The Brazilian government is reconsidering how it sets its minimum coffee price guarantees following farmer criticism and boycotts, according to media reports.
The nation’s Agriculture Ministry announced on May 2 that it will look again at the methodology used to establish the government’s minimum prices for coffee, according to a Reuters report.
“Current minimum prices do not meet farmers’ needs, they do not express our reality,” said congressman Evair de Melo, a leader of Brazil’s congressional farm caucus and a former head of coffee research body Incaper in Espirito Santo.
The Brazilian government sets minimum prices each year for several commodities, considering production costs and minimum profit margins for farmers. If market prices for a commodity such as coffee slip below the minimum, the government can step in and buy the commodity at the minimum price.
The move comes after Brazilian coffee farmers refused to sell their arabica beans after market futures fell to 13-year lows. Instead of selling at such low prices, the farmers are holding back their crops in hopes of a price recovery, according to a Bloomberg news report.
Brazilian exports of green coffee in March dropped about 20 percent from the prior month to about 2.6 million bags, and that pace is likely to hold in April, Salvaterra forecasts, Bloomberg reported.