Mitsubishi Corp buys stake in Brazil coffee farm

BRASILIA Tue Apr 3, 2012 3:50pm EDT

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BRASILIA (Reuters) - Japan's Mitsubishi Corp (8058.T) said on Tuesday it bought a 20 percent stake in Ipanema Coffees, one of Brazil's top coffee farms, which covers an area the size of New York City's Manhattan island.

The purchase is the latest swoop by Japanese companies into commodities assets in Latin America and elsewhere, where profitability has been helped by relatively high prices for grains such as soy and corn, sugar and, in particular, coffee.

Two months ago, Mitsubishi bought the same size stake in South American grains producer Ceagro CEGR.UL, which is controlled by Argentina's Los Grobo.

Ipanema Coffees, a producer of specialty beans marketed to the upper end of the coffee market, was Mitsubishi's second agricultural investment this year in Brazil, a country it describes as strategic to its plans.

Growers in Brazil, the world's top coffee producer, have profited as prices have risen due to tight supplies. Coffee prices doubled in 2010, and while prices have fallen in the last six months to about $1.85 a lb, they remain nearly 60 percent higher than the average for the past 10 years.

Mitsubishi, Japan's largest trading house, said growing demand for coffee was a motive for the investment in Ipanema.

"(T)he demand for certified coffees which Ipanema produces, has been growing by roughly 10 percent a year in developed nations such as the U.S., Europe and Japan," Mitsubishi said in a statement.

In another transaction, Tchibo Austria Holding, owner of the Tchibo coffee roasting house, bought a 16.5 percent stake in the company, Ipanema CEO Washington Luiz Alves Rodrigues said. Some of the proceeds of the stake sales will be invested in more irrigation and mechanization of the harvest.

"Both (Mitsubishi and Tchibo) are coming in with proposals for Ipanema to grow and help with the governance of the company and at the same time to understand more about Brazil and look at other opportunities for the future," Rodrigues told Reuters.

The investments would boost the company's capital while the existing owners, ML Participacoes, local investment fund Paraguacu and Norwegian coffee roaster Friele also sold some of their shares as part of the transaction.

ML Participacoes is owned by the family that founded Ipanema Coffees in 1969.

Rodrigues said the companies would not declare the value of the transactions. Based in Alfenas, the company is located at the heart of coffee country in Brazil's highland state of Minas Gerais.

Ipanema only grows arabica-type beans, which are smoother and more expensive than the other main kind, robusta.

Ipanema's plantations sprawl over about 60 square kilometers (23 square miles). Mitsubishi said it will send staff to Brazil to oversee investments in the plantations.

Brazilian coffees are popular in Japan and its importers are often the highest bidders for coffees that reach the Brazilian finals of the Cup of Excellence, an annual coffee competition. Some prize coffees fetch more than $100 per lb, versus less than $2 per lb for regular arabicas.

Brazil is just weeks away from harvesting its 2012/13 crop which comes in an 'on year' in coffee's biennial cycle. This cycle sees output rise one year only to fall the next. Private analysts and exporters expect a large, but not record, crop this year.

(Editing by Jeb Blount and Jim Marshall)

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