Brazil, as a continental country, has been suffering the impacts of climate anomalies. Coffee plantations have also been exposed to extreme events, with different scope and effects, such as prolonged droughts and high temperatures, as well as recent frosts.

In this scenario, resilience is built by a short, medium, and long-term ESG (socio-environmental governance) agenda to mitigate the adverse effects of climate change and with actions aligned with trade and climate policies consolidated in the main Brazilian coffee consumer markets.

The existence of structured governance strengthened by the maturation of the Brazilian coffee production chain is a crucial differentiator in terms of sustainability. It allows for timely and collaboratively designed responses between the public and private sectors to unexpected problems, enabling emergency support to coffee growers who face losses due to bad weather and mitigating its impact on the entire production chain.

The Deliberative Council on Coffee Policy (CDPC), in which Cecafé is the legitimate representative of the exporter segment, is responsible for the allocation of the Coffee Economy Defense Fund (Funcafé) R$ 6 billion. Funcafé offers different financing lines to all segments of the production chain. These resources support the recovery of coffee plantations damaged by extreme weather events and organize supply, an important strategy in the face of increased price volatility.

Good sectorial governance is also associated with instruments to manage supply chain risks, such as hedge contracts and rural insurance, a fundamental tool to minimize losses from climate extremes.

In Brazil, futures, forward, and barter contracts have become popular in recent years, being adopted by small and medium-sized coffee growers, who can now have revenue predictability and protect their investments. The strengthening of these tools results in better use of the most favorable windows for the negotiation of coffee in the market, ensuring future income.

Regarding insurance, coffee is included in the Rural Insurance Premium Subvention Program (PSR) of the Ministry of Agriculture, Livestock and Supply (MAPA). Since last year, the industry has benefited from the increase in the premium subvention percentage, whose minimum limit rose from 20% to 40%.

Although substantial growth is noted in subsidized coffee policies, which jumped from 2,832 to 8,979 (+217%) between 2019 and 2020, improvements are still needed. They are being worked on by the production sector, in partnership with insurers and the government. In 2020, 170K hectares of coffee were protected, with a total insured capital of R$2.1 billion. This number represents less than 10% of the area cultivated with coffee in the country and can grow with the offer of insurance products that are more attractive to producers.

The continuous improvement of these risk management instruments, with the adoption of new technological tools and models that are more appropriate to the productive reality, is of utmost importance to guarantee liquidity, predictability, and transparency to the market, especially in the current scenario of climatic uncertainty.

Environmentally speaking, the adaptation of the Brazilian coffee chain to climate change is also the focus of the national governance structured in the CDPC, which guides the application of Funcafé’s discretionary resources in research.

The portfolio of the Coffee Research Consortium, with 95 projects in execution, has specific research lines in environmental services related to climate change, genetic improvement focused on resistance to biotic and abiotic factors, adaptability and stability of cultivars in different producing micro-regions, among others, whose results will strengthen the resilience of Brazilian coffees to climate instability.

Science and research are the vectors for the continuous improvement of Brazilian coffee farming sustainability. They have made possible the productivity leaps that place Brazilian coffees at the forefront of world competitiveness. In a continental-size country such as Brazil, investing in technologies that enable sustainable high-yield production will be increasingly important for a stable trade flow in the face of the increasing frequency and intensity of bad weather.

The Coffee Research Consortium agenda is an example of the Agriculture Innovation Mission for Climate (AIM-C) initiative, proposed by the United States and the United Arab Emirates, with the support of Brazil, to foster innovation, research, and development in world agriculture. The initiative is under discussion at the UN Food Systems Summit. In November this year, its results will be presented at the 26th United Nations Conference of the Parties on Climate Change (COP26).

In synergy with the domestic and international agendas, Cecafé is also developing a study to give more transparency to the contribution of Brazilian coffee production to the low carbon economy. Cecafé’s ESG agenda aims to align the exporting segment with the trends of international trade, which are gradually consolidating with the programs and policies under discussion in the European Union, the United States, and China focused on reducing greenhouse gas emissions (GHG).

In July, there were important signals regarding policies that connect trade and climate in these three regions of interest for Brazilian coffee exports. The European Union announced its plans to implement the Carbon Border Adjustment Mechanism (CBAM), which, although not covering Brazilian coffee exports, reinforces the trend of taxing imported products with carbon emissions above European standards starting in 2023. Following this, the US Democrats announced an agreement to create a tax on imports from countries that have not committed to policies to tackle climate change. The two announcements coincided with the beginning of the Chinese national carbon market, still surrounded by uncertainties.

As the world’s leading coffee supplier, Brazil needs to be aware of the trends in the main consumer markets and communicate, on an ongoing basis, the advances made in sustainability that promote national resilience to extreme climate events.

With its ESG agenda focused on carbon neutrality, social responsibility, efficient risk management, and food safety, Cecafé performs its mission to show the world that Brazil is and will continue to be a safe and reliable source for the global supply of sustainable coffees.


Marcos Matos

Silvia Pizzol
CECAFÉ Sustainability Manager