“ … there is no magic formula for a farm’s success, it is essential to put a lot of effort into the work and have the main objectives always clear …”
AgriBrasilis interviewed Paulo Cesar Cau, president of Agropecuária Lago Azul and irrigated coffee farmer, who verticalized the farming, processing and export.
Cau has a degree in Economics from Moura Lacerda University, with a specialization in Marketing from FGV – SP. Along his career, he worked at companies such as Syngenta, Cargill, Monsanto and Produquímica.
Agropecuária Lago Azul is a group of farms, including “Córrego do Campo”, with 540 hectares of irrigated coffee.
AgriBrasilis – Córrego do Campo is a coffee farm that verticalized the steps of farming, processing and export. What are the advantages?
Paulo Cau – We carry out the entire steps of coffee production to export. The decision to do everything in house is because the value of coffee is not in the amount in kilograms, but quality of the coffee bean.
Each step, from planting to harvesting, influences the quality and we need to have full control over it. These care and handling of the coffee beans reflect on the quality of the drink’s flavor. For this, we need to have all human, social, and environmental responsibilities on the farm. And because we do all responsibly, we’re certified and have the Rainforest Alliance Certified seal.
Upon receiving this certificate, we opened the market to brands such as Starbucks, Coca-Cola, Louis Dreyfus Company and other large companies in the coffee market, because the farm receives the Premium grade for coffee quality.
I believe that we build a good image for the market as we present excellent human, professional and technical management. The combination of these three qualities results in a business capable of being certified, thus achieving visibility to attract the most demanding brands. 80% of our production is exported due to the high quality and the best price paid by the international market. The other 20% is for the domestic market.
Another advantage of controlling all steps of production is assuring the quality of coffee in new areas. We buy seeds from research institutions for the generation of seedlings, which are developed in our own nursery with capacity of 700,000 seedlings, until they reach the ideal age to be transplanted to the field.
We also select essential equipment to separate harvested beans from different types of coffee beverage quality. Our mill has dryers with high load capacity. These equipments need to be as close as possible to a natural drying carried out in the sun, that does not harm the natural quality of the coffee. For this, we invest to have quantity and quality at the same time.
AgriBrasilis – What competitive advantages and technological innovations are present in these steps?
Paulo Cau – The conservation and improvement of the soil profile, balanced plant nutrition, including significant addition of organic matter, harvest at the ideal point of bean maturation, modern coffee drier and selection equipment, and an extremely committed, trained and well-paid team.
Farmers in Brazil does not see each other as competitors: each one competes against their own capacity. The biggest competition is managing the details of the business so that you improve quality, yield, cost management and human relations improvement in your own farm every year. All of these make you stand out in the market and be more successful.
About technological innovation, for each crop, we have a specialized agricultural consultant. The sum of information that comes from research centers, consultants and the access that companies have to the best farmers, makes new technologies reach us. We test these technologies before applying them on a large scale. But being an innovative farmer in the region make suppliers look to you whenever something is launched in the market.
Suppliers offer a product for testing during research and development step. In this way, we test together with them. After the product is commercially approved, supplier gives preference in the first year to purchase, and this is very interesting. Farmer needs to be aware of market news and be open-minded to technological changes in our property.
AgriBrasilis – What is the cost-benefit of irrigation?
Paulo Cau – Currently there are 545 irrigated coffee hectares of 2 coffee farms. Irrigating with a drip, made a enormous difference in the quality of the harvested coffee. Only in this way we got big customers.
The average coffee yield in Brazil varies between 23 to 25 bags (1,500 kg) of processed coffee per hectare. This low harvest is due to climatic instability and agricultural management, besides several technical mistakes. Irrigation allows to create a perfect environment for coffee plant development, reaching a production of 50 bags/ha (3,000 kg).
Irrigation makes the profitability high and, besides paying the investment quickly, it allows investing in essential components to produce a high quality coffee beans for export. Such components involve washers for grain separation, pulper, machinery, power plant with technological dryers, etc.
We are always looking to acquire land with access to water, as irrigation is essential. Initially the investment is high. We currently have 6 lined water tanks that supplies 290,000 m3 of water and 4 natural dams equivalent to 180,000 m3 for irrigation. The cost-benefit of irrigation is very positive. All these areas are granted by the local environmental agencies in order to increase yields.
There are environmental regulations with standards for using water. It is only allowed to use between 30% to 40% of the property’s water, and the rest is prohibited. It is recorded at the environmental agency, which inspects the farm and measures the volume of available water. So it approves the volume of water that can be used. All of these are extremely important for environment preservation and the farmer must pay attention to all regulations.
AgriBrasilis – What are the destination markets for coffee and why?
Paulo Cau – Most of the coffee is sold to the Asian and European markets, as they are consumers and are not major producers of the beverage. Our coffee is exported to China, Japan, India, UK and Germany, for example.
One of our buyers is American Starbucks that has more than 3,600 stores in China. In other words, we export a lot of cargo to the Chinese population because the demand is high, and they are increasingly switching from tea to coffee.
Germany, on the other hand, re-exports a large amount of the imported coffee due to its industry that adds value to this commodity and then sells it at higher prices, resulting in a high profit for the country.
In short, coffee is one of the most consumed beverages in the world and, consequently, great economy powers import quality coffee beans for different purposes.
AgriBrasilis – Will recent frosts impact the value of coffee in the coming years?
Paulo Cau – Frosts affected an average of 20% of the Arabica coffee area and will create a deficit in the coffee supply in the world in the next 2 years. There will be a price increase for the consumer. It’s the law of supply and demand: the less coffee available on the market, the more expensive the bean.
We are working hard to reverse the losses. We carry out a radical pruning, we were forced to cut the plant close to the ground so that it can sprout and generate a new plant that will be productive only after 3 years.
As frost harmed the farms of Minas Gerais, the most coffee grower State in Brazil, the 2022 harvest will be impacted by weather effects, causing a drop in the quantity of the beans. The price of the bag remains above US$ 189, but this amount may rise even more in the coming years.
AgriBrasilis – What are the next challenges for Córrego do Campo farm?
Paulo Cau – Over the next 3 years, the biggest challenges are to recover the 30% of the coffee area affected by frost, to continue the investment process in professional training and quality of life for employees, and to always keep the preservation of the environment. We also want to increase the quality of the drink to meet the different needs of each region in the world.
We still intend to increase coffee planted area. However, we want to maintain irrigation throughout the planted area, and it is a challenge to find land that has water availability.
Another challenge is to manage coffee production along with 3,000 hectares of annual crops including soybean, corn, sorghum and wheat. They are two different businesses. Coffee market is different because it is perennial. Grains market is another business as they are annual crops. To handle both, we have two distinct structures, a technological and organized management system that shows in real time the amount of agri-inputs applied in each field, fuel consumption, information about employees, etc. To manage everything, we have a team of 12 professionals in the administrative office.
It is always a challenge to manage quality in a large property, but without a doubt, problems are easier to solve with a trained and organized team. Also, I believe there is no magic formula for a farm’s success, it is essential to put a lot of efforts into the work and have the main objectives always clear to yourself.