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Brazil seems unlikely to join ICA.

Brazil seems unlikely to join ICA

Despite occasional diplomatic rumblings from abroad, chances of Brazil joining any International Coffee Agreement quota system again were called "remote" by government trade officials and coffee market leaders, as was reported in the Journal of Commerce.

"The entire Brazilian market - traders, producers, exporters - would be against re-entering a quota scheme," said Carlos Calmon, president of Coffee Exporters Federation (Febec). "Besides, there is no political climate for it in Brazil today. All the talk among officials of the new administration is liberalization and privatization."

Mauricio de Assis, director of the nation's newly-formed Foreign Trade Coordinating Commission, known as CIC, agreed, saying, "Our whole aim is to liberalize Brazilian trade, both exports and imports. We want to keep the whole process wide open."

CIC was formed in March by newly inaugurated Brazilian President Fernando Collor de Mello as part of his avowed aim of stream-lining foreign trade. A key specific measure, aimed at freeing coffee exports from excessive red tape, was the elimination of the Brazilian Coffee Institute on March 16.

"Brazil has some 4.2 billion coffee trees," Mr. Calmon said, "but not all those trees are very productive." He noted costs have been pushed up to an average of 7,700 Brazilian cruzeiros (US$140) a 60-kg bag, against a domestic price of 5,300 cruzeiros, due to low world prices, high domestic costs and "the inefficiency of many marginal producers."

Calmon predicted "a continuing shake out" among Brazilian producers, noting that average Brazilian yield is about six bags a hectare against Colombian yield of approximately 12 bags. He predicted it will take "two to three years" to complete the process of eliminating marginal producers, and putting Brazilian production "back on an entirely professional basis."

Calmon estimated that Brazil might even return to higher annual production, based on fewer trees but higher yields and better quality. He said current market forecasts call for a 1990-91 (May-April) crop of about 25 million bags.

Arguing that there would be "no enthusiasm" within the Brazilian market for a return to quotas, a trade person added that "some of the countries which aggressively marketed coffee last year have now used up the easier mechanisms for competing, such as elimination of taxes, use of certain subsidies, etc."
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Title Annotation:International Coffee Agreement
Publication:Tea & Coffee Trade Journal
Date:Aug 1, 1990
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