Recent History Which Impacts Current Condition and Risks
Prices are increasing on not only because buyers are willing to pay more as demand increases. But also because the supply of coffee is beginning to decline.
The current major concerns agro-markets in Brazil is the price hike in the cost of food. The increase in prices largely stems from the dry weather that the country has been experiencing. Scientists in Brazil indicate that extreme weather has played a key role on the country’s drought. Farmers are starting to suffer total losses with corn and soybean in the bread-basket region where also a lot of coffee is planted.
Brazil government for the most part has ignored and refuses to acknowledge that climate has anything to do with the decline in crops. If there is no turnaround, the harvest could be cut 10% by the year 2020 (Garcia-Navarro, 2014).This could have long term effects for not only coffee but for the food supply in Brazil overall.
Another issue that is of relevance in our venture is one of government corruption. Though the country has made great strides and advances in the past decade, misappropriation of funds frequently make headlines. Poor public services and institutional inefficiencies are at a low level in Brazil. Currently there is a sense of anger as the government has spent billions on the 2014 FIFA World Cup when so many are poor and uneducated.
Referrences
Lourdes Garcia-Navarro (2014). Drought could drain more than Brazil’s coffee crop. NPR.org Retrieved March 21, 2014 from the World Wide Web: http://www.npr.org/2014/02/23/280770928/drought-could-drain-more-than-brazils-coffee-crop