As we within the coffee industry know, Brazil is the powerhouse coffee-producing country and determines the C-Market price thanks to their hefty exporting volumes. Yet, the moment yields are lower, C-Market prices rise, and the coffee industry must readjust.
2020 was a record-breaking year for Brazil, with yields exceeding those of many previous years. This means, however, that 2021 is a recovery year, so coffee trees generally produce less than peak years as they rest. However, back in September of 2020, severe drought swept through Brazil, harming the development of coffee cherries.
Predictions place the 2021/22 yields at 43.8 million 60-kilogram bags of both Arabica and Robusta, which is a drop in nearly 31%. 2020/21 yields reached 63-68 million bags. This is occurring not only because it is the negative biennial pattern, but also because of the aforementioned severe drought that impacted the southern growing regions in the latter half of 2020.
In some regions, temperatures reached the highest on record, with averages reaching 43˚C. In order to flower and fruit properly, coffee requires a set temperature; most successful at between 18-24˚C. With exceedingly warm temperatures, coffee trees wilted, shed foliage, and root systems grew stressed within many trees. This occurred at peak flowering season in October, and without rain to follow after the bloom, flowers ‘pink’ and die on the trees before they can successfully develop fruit.
Arabica yields alone are predicted to drop between 32.4% to 39.1% compared to last year’s harvest. The increase in temperatures and decreased rains will significantly impact Minas Gerais, the leading contributor to Brazil’s exports, accounting for between 50 and 60% of yields.
Allan Botrel, Market Developer for one of our partners in Brazil, San Coffee, mentions that the coffee plants kicked into ‘survival mode’ as soon as the drought hit, by dropping flowers and fruits to survive. This has led to producers increasing their pruning methods in Minas Gerais and São Paulo states to protect the overall health of the trees.
General Manager of San Coffee, Fabrício Andrade, notes that rains typically arriving in late August instead fell in late October, forcing the coffee trees to go nearly two months with no rain. The impact on quality is still unknown primarily due to the fact that Brazil has not experienced this extensive of a drought in recorded history. However, producers remain positive that with lower yields, they will have more space to focus on post-harvest processing methods which will lend support to improving cup quality.
Our other partners, SMC, in Guaxupé, note that 2020 really stood out as a year with decreased rainfall, especially within the coffee-producing regions where they function. Water loss was significant due to decreased and unevenly distributed rainfall in addition to increased evapotranspiration within the plants. This long period without rain contributed to the reduction in the available water within the soil – which led to serious defoliation. By October and December, as noted by an SMC agronomist, there was a prolonged water deficiency and historically high temperatures.
Weather conditions resumed to some form of normalcy in December and crops began to recover. Yet, unusual weather patterns returned from January through March with increased temperatures and drought. Reports by the National Supply Company, CONAB, indicate that there will be an estimated reduction in Arabica production of around 31.5%. The culprit being the negative biennial period and poor climate conditions. Producers are anticipating this drop in yield and hope to make up for the loss with an increased focus on quality.
Additionally, Bourbon Coffee, exporters working with producers in Minas Gerais and São Paulo, declare that rainfall levels in October of 2020 were below historical averages – which continued through February and March of 2021. The Brazilian government even released a water emergency alert within five Brazilian states: Minas Gerais, Goiás, Mato Grosso do Sul, São Paulo, and Paraná. Although it is still too soon to know the official decrease in yields, representatives at Bourbon also predict a drop in nearly 35%.
“2021 crop yields are expected to be 30-32% less than 2020,” mentions Jose Francisco Pereira of Monte Alegre Coffees in the South of Minas Gerais. He notes that normally, on an off year, yields are only about 20% lower compared to high years. The 8-month drought led to late and decreased flowering amongst the coffee trees. Additionally, the decrease in rain in March and April harmed the consolidation or final stages of fruit development which led to more occurrences of peaberries within the coffee cherries. Nearly 7-8% of Pereira’s coffee experienced this change, meaning that although there were cherries, yields were reduced due to singular seed development. Not only that, but the drought will have lasting impacts on branch development which could harm future yields. However, Pereira is optimistic about new processing methods and continues to look forward.
Coffee futures are already increasing, and the C-price is higher now compared to previous years. Data and estimates from a number of sources indicate a drop in yields, but producers remain hopeful. The lasting impact of the drought and decreased yields may not be evident at this time, but the coffee industry is a resilient system, and will find a way to bounce back.