Coffee, Valorization of (Brazil)

Valorization of (Brazil) Coffee, the government's efforts to prop up (valorize) the price of coffee by reducing the world supply. The first valorization (1906–1914) was occasioned by an unusually large crop that threatened to decimate coffee prices. The governors of São Paulo, Minas Gerais, and Rio de Janeiro agreed to reduce production and remove coffee stocks from the market. The valorization did not raise coffee prices, but it successfully prevented prices from falling further, since Brazil controlled 80 percent of world coffee production.

The success of the first program convinced the federal government to finance another valorization program in 1917, when coffee prices again slumped. Undertaken only with Brazilian funds, it enjoyed great success because a severe frost in 1918 reduced production and ended the threat of glut. The last stocks were sold off two years later. In 1921 the federal government along with São Paulo intervened again to prevent low prices. European and U.S. lenders and exporters provided the funds to sustain prices until 1924.

In the 1920s São Paulo, Rio de Janeiro, and Minas Gerais established state institutes to finance and regulate coffee's flow to market. In 1931 the new government of President Getúlio Vargas created the National Coffee Council (changed to the National Department of Coffee in 1933) to control coffee marketing and financing. This arrangement was effective as long as Brazil produced most of the world's coffee, but after the late 1920s its share declined. In 1946 the Brazilian government signed the Inter-American Coffee Agreement to stabilize prices within the Americas through a quota system. This program was expanded to producers in the rest of the world in 1962 with the signing of the International Coffee Agreement, which made coffee one of the most closely state-controlled commodities in the world. The agreement remained in effect until 1989, when Brazil abandoned it in a dispute over quotas and at the same time, abolished the National Department of Coffee. The next year Brazil lost its place as the world's leading coffee producer to Colombia, though it subsequently regained its preeminence.

See alsoCoffee Industry .

BIBLIOGRAPHY

Carlos Manuel Pelaez, "Análise económica do programa brasileiro de sustentação do café, 1906–1945," in Revista Brasileira de Economia 25, no. 4 (1971): 5-211.

Thomas Holloway, The Brazilian Coffee Valorization of 1906: Regional Politics and Economic Dependence (1975).

Antônio Delfim Netto, O problema do café no Brasil, 2d ed. (1979).

Steven Topik, The Political Economy of the Brazilian State, 1889–1930 (1987).

Additional Bibliography

Teixeira de Oliveira, José. História do café no Brasil e no mundo. Rio de Janeiro: Barléu Edições, 2004.

Perissinotto, Renato M. "Estado, capital cafeeiro e crise politica na decada de 1920 em Sao Paulo, Brasil." The Hispanic American Historical Review 80, no. 2 (May 2000): 299-332.

                                          Steven Topik