By Oliver Griffin
VITORIA, Brazil (Reuters) -Brazil coffee exports to the United States will decline further if U.S. tariffs remain in place, Marcio Ferreira, the head of exporter group Cecafe said, adding the industry was pleased by warming relations between the leaders of the two countries.
U.S. President Donald Trump imposed a 50% tariff on Brazilian coffee and other goods, which came into effect in early August, amid tensions between his administration and the government of Brazilian President Luiz Inacio Lula da Silva.
As a result, Cecafe reported that the U.S. was no longer Brazil’s biggest market as coffee sales there fell 46% in August, compared with the year before, when Brazil saw record exports. Through September 19, exports to the U.S. were down a further 20% versus their level in August, Ferreira told Reuters on Thursday.
If tariffs continue, exports “will keep falling,” said Ferreira, who also works as the superintendent of Tristao Trading, a leading exporter of Brazilian coffee.
Only a shift in policy could revive sales, he said, adding that the industry was encouraged by the positive exchange between Trump and Lula at the United Nations this week.
AN IRREPLACEABLE MARKET
U.S. tariffs on goods from Brazil, the world’s largest coffee producer and exporter, have upended the global coffee market, pushing prices upwards.
In the short to medium term, the tariff restrictions may be good for producers, who have benefited from higher prices, Ferreira said, but added that exporters, roasters, and consumers are suffering.
Some producers are holding on to their stock, betting prices will return towards recent records, said Valdecir Schmidt, warehouse manager for Cooabriel, Brazil’s biggest cooperative of Conilon, a type of coffee related to robusta.
“We have a very high stock level for this time of year,” he said. “Last year, we didn’t even have half of what we’re seeing now, in the month of September.”
As U.S. purchases shrink, exports to other countries are growing. According to Cecafe, total coffee exports to Colombia soared 578% in August.
Cooabriel’s Conilon exports to Colombia – itself a major arabica coffee producer – increased 300%, said Jose Carlos Azevedo, the cooperative’s sales manager, adding that places like Italy and Britain had also increased demand.
Still, the U.S. market is too big for other countries to replace it, Ferreira said. If tariffs remain in place for too long, Americans could grow used to other types of coffee, making it harder for Brazilian companies to recover their position in the U.S. market in the future, he added.
“It’s time to get the kids out of the room and get the adults in to negotiate,” he said.
(Reporting by Oliver GriffinEditing by Marguerita Choy)
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