with the titles of an estimated 300 barons at the time estimated to be farmers, bankers and traders directly linked to their vast fortunes generated from the boom  in coffee. To this day, tales of the wealth and political influence wielded over the country all the way up to the late 1930s remain legendary in Brazil and many of the former coffee mansions have today been fully restored and now operate as tourist centres for “Coffee Baron Tourism” and cultural visits.

“For most of the 19th century, coffee production generated a large portion of Brazil’s wealth. Follow in the footsteps of the traditional coffee barons and visit the original coffee plantations from the 1820s-60s in the coffee valley in Rio de Janeiro state to learn more about the history of these landowners and the Africans slaves,” reads a promotion by the tour agency Historic Fazendas Brazil.

When slavery was abolished in Brazil in 1888, scores of coffee farms across Rio de Janeiro and southern Sao Paulo went bankrupt. To avoid a collapse of the industry a political decision was made to welcome immigrant workers to replace the labour force on coffee farms.

“During the second half of the 19th century, the empire welcomed Europeans who came to work in coffee cultivation,” said a 2005 study by the Washington, DC-based Migration Policy Institute. The study found that coffee immigrants in particular went to interior areas of the Sao Paulo, Parana and Rio Grande do Sul from the end of slavery through the 1930s.

The rise in prominence of the Italian immigrants would continue all the way up to present day Brazil. Initially known as the “white slaves” in the coffee estates, it was the Italians who ended up doing better when coffee prices in the 1930s plunged as a result of the Great Depression and resulted in a second wave of coffee farms going into financial ruin.

“The Italians always kept money under their mattresses, so they had liquidity and when the economic crisis started to affect the coffee industry, it was the Italian immigrants who were able to buy farms,” said Brando.

From the rural back roads of Espirito Santo do Pinhal, through the rolling hills of Sao Paulo’s Pocos de Caldas region to the highlands in the northwestern part of the state known as Alta Mogiana, coffee history is everywhere. The economic crisis, first caused by the switch from slaves to paid immigrant labour, then followed by the crash of Wall Street in 1929, opened up new opportunities for other regions to prosper.

“Alta Mogiana and Franca started to become important coffee regions during the early 20th century and lived through several coffee barons,” explained O’Coffee’s Bressani. “The rapid development of coffee culture brought with it wealth and progress, and encouraged the arrival of the so-called “coffee railroad” when the Mogiana Railroad Company added Ribeirao Preto to the rail network that connected the coffee plantations directly to the port of Santos.”

Famous coffee barons of the time included Jose Garcia Duarte, the Baron of Franca, and Francisco Schmidt, who originated from Prussia and became known as the “King of Coffee” in Ribeirao Preto. The family’s history lives on in the region today as one of the O’Coffee Estates’ farms, Fazenda Chapadao, can be traced back in a direct line to Baron Schmidt’s early coffee holdings.

“Today this region is known for producing some of the best coffee in Sao Paulo because of its altitude, climate and extensive experience in the production of fine and specialty coffees, which are exported to more than 20 countries across the world,” said Bressani, who has led efforts at O’Coffee to switch the production from the more conventional commercial grade coffee to top-grade beans.

Always Finding Ways to Adapt

Always ahead of the trends in the global coffee industry, coffee is a national pride to Brazilians from all walks of life. As Brazilian coffee families going multiple generations back in time start to prepare for the next generation to take over, progress for the new harvest that starts reaching the market between June and July will be watched closely.

After two years of massive drought problems and the constantly growing impact of climate change it’s still too early to predict just how big the 2016-17 harvest will be. But as so many times during Brazil’s long history of defying the odds in coffee, few in the industry doubt that the South American giant won’t yet again find a way to deal with climate change in order to remain the world’s top grower.

“Brazil is the most competitive coffee-producing country in the world because of the combination of low costs of production, the highly advanced technology used by farmers and high quality beans. Even if we are dealing with a lot of new challenges from climate change at the moment, we will figure out how to deal with this and Brazil will continue to evolve,” said Brando.

 

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