Performance of Coffee Industry in Brazil

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PERFORMANCE OF COFFEE INDUSTRY IN BRAZIL

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Performance of Coffee Industry in Brazil
Introduction
Brazil is the world’s largest coffee producer. It produces approximately twenty five percent [25%] of the world’s total supply of the commodity. It has dominated this position for the last over hundred and fifty years [150]. Eighty percent [80%] of the coffee from Brazil is the Arabica coffee with the remaining percentage being the Robusta type. The Brazilian climate is very ideal for coffee growing with favorable soil type that supports coffee growing. Approximately twenty seven thousand kilometer squares of the country are under coffee
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Despite the fall in production however coffee earnings continue to grow in Brazil owing to the favorable global prices of the commodity. It should be noted carefully that Brazil is the only great producer of coffee that experiences frosts conditions. This puts its global competitiveness in terms of quantity and quality to be at stake since the other large scale producers do benefit a lot during the periods when Brazilian coffee is affected by frost. Additionally, these frosts are advantageous to the other suppliers in that when Brazilian coffee is affected an extremely large supply gap is felt by the global market. This makes the demand for coffee to outstrip its supply leading to increased prices of coffee in the world market. This scenario was experienced in the year 1994 when heavy frost struck Brazil and destroyed vast coffee estates. This caused a reduced volume of coffee in the market and consequently the prices of the good in the world market skyrocketed, (Ponte, 202).
Graphical Representation of Coffee Production in Brazil

As seen in the above graphical representation of major world production it’s true that Brazil is the leading producer of coffee globally and its production capacity is seen to increase recently. This is despite the fact that its land area under coffee has been diminishing owing to adverse climatic conditions.

The price of the Arabica coffee is dominantly high as compared to Robusta. We noted that approximately 80% of total

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