
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, March 23, 1991                   TAG: 9103230154
SECTION: BUSINESS                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: BRASILIA, BRAZIL                                LENGTH: Medium

BRAZIL JOLTS THE COFFEE MARKET/ EXPORT LICENSES HALTED; RETURN TO CARTEL

Brazil is suspending all new coffee exports and is considering a possible return to the International Coffee Organization.

The impact of such a move would be to reinstitute an OPEC-style cartel to stabilize sales and prices on the world market.

"The producers and roasters are mature enough to decide if the country should go back to the ICO or not," said Economy Secretary Edgar Pereira. Beginning Friday, he said, "Brazil [halted] registering all new sales contracts abroad indefinitely."

By suspending the registration, the government is effectively suspending any new exports as exporters must register such shipments.

Brazil is the world's largest coffee grower, exporting 19 million bags last year - 20 percent of the world market. Of the total exported, 15.8 million bags were in the form of coffee beans.

Pereira said the suspension of contract registrations would help stop price speculation and a possible foreign-exchange crunch.

Members of the ministries of Economy, Agriculture and Foreign Relations, and producers and exporters will study proposals to rejoin a world coffee organization, he said.

Pereira said a decision on a return to a quota system would be released before December.

"Much will depend on prices, quotas and a series of factors that will affect the market in the future," he said.

On July 3, 1989, an executive committee of the 74-nation ICO voted to terminate a quota system that for years stabilized coffee prices on the international market.

The system was abolished after Mexico, Colombia and other countries failed to pressure Brazil to reduce its quota. At the time, Brazil produced 30.6 percent of the world's coffee.

However, a subsequent plunge in the price of coffee worldwide prompted smaller coffee-producing nations to demand a new quota system. Brazil has since resisted signing a new quota agreement, putting on hold negotiations for a new world trade accord.

So far in 1991, Brazil has registered 4 million bags of coffee for export. Pereira said Brazil's coffee reserves amounted to 17 million bags that would be commercialized in the near future.

by CNB