Key Success Factors in the Brazilian Coffee Agrichain: Present and Future Challenges

Abstract

Coffee production has grown 100% in volume over the past 30 years, accounting for 144 million coffee bags produced in 2015. Brazil responded to 42% of this production, along with Vietnam (19%), Colombia (9%), Indonesia (8%), and Ethiopia (4%) (OIC, 2016). Following this pace, the consumption expanded not only in such traditional markets as the United States (4.2 kg/year), Germany (6.9 kg/year), and France (5.7 kg/year) but also in tea-driven markets, such as Japan, Korea, Russia, and China (CECAFE, 2013). In 2015, Brazil harvested 43.2 million 60-kg bags of green coffee, 32 million of which were of Arabica coffee and 11.2 million of a Conilon species (CONAB, 2016). The planted area in Brazil is 2.3 million hectares, and there are about 287,000 producers, predominantly mini- and small farmers. Having continental dimensions, the country presents a variety of climates, reliefs, altitudes, and latitudes that allow the production of a wide range of types and qualities of coffee (MAPA, 2016). This research aimed to clarify present and future challenges for the Brazilian coffee agrichain, considering the growing demand and also competitiveness between the coffee countries’ producers. To capture the vivid perception of the actors in the coffee chain, a qualitative approach was employed. The research was conducted in three phases. In the first phase, 10 coffee specialists were interviewed to identify the coffee sector’s main milestones for Brazil over the next 30 years. The findings culminated in eight key success factors for coffee-farming management. Finally, in the second phase, the results of phase two were submitted for analysis by 39 coffee farmers through three discussion panels held in the major producing regions: Sul de Minas (corresponding to 25% of the national production), Cerrado Mineiro (with 10%), and Matas de Minas (with 16%) (MAPA, 2016). The third phase comprised the data analysis, aggregating the patterns by regions and by critical factors. The first outcome was a comparative analysis of the three regions using the lens of the key success factors and, second, the main future challenges faced by each region. The study consolidated new drivers of change that directly impact corporate strategies and public policies, namely: (a) increasing complexity in coffee farming, (b) farm succession, (c) mechanization, (d) increased use of pesticides, (e) climate change, (f) consumer behavior, and (g) risk management in the coffee agrichain. Given these drivers of change, companies in the Brazilian coffee agrichain may move forward with relevant strategic focus on important issues, leading to: (i) loyalty from the farmer to guarantee high-quality coffee supply, (ii) increase in entry barriers to ensure the maintenance of leadership in world coffee production and exportation, (iii) operational risk minimization for companies as well as coffee farmers, (iv) encourage and participate in the farmers´ actions to make coffee activity more environmentally friendly, and finally, (v) designing marketing plans connected with the coffee consumers’ habits and desires, current and future.