Tuesday, August 5, 2014

Brazil's Middle Class and the Price of Coffee in New York

It looks like Brazil will surpass the U.S. this year as the world's biggest consumer of coffee. The Wall Street Journal reports that this is driving up global prices. Coffee futures (the "C price" as it is known in the trade) reached $1.95 a pound last Thursday, its highest since the price collapse in 2011. This is good news for the smallholding Maya farmers in Guatemala who produce high-altitude, high-quality coffees. (I have previously discussed high-end coffee and Maya farmers and the research carried out with Bart Victor.

It also reflects a change in global political and economic relations (as discussed here in more detail)--the rise of Brazil as a foreign aid donor, middle class consumer, and politically self-confident country.No longer just a supplier of the raw materials we need for our consumer goods, but a competitor driving up prices of consumer goods (coffee as well as Miami real estate), an emerging world power whose positions we need to engage and not assume we can dictate.

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