There is a saying in the international coffee trade that everyone knows by heart:
"When Brazil sneezes, the whole coffee world catches a cold."
For anyone growing coffee in Lâm Đồng, Đắk Lắk or Gia Lai, this is not a figure of speech — it is a reality that hits their income every harvest. Whether the price goes up or down at the farmer's drying yard depends far less on the weather in the Central Highlands than on a country half a world away from Vietnam: Brazil.
So why does Brazil hold so much power? To understand it, we need to go back in history — an eventful story, from pioneer-era plantations to coffee burned in the open air, and on to the 1989 crisis that reshaped how the world buys and sells coffee to this day.
Part 1: A land made for growing coffee
If you had to find the ideal place on earth to grow coffee at industrial scale, Brazil might almost have been made for the purpose.
Most of the big coffee-growing countries — Colombia, Ethiopia, Vietnam, the nations of Central America — farm on steep hillsides where every cherry has to be picked by hand. Brazil, by contrast, has vast and relatively flat plateaus. It is a geographic advantage no other country can copy: flat land allows the whole process to be mechanised, from planting and tending to machine harvesting. A single harvester in Brazil can do the work of hundreds of hand pickers.
The result: Brazil now produces around 65–75 million bags of coffee a year — double Vietnam, the world's second-largest producer. Brazil is also both the largest producer of Arabica and the second-largest producer of Robusta in the world. No other country matches it for both scale and range.
This is why, whenever Brazil is hit by frost, drought, or rain at the right moment, the world market reacts immediately. In 2021, a frost across Brazil's Arabica regions pushed coffee prices up 35% in just six days. That warning was no longer Brazil's story alone — it instantly became the story of every farmer in Vietnam.
Part 2: A century of dominance, and coffee burned in the open
By the late 19th century, Brazil was producing 70–80% of the world's coffee. Coffee was not just a crop — it was the backbone of Brazil's economy and politics. This era is known as the "coffee cycle", running from roughly 1830 to 1930.
But total dominance brought a hard problem of its own: too much coffee.
In the early 20th century, Brazil's output outgrew what the market wanted. Prices collapsed. To rescue the situation, in 1906 the Brazilian government signed the "Taubaté Agreement" — buying up surplus coffee, holding it in warehouses, and trying to push world prices back up. It was one of the first large-scale interventions in a commodity market in history.
It was not enough. When the Great Depression struck in 1929, global demand collapsed while Brazil's warehouses kept filling. The Brazilian government took a decision without precedent in the history of world trade: it burned and destroyed coffee — millions of bags, in broad daylight — to stop the price falling to zero.
It is said that the smell of roasting coffee hung over Brazil's states for weeks. It was the smell of despair, and at the same time proof of a productive power that no country could control — not even Brazil itself.
Part 3: The quota system — when the world had to sit down together
By the 1950s and 1960s, the international community had realised that coffee prices could not be kept stable by leaving Brazil to go it alone. A global mechanism was needed.
In 1963 the International Coffee Organization (ICO) was founded, together with the International Coffee Agreement (ICA) — a system of export quotas setting how much coffee each country could sell on the world market. In essence it was a global coffee cartel, with Brazil at its centre.
For decades the system worked fairly well: coffee prices were relatively stable, and growers earned a living income.
But underneath, the tensions kept growing.
Brazil was frustrated at having to hold back its exports year after year, while countries such as Colombia, Central America and Africa freely expanded production and took market share. Brazil was playing "central bank of coffee" — keeping prices stable for the whole world — yet paying the highest price for it.
Importing countries were unhappy too, because when supply was plentiful they still could not buy cheap coffee — Brazil and the other exporters were obliged to hold stock back and keep prices from falling. Consumers paid more than they needed to.
Both sides were frustrated. Everything was heading towards a breaking point.
Part 4: The 1989 collapse and the value revolution
In July 1989, the talks to renew the quotas failed. Brazil — worn out by years of giving up market share — no longer wanted to keep the system alive. The quotas officially ended.
What followed was brutal.
Coffee that had been held back for years in the warehouses of Brazil and the other producers poured onto the market. Coffee prices collapsed. Within three years, prices had fallen to a third of their level before the quotas ended. Millions of farmers in Brazil, Colombia, Central America and Africa were plunged into hardship. It became known as "the 1989 Coffee Crisis" — the deepest wound in the history of the modern coffee industry.
Yet from those ruins, the world coffee industry found a new path — the path Vietnam is following today.
Instead of going back to the old quota system, roasters, traders and producers began to ask a different question: "How do we get consumers to pay more for coffee?"
That question gave birth to movements that still affect the income of farmers in the Central Highlands today: specialty coffee, premium grades (Grade 1, Grade 2, …), 4C certification, Rainforest Alliance, Fair Trade, organic, single-origin… All of them flourished after 1989 as ways for the coffee industry to escape the trap of pure commodity pricing.
Part 5: The futures market and "certified stocks" — why farmers need to know this
The 1989 crisis had a second important consequence: it accelerated the growth of the coffee futures market (ICE Futures) and the growing role of certified coffee stocks (Certified Stocks).
Before 1989, while the quotas still existed, coffee prices were partly "anchored" by the export control system. Companies had little need for hedging tools. But once the quotas collapsed, coffee prices became more volatile and harder to predict than ever. Companies began to need the futures market to protect their margins.
This is when speculative funds and hedge funds started pouring money into the coffee market — a phenomenon specialists call the "financialisation of commodities". And once speculative money is involved, the coffee price no longer reflects only physical supply and demand — it also reflects the expectations, sentiment and positions of tens of thousands of investors around the world.
This is why coffee prices today can move by tens of dollars a tonne within a few hours, even when nothing has changed in the coffee gardens of Lâm Đồng. The futures market trades the future, not the physical coffee beans.
What does this mean for Vietnamese farmers and traders?
Understanding Brazil's history is not about satisfying curiosity — it is about reading the market better.
Whether Brazil's crop is big or small directly affects the price farmers receive at the drying yard. A bumper Conilon (Brazilian Robusta) crop as forecast for 2025–2026 — an estimated record 25 million bags — means considerably more competitive pressure on Vietnamese coffee during Brazil's April–August harvest, just as Vietnam is finishing its own.
Movements in the Brazilian real (BRL) also reach farmers' pockets. When the real weakens, Brazilian farmers get more reais for every tonne they export, so they sell more and world prices fall. When the real strengthens, they hold their coffee back, and world prices find support.
And the biggest lesson of 1989: the coffee price is not a simple story of supply and demand. It is the result of centuries of history, policy decisions, market sentiment and global speculative money.
A coffee grower who understands this — even at the most basic level — will know when to sell and when to hold out for a better price. And that is a real advantage, season after season.
