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Can Brazil take over the world?

There's a lot of coffee in the world. You could honestly say it grows on trees. It grows on trees in just about every tropical and semi-tropical country in the world. You can walk into any coffee specialty store and find coffee from the far-flung fields of Colombia, Guatemala, Kenya, Vietnam, Papua-New Guinea, Hawaii, and Ethiopia.

Oddly enough, however, you probably won't find a coffee identified as originating from the world's largest producer and largest exporter, Brazil. The reasons are rather complex. They involve politics, technology, price, quality, Big Brother, Mother Nature, and Tio Juan Valdez. Together these factors have all but plotted to hold back the giant of coffee. But if the business continues in its current direction, those same factors may soon pull together to put Brazil into the ranks of the most valued coffees in the world. Brazil's day is coming. The sleeping giant is awakening. All it needs is a good cup of coffee. Mother Nature loves Brazilian coffee.

There is no accurate way to refer to Brazilian coffee as a single product; it's a big country, almost as big as the continental United States. Its coffees grow in regions with distinctly different altitudes, soils, and subclimates. In fact, microclimates following creeks and wrapping around hills can let one farm's coffee dry on the trunk while neighboring farms scramble to beat the frost and get their beans onto and off the patio before rains ruin it all.

Brazil is not the vast rainforest (or former rainforest) that many people assume it is. Its southern areas - especially the states of Sao Paulo and Minas Gerais - can look like anything from well kempt Amish territory to fairyland hillsides draped in fog and graced with scattered palms and massive fruit trees. The infrastructure in that quarter of the country is an anomaly in South America, with nicely paved roads, cellular phone service just about everywhere, high-tech cars that run on alcohol distilled from sugar cane, and mechanical coffee pickers that would leave Juan Valdez in the dust. The qualities of coffee range from lousy to astounding. They are generally broken down into regional distinctions. Along the fertile, temperate belt that roughly follows the border between Minas Gerais and Sao Paulo, it is the Cerrado, the Sul De Minas and the Alta Mogiana regions that are the most widely prized.

TECHNOLOGY HELPS

In terms of good and bad in the cup, the quality of these coffees tends to depend far more on how they are picked and processed than on where they are grown. The lousy coffees tend to come from careless producers who either haven't taken the time to do the job right or haven't spent the money to do so. Most of their coffee ends up soluble, that is, freeze-dried or instant, for which there is no great expectation. At the other end of the scale are Brazil's gourmet coffees. These coffees don't necessarily depend on soil from Bloomingdale's, but with a little help from the climate and a lot of help from technology, they can attain excellence. They're on that high plateau of quality where there's no better nor worse; it's just a matter of personal palate.

Eduardo A. de Lemos Junqueira and his wife, Beatriz Lotufo Junqueira are among those who are striving to produce a truly special coffee. Lively and quick to smile, this couple just seems to enjoy doing coffee right. Their farm, Fazenda Corrego do Campo in Boa Esperanca, M.G., (Country Creek Farm in Good Hope, General Mines) of 800 hectares, of which 600 hectares are planted in coffee, qualifies as merely medium-sized. Its 1.5 million plants are manageable without the business getting terribly corporate. They, the owners, live right there. They rise to the crow of roosters. They drink milk not long out from the udder. They live in a house surrounded with pink bourgainvillea, and they drink the best of coffee. They call it Cor Campo, an abbreviation of the name of their beloved farm.

"I am an artist," Beatriz says with a rapturous, two-handed clasp of her heart. She says it partially to explain a certain tendency to discuss half a dozen topics at once, partially to explain her attitude toward coffee. "Do you notice any difference between my separation process and those of the big farms?"

One needn't be an expert to notice the difference. Hers is smaller, of course, but it's also cleaner. While one farm, which we shall leave unnamed, has a horse pulling the little plow that turns the coffee on the patio, Beatriz has young men who carefully step around the coffee. (Men at the other farm watch their step for an entirely different reason.) Eduardo is proud that drying process is cleaner, too, and friendlier to the environment. Instead of burning logs to heat the water that heats the dryers, he burns propane. No trees die, no smoke fouls the air, and there's no chance of smoke getting into the drier and tingeing the flavor of the coffee. The people who installed the system assure him that before long, the system will pay for itself - nice news to someone who has suffered devastating losses and high-stakes reinvestment.

WHITE FROST, BLACK FROST

The losses came right after Eduardo and Beatriz purchased the farm from her father, back in 1994. Frost hit them hard that first year, first the light, so-called "white frost" that touches down here and there, slaying a few buds. Then the "black frost" that comes on wind that spreads the cold and kills trees.

Oddly enough, frost in Brazil hits the lower elevations while the higher slopes escape. It comes in on low-borne fog. Bodies of water, however - even a small river - will tend to ward it off. Corrego do Campo has a creek, not a river, and even though the trees are on relatively high land, the frost chilled them enough to ruin a lot of the coffee and kill a good number of trees. The next year, drought hit, killing some plants and rendering others fruitless. It has taken five years to recuperate. This year would be their first good year except that it's on the downside of the unavoidable cycle that follows a pattern that goes good, bad, so-so, bad, good. On a graph of productions levels, it would look like a capital W repeating endlessly across the last century and, no doubt, across the century to come.

This year, Eduardo expects to sell just about all his coffee to exporters. The only place you can Cot Campo in Brazil would be at Beatriz's little coffee store in picturesque Pocos de Caldas, M.G., where she roasts and sells the very best of her production. The luncheonette next door brews it. It may be Beatriz's artistic sense of excellence, or maybe it's a certain appreciation of nature, but for the last 10 years she's been pressuring Eduardo for three things: a patch of Bourbon trees; a stab at organic coffee; and a bunch of cows to provide nitrogen compounds (to put it nicely) for the latter. She now has 40,000 Bourbons trees that produces a tasty bean, albeit in relatively small quantities. She also has 5,000 trees set aside for pure organic treatment, and her hundred head of cattle, including a few buffalo, work day and night to provide fertilizer and its delicious byproduct, milk.

Corrego do Campo isn't likely to make much money on that much organic coffee, but it's a good experimental start. A few hours north, near Patrocinio, M.G., the Veloso family follows a similar tradition, perhaps more for the sake of the cows than any claims of organic products. Together, Paulo Veloso Jr., his father, Paulo, his sister, Viviane Veloso Campolino, and her husband, Renato Campolino, operate a string of four large, sweet-sounding fazendas along the upper Paranaiba River valley - Fazendas Paraiso (Heaven), Cachoeira (Waterfall), Sao Laurenco (St. Lawrence), Nova Suissa (New Switzerland) and Berredor (Moo). Yes, Moo. Being from Minas Gerais, the Veloso's like their cattle. At Fazenda Berredor they raise not only coffee as far as the eye can see, but a few hundred head for the milk, the meat, the genes, and the dung. They also raise a few show horses, the famous Campolino breed that was developed by Renato's family.

The dung from a lot of pigs, too, gets added to the discarded pulp of the coffee beans to make a compost that's perfect for the next generation of coffee. The Veloso's are happy to report that this not only costs less than chemical fertilizers but produces a better coffee as well. Ronaldo Rodrigues, a coffee classification assistant who has been with the farm since he was a child, has the job of touring neighboring farms to see who's got coffee good enough to complement the Veloso supply when export demands more than the Veloso's can grow. The real competition in this part of Brazil, he says, isn't to find a buyer - just about everybody sells just about all their coffee - but to find sellers who have a decent crop but no ability to process the beans properly.

One of Veloso's biggest competitors, then, operates out of a small office in the small town of Carmo do Paranaiba, M.G. It's a small office doing a big, international business and operating several farms that produce a fine coffee marketed in Brazil and abroad as Sabor de Minas (Flavor of Minas). Four Andrade brothers have run the business, from planting to roasting to office brewing services, for 20 years, and have been exporting since 1992. Ismael Andrade also happens to be vice president of the BSCA and is deeply involved in the Gourmet Coffee Project that is supported by the International Coffee Organization and by the United Nations Commission on Trade and Development. His coffee also happens to have been a finalist in the world famous illycaffE competition for four years. Quality, in other words, is very important to him.

"Brazil has made a very big step in quality," he says. "This is good because the world is paying more attention to gourmet coffees and quality in general. Brazil will assume more prominence because its quality is improving." (see sidebar)

POLITICS HURTS

People don't know what Brazilian coffee is, Andrade notes. If they've heard of cafe Santos, they think that's where the coffee comes from. In reality, the Santos area produces no coffee whatsoever. It's just the port through which a lot of it leaves. Still, due to a federal coffee policy that held sway in Brazil until the early 1990s. the coffee that went to Santos was often an indelicate blend of whatever came along. Under that policy, producers could not export directly and thus had no reason to spend extra money on quality. It didn't matter a whole lot whether cafe Cerrado was mixed with the low-quality cafe Zona da Mata. The price was all the same and the quality came off as a low average. That policy ended in 1991, and it has taken all these years since for Brazilian producers to replant and regear for quality. The effects, says Ismael, are just being felt now.

"The challenge is to improve productivity while improving quality," he says. "We have to mechanize as much as possible, even sweep the ground to get it all." Ismael currently harvests about 60% of his crop with vehicles that were originally designed to pick olives. Over the next few years, he expects to increase that percentage by planting between wider rows. Mechanization is possible in parts of Brazil that are flat enough for these machines to operate on and, with weather patterns consistent enough to produce a reasonably simultaneous flowering, followed by crops that are ripe pretty much at the same time, get mostly red beans in one sweep over the trees.

It doesn't work that way in Colombia, which explains Juan Valdez's arduous, finger-picking trip down the rows. The rains aren't regular there, so the flowering happens over the course of months and the picking has to be done bean by bean. Sometimes the pickers even have to pick beans while the delicate flowers are still in bloom. One result is a good coffee made from beans that are consistently ripe. On the downside, the harvest is relatively expensive.

Brazilians are betting that they can use technology to get the cost of harvesting low enough and the quality high enough that their coffee will be cheaper and better than the rest of the world's. Northwest of the Cerrado region is the Alta Mogiana that is best known for its relatively high production of "natural" beans that dry on the tree. The resulting coffee is soft and pleasant in the cup. Roasted just right, it also makes a pretty good espresso. Consequently, a lot of it goes overseas, especially to Europe and to illycaffe. Senhor Cafe is the best known brand. David Sebastiao Ferreira, president of the region's Coffee Growers and Cattle Farmers Cooperative (COCAPEC), located in Franca, S.P., wants to increase the portion of coffee that the organization exports directly. Last year, they directly exported 30%, roasted 30%, and sold 40% to companies to with as they pleased. The trouble is that the co-op doesn't have the capital needed to push exports and the government isn't supporting the industry with exchange credit.

Part of that problem is that, despite the high quality of Alta Mogiana coffee, it's expensive to harvest and the average producer has less than 30 hectares. Only 5% of them use mechanical harvesters. On top of that, January's devaluation of the national currency, the real, hasn't led to an increase in exports in coffee or anything else. All it did, Ferreira says, was increase the cost of fertilizers and other imported consumables.

LOSING $20 ON EACH SACK

According to Carlinhos Oliveira, administrator of Fazenda Nossa Senhora da Guia (NSG), this will mean real trouble not only for countries that can't use mechanized pickers but also for small producers in Brazil who can't keep up with the technology of quality. Many, he says, are already losing $20 on each sack of coffee they produce.

Oliveiras claims, and few would argue, that NSG is one of the most organized farms in the region. It is also one of the most beautiful; its 3.5 million plants straddling hills above the inlets of the long, irregular Furnas lake. The lake keeps the frost away and the rains are pretty regular. The big challenge, then, is creating organization. Oliveira says he has to put extra effort into educating workers, even those who have been picking and processing for years.

A lot of the education is aimed at getting the beans properly processed. Mechanization inevitably results in a mix of beans that vary from light green to deep red to dark brown. For any kind of decent quality, these beans shouldn't be processed together. The dark brown beans are the best - they've ripened fully on the branch, tapping the tree for all it's worth and building up a coating of sweet mucilage that has dried inside the pulp of the bean. These very special beans are called "natural."

Through a flotation process, red beans can be separated and dried on the patio with their mucilage intact. Green beans go through a separate process that essentially washes them of their pulp and removes their mucilage. The "semi-washed" or "pulped natural" red beans will produce a sweet coffee of low acidity, while the washed coffee, having gone through a fermentation process that removes the mucilage, will be less sweet and more acidic. The natural beans that dried on the tree will be of medium-low acidity with a full-bodied sweetness.

Fazenda Boa Vista, owned by Daterra Atividades Rurais, is making an all-out effort to mechanize the harvest of its rich Cerrado coffee and to streamline and tighten control of its drying and separation process. The company has bought a unique machine called a fertigator from the French company Braum. Though it was designed to pick grapes, the machine needed virtually no modification to be applied to coffee trees. It picks at a rate of 3-5 kilometers per hour rather than the 700 meters per hour of less advanced pickers. It also carries tanks of fertilizer and water, giving it something to do year-round rather than just during the May-August harvest season. According to Carlos Roberto Piccin, the farm's administrator, the machine will pay for itself in a year. Daterra is also experimenting with a drying process that leaves the beans on the patio for only four hours, followed by a quick pass through an air drier. They are fine-tuning and standardizing the process, from patio to sack, to the point where the process is not only economically efficient but also will produce coffee of very precise characteristics. Unlike many industries, this is one where efficiency and mechanization go hand-in-hand with final quality.

Jose Francisco Pereira, superintendent director of Fazenda Monte Alegre (Happy Mountain Farm), says that technology has helped his operation produce coffee of ever-improving quality while keeping costs down. As a result, 10-20% of Monte Alegre coffee qualifies as gourmet. This year, 60-70% will be exported under the Monte Alegre brand name, which is touted as an "authentic estate coffee."

"Brazil has always been a region of good coffee," Pereira says. "Forty years ago, Europe saw it as such. But the government instituted a policy that eliminated competition. Exporters mixed good coffee with bad, so the producers had no reason to invest in good coffee, so Brazil descended from a reputation of quality to one of value." Serious Brazilian producers have spent the last decade improving their quality and reputation, Pereira says. They developed new strains that resist disease and rust. They developed patios that don't absorb moisture. They use better equipment, such as hot air dryers that avoid the danger of fire and smoke being applied directly to the tumbling cylinders that slowly dry the coffee. Many producers screen and blend the beans right at their plantation, then ship the product directly to port.

"All this technology and control is for better quality," Pereira says. "Before, everything was dried together. They tried to separate qualities somewhat, but it wasn't done well."

Pereira is a big supporter of the efforts of the BSCA. The association not only offers a seal of approval but also visits farms to look for defects in their processes - a kind of internal ISO system. The guaranteed quality is also a marketing device and all members of the BSCA will be represented at the Specialty Coffee Growers exhibit in San Francisco next year. Joaquim L.F. Leite, foreign market superintendent of the COOXUPE cooperative in Guaxupe, in the south of Minas Gerais, testifies to the new importance of exporting directly rather than through a third-party exporter.

"If Brazilian coffee has a future in this world, it's for the producer/exporter," he says. "The mentality of our co-op is that it has to be an exporter. This leads to a different approach to the coffee. We aren't just a place to stack the sacks." The only co-op in the region that is ISO 9002-certified, COOXUPE operates somewhat like a bank. Members can deliver their coffee and exchange it for a document that entitles them to payment if the coffee is sold. They can also come get their coffee, if they want it, or a coffee of identical quality. COOXUPE is that careful with its selection and grading process. The process also produces the kind of consistency that foreign buyers demand, especially in Germany, where Brazil is probably the largest single supplier of good coffee.

At the Cocap co-op in Araxa, Juarez Pereira Valle, president, meets the demands of the foreign market by offering a blend to match virtually any taste. In Europe he uses an appealing gold-and-black package to market Minas Gold, which is actually any of several blends that he creates for specific market areas. The brand has been gaining recognition in Europe.

GETTING ORGANIZED TO MARKET CAFES DO BRAZIL

If one thing sends chills down the spines of the world's coffee producers, it's the scenario of Brazil marketing aggressively as its Cafes do Brasil. So far, marketing hasn't been a big problem for many except Brazilians themselves. But it looks like that's changing.

Brazilian exhibitors perceived that fear at the Specialty Coffee show in Philadelphia last May, when they mentioned the possibility of a new, non-governmental coffee organization in Brazil. If the plan works out - and it looks like it will - the federal government's Conselho Deliberativo da Politica do Cafe (CDPC) will create an independent marketing organization that will be funded by a surcharge put on every sack of coffee that leaves the country. The most commonly cited per-sack figure would be a nice, round dollar.

If 1999 is any kind of measure, this year's contribution to the marketing fund would be $20 million - enough for a pretty strong global marketing campaign and a good match for what Colombia is estimated to spend in good years. That would not be an impossible figure if - and it's a big, scary if - Brazil discards the quotas that the Association of Coffee Producing Countries has set.

As planned, the new non-governmental organization would be a natural sequence for the Cafes do Brasil marketing plan the CDPC commissioned last year and which experts are about to conclude. This new marketing and intelligence organization would give Brazilian coffee something it has never had before - consistent, long-term strategy. Government control in the past has inevitably led to chaos and inefficiency. If Brazil ever develops plans and policies that match the efficiency of its production and the consistency of its quality, the rest of the world is going to face a giant the size of half a continent.

RELATED ARTICLE: A Planter-Grower-Processor-Roaster-Freeze-dryer-Exporter-Office-Server Speaks on Quotas

Ismael Andrade is one of the four Andrade Brothers who run the Andrade business. They are the only company in the Cerrado region that handles the full gamut of the coffee business, from the seed to the cup. Four-time finalists in the illy competition, their coffee is respected around the world.

Ismael shared his views on world coffee quotas. "Quotas are not good for Brazil, founded on the principle that Brazil has to be competitive and [must] export as much as possible. We are approaching a national production of 30-33 million bags, and if we stick to the quota of the Association of Coffee Producing Countries, we'll have an extra 4-5 million bags to sell domestically. What are we going to do with such a surplus? We have to export."

"Our competitors complain that we are flooding the market. That doesn't matter! We are making money and foreign exchange credits. This is our time to conquer new markets which were lost precisely because of a policy that limited exports. As for next year's harvest, we will certainly break our quota. In my opinion, the ACPC export control system has never worked."

RELATED ARTICLE: OTTONI

Cristiano Ottoni, whose family owns Fazenda Limeira in the Sul de Minas region and Fazenda Vereda in the Cerrado region, produces 70,000 bags a year and expects to increase that to 100,000 next year. He sees a good future in the business but only for producers who are ready to invest in quality and diversity. That, he says, is the only sales strategy that works. Investing in quality means planting the right varieties, using the right technology, and training personnel in all aspects of production.

"Specialty coffee is a reality in Brazil, and every day it gains importance as roasters come to know the real characteristics of specialty coffee and the consumer sees the value in it," Ottoni says. "The world values these coffees, and the tendency is to value them more."

Ottoni warns that specializing in quality while reducing costs is the only way for producers to survive the future, where he sees a trend toward lower international prices.

RELATED ARTICLE: IPANEMA BOURBON OPENS DOORS FOR BRAZIL

The vanguard of Brazilian gourmet coffees finding their bay into foreign markets is the now-famous Cafe Ipanema Bourbon, which is now sold under that name in 2,000 retail outlets of the Starbucks chain.

The international accomplishment is the crowning accomplishment of the ten-year effort to improve not only the quality of Brazilian coffee but its reputation as well. The effort first took palpable form in 1992 when Ipanema and 11 other producers formed the Brazilian Specialty Coffee Association, which, even in Brazil, carries that name in English. The organization offers a seal of approval to a certain number of qualifying coffees and regulates its members to ensure quality control.

Negotiations with Starbucks demanded as much patience as the growing of a good coffee. In 1995, Ipanema introduced its coffee to the American chain when a representative visited Brazil. The taste led to two years of tinkering with blends until, in 1997, Ipanema achieved the specialty coffee classification. In 1998 Ipanema and Starbucks struck a deal, and in 1999, the Brazilian coffee will join the world's best in the world's largest chain of retail outlets.

Ipanema Bourbon is grown on the company's three farms in the town of Alfenas, Minas Gerais, in the region known locally as Sul de Minas. The company produces 90,000 bags of a year, blending natural, washed and naturally depulped beans to produce coffees appropriate to brewing by either filter or espresso systems. Besides the Ipanema Bourbon brand, the company markets brands called Conquista (natural), Gourmet (naturally depulped) and Ouro Preto (washed).

"The sale of cafe Brazil Ipanema Bourbon by Starbucks may open the doors to other high-quality Brazilian coffees on the competitive specialty coffee market in America," the company said in an official statement. "This launching by Starbucks may also represent an important point in the reconstruction of the image of Brazilian coffees as a product of high quality."

RELATED ARTICLE: EASTCO USA, INC.

Eastco USA, Inc. offers a number of products/brands which vary according to the market; among these are spray dried, agglomerated, freeze dried, sachets, brick pack, and cappuccino. The company has offices in countries ranging from Europe and Asia to South America and the U.S. It provides Brazilian Best in its home market of Brazil and Russia and will launch Samba Cafe in New York this fall.

Eastco USA, Inc., 100 N. Biscayne Boulevard, Ste. 607, Miami, Florida 33132. Tel: (1)(305) 374-0122, Fax: (1)(305) 374-5453, Website: eastco-food.com

RELATED ARTICLE: BULLISH ON BRAZIL

A lot of good Brazilian coffee comes into North America through Blaser & Wolthers Specialty Coffee of Miami. The company specializes in the gourmet, specialty and fine commercial coffees of Brazil. Christian Wolthers, vice president, says he's dealing with the right country.

"Brazil is very reliable," Wolthers says. "They deliver no matter what. This is not always the case with other countries of origin. In coffee production, Brazil has the world's highest level of local expertise and technology. The diversity of Brazilian coffees from different regions and different production processes is also a big attraction. As a partner, the advantages of working with Brazil are incomparable."

Among the many organizations Blaser & Wolthers represents are the Brazilian Specialty Coffee Association and Ipanema coffee, which may be Brazil's largest single producer. Ipanema also happens to be the coffee that Starbucks has selected for national promotion.

The brokerage has been working directly with Brazilian producers since before the days when producers were allowed to export. Today, it has an intimate knowledge of the production capabilities and logistics of the business on the Brazilian side. A companion company headquartered in Santos, Wolthers & Associates, not only oversees the Brazilan side of the business but is also active in quality control for various shippers.

Christian Wolthers is impressed with Brazil's success in North America, even though it's less than it should be.

"For a country that lacks total marketing support, we have a achieved a very impressive level of success during the last 10 years," he says. "We have roasters who never used Brazilian coffee, and now they use a lot. We have other roasters who used to use Brazilian coffee only as a tiller. Now they promote it as single origin."

Glenn Cheney is a freelance writer and the U.S. liaison of the Federation of Industries of the State of Minas Gerais. His most recent of many books, A Year in Minas, will be published next spring. His website is: www.99main.com/~cheney.
COPYRIGHT 1999 Lockwood Trade Journal Co., Inc.
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Title Annotation:coffee industry; includes related articles
Author:Cheney, Glenn
Publication:Tea & Coffee Trade Journal
Article Type:Cover Story
Date:Aug 1, 1999
Words:4751
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