Brazil to reassess minimum guarantee prices for coffee

SAO PAULO/RIBEIRAO PRETO, Brazil, May 2 (Reuters) - Brazil will reassess the methodology used to set the government’s minimum guarantee prices for coffee, the Agriculture Ministry said on Thursday.

The review - to be jointly undertaken by crop supply agency Conab as well as private sector experts and farmer cooperatives - comes after farmer criticism that current guarantee values do not reflect production costs and are helping pressure global coffee prices to their lowest levels in more than 10 years.

“Current minimum prices do not meet farmers’ needs, they do not express our reality,” said congressman Evair de Melo, one of the leaders of Brazil’s congressional farm caucus and a former head of coffee research body Incaper in Espirito Santo, a leading robusta coffee producer in Brazil.

Every year the Brazilian government sets minimum prices for several commodities, considering production costs and minimum profit margins for farmers. If market prices for a specific commodity fall below the minimum guarantee level, the government is allowed to intervene in the market, buying products at that minimum level, as a way of guaranteeing that farmers will at least cover their costs and have a small profit.

Current minimum prices for good quality coffee are 362.53 reais ($91.37) per 60-kg bag for arabica and 210.13 reais ($52.96) per bag for robusta.

“We hope that Conab and the national agricultural policy secretary can check with the private sector, can ask the advice of experts that are familiar with production costs for coffee, so we can have a minimum price that is fair to farmers,” de Melo said during Agrishow, Brazil’s largest farm equipment exposition, in Ribeirão Preto. ($1 = 3.9676 reais) (Reporting by José Roberto Gomes and Marcelo Teixeira; Editing by Sandra Maler)