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Coffee grower Virginia Aguiar at her Fazenda Semente in the Cerrado region inspects what little is left of her farm after the frost damage. Photo by Maja Wallengren.
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The frost damage to Brazil’s coffee growing areas is so extensive that major replanting will be required. A regular production cycle will not be achieved until 2025. Photo courtesy of Fernando Barboso.
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Individual coffee farms in Brazil’s top growing region of Cerrado Mineiro report damage of up to 60% from frost. Photo courtesy Fernando Barbosa
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STiR contributing editor Maja Wallengren was the first reporter on the ground to cover the massive frost damage directly from the coffee regions.
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STiR reporter Maja Wallengren meeting with coffee growers Zaqueu de Oliveira and Fernando Barbosa in the Southern Minas region of Nova Resende.
The global coffee trade enters an unexpected wave of turmoil as the most damaging frost in over 40 years hit an unprecedented majority of growing regions across Brazil, the world’s largest coffee producing and exporting country. Top government officials told STiR coffee and tea in early August the latest figures for losses will be around 10-12 million 60-kilogram bags. Around 10-15% of the entire cultivated area was hit with varying degrees; of many with losses as high as 30-60% of planted fields. Global supply is at risk as the timeline for either pruning – or, as in many cases entire replanting of vast parts of farms – will be impossible to catch up with until the 2025 production cycle, agricultural experts said.
Travelling over 2,500 kilometers overland through Brazil’s frost damaged coffee fields to see the utter devastation is so compounding to witness that it is hard to find words that adequately describe the situation. Overwhelming is the word that find its way back to the conversation with Brazilian coffee growers spread out over an area hit by frost so extensive that it covers 65% of the total Brazil harvest in an average crop cycle.
Brazil’s Agriculture Ministry forecasts a preliminary figure of minimum a 10-12 million bags in frost losses to the next 2022 harvest, for which flowering starts around the end of September to early October. This figure is based on the percentage of area so severely affected that coffee production will not start to recover until the 2024 and 2025 crops, but it does not include the much larger area of coffee farms which will have to be renovated or replanted because of the uneven impact of damage by the frost.
“At my farm about 30% of the total area planted with coffee was badly affected which was a lot less than many growers in the region here with damage on between 60-70% of their farms I know, but because of the way the frost burned the trees and land in a very uneven way I will have to renovate at least 50% of the total area,” producer Dalcio Oliveira Guidett, a grower in the Serra Negra region of Sao Paulo state, told STiR coffee and tea.
Such comments represent the vast majority of farmers as they work through the initial damage evaluation. While smaller parts of frost affected areas can be renovated with less invasive pruning methods, the majority need either stumping, where the stem is cut just 8-10 centimeters from the root, or replanting, both of which cases will require 3-4 years before production will be back. And in case of replanting, this won’t be possible to start until the end of 2022 because of a lack of planting material.
“This is the worst frost to hit Brazil’s coffee industry since 1978,” said Fernando Barbosa, himself a grower in the key Southern Minas coffee region and a long-time industry advocate who works with multiple grower groups across Brazil. “The producers are devastated; many growers are in shock to see all their work been reduced to nothing overnight.” While the overall scope of frost damage in percentage of the crop may still turn out to be less than the 1994-1995 frosts, the overall impact for the 2021-2022 crop years is more significant as global demand today is over double what it was then, market analysts said.
Arabica futures at 7-year high as unprecedented large area hit
This comes at a particularly sensitive time for the world coffee market as supply runs low against an already smaller than expected harvest in Brazil and consumer demand booms against low inventories and stocks, according to figures and data from the International Coffee Organization (ICO) and the US Department of Agriculture (USDA).
The unexpected severity of the frost in Brazil sent arabica futures at the ICE exchange in New York soaring to 7-year highs over $2.20 per pound in late July before profit-taking took over. But prices remain trading in the $1.80-1.90 range and is expected to roar back to over $2.00/lb. in the short to medium term, and possibly even reaching $3.00/lb. for the first time since 2010, commodity analyst Judith Ganes told STiR.
The damage from the four cold fronts that brought the coldest weather to Brazil in over 30 years between the end of June and early August is so severe the result ultimately will go down in the history books to be known as the “black frost of 2021”. Unlike the “black frost” events that hit in 1975 and 1978, and were primarily isolated to the state of Parana, the 2021 black frost hit an unprecedented large part of Brazilian coffee producing areas across Parana, Sao Paulo, Alta Mogiana, and the top Minas Gerais producing regions of Southern Minas and Cerrado Mineiro.
A “black frost” is a term coined by Brazilian agronomists that describes a particularly damaging frost where extended cold weather below -2 or -3 °C combined with the effects of winds and humidity causes not only leaves and branches to be burned but also taps into the heart of the stem and sap of the coffee trees, leaving it either entirely killed or dead so close to the root that it has insufficient nutrients left to bounce back from pruning or stumping.
At least 3-4 years of uncertainty in fresh coffee supply
The damage from the frost cannot be underestimated. For multiple reasons, the numbers of losses as well as overall impact on the Brazilian production cycle will have much more long-term effect than what the initial figures reveal, said agronomists and market analysts. There is agreement by sources that the market should prepare itself for at least 3-4 years of critical supply problems as it will be until the 2024 and 2025 crops before Brazil’s coffee regions will be able to register any significant recovery from the extent of the frost damage.
“In the best-case scenario we are three years away from seeing a full recovery to Brazil’s production cycle,” said Jonas Ferraresso, an agronomist who himself has a small coffee farm of three hectares in the state of São Paulo. “But more likely it will not be possible to see all the areas affected re-planted until the harvest in 2025 as it is already too late for most farms to contemplate replanting in the next year.”
Brazil’s top arabica region of Cerrado among hardest hit
Driving through the normally beautiful, lush, and green coffee lands from Southern Minas through Alta Mogiana to Cerrado, vast areas of completely burned black and dark brown coffee farms dominate the landscape for over 800 kilometers. From Varginha, Alfenas, Nova Resende, Muzambinho, Juruaia, Guaxupe, Franca, Pedregulho, Araxa and Patrocinio, the frost-stricken landscape just doesn’t stop.
“I lost everything; every single hectare of coffee planted was burned and I’ll be lucky if I can recover perhaps 5-10% with some pruning,” said Virginia Aguiar, her voice choking as she fights back tears at her Fazenda Semente in the Cerrado coffee region of Patrocinio. “I just don’t know what to do right now, I am thinking I might move away, that this is it for me with coffee,” she told STiR during a visit that quickly becomes emotional.
Farms across the Cerrado region of Patrocinio were among the very worst hit by the frost and preliminary figures point to massive losses of up to 60% in individual farms here while the total figure for all of Cerrado is estimated at between 25-30%. But with Cerrado producing the world’s highest average yields of 55-60 bags per hectare in a big-crop cycle, the negative and long-term impact on Brazilian production figure is much more significant.
In any given year Brazil produces 35-40% of the entire coffee consumed around the world, and even though an overall loss of 10-15% might not sound like much, in the case of Brazil it makes up for as much as the entire coffee grown in Mexico and most of Central America combined. There is no other producing country or region in the world with even remotely close to the ability to make up for such a major shortfall in Brazil.
Roasters may be forced to buy coffee on a day-by-day basis
Speaking to STiR in exclusive comments traders, growers, agronomists, and exporters said the magnitude of damage leaves the market in a precarious situation, as roasters and buyers will push stocks to its limit in order to cover positions ahead of the next harvest, and if even the slightest additional damage — such as further frosts in Brazil, issues with the new flowering season that start in October, or any other weather problems in producing areas elsewhere in the world — can potentially push the deficit into a situation where roasters will have to buy on a day-by-day basis based on fresh supply reaching the market.
“The coffee farmer is brave,” said coffee grower Joao Antonio Ribeiro. “We will start over and wait until the trees start producing coffee again.” Most of the Brazilian farmers will agree with this sentiment, but for the global market there is no such luxury of waiting as the world’s biggest producer and exporter just started running out of supply a lot faster than expected.