May 7 (Bloomberg) -- Brazil, the world’s biggest coffee producer and exporter, raised the minimum domestic price for the arabica variety by 17 percent to help increase income for farmers after international prices slumped.
The benchmark price for government purchases of the commodity was raised to 307 reais ($153) per 60-kilogram (132-pound) bag, from 261.69 reais, the Agriculture Ministry said on its website today. The ministry will also propose 3.1 billion reais of loans for coffee growers and roasters.
“This measure is very important, but is only a first step,” Silas Brasileiro, head of the country’s National Coffee Council, said in an interview from Brasilia. “The government is signaling that it will take more measures to help producers, such as auctions or measures to compensate sales below minimum price.”
Futures for the mild-tasting arabica beans have declined 18 percent in New York in the past 12 months after Brazil reaped a record crop in 2012 and is set to almost match the amount this year. Arabica for for July delivery rose 0.7 percent to $1.427 a pound on ICE Futures U.S. in New York.
Brazilian coffee producers will harvest between 47 million bags and 50.2 million this year, approaching last year’s record 50.8 million bags, the government said in January.
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