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Brazil Plans to Double Financing for Coffee Storage in 2012

March 6 (Bloomberg) -- Brazil, the world’s largest coffee producer, plans to double financing available for coffee storage this year, according to the Ministry of Agriculture.

Investment for storage would rise to 1.5 billion reais ($857 million), Edilson Martins de Alcantara, director of the coffee department at the country’s Ministry of Agriculture, said in an interview in London today. The proposal may be approved as early as this month, he added.

“The aim is to enable the producer to store coffee and to sell it at the best opportunity,” he said at a meeting of the International Coffee Organization.

Coffee output in Brazil will likely rise to a record in the 2012-13 season starting in July as trees enter the higher-yielding half of a two-year cycle, the government estimates. Production will be 49 million to 52.3 million bags, exceeding the all-time high of 48.5 million bags in 2002, according to a Jan. 10 report from Conab, the government’s forecasting agency.

“It has been raining normally and the tendency is for a large harvest to be confirmed,” de Alcantara said. “There are no indications that there will be a problem.”

Dry weather last year raised speculation that the next crop in Brazil would be smaller than the previous high-yielding season in 2010-11. Arabica coffee futures traded in New York rose to the highest price since May 1997 last year. Prices have since dropped 36 percent.

Agriculture producers in Brazil have had to sell most of their output at the same time due to the lack of storage facilities, de Alcantara said.

“This harvest is turning out to be big and it is up to us to manage this big harvest so that we can have price stability,” he said. “That would be our great challenge.”

A bag of coffee weighs 132 pounds.

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

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