Financing is being discussed at International Coffee Organization meetings this week in London, Gama said in an interview in London yesterday. Brazil is the world’s largest producer of coffee.
“We will explore financing possibilities and discuss problems faced by small and medium-sized coffee producers, especially the issue of storage,” Gama said. “That will allow stocks to be kept in producing countries and not in consuming nations.”
Brazil’s coffee production was 54.5 million bags last year, according to the U.S. Department of Agriculture. “Brazil is already the second largest consumer and according to estimates it will overcome the U.S., the largest consumer, in four years,” Gama said.
“Exports only do not constitute guaranteed revenue to producing countries,” he said. “It’s very important to develop the domestic market and Brazil is an example to other producers.”
Increased usage in the South American country as well as in other developing nations may have “some impact over future stocks,” Gama said. Inventories in producing nations are currently at 13 million bags, the lowest since records began, according to data from the ICO.
Brazil’s government is seeking to improve the quality of coffee produced in the country. “We are investing a lot in fine cups,” he said. A shortage of fine coffee earlier this year led prices in the country’s futures exchange, BM&F Bovespa, to climb above the New York price for the first time since at least 1999, data compiled by Bloomberg show.
The acceptance of beans from Brazil in the New York contract on ICE Futures U.S. may be a “stabilizing factor” to prices, Gama said. Beans from the nation will be included in the New York contracts from 2013.
Brazil reopened its commodities mission in London last year to win more influence at international organizations such as the International Coffee Organization, the International Sugar Organization and the International Cocoa Organization.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.