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Azevedo reports on the Brazilian coffee scene.

Azevedo reports on the Brazilian coffee scene

Nercio de Lima Azevedo, well known figure in Brazilian and world coffee circles, with more than 40 years experience in the Brazilian and international coffee trade, reports on the present state of the Brazilian coffee situation.

Nercio is a partner-director of the international brokerage house of Barletta, Brambilla and Lima Azevedo Associates and has been for many years an executive director of the Santos Commercial Association. In a recent interview with the Santos daily newspaper A Tribuna, Nercio made an analysis of the present picture of the Brazilian coffee trade and the following are excerpts from this report:

"Coffee today represents only 5 to 6% of Brazil's commercial balance against 70% in the 50's but about 10 million Brazilians still depend, directly or indirectly, on coffee for their living which points out its fundamental importance to Brazil.

"The coffee market today is in a temporary period of crisis and all the economic areas are feeling similar problems due to the consequences of the government's plan for a New Brazil. The problem with coffee is that the exchange rate at present (Commercial rate formerly known as Official rate) is about 15% overvalued which takes us out of competition with other producing sources.

"The extinction of the IBC and the delay in introducing new export procedure now controlled by the Coordination Bureau for International Commerce (CIC), provoked uncertainties in the trade and with the exchange problem, a prolonged period without new export business.

"Brazil's participation in world markets which many years ago reached 70%, accepted a basic export quota of 30.3% of global quotas when the ICA was established in 1962. In recent years Brazil has been pressured by some producing and consuming members to wave part of their quota and agree to a system of selectivity. The Brazilian authorities and most of the trade were strongly against these measures and this was the position adopted which along with the intransigence of the principal members led to the break-up of the ICO in July last year. The majority of the trade in Brazil believe the laws of supply and demand in a completely free market, without quota restrictions, will be beneficial for Brazil to recuperate their participation in international markets. This will not be short term but with a return to more normal economic and climatic conditions, Brazil has the infrastructure to compete with the major producing countries.

"The port of Santos exported 8.2 million bags in calendar year 1989 representing 50% of total coffee exports which was down from the usual average participation of 60 to 65%. This was due to high port costs in comparison with other centers and the Santos Commercial Association is actively working on projects and studies to reduce Santos port taxes. "The estimates for the 90/91 Brazil coffee crop vary from 20.0 to 33.0 million bags. The latter being the figure promoted by the U.S.A. Department of Agriculture. Our sources believe the crop will be somewhere between 25.0 and 27.0 million bags. So far there has been no official crop estimate which formerly was a service offered by the IBC but it is believed eventually some government entity, federal or state, will release crop figures to counter attack the image of the USDA estimates."

"The formation of the European Common Market and the opening of free markets in Eastern Europe are positive optimistic signs for the larger development of Brazilian coffees to those areas.

"Japan, a country that 30 years ago was a traditional tea drinking market, in 1989 consumed 5.1 million bags of coffee of which 25% was from Brazil. The projections for the year 2000 indicate a consumption of about 7.0 million bags and if Brazil maintains her percentage of participation, it will mean an export market of about 2.0 million bags. Japan will be the fourth largest market for Brazilian coffees after the U.S.A., Germany and Italy."

"As a Brazilian it is hard for me to understand that the former government did not honor their signed commitment in the so-called "Operation Patricia" intervention in the London Futures Market. This operation is presently estimated to be producing a loss of US$300 to US$350 million to the government and the 18 export firms involved. I sincerely hope that the government of President Collor will take the necessary action to liquidate this operation and compensate all those involved."

Nercio began his career in the coffee business over 40 years ago as a commodities assistant in various Santos firms. Later Nercio worked in New York as classifier and salesman for W.R. Grace & Co. and in Europe for Proex S.A. Returning to Brazil, Nercio worked as sales director for Cunha Bueno, Leite Barreiras and Pinho Guimaraes and later he served on the board of Dantas Reiner S.A. and was manager of Trader Comercio e Exportacao Ltda, a division of the Brazilian banking group COMIND. Still later Nercio was appointed export director for the large Brazilian coffee group Irmaos Ribeiro.

At present Nercio is a director partner of the Santos based Brazilian brokerage house of Barletta, Brambilla & Lima Azevedo Associates. The Barleta, Brambilla Azevedo group has extensive experience in the domestic Brazilian market with sales averaging about 1.5 million bags per year.

Eduardo, the son of Nercio de Lima Azevedo started his career in commodities 10 years ago working as a coffee broker for Escritorio Suplicy one of the largest and traditional Brazilian brokerage houses.

In 1982 Eduardo became the manager of the cocoa department of COMIND Comercio Exterior and in 1983 he continued his work in commodities for an extended period in London with the firms Czarnikow and Socomex. Later he returned to Brazil as manager of the cocoa department of Dantas Reiner Ltda. In 1983 Eduardo joined Barletta, Brambilla & Lima Azevedo Associates as a partner and coffee trader.

Kenyan growers threaten to destroy their coffee

Kenyan coffee growers have threatened to destroy their bushes and replace them with more profitable crops if the producer price is not immediately increased.

This ultimatum is the result of growers' loss of confidence in the Coffee Committee of Kenya (CCK), whom President Moi has put in charge of cofee affairs. Growers want the CCK to be dissolved, accusing them of being a puppet of the State.

The producers said that they would replace their coffee bushes with more profitable crops such as maize and soya beans. Currently the price of coffee is KSh1.0(4.4US cents) per kg whilst the official price of soya beans is KSh 10 (US$0.44) per kg and maize KSh 5.0 (US$0.22) per kg.

Their threatened action, although illegal, could cause problems for the country because coffee is the second largest foreign currency earner after tourism. The Kenyan Government blames the low coffee prices on a depressed world market.

PHOTO : Nercio de Lima Azevedo, at right, with son, Eduardo.

T. Jones Brazil Correspondent
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Title Annotation:Nercio de Lima Azevedo
Author:Jones, T.
Publication:Tea & Coffee Trade Journal
Article Type:Interview
Date:Sep 1, 1990
Previous Article:China improves its tea export sales.
Next Article:On the market.

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