Adjustment of minimum salary causes high coffee production costs

The biggest impact occurred on manual harvested farms, which demanded more manpower, with an increase of 6.34%.

Brasília (04/19/2016) – The 2016 minimum salary adjustment directly impacted the costs of producing Brazilian coffee, especially in properties where coffee is harvested manually. This item alone caused increases in the Effective Operating Cost (EOC), which includes the daily expenses of the activity and the pro-labore, of 4.05%, on average, for the arabic variety and 5.70% for the conilon, with the new value in force since January, of R$ 880 (USD 217).

The information comes from the newsletter Activos do Café, prepared by the Brazilian Confederation of Agriculture and Livestock (CNA in Portuguese) and the Federal University of Lavras (UFLA), based on production cost surveys in the main producing regions of the country. The greatest impacts were observed in the properties that adopt the manual harvesting system, especially for arabica coffee, whose average elevation was 6.34%, or R$ 27 (USD 6.70) more per bag of 60 kilos.

According to the study, the increase in the minimum salary is just one of the factors of the high of the COE, which can rise even more with the current political and economic moment. “Due to this scenario, and its consequences on variables that directly affect production costs, such as the exchange rate and fuels, the possibility of further increases in the coming months should not be disregarded,” explains the survey.

Thus, CNA and UFLA advise producers to manage their property costs with greater discretion, as well as intensifying cash flow control and reviewing the budgeting of the arabica production process. For mechanized production, the impact of the minimum salary was 2.29%, and for the semi-mechanized, 6.22%. In the properties that adopt these two types of management, the demand for labor is lower than the manual system.

In conilon production, the rise in EOC caused solely by the readjustment in staff salaries was 5.7% on average. The largest increase was in Jaguaré (ES), 5.95%, an increase of R$ 14.20 (USD 3.50) / bag. In Cacoal (RO), the increase was 5.31%, and in Itabela (BA), 4.68%, which represented increments of R$ 10.29 (USD 2.54) and R$ 12.03 (USD 48.60) per bag, respectively.

Source: CNA