Determinants of Brazilian coffee international demand

Abstract

Coffee gained importance in national and international trade from 19th century and contributing to foreign exchange inflows and Brazilian economic growth as well as development of places dependent on this crop. This study searches answer if there are others variables that are, besides price, capable to influence Brazilian coffee international demand. The data are from secondary sources. To analyze demand behave, Simultaneous Equation method and Two-Stage Least Squares were used. The results show that Brazilian coffee demand is significant, compared to world production. Other features are: it’s price-inelastic; Colombian coffee presents as Brazilian coffee substitute; world income influences on demand fluctuation. It conclude that Brazilian coffee farms may increase your returns gain new markets by production diversification, investment in differentiated products with better added value and adoption of best practices in qualification and professionalization of the agents of coffee chain, seeking to create synergies and governance.