Chief Executive of Brazilian National Council of Coffee (CNC)

Russia-Ukraine conflict reflects in coffee chain

For the Chief Executive of Brazilian National Council of Coffee, Silas Brasileiro, the conflict will partially affect ag inputs

The world has been progressively tense and apprehensive with Russia-Ukraine conflict. Brazilian National Council of Coffee (CNC), historically, avoids every and any comment over issues not related to coffee production chain. Unfortunately, though, Russian invasion to Ukrainian territory has harshly shocked our routines. However, we are conscious that ag inputs are going to be affected partially, and not in such a large scale as pointed out by some people.

We cannot promptly relate the current coffee prices with the conflict. As representatives of Brazilian coffee production, we can affirm that adverse climate condition has been a great influence as well. After an extended dry period, coffee growers faced severe frosts, which reflected directly in coffee production. Productivity has diminished as a result.

Ag inputs high costs are also to be considered, for prices had tripled, even before the armed conflict began. Not only does it refer to fertilisers, but pesticides too. Therefore, there is no reason for price review by now, perhaps for those fertilisers that might be soon affected.

Climate phenomena have also occurred in other producing regions, which reduced coffee supply. Consequently, the unchanging market forces – offer versus demand – reflect in current prices, following such adverse conditions. Another influencing factor is the uncertainty about climate conditions for the current year, which will affect 2022/2023 crop. No need to mention the pandemic is not over yet. 

Russia and Ukraine conflict: Producers under low prices

Producers had been working under very low prices, which sometimes, were not enough to cover production costs. That caused many coffee growers to change their activities, specially to crops like soybean, maize, and wheat. By these means, the offer is quite lower, and the demand is still high, even with the pandemic. This last element has also influenced the rise in prices for coffee. CNC expects that, in case of greater 2023 harvest, with adjusted prices for ag inputs, coffee sector might move back to normal, without losing fair pay.

Brazilian coffee farming plays important economic and social role with job creation. It means 8.4 million jobs throughout its chain in Brazil. Coffee is currently the 4th product in national trade balance, with foreseen net income of BRL 70 bln in 2022. It is actually a great deal.

Lastly, we do believe coffee growers must face all of these challenges with pride, believing that these setbacks will be overcome, and moving towards our goals, always aimed to devoted ever efficient job. We cannot spread the good news that the war is over now, but we can believe ourselves to stand against these challenges, and count on the structure provided by our co-ops for Brazilian coffee producers.

*By Silas Brasileiro – Chief Executive of Brazilian National Council of Coffee (CNC)