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10/26/1968 - Brazil: The Importance of Coffee by Francis Foland

INSTITUTE OF CURRENT WORLD AFFAIRS Brazil The Importance Coffee Rio Janeiro October Richard H Nolte Executive Director Institute Current World Affairs Madison Avenue New York New York 10017 Ber Mr Nolte I chose wrong topic FMF newsletter Cof breakfast starts right I started I longer interested drinking acrid black liquid To gather information report I spent about weeks around So Paulo Rio visit institutions Bra zilian Institute Coffee Ag ronomic Imstitute Campinas Industrial Oompany Soluble Dffee Never I drurk coffee2 In smaller establishments secretary larger white whose function dispense endless succession Ii Ie coffee He appears average every quarter primed demitasses already overly sweetened sugar One sessioms Coffee Insti lasted three hours That awful coffee It insult accept cafezinho meatus protection adopte There I being discour teous refusing proffere I elevator I waiting Once inside innersamcum executive office would traitorous No matter modest office clinic store factory sacred institution Brazilian society cafezilnho ritual One ferocious escaped circus offices Being hungry typist first second switchboard operator Om third assistant manager On fourth company president And until comitte serious error served cafezi_nho Only presence discovered Besides being escape ernui morning fortifier dietary supplement social nicety excuse cigarette cafezinho mainstay national economy The percapita sumption coffee averages Ibs Carioca chauvinis tically downing Ibs transformed bitter Rio coffees disparaged Paulista consumes milder So Paulo coffees But cfezi_nh_o contribution national cause considerably beyond support sacrosanc coffee likewise contributes significantly sugar indus Subsidized Brazilian goverzment fezinh_ costs cents addition sugar couter contents available whatever quantity I gives ragged cruzeiro notes emaciated little their stomachs cafezinho chock sugar A German yatchi Brazilian halfway sugar asked jokingly Why right Seriously Brazilian replied It because I coffee little bitter So popultion about million people consumes three million metric sugar about Ibs person armually Drinking cafezinho therefore patriotic Brazilian _perform Refusal suggests least treason But internal market bring important dollars national coffers Over O Brazil export earnings coffee sales without income currency country would primitive bankrupt Brazil world largest supplier market United States world largest consumer million Therein stormy affair For century coffee green which modifie Brazil landscape politics economic development international tions Way Throughout history country product psychosis First sugar Nor Which Salvador beautiful tropical capital fille churches radiant mulatas The caravels saile large proected Bay All Saints bearing cargo auslaved Africans reured Europe holds sugar Bu century Dutch Caribbean broke Brazilian monopoly market discovered State Minas Gerais All attentio turned found wealth Salvador divested national government favor aother large Rio Janeiro focal point ransfer New Old In century coffee plant began journey toward soils So Paulo Paran Caribbean Surinam Belm From became Brazil principal commercial Wih climatic co1ditions suited remunerative plant south country accumulated wealth which gives region political economic dominance Though never crowaed national capital So Paulo became potent rival Rio century surpasses latter almost signi ficant counts For several decades until Revolution states controlled nation executive branch called loire politics coffee S Paulo symbolized Minas Gerais ___ee passed presidency forth between gentl agreement betwee tycools With plemty virgin labor fzed_eiros covered rollig terrai So Paulo Minas Gerais Rio Jameiro Espritu Santo coffee trees ufficient control government create artificial mechanism assure market overpro duction caught century By Con vention Taubat national government initiated system quotas which would store pduction limit exports world deman support market price The Brazilia Institute Coffee IBC created execute polic Assured buyer favorable price growers heyday annual productio governmental stockpiles soared In words magazine Bra _Business The governmen Store coffee astronomical Ware houses rented along coffee producing areas sacking purchased railway lines highways strips constructed order coffee fields warehouses A complex messier eaucracy built itself years Brazilian president either choice political friends igaored completely became sacred filled utouchable positions operations willing attempt reforms The v1lue system society predicated To become large coffee plantation owner ultimate achievement society homogeneous agglomeratio fazendeiros Children Europe education No Brazilian product deigned worthy homes extravagant museums china silver crystal silks veneers Continent Coffee exports possible these luxury expenditures instance erned Brazil international receipts To So Paulo families considered literally grand continue large lndowners One typical family clique I continue large almost consumed commercial center seignorial house musty malfunctioning Its interior recalls marre C arrara floors uncom fortable rococo furniture threadbare Arraiolos carpets The parents speak Portuguese French English fluently related Washington Luis leit__ presidents therefore lived England child while father sellor The husband manqu attorney dillettante hobby binding leather books VictOr Hugo Beaudelaire Verlaine Both conservative their political views refusing voice names certain liberals sider Communists participating actively planning Revolution championing cause U S politicians Barry Goldwator Angling invitation fazenda I learned manorhouse longer guests furthermore coffee meager Instead I surmised profits siphoned country So Paulo estate But there onger income allowing luxuries The childrem University So Paulo their cultural orient ation toward United States rather England France Week outings longer fazenda guests modern glass walled swimming pooled country banker industrialist The first traditional coffee culture depression By Brazil productive capacity nearly double amount being exported With crash coffee consumption plunged price eight cents pound monocultural economy Brazil bankrupt strongman State Rio Grande Sul brought Brazilia republic loire politics In years bonfires consumed million sacks coffee beans policy government continues until constant dread production Talking officials government Coffee Institute IBC I found lamenting brought severe frosts Having visited Agronomic Institute Cam pinas knoing reputation I asked about applica bility research coffee cultivation I learned findings Institute could greatly increase yields modernize ABOVE Coffee drying Beans spread concrete forms called terrerp_s turned regularly guarantee formity coffee growing industry Thousands hectares could freed yield extensive greater production could realized intensive aporoach cultivation But greater yields production government Today Brazil almost million stockpiled around country enough entire world demand In addition original coffee producer there transort warehouse sacking costs Coffee beans absorb moistur swell making necessary enlarge sacking three different stages Brazil biggest production longer So Paulo coffee history country The vagabond century moved southwestward staking claim northern western parts State Para Leading present location Paran swath coffee trail cutting across southern Brazil Lands cultivated decades abandoned coffee planters moved better soils their Oce flourishing decay population commerce surgingo frontier where swirl money losses lawlessness lessness soils abused exploited quick profit Behind devstatiom natural fores destroyed coffee trees planted slopes crystalline plateau exposed heavy erosion The first I traveled through coffee I aware misinformed Brazilia cause poverty strickea I seeing Leaving So Paulo headed northward Via Presidente Durra highway Rio Janeire It fellows Valley Parafba Sul River between massifs Serra Mar southeast Serra Mantiqueira northwest This riverime impor chain industries century coffee Volta Redonda pride Brazil steel erected decademt coffee Closer Se Paule Japanese floodplain cultivationa truck farms Leaving Paraba basin So Jos Campos followed narrow which twists along tributary Paraibuma River where hillocks abruptly stream Galleries eucalyptus follow water course beyond occasional clumps tropical forest secondary growth remain The terrain rolls savanna coarse inferior grass Milk front fields herds criollo cattle interspersed better quality Holsteims Zebu Most impressive landscape termite anthills sometimes height erupting across fields intervals The first explanation I given destitutiom staged blitzkrieg inwading devouring vegetation To would practically impossible walking other thousands anthills drown powerful insecticide I later learned relative latecomers first stripped trees finished coffee With exodus surface suffered overburden cattle raising W I first interpreted cattle paths around hillsides I later found vestiges coffee regular alignments depressions where trees stood The conjuncture blights attacking could nature recourse would desert Thus coffee region grows I contrast Paran bloom coffee groves stretching horizon Boo cause economic factors cultivation exceeded natural boundaries state pushing soils climates which often prejudice crops Coffea arabica native habitat Ethiopia flourishes humid tropical climates meliorated altitude average temperature fluctuates within It almost strictly fined withim Tropics Cancer Capricorn these boundaries exceeded precariously island Taiwn southern Mozam bique parts Brazil Paran This souther state toyed coffee ultivation plunged In state produced years later topped million This proliferation cause Brazil warehouse burden peculiar market situation popular The reaso production trace largely world market prices years When World War II practically iternational coffee marke United States export quotas stabilize situatio certain coffee producing countries economic chaos But price market sevemly limited wartime exigencies growers turned other crops The renewed demand after annual production plemented stocks Suddenly these suffi cient first quarter century there coffee shortage The price jumped about cents three years The favorable quotation prompt scurry plantings especially pioneer areas Paran But since three years before produces market immediately supply instead rumors serious frost damage Brazil Aother flurry price soared settled cents cents The coffee fever spread across sandy soils western decline plateau exposed sporadic invasions Atartic masses which sweep across pampa Parn basin Response prices likewise Africa which until posed threat Brazilian coffee The coffee price three matur ation brought predictable surplus Brazil stockpiled market obeyed dictates supply demand Im I5 Brazil topped milliom sacks exceeding total world consumption The commercial excellence again vagaries inelsiC demand highly elastic preductiom The crisis affecting Brazil major foreign currency earer President Juselio Kubitschek WORLDSUPPLYAND DISTRIBUTIONOFGREEN COFFEE In millions kilos NET EXPORTS country ambitious development infrastructure industrialization Hard import capital goods critical Unilaterally Brazil decided restrain severely coffee sales order maintain prices She began inter national accord No other country experienced comparable excess capacity therefore Brazil residual supplier monopol control market One ironies policy described opening holding umbrella withholding assure price other countries particularly African chose money makers planing areas stealing parts Brazil market arope United States At World War I Africa produced world coffee coming nations In contrast Brazil share marke diminished P beginning century current One causes soaring African sales soluble coffee industry which being after Com pared Brazil coffee umwashed arabic African robust inferior cheaper It serves blends isanc _olombian milds herefore theprincipalcoffeeuseintheU instantcoffeeindustry From U S imports African robust reache largely detriment Brazilian coffee sales Brazil ilemma described June The New York Times Since July I Brazil followed strict coffee defense policy under which Government brought coffee exporters producers whenever prices New York Coffee Sugar Exchange below established minimum price Bcause United States buyers could cheper African coffees little Brazilian coffee The results twofold The country foumd iself highly favorable intermational balance payments governmen defici skyrocketed Government contributed further inflation buying II coffee On Brazil entered agreememt other Lain American coffee producers export market exportable production another effort maintain prices Oter Latin American producing coumiies leeping their exportable productiom This produced limited results because African producers boumd Now Brazilian growers traders exporters against renewal unilateral arrangement Senhor Lo Brazilian Finance Minister evidently assumes talks Coffee Study Group Washizon which Unie States Lai American African producers participating produce price guarantee import quota formula exports nation dollar income owOthevolumeofunsoldcoffeetheGovernmen iscommittedobuy The arrive Ist International Coffee Agreemem prolonged The United States consume eager enter agreement which committed support prices above their equilibrium levels There exists formidable array argumentsagainst commodityagreementsingeneral thatheySeno maintain arificially prices leading overproduction Sha quota system built agreements freezes production paterns favor traditional producers discourage enterprising ucers apparatus supervise agreemeats inevitably complex balances eviations andha income consumers forced higher prices which serve sidies advantaging landowners producing countries Spearheae theories Radl Prebisch presente economists negotiators lesser developed nations emphasizes inexorable deterioration trade terms since Nar II their primary products earning international market while manufactured goods import Causes weakening position commodities several including overproduction substitution synthetic products protectionist policies developed coutries The thrust argument exporting tries commodity agreements contribute significantly their economic development assuring degree stability currency earnings easing their dependence foreign There little doubt Castro power Cuba caused United States greater coffee agreement which would Benefit Brazil Colombia Mexico several Central American countries Coffee politics economics comment often heard One English author observed The Agree admittedly political large extent which Americas beCme intensive result Cuban revolution Coffee commodities suited control price quota system Production widespread benefits accrue number nations excess hands Brazil Colombia supply control concentrated manageable center Brazil offers other qualities interest agreement system quotas contribution which increased earnings economic development rather fazendeiro account program agricult diversification aimed reducing coffee Besides stabilizing international receipts Brazil surely interested restraining upstart African nations burgeoning expansion their coffee production But natural favorable guaranteed price encouraged prolifera through years first agreement abuses place extra quota exports transhipments through member countrias There those argue agreement Brazil advantage Due preponderant control world buffer stock country effect manipulate international market One proposal Brazilian Government should political courage reducing price producers coffee exported purchased IBC force inefficient growers eliminate capacity Thus streamlined Brazil already producer could uderprice African nations cultivation primitive infrastructure developed It observed Brazil dumping stockpile could shatter world coffee market pieces itself At least major factors however against drastic measures One nature coffee cultivation being perennial which produces years addition common other crops cotton beans mandioca between Therefore relatively priCe cycle grower exerts little patience A sociological variable comes difference standards living between African Brazilian producers The first tends small subsistence farmer whose survival dependent coffee whose simple relatively ready In Brazil significant coffee produced fazendas medium sized farms owner accustomed degree luxury consumption worker dependent salaries earned coffee cultivation Therefore though Brazil underprice world seems unlikely donnybrook would purposes The International Coffee Agreement negotiated months effect month October years until September Sixty seven members represent consumer producer countries naturally there great squabbling compr6mising among Brazil major demands included price structure favorable washed arabics tighter control forestall extra quota shipments program foster diversification producing countries removal protective tariffs prejudicing salem Latin American coffees To considerable degree successful first three these In quota system established agreement types coffe4s compose world supply miXlion sacks The largest quota washed arabics giving Brazil market share million sacks I quota African robusts largest group giving African nations world market other milds comtribute largely E1 Salvador Guatemala Mexico Colombian milds granted Each these World market quotation based cents robusts being cheapest Colombian milds expensive When indicator price types coffee exceeds IAC establishe quotation maintains level countries supplying coffee granted increase their quota This system selectivity based quality price competition brought increase quotas Colombian African coffees Brazil increase Therefore negotiations commercial Brazil demande price washed arabic petitive other three types The final price structure favorable Brazil raising robusts level nearer arabics which since latter higher quality significan likewise milds suffered price again giving cheaper Brazilian beans advantage A president taking charge IBC launched aggressive sales campaign expected Brazil succeed obtaining increase world market quota revived demand Several steps taken eliminate evasion export quotas Importing nations United States prime example precautions ascertain legitimacy Bource incoming coffee Certificates origin export required exporting members cannot coffee unless export document stamp obtained Coffee Council executive Inter national Goffee Agreement Measures therefore taken control touristic coffee going round about order escape ICA sueillance Ironi cally seems however Brazil herself initiating calle special deals which borderline ICA regulations One o_peraco especial comprised million sacks destined U S importers price cents under indicator price IAC controls Another maneuver called paired married coffee casad involves coffee shipped abroad IBC warehouses IAC member countries Yugoslavia Lebanon Hong Kong This coffee counted Brazilian quota often counterpart sales reduced prices Brazil initis financed diversification program aimed reducing coffee production The intention should followed other nations agree month diversification established which producing members contribute This money shall programs projects approved Fund objectives limiting production coffee order bring supply reasonable balance world demand Although Article Agreemeat deals Removal Obstacles Consumption Brazil succeed eliminating discrimination European Common Market against African coffees Ins effete article recognizes there presently effect sures which greater lesser extent hinder increase consumptiom meanful measure rectify situation proposed Hashing accord above mentioned items however child comparison major battle which threatened destroy whole international agreement The titans repre senti largest consumer largest producer swords issue soluble coffee months recrimination obduracy before Brazil finally backed before superior force United States Brazil cheaper instan coffee which beating U S firms their their market The powdered represents U S coffee consumption since largely supplied giants General Foods Standard Brands Tenco subsidiary Coca Cola ABOVE A small Brazil stockpile plants U S Africa Mexico Gentral America The usual soluble product composed chiefly cheapest African beans scant aroma indifferent flavor bolstered admixture quality milds In contrast Brazilian arabic makes tasty coffee superior scores breed Of I having cafezinhos Brazilian soluble during talks executives industry ertaim U S distributors Hills Bros turned better product Brazilian solubles U S direction although amoun about million pittance total coffee market Due lobbying action giants U S Congress imposed tariff soluble coffee would American firms plants abroad Now other recourse should found alien Wih renegotiation International Coffee ARreemen Brazil established policy upholding world price combined production allowed Government exact officially referred contribution quota unofficially confiscator exchange I amounts expor Foreign currency erned coffee sales Bank Brazil Wh exporters therefore producers cruzeiros government decreed exchange artificial always lower official A reasonable excessive profi allowed Inflation curbed Brazil assures cheap coffee enter upset world market The government income maneuver benefits coffee sector agriculural research sales promotion diversification program administration Of Coffee Institute In addition significant amoun diverted general program economic development The contribution quota exacted exports poduc Within coquetry IBC sells subsidizing coffee beans regular domestic onsumption Much Brazilian surplus composed broken beans saleable abroad usable soluble coffee manUfacture Therefore Brazilian instant plants obtain their product plants wholly Brazilian enterprises The coffee industry happy fulfillment The Declaration American Presidents signed President Johnson Pun Este April Among other things states The Government Unite States intends efforts purpose liberalizing conditions affecting exports basic products special interest Lain American nations pledges itself provide incentives financial resources indus rialization agricultural products especially small medium industries promotion exportation these indus trialized agricultural products In light official pledges U S Agency In national Development channelled funds through government development corporation program embryonic instant coffee industry Acting faith agency caugh maelstrom conflicting interests AID officials sidle involvement affair In chain command Big Food U S brought pressure Congress which avise State Department concer Compe itiOn posedb foreign upstart Braziliam overmme convinced product usedb industry comparable U S firms Brazilian exp0r The U S hardened Brazil pleas negotiate matter bilaterally outside member council Inter national offee Agreemn there concession The others watched waited hrough months negotiation giants Though there hints other items U S foreign Brazil stake seems cudgel U S threa withhold support International Agreement Brazilian newspapers through early January editor ialized never handed blackmai This President Johnson attacks Sate Department called honor signature solemnly inscribed document which commits support industrial ization agricultural production coffee promote exportation industrialized agricultural products soluble coffee It commitment Viet Nam intends He orders permits which thing emissaries immoral because Brazilian soluble coffee industry would compete disloyally U S industry Where enterprise Where competition And Continental solidarity Other press attacks vitriolic The Brazilm people aroused though issue settled February still simmers under surface With amplification needed words soldvel Repfblica Dominicana synthesize cynicisms disillusionm U S foreign policy There course strong arguments U S injus arificially price impose U S firms absence import tariff U S contribution U S Brazilian coffee industry greement But never convinced local populace Within tries veste ineress pitted against Those U S coffee distributors relying profiting heBrazili productwe opposede General Feedsbloc buthe former smaller I Brazil instamt coffee indus rialists eppese green coffee feared international greemen former sller weber I Jmua Hr Horatio Ceimbra remied preside ofheBrazilianCoffeeInstitute Hisfirm CompanhiCaciquee Caf Soldvel Brazil largest coffee poessor comprising industrial complex Lnina Par which employs about workers Under presses coffee producs U S Brazilian Govement longer Sr Coimbra convenient iating chief A Brazili journalist ebsee resiion indicme weening Brazilian pesiiom isputeh Uni States Alluding fcetious national saying article closes Althouh hnorloptimism ImEong meapromis I ofind God really Brazili hasdecidedtbecometheigh efGenerFeeds January editorials rerring immeasurable posed U S Brazil impasse which hreated Agreement stability market income coffee producing nations immense effort since eliminate dangerous fluctuations product price The U S mobilized overt suppOr other importing countries Fright possible consequences Brazilian intransigence producing countries began pressure conciliation A U S negotiator caveat Brazil would accept U S terms caused Brazilian retort Whe going gunboats On February International Coffee Agreement approved Arti incorporated Brazil defeat In essence stipulates Brazil other exporting country prohibited selling soluble coffee under conditions favorable green coffee This means Government their exports soluble coffee comparably green coffee eliminate contribution quota latter The United Sates right present formal grievance Executive Director Coffee Council whenever judges itself prejudiced irregularities exportation soluble coffee After litigants resolved question bilaterally Executive Director Coffee Council create arbitration board composed three impartial parties If board decides favor United Sates Brazil other violating country remedy irregularity United States conider matter corrected retaliatory action aimed specifically Bra zilian imports When I opinion official Brazilian Coffee Institute regarding soluble coffee settlement I things official private As employee Government I comment As citizen I think crime Brazil U S Though economically small matter immeasurable U S image great victory Left major contribution cynicism average citizen regarding sincerity pretty phrases which U S voices supports signature We U S Government itself force Article Government intentions squelched economic powers within U S Article impac Brazilian oluble industry For thing aggressively hunting markets especially raditionl IAC member countries Eastern Europe Asia G ompanhia Cacique instance originally dependen U S market ether countries production Horacie Coimbra recently Hungary trying expand sales Them predice Brazilian overnment exercise ilute delay applicatiom measure As concession leveled exper soluble coffee tekem likely satisfy U S firms There fellow series pretests insufficien redresses An Brazilian businessman doubt capable various shenani around restricioms He damage U S image Br zilian soluble coffee industry Sincerely__urs Received New York November