We left off on the winds of change in Brazil and the global economy. Brazil tried to stay ahead of its boom/bust cycle but found it was impossible. The bust was inevitable and the country was tired of seeing their economy collapse because of it. The people, pointing fingers at President Varga, called for his impeachment. In response to their accusations the President wrote a letter to the nation. In his letter he shared his sadness at their claims of bad leadership on his part. He ends the letter with a goodbye saying, "I have given everything to this country, and the only thing I have left is my blood. That I now give." President Vargas then shot himself in the head, committing suicide.
On the cusp of the Cold War, the Inter Coffee Agreement (ICA) was founded with all coffee consuming countries joining in, with exception to Russia. This guaranteed a quota for each coffee producing country. It created rules that allowed participants to sell a certain amount each year based on the country's producing ability and dependence on the profit. Countries who took part in the agreement both hated and liked it at the same time. Because of its close regulation of exportation, the coffee market stayed relatively competitive.
In 1989 the Cold War ended and so did the ICA. This caused the bottom to drop out of the coffee market. For the first time in years coffee producing countries could sell as much as they would like to whomever they would like. Brazil tried to fight the low prices by developing equipment that did the farmers' job. This decreased the farm's overall costs, but had a huge, detrimental effect on the quality of their coffee. However, not all coffee farms made the transition to machine labor, and some of those plantations are still around today, keeping with the quality craftsmanship the farms were founded on.
All of the sudden, in the 1990's, Vietnam shows up on the coffee scene overnight. They have the man power to produce large crops, but unfortunately, the climate and terrain are not suitable for high grade plants. Vietnam's cheap, Robusta coffee infiltrated the coffee market created a drought of work in Brazil. A small group of men decide to do something about their situation and leave their homes to find work in other territories. When they die crossing the dessert, their sacrifice makes national news. Americans, Europeans, and other coffee consuming countries begin to get serious about responsible consumerism.
Join us next time as we discuss the different trade groups in depth.