Ground coffee prices soared in Brazil as a result of adverse weather. In the 12-month period up to January, the increase for consumers reached 56.87%, according to data from the IPCA (National Broad Consumer Price Index), the official indicator of inflation calculated by the IBGE (Brazilian Institute of Geography and Statistics).
In the view of analysts and industry representatives, the trend is for the product to remain at a high level in 2022, in a context of firm global demand and supply impacted by the drought and frosts of last year in Brazil. This combination of factors has been putting pressure on commodity prices.
While prices show no signs of letting up, consumers are trying to find alternatives to keep coffee on the table, including replacing brands and looking for lower prices in the country.
This is the case of social media LÃvia Neiva, 43, who says she cannot live without drinking. With the rise in prices, the resident of Goiânia (GO) switched from gourmet coffee to more popular brands in the final stretch of 2021.
“I went back to the traditional coffee. I no longer have brand loyalty. What defines the purchase now is the price”, he says.
In January, the inflation of ground coffee for the consumer was 4.75% in Brazil, according to the IPCA. This is the 11th consecutive month of growth. That is, the product has advanced since March 2021. In this period, the accumulated increase reached 57.24%, says the IBGE.
In 2021, the culture experienced a negative biennial year, which in practice means lower production. The biennial cycle is marked by the alternation of a year with great flowering (2020) followed by another with less intense flowering (2021).
To complicate the situation, there were losses due to drought and frost in states like Minas Gerais and São Paulo last year, which impacted prices. Brazil is the world’s largest coffee producer.
On February 9, a 60-kilogram bag of the Arabica variety reached R$1,555.19, according to data from Cepea (Center for Advanced Studies in Applied Economics).
It is the nominal record of the institution’s historical series, which began in 1996. In real terms —that is, discounting inflation—, it is the highest value since December 1999.
The price even lost breath in the last few days, but remains close to R$ 1,500. At the end of February 2021, the amount was BRL 746.50, according to the study center.
Renato Garcia Ribeiro, a researcher in the area of ​​coffee at Cepea, believes that the demand for the product remains firm while the forecast is for supply below the Brazilian potential. Thus, it is possible that prices will remain at a high level in 2022, says the expert.
According to him, another factor that puts pressure on quotations is the increase in production costs during the pandemic. Inputs such as fertilizers soared, affecting coffee growers.
“This year’s crop is a positive biennial, but it will not be as high as it could be. There is a reflection of the drought that stressed the plants”, says Ribeiro.
An estimate released in January by Conab (Companhia Nacional de Abastecimento) indicated that the Brazilian coffee crop should reach 55.7 million 60-kilogram bags in 2022. 2021.
The increase was already expected because the previous season was a negative biennial for culture. The projection for 2022, however, is below the results for 2020 and 2018, the last two with a positive biennial.
“The drop in production this year, when compared to 2020, is a reflection of adverse weather conditions recorded mainly between the months of July and August in 2021,” said Conab when releasing the projection in January.
“The drought and frosts that occurred with greater intensity in the states of Minas Gerais, São Paulo and Paraná impacted the physiological conditions of the coffee plantations”, he added.
industry concern
The rise in coffee also worries the industry. According to Abic (Brazilian Coffee Industry Association), 82% of the sector is made up of micro and small companies, which are less able to deal with rising production costs.
“The working capital of these industries is smaller. If they used to buy one hundred bags, now they are buying less with the increase in coffee”, says CelÃrio Inácio, executive director of Abic.
The entity has not yet closed the data on consumption in the country in 2021. The trend, says the director, is growth.
According to Inácio, Brazilians did not stop buying the product, but had to adapt consumption to the situation of high prices, reducing waste and seeking more offers.
“The consumer does not stop drinking coffee. He ends up adapting. He becomes more demanding at the time of purchase, he tries not to waste it”, he analyzes.
The director considers that the scenario is still of high prices in 2022, with consistent global demand.
“Coffee is a commodity. The market also reacts to political issues and exchange rates, for example. It is a supply and demand market, and the industry feels the effects of this”, he points out.
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