Credit policy for the coffee sector: an analysis of the effectiveness of Funcafé and its impact on coffee activity in Minas Gerais

Abstract

Coffee production plays a key role in Brazil's economic history, continuing to be essential in the 21st century both for the agricultural sector and for Brazil's export agenda. The Fundo de Defesa da Economia Cafeeira – Funcafé is the main form of
public financing exclusively directed to this sector, responsible for funding all stages of coffee production and post-production. The state of Minas Gerais is responsible for approximately 70% of Brazil’s total coffee production and a similar percentage
of the allocation of Funcafé resources. This study sought to understand the impact dynamics of Funcafé resources in Minas Gerais across five distinct variables: 1. Total coffee production, 2. Total number of employees in the coffee chain, 3. Total value of coffee production, and 4. Value of coffee exports (FOB). The results indicated a correlation between Funcafé disbursements and total coffee production; however, no statistically significant relationship was found between recent variations in the Fund's resource allocation and the other three variables.