Brazil - With the harvesting well under way of all Brazil crops including coffee, the government finally announced their Agriculture Plan for the 2003/04 season.
The announcement was made at a staged political rally in Brasilia presided by president Ignancio Lula de Silva and Agriculture Minister, Roberta Rodrigues. The government allocated record funds equivalent to US $16 Billion for financing, support pricing and harvesting costs of all interior farming and cattle interests. The funds were made available to growers, Cooperatives and milling industries but not to exporters alleging that sector was already benefited by other lines of credit.
Coffee received increased special attention for the 2003/04 crop with the approval of $100 million for farming expenses plus $150 million for harvesting and warehousing costs. These funds were made available at an interest rate of 9.5% p/a in comparison with the present Federal fixed rate of 26%. These funds are also in addition to the previously announced auction of government sake options equivalent to $300 million (equal to about 3 million bags). Coffee was also included for the first time in the Federal Government Policy of Minimum Prices and the Agriculture Loan Plan with the special interest rate of 8.75%.
The Plan also included a reduction of the interest rate for previous crop loans from 13% to 9.5% in accordance with a reduced inflation contract clause. The Santos coffee brokerage firm, Escritorio Carvalhaes, predicts that without a frost or drought, the allocated funds for price support, financing retention and exercising of sale options, could remain as much as 12 million bags from the reduced 2003/04 crop - last officially estimated at between 27.7 to 29.7 million bags.
The possibility was partially confirmed by the fact that the auction of sales options to growers and Cooperatives for September/November delivery was 97.3% exercised at price premiums. The interest was not 100% since the strike price for the Robusta quota was below present market levels.