Investing in Brazil Coffee Industry

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Table of Contents

Introduction
Trade Zones
Conclusion
Works Cited

Introduction

There comes a time in life when a chance to invest knocks on everyone’s door. Having inherited five million dollars from my aunt, I feel that this is that time in my life. I need to invest. Consequently, I have taken time with my wife to think over several viable investment options and we have come to settle for coffee production. This paper is a record of the underlying principles behind our choice.

Brazil is the leading producer of coffee, a world wide cherished beverage according to (Lemos 47). My wife and I having been born, raised and settled in Brazil imply us having the advantage of distinct familiarity with the coffee industry. Our parents have worked in the coffee plantations and up to date, several members of our families still do. I majored in Agricultural Economics in my University Degree while my wife took Pure Economics. This means that we have both been exposed enough to understand the coffee industry from both a personal and professional perspective. Before I made the final decision on my choice of investment, I analyzed the coffee industry in sections as discussed below.

Trade Zones

There are three main trade arrangements to consider.

Free Trade Area of The Americas

First to consider is the 1994 Free Trade Area of the Americas. This was an arrangement to open up all countries of America for free trade except Cuba says (Lemos 48). This has been received both with applause and booing by the public. Those opposed argue that its undercover plan aims at exploiting the less developed countries of Latin America. On the other hand, its supporters argue that it’s geared to promoting access to foreign markets and considering the special needs of its members. FTTA failed to meet its plans of 2005. Generally, FTTA has not been so vibrant on the economy and therefore its effects are too mild to feel according to (Lemos 50).

Southern Common Market

Apparently, Brazil belongs to one very vibrant trade region called the Southern Common Market (MERCOSUR) as explained by (Fiallos 72). Adopted in 1985, its objectives were to implement free transit of products and services between member states, adopt a common trade policy for member states and coordinate national economic policies relating to foreign trade and commitment by member states to strengthening the integration says (Fiallos 72).

Achievements of MERCOSUR

MERCOSUR in its list of achievements saw the construction of Free Trade Zones that provide favorable conditions for foreign exchange among member states. This FTA has seen an increase in Brazilian coffee production from about 20 million bags to well over 45 million 60 Kg bags between 1997 and 2009. This can be attributed to MERCOSUR’s objectives. The objectives have made it easier for Brazil to use advanced technology in this industry thus increasing yields, reducing costs and diversifying the end product. Eventually, the prices of the product have been relatively rising. This has seen an increase in returns to all dealers in this industry thus motivating them to work harder for better results.

Challenges and Opportunities in MERCOSUR

MERCOSUR is however faced with several challenges such as insufficient capacity for a judicial system where member states can solve disputes, biased balance of power among member states and the influence of controversial politics.

Despite the challenges, MERCOSUR remarkably provides its member States with opportunities as discussed in its objectives.

Fair Trade in Brazil

Another consideration worth making is the presence of Fair Trade in Brazil. According to (Downie A16), Fair trade has its roots in the Solidarity Economy works of the European NGOs around the 1970s. However, it was not until the wake of the millennium that remarkable progress was made towards developing an internal Solidarity Market in Brazil. Fair trade objectives include creation of an enabling environment for producers, encouraging open transactions, promotion of fair trade, fair and timely rewards, improving the working environment, protecting child rights, conserving environment and respecting cultural identities says (Downie A16). With fair trade have come numerous fair opportunities and rewards to the chain players. Thus, it has not only been received with applause in the region but also active support for its continuity.

Difference of Fair trade from Free Trade

Unlike Free Trade, fair trade is an agreement between the South American countries based on social, economic and cultural promotion and therefore no aspect of national exploitation.

Again, Fair trade development is through projects that collectively involve the producer, the dealer and the consumer therefore implying mutual and fair benefits to all says (Downie A16).

Achievements of Free Trade

Despite Fair trade having a few mild challenges that is in fact already being dealt with such as the call for a common definition of Fair trade, many are its tangible positive implications. For instance, in Ceara (North of Brazil), World Vision was able to redeem poor local farm families by establishing a fair trade co-operative. Through this co-operative, these peasants have been able to grow organic melons for supply in large chain supermarkets of the European Continent. Without much say, I chose to get into coffee production through fair trade co-operative. It is an agreement that not only benefits the players but is also in line with the United Nations Millennium Development goals.

Connection between Fair Trade and UNMDG

One of the UN Millennium Development goals is to end poverty by 2015 as put by (Ross A01). I believe that this is achievable. However, it is not going to come unless individuals, organizations, institutions and governments take active roles in living up to it. The wider players are a constituent of us as individuals. It is therefore a responsibility of each one of us to take position and roll the ball. I feel obligated to invest in coffee production, a heritage of my motherland.

My choice is with no doubt going to be part of poverty eradication by 2015 as designated by the UN. First, it will be through the creation of a fair environment. My company, operating with Fair Trade co-operatives, will provide for the continuity of fairness in the coffee industry. Second, through employment, workers will be subject to fair wages and as a result be able to raise their living standards. Third, Fair Trade obligates consideration of child rights and support for education. This is a long term measure for poverty eradication.

These among others are the key links between my company’s preset objectives and the United Nations Millennium Development Goals to eradicate poverty by 2015.

Conclusion

To conclude, I have taken enough time to research before making my choice. There is a lot to show of the successes of Fair Trade in Brazil that could not be covered in this paper. There is a lot more that can be achieved through the same procedure. Fair trade is a sure way to go in investment and I would recommend it to anyone interested in investing in Brazil says (Ross A01). I choose to invest in coffee production under Fair Trade.

Works Cited

Downie, Anne. “Fair Trade Brand Helping Brazilian Farmers.” The New York Times Media Group 2007: A16. Print.

Fiallos, Micah. “Implications for global coffee players.” Management Magazine 2001: 72. Print.

Lemos, Frances. “Fair Trade and Solidarity Economy in Brazil.” The Economist Magazine 2006: 47-51. Print.

Ross, Judith. “A Bitter Brew for Coffee Farmers.” Toronto Star 2002: A01. Print.

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