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Brazil coffee exports up; soluble down.

RIO DE JANEIRO, BRAZIL - According to a report released by ABECAFE (Association of Brazilian Coffee Exporters), Brazil green coffee exports during 1998 reached a total of 16.6 million bags. This was the best performance since 1992 when exports totaled 16.7 million bags. Although exports were low during the first half of 1998 with an average of 930,000 bags per month, they jumped to an average of 1.8 million bags per month during the period July/December. This was due to the abundant supply provoked by the crop of 1998/99, the largest in 10 years. The 1998 volume was up by 15% to exports in 1997 but exchange earnings at $2.3 billion were down by 15% from the record $2.7 billion earned in 1997. This was due to the expressive drop in international prices during the year, the average price per bag for green exports in 1997 was $189.66 which dropped to $140.47 in 1998. ABECAFE expects that 1999 exports will be lower due to the estimated smaller 1999/2000 crop and the fact that growers are well capitalized as a result of the favorable price levels over the last two years. The policy of many growers is to retain the product to average with the expected lower production next year and they are being helped by a recent government measure to extend all expiring farm loans to June 30, 1999. This policy does not encourage exporters to actively promote export sales.

A report recently released by ABICS (Brazilian Association of Coffee Soluble Industry) estimates that exports of Brazilian soluble coffee will close 1998 with a drop of 27%. Dollar export earnings for soluble coffee are expected to be $268.8 million in comparison with $373.0 million registered in 1997. This is the worst performance in seven years. The loss in volume reaches 8% with 39,000 tons shipped this year against 54,200 tons during 1997. The reason for the drop according to Sergio Coimbra, president of ABIC is the world financial crisis especially in Asia and Russia, the principal markets for Brazilian soluble coffee. Another reason is the taxation on Brazil soluble coffee, and the taxation on Brazil's soluble imports imposed by the European Common Market which is presently 8% but will increase to 10.5% as of January 1, 1999. Soluble imports from Colombia and Ecuador are not taxed due to an arbitrary action that favors those countries on the basis that measure stimulates coffee production and helps to combat the drug trade. Brazilian soluble which accounted for 18% of the European market in 1993 fell to 7.7% in 1997 due to the taxation. Colombia soluble during the same period grew from 5.4% in 1993 to 7.8 in 1997, surpassing the volume exported by Brazil.

The Brazilian government and trade associations have long protested the discrimination and after exhausting negotiations with Common Market authorities have now registered a formal protest with the World Commerce Organization in Brussels. Hearings a re expected in the near future.
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Author:Jones, Harry
Publication:Tea & Coffee Trade Journal
Date:Mar 1, 1999
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