Measures to increase the price of coffee By Armando Matielli

In the case of coffee we are steeped in anachronistic precepts and umbilical amateurism. Our leaders and coffee growers are oblivious to these changes, and unfortunately, they are shut down and practicing a real suicide by a distorted and chaotic vision and being deceived by the manipulators of the great oligopolies that are swallowing our expertises. They are hijacking all our technologies by evading foreign exchange and bringing them exorbitant profits that make it possible to invest in state-of-the-art logistics globally. While we are looking at our own navel, the big corporations have implemented a system that captained what we had to drink in the cafe.

When we look at coffee statistics, prices should be at a level of at least three times the current prices, but the radical changes in the world in relation to the business profile are in an accelerated momentum and we, with this real mess in the coffee policy, by the anachronism of our leaders who are not realizing this dynamic and implanted, do not want or can not see the horizon for a modern policy and not realizing, or caring that the coffee business is being manipulated and abducted by the technologies cited. The coffee business, world-wide, is walking with excellence and has never been so well in the world as in the present times. Young people are drinking a lot of coffee, and consumption is growing. But the profit, despite Brazil being the largest coffee producer, is going to the hand of the great foreign oligopolies that with the use of these technologies is conquering the business. First, they introduced the certifications that assure them of certain strategies, conditioning us to the game of these corporations. Then they buy the big national roasters to gain all the distribution within the huge Brazilian consumption and, dominate the coffee policy makers in Brazil and also when we analyze the prices of the world consumers are based interesting but, the profit of these prices never arrive in the pockets of Brazilian coffee growers and even of other producing countries. We have always had excellence in the coffee business in classification, in distribution, in marketing, in beverages and others. With this they are exposing their rule and even ending with the strictly soft, soft, and so on. They came in the style of the American Specialty and now they try to end our traditional table C.O.B. (Brazilian Official Code), and introducing and imposing its rules and we are not seeing this domain, with that all the rules of the coffee are coming from the outside to the inside.

In the past, such as the profit from coffee that was with the Brazilians, we had resources both for our local authorities and for coffee growers, and we invested in universities and research centers, and in this respect we progressed and we were ahead of the international market. Currently, with the profit hijacking the large slice gets out there and so all the innovations are coming from “out in” because they who have the money for marketing and research. We can cite, for example, Nestle’s “case” with Nespresso, where a lot of money has been invested and from there we can understand why they are always ahead and we accompany them as mere spectators and working for these big corporations.

One only has to analyze how much the coffee is sold, and there are significant profits and invest in research and technological improvement in relation to our tupiniquim system and with that we are being massacred and losing the coffee business to the foreigners.

With statistics indicating that stocks are dropping and at a certain point the price will rise and the “troop”, we coffee growers, we will run out to plant more coffee and as soon as they all plant they will “knot” the market and hold the prices at the levels that they are very interesting and, always putting us “under the balaio”. We URGENTLY need to make a modern policy and face all of the above.

The stock situation is tight and we are clearly seeing prices not rising because they have the reins of the business and we are accepting all of it passively without struggling to recycle the leaderships and create a new constellation of people imbued with reverse the situation. Here it is up to us coffee growers, to push for changes to take place and to create a new leadership with a futuristic vision and to resize our actions to face these adversities imposed by foreigners, especially first world countries.

We have O.I.C. (International Coffee Organization) which show that consumption is growing linearly 2% per year. Nowadays, we no longer waste so much coffee because of the “drain” coming from teapots and thermal bottles, and this shows that the world is drinking a lot more coffee. We know that the market has digital platforms and these large companies currently have operations worldwide: Asia, Europe, Africa, Brazil, Colombia, etc., and they also have financial settlements in New York, London, Frankfurt, Singapore, Hong Kong and so many other warehouses. On top of this, these corporations have real logisticians. They are geniuses. This modern logistics with numbers, graphs, robots, algorithms and others enable simulations to perfect logistic assemblages. When the domestic market is not in the hands of these corporations, they practically dry up the profit of the distributors causing them to break down and enter exposing the distribution itself. This is a science that they have developed in a fantastic way and with this, they probably do not look at Brazil’s production in isolation as they did until then. They analyze the market as a whole and the demand, month by month, of the world. In this context, we must be aware of future strategies.

There is a great risk that the importation of coffee and the use of a mechanism by these big organizations that would pull the coffee conilon of Asia and would revert Arabica and would have all the logistics mounted. With this, they would work in both hands and would suffocate, even more the national industry and, consequently, the coffee growers.

This perfect logistics and this global platform that we are not taking into consideration and they can work with a minimum necessary inventory. I try to find the perfect explanation for the current situation of ridiculous prices on top of the perfect logistics of large groups, and so the fundamental factors such as drought are dispersed within this system. The impact on prices will come given the constant crop failures that we have been living in recent times, including to 2018. But the rise in prices may be more time-consuming based on the above. The world’s stocks are low, given the intelligent systematics they have implemented in logistics, which enables a competent professional administration.

Brazil needs to take its place because we have 33 – 35% of market share and, with structured actions, we will be able to resume the position of protagonist. We need: A STRATEGIC PLANNING involving the productive and industrial sector with aggregation of values ​​and conquering better prices and foreign exchange for the country. This STRATEGIC PLANNING should have a return to the research of technological innovations in industrialization and quality, and implement strategies regarding the measures that should be taken in the years of high and low harvests. Privileging the national industry with quality coffee by abolishing these by-products used indiscriminately in the roasters that have masked the statistics because, when we do the accounts of Brazilian production for several years and, we subtract the export and domestic consumption, the statistics never close at the expense of ignorance of what is actually being industrialized.

STRATEGIC PLANNING should contemplate a futuristic vision of at least 15 years, to ensure the productive and industrial sector with informed and safe decision making. The modernity of large corporations and even of developed countries, work with projection and scenarios for decades ahead. We will have to implement safer strategies avoiding the “Fire Extinguisher”, and punctual and political measures.

For the quick and possible price increase we must tighten our leadership from the base, within the Rural Producers’ Unions, Cooperatives, C.N.C. (National Coffee Council), MAPA (Ministry of Agriculture), among others, in the search for defined strategies and in practices of measures that were totally abolished to the detriment of the productive sector. There are numerous deformities and we need:

1) STATISTICS – Open and real numbers of stocks, planted areas and production;

2) ELIMINATION OF FORECASTS made by IBGE and CONAB. How can we cope with two predictions by state entities and disqualified?

3) REVENUE OF COST AND BANK FINANCING maturities within the recommended in M.C.R. (Rural Credit Handbook), where it is explicit that the maturities must occur 60 days after the harvest. Thus, the end of the harvest takes place in September and the financing and onlendings to coffee growers are expected to expire 60 days after, that is, November 30. Still enabling coffee growers to refinance their stocks for another 90 days, or even for 180 days in the expectation of seeking better prices. This practice, which was abolished in recent years in order to enslave coffee farmers to sell coffee at a vile price in full harvest time. FUNCAFÉ funds and obligatory resources provided by C.N.C. have always been used in this modality with financial institutions.

4) MINIMUM PRICE – For both Arabica and Robusta, minimum prices were established below the cost of production. For Arabica, R $ 333.00 / bag was established and we know that the cost of production is around R $ 500.00 / bag. This measure was published by MAPA on 04/18/2017 and in the following days prices plunged 11.6%. This situation was misplaced, and gave a connotation to the international market that at the prices practiced were happy. Total irresponsibility.

5) STATUTE OF THE EARTH – That by Law 4504, article 73 and 85 states that we must have 30% margin plus transport, packaging and others that would raise the minimum price to the coffee grower in the range of R $ 670.00 / bag. Therefore, this inconsistent attitude is driving farmers to a loss in the range of R $ 220.00 to R $ 250.00 / bag, which in the end the coffee growers are losing around R $ 12,000,000.00 (Twelve Million Reais ) without taking into account the taxes levied on the amount harmed beyond the coffee farmers, rural workers and the HDI of the municipalities.
[13:38, 16/10/2017] Armando Matielli: 6) NEW YORK BANK – It is governed by washed coffees from 19 countries and we do not have contracts for natural coffee. Through contract C (C of Colombia) with this we are always selling coffees with discount, absurd. A country with a market share of 33 to 35% can not be a market leader, causing DUMPING to Brazilian coffee growers and the other 3,000,000 worldwide. We are causing poverty and misery to the coffee market and hurting the laws of the WTO (World Trade Organization). With this market share we should “send in the market and not be sent”. Unthinkable attitude!

7) STOCKS – We sell the remainder of the stock in full record harvest of 2016 and zero our inventories. Strategic stocks have to be put into practice aiming, mainly, the internal consumption in a moment of scarcity. This is a factor of national security. Moreover, they try to import coffee to an unreasonable and unpatriotic extent and undermine the productive sector. We sold coffees in recent years at a vile price and did not have the ability and intelligence to secure stocks for domestic supplies. This is a situation that demonstrates that the CNC the CDPC and the MAPA are aiming only the interest of the international oligopolies and of this Brazilian industry CAOTICA. Resources for STRATEGIC STOCKS we have enough, just practice the SOVEREIGN FUND, resources of FUNCAFÉ, R.O (Compulsory Resources) and use the standards of the MCR, cited above, and other appropriate instruments.

8) QUALITY OF THE INTERNAL MARKET – It is necessary to return with IN 16 (Normative Instruction), which recommends the industrialization of better quality coffee, removing black coffee, burnt coffee, straw and other unfinished products. In fact, we estimate that we could increase the consumption of real coffees in the range of 4 to 5 million bags, in order of magnitude, improving quality and prices for Brazilian coffee growers, and enabling consumers to have a better quality coffee, decontaminated unacceptable products.

9) WARRANT / DEPOSIT RECEIPT – Coffee growers must require the warrant / deposit receipt when depositing their coffees in Cooperatives or General Warehouses. As a result, these establishments remain faithful custodians and can not handle coffee from coffee producers, avoiding the use of inventories for their own benefit. In addition, with the possession of these documents, which are assets, fully negotiable to raise funds in any financial institution. These documents will give full confidence to coffee growers in all respects

10) FUNCAFÉ RESOURCES – The resources of FUNCAFÉ that are practically monopolized by Cooperatives should be opened and citing the CPF or CNPJ of the coffee growers, this practice has not occurred due to intransigence of these institutions and demonstrating obscurity in the application of this resource that is the coffee grower . This is an improper practice and should be monitored by the competent bodies.

11) STATEMENTS OF COOPERATIVES – Cooperatives omit their stocks in the rhetoric of a strategy that the market should not know of these positions, it is a practice that omits transparency by showing that numbers are always “in secret”. Unacceptable and bringing suspected suspicions to these corporations.

Besides these points still, there are many to be successful. These points we placed at the meeting of the CNC Board, on September 20, 2017, in Três Pontas / MG. The points were discussed, but it was clear that the CNC is not adept at taking professional initiatives to improve coffee growers.

Regards,

Armando Mattiello
President of SINCAL

Association of Coffee Growers of Brazil