Creating new coffee areas is not the best option against possible supply shortages
As the Brazilian Coffee Council (CNC) evaluates, markets have to comprehend that fair pay is enough for farmers to produce sufficient coffee.
Some reviews consider coffee crop as small back in 2021, and indefinite for 2022.
Some analysts say the solution for possible supply shortages would be the increase of areas for coffee farming.
For CNC it is not the best alternative.
Areas for coffee farming
According to CNC, there are 1.81 million ha of land producing coffee, and 391,560 ha not yet producing. It totals 2.2 million ha of coffee plantations. Under usual weather conditions, by the average productivity, 2021/22 harvest would reach 71.5 million bags.
“It is not an overstatement to affirm that we do have enough planted areas to serve the domestic market and the exports. Nevertheless are we awed that the market does not react to the reality by means of stimulating producers to keep their activity”, the Council ponders.
“Historically, high prices cause world production to rise. But, unfortunately, there are great plunges in international prices just after surges, driven by oversupply”, the entity completes.
Market and production
According to CNC, the Market is highly speculative. In addition, farmers face high costs from inputs, workforce, and charges. By these means, oscillation in prices at low levels might not cover production costs.
“As we do have, in the history of coffee, 44.7 mln bags exported, the greatest volume on record, and the consumption of 21 mln bags, we might assume our assessment is correct. In normal conditions of weather, we can increase our productivity even more with the current planted area”, CNC ponders.
Consequently, CNC states that caution is necessary, regarding pricing stimulus currently carried out, which would mean positive results for producers in normal conditions.
The entity questions: “how is our future going to be if climate issues linger on? What if they stay present under normal conditions? Thus, in case of adverse conditions, expanding the area would be worthwhile. We hope the market understands that fair pay is all we need for farmers to produce enough for the supply chain”.