RomanExplainsEurope - Coffee from Mercosur
WINNERS AND LOSERS
Coffee from Mercosur
Coffee is the most popular drink in Germany. On average, one German person drinks 166 liters per year. The Polish neighbour drinks in competition only 55 litres. But the coffee plant isn´t a native one. Europe has to import the coffee bean from countries which have the climatic conditions for cultivation. Who are the percect partners? The countries around the equatorial belt, espiacally Brazil. To make the economical conditions easier, the EU and Brazil, Argentina, Uruguay and Paraguay made a trade deal, the so called EU-Mercosur-deal. As a result a there were a lot of simplifications on customs, therefore the import of Brazilian goods increased rapidly, especially coffee. Brazil is the biggest coffee producer worldwide; 62,9 mio. bags, arround 3,77 mio. tons were harvested by Brazilian farmers and companies in 2018/19. The Brazilian economy benefits from the deal, due to extend their market. The European citizen enjoy the cheap coffee. EU companies who produce pesticides can sell them to Brazilian farms. So they can support the monocultural cultivation. Sounds very good firstly, however we must not forget of the negative aspects caused by this deal.
Mercosur deal - Explotation and clima hazard
IMPACTS ON BRAZIL, EU AND AFRICA
The biggest free trade zone has also his negative aspects. The Brazilian Amazonas tropic forrest gets negatively influenced. Due to use of pesticide, the clima and the diversity of animals suffer. The forrest gets more and more cleared due to increasing demand of coffee. A lot of small farmers get expelled from their properties. Large corperations use those as area for coffee cultivation , they got the license from the corrupt government. If the farmers don´t get expelled, they will have to work on theirs farms for the corperations under inhuman conditions and get very small wages. These farmers can´t offer resistance.
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For long time following process was common: Raw coffee gets imported into the EU, processed in the roaster companies and sold afterwards. Therefore there have never been any customs on raw coffee, meanwhile foreign corperations had to pay 7,5% customs for import of processed coffee. These customs were abolished by completing the contract. European roaster companies e. g. Dallmayr suffer under small sales because of their competitor from Brazil who can sale his processed coffee cheaper and import it without paying customs.
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Between the deal with Mercosur and EU, the third party, Africa, is used to be forgotten. For a long time the European Union didn´t demand any duties for import of African goods, no matter if it was processed or raw coffee. Europe tried to help Africa building their economy. For South American goods, there weren´t duties on raw coffee, but on processed one. By concluding the Mercosur contract, the conditions for African and South American goods were the same, therefore Africa had no advantage anymore. The African farmes have hardly a chance to sell their coffee on the European market, because the Brazilian ones can sell theirs in a bigger amount and for lower prices. That´s why Africa cannot develop their economy in the bright future. Not only in things of coffee, but in the whole agrarcultural sector.
Coffee prices
COMPARISON BETWEEN GERMANY, POLAND AND SLOVAKIA
The prices vary from each country, because every one get their coffee import from different markets and use different taxes. In Germany for example, there is a coffee tax on raw coffee for 2,13€/kilogram raw coffee, and for processed one 4,18€/kilogram. The origin of the coffee matters when it comes to cost of production.
Germany gets their coffee mainly from Brazil, raw and processed, due to the amount of German roaster companies. One pays on average 8,10€ per kilogram processed coffee.
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Poland gets their coffee mainly from Vietnam, on the second place one can find Germany. In this middle European country the coffee gets roasted and processed, afterwards it gets exported to Poland. One pays in average 8,26€ per kilogram. Firstly it looks like coffee costs the same in Germany as in Poland. But secondly, one have to take the price level into consideration. In Poland, the wages are on average lower than in Germany. That´s why coffee is seen as luxury good in Eastern Europe. In addition one must consider that the roasting is taking part in Germany, which means that the prices include also the German costs of production.
Slovakia gets their coffee from Brazil, than one can see Germany on second place, too. Lowkey like in Poland, Germany is a exporter for processed coffee. The prices in Slovakia are way higher. For 200g of processed coffee one pays 8,00-10,00€, depents on the sort. Just like in Poland, one has to take the price level and the German costs of production into consideration.
