Coffee Economic impacts

- May 18, 2020-

Coffee Economic impacts

Map of coffee areas in Brazil.

Market volatility, and thus increased returns, during 1830 encouraged Brazilian entrepreneurs to shift their attention from gold to coffee, a crop hitherto reserved for local consumption. Concurrent with this shift was the commissioning of vital infrastructures, including approximately 7,000 km of railroads between 1860 and 1885. The creation of these railways enabled the importation of workers, in order to meet the enormous need for labor. This development primarily affected the State of Rio de Janeiro, as well as the Southern States of Brazil, most notably São Paulo, due to its favorable climate, soils, and terrain.

Coffee production attracted immigrants in search of better economic opportunities in the early 1900s. Mainly, these were Portuguese, Italian, Spanish, German, and Japanese nationals. For instance, São Paulo received approximately 733,000 immigrants in the decade preceding 1900, whilst only receiving approximately 201,000 immigrants in the six years to 1890. The production yield of coffee increases. In 1880, São Paulo produced 1.2 million bags (25% of total production), in 1888 2.6 million (40%), in 1902 8 million bags (60%). Coffee is then 63% of the country's exports. The gains made by this trade allow sustained economic growth in the country.

The four years between planting a coffee and the first harvest extends seasonal variations in the price of coffee. The Brazilian Government is thus forced, to some extent, to keep strong price subsidies during production periods.

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