Brazil coffee exports to rise 35% over next five years on back of EU Mercosul trade deal

Dec, 28, 2019 Posted by Sylvia Schandert

Week 202001

In 2018, Brazil, a world leader in the coffee industry, produced 61.7 million 60-kg bags of coffee, of which thirty-six million were exported, mostly as green coffee, resulting in US$ 5.15bn in revenues. Following the EU-Mercosul Trade Deal Brazil’s exports are set to grow considerably.

According to the Brazilian Coffee Exporters Council (Cecafé), out of the above total, about 17.5 million bags (49%) were shipped to the European Union, specifically to markets in Germany, Italy, Belgium, France and Spain.

The below chart, based on Datamar DataLiner data, shows Brazilian coffee exports from January 2015 to October 2019:

Source: DataLiner / Datamar

The trade deal, signed in June 2019, should benefit Brazilian coffee producers, removing tariffs currently charged for coffee exports to the EU. When the agreement becomes valid (it must first be approved by both trade blocs’ parliaments), Brazilian coffee, currently taxed at 9%, will gradually have its tax reduced, until it is freely traded after four years, making Brazilian products more competitive in the European market.

The European Union was the second largest destination for Brazilian instant coffee exports in 2018 (466,000 60-kg bags), losing out only to the United States (644,000 60-kg bags). Abics (the Brazilian Association of the Soluble Coffee Industry) projects a 35% growth in export volume over the next five years.

According to the agreement, a substantial percentage of EU green coffee imports for roasting (40%) and of soluble coffee (40% to 50%) must come from Brazil. This will allow Europeans to sell roasted and soluble coffee to Mercosul countries tax free.

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