“Coffee farming is like an open-air industry, exposed to frost, hailstorms, high temperatures and other climatic risks…”
Simão Pedro de Lima is the CEO of the Cerrado Biome Coffee Farmers’ Cooperative – Expocacer, with a degree in Law from the Centro Universitário do Cerrado Patrocínio and in Business Administration from FCG SG, as well as a M.Sc. in Education and Organizational Management from the Centro Universitário do Triângulo and a postgraduate qualification in Business and Commerce from Unicerp.
AgriBrasilis – What is driving up coffee production costs?
Simão Pedro de Lima – The coffee production cost structure includes a wide range of expenses, such as fertilizers, crop protection products, labor, fuel, electricity and logistics. In recent years, the costs of direct inputs, particularly fertilizers and crop protection products, have increased significantly. Some of these increases resulted from external factors, such as the war in Ukraine. Fuel and labor costs have also risen considerably, while financing costs have increased sharply. Today, subsidized credit rates are virtually unavailable for agricultural activities.
Climate change must also be considered, as it has affected coffee production since 2015. In 2021, frost hit the producing regions and affected approximately 35% of the productive coffee-growing area in the Cerrado Mineiro region. This generated extraordinary costs for the recovery of plantations. In many cases, coffee trees had to be removed and replanted, leaving farmers without production for approximately three years. Together, these factors explain the increase in production costs.
AgriBrasilis – Green coffee prices have nearly doubled over the past five years. Is it reasonable to claim that farmers’ margins remain under pressure?
Simão Pedro de Lima – Although green coffee prices increased significantly, most farmers did not fully benefit from this appreciation. Coffee farmers commonly sell their production in advance, sometimes committing coffee from two or three future crops.
When the first major upward price movement began in 2022, two factors prevented farmers from benefiting more fully: a large portion of the crop had already been sold through forward contracts at prices below those prevailing in the physical market, and production had been severely affected by the 2021 frost, followed by insufficient rainfall in subsequent years.
When the market reached R$ 1,300 per 60-kilogram bag, approximately 50% to 60% of production had already been sold at prices ranging from R$ 500 to R$ 600 per bag. More recently, when prices approached R$ 2,500, a large share of production had already been sold for between R$ 800 and R$ 1,000 per bag. We can therefore say that most farmers did not effectively participate in the period of highest prices.
Furthermore, between 2022 and 2025, production remained below the plantations’ potential because of adverse weather conditions. This significantly reduced yields and, consequently, coffee farmers’ profitability.
AgriBrasilis – What have been the consequences of the recent years of unstable weather and market volatility?
Simão Pedro de Lima – Volatility in the coffee market has been driven by production fundamentals, particularly unfavorable weather conditions, global geopolitical factors and speculative activity by investment funds on the New York and London exchanges. Recently, in a single trading session, coffee futures on the New York exchange rose by 5,300 points, an unprecedented movement in the coffee market.
This volatility creates uncertainty and concern among farmers, who lack adequate hedging instruments to price their production. Since 2022, futures contracts have traded at a discount to the physical market, discouraging forward sales. In principle, forward contracts are an effective hedging instrument because they allow farmers to lock in prices and protect their production costs against future market fluctuations.
Low inventories, combined with smaller crops in recent years, export logistics bottlenecks and global geopolitical instability, have further intensified volatility in the coffee market.
AgriBrasilis – Is the recent crisis still affecting farmers’ debt levels?
Simão Pedro de Lima – Yes. Over the past five years, yields have remained low, production has fallen short of its potential and costs have increased. Farmers also failed to fully benefit from higher prices for the reasons already mentioned. Crop losses, combined with rising production costs, have forced farmers to increase their reliance on financing from the banking system.
Agriculture as a whole is facing a similar situation. On July 15, Provisional Measure No. 1,376/2026 was published, authorizing the creation of credit lines for the repayment or amortization of rural debt held by producers affected by crop losses.
AgriBrasilis – What is the outlook for the coffee crop in Minas Gerais?
Simão Pedro de Lima – The 2026 crop in Minas Gerais has favorable prospects in terms of volume. It is expected to exceed the 2020 crop, which remains the largest ever harvested in the state. This result is due to favorable weather conditions during the development and bean-filling stages.
In terms of quality, however, this may not be the best crop. Unusual rainfall in July, during the harvest period, caused many ripe coffee cherries to fall from the trees. We estimate that approximately 20% of the cherries fell to the ground, which may affect both the physical characteristics of the beans and cup quality.
The harvest is still underway. In the Cerrado Mineiro region, we estimate that approximately 45% of the crop has been harvested and 20% has already been processed.
AgriBrasilis – What have been the main concerns raised by Expocacer’s members?
Simão Pedro de Lima – I would not describe them as demands, but rather as concerns. They are not exclusive to Expocacer’s members but are shared by the entire coffee industry. The main concern is related to weather conditions.
Coffee farming is like an open-air industry, exposed to frost, hailstorms, high temperatures, wide temperature fluctuations and drought. For more than ten years, coffee-producing regions have faced a succession of adverse events, including frost, drought and, more recently, unseasonal rainfall affecting production.
Among the external variables affecting coffee production, the weather is the factor over which farmers have the least control and, at the same time, the one with the greatest impact. Mitigating the effects of adverse weather conditions is the major challenge facing the coffee industry, both now and in the future.
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