in Avisos de Garantia (hereafter avisos), a negotiable, dollar-denominated export tax rebate paid
by the Brazilian Institute of Coffee (IBC) to foreign importers that purchased Brazilian coffee
during most of the period that the ICA was in effect. Though these avisos seemed important, we
were consistently told that they had only a neutral role, simply offsetting another policy-induced
market distortion. It nonetheless became clear to me that the avisos’ effect might not have been
neutral and, without so determining, it was impossible to understand the disposition of Brazil’s
domestic coffee quota rent (Jarvis, 2001). Thus, I began to analyze the effect of the avisos.
Though the Brazilian coffee industry was mainly in private hands, the IBC strongly
affected the coffee sector’s operation. Created in 1953 to formulate and implement Brazilian
coffee policy, domestically and internationally, the IBC was given great power. This power
reflected coffee’s importance in the Brazilian economy and the widespread national view that
manipulating coffee production and exports was key to Brazilian economic success. The IBC
influenced export prices through numerous policies, especially the export tax (tcq, known as the
contribution quota) and the minimum export registration price (PMR). Technically, exporters were
not allowed to sell Brazilian coffee for less than PMR, though they could and often did so.3 After
1965, the IBC also provided export tax rebates to many importers. In addition, the IBC
established a Guaranteed Minimum Price (PGM) at which it stood ready to purchase all coffee
offered by producers. Nonetheless, producers, mainly small and medium-sized farmers, usually
sold coffee to private exporters at the open market producer price, PD. PD usually exceeded PGM,
because the IBC purchased coffee only for storage. Throughout the period studied, Brazil’s
coffee producing states levied an additional coffee tax, ts, on all sales, domestic and foreign.
3 The IBC used PMR as the basis for determining the amount of foreign exchange that exporters had to deliver to the
Central Bank and, after 1985, as the basis for levying the ad valorem export tax. Producers had to declare that they
had sold coffee for at least that amount. However, producers sold at whatever was the world price, purchased foreign
exchange in the black market if needed and then adjusted the price they were willing to pay to farmers for coffee.