In response to consumer, congressional and federal regulatory criticism of Brazil's activities in the world coffee market, a Brazilian government-financed marketing agency defended its nation's role in a quarter-page advertisement in yesterday's editions of The New York Times.
Intercom, described by coffee industry sources as a semi-autonomus export marketing agency financed by the Brazilian government, triggered a barrage of queries from the industry, its regulators and investors yesterday with its ad.
"Who the hell are they anyway?" one floor trader at the New York Cofeven officials at the Commodity Fufee & Sugar Exchange asked. Not even officials at the Commodity Futures Trading Commission here, which regulates the trading of U.S. coffee futures, could identify Intercom or its agents, commissioner John F. Rainbolt II said.
Recently, the Brazilian government trading company Interbras has won unwanted attention for its large holdings in the New York coffee market. Its participation in the expiring September futures contract has worried CFTC and exchange officials, who made visits recently to officials of Interbras and other large traders to ask them to liquidate their positions in an orderly manner as soon as possible without pressuring prices upward.
The Intercom ad said, "When Brazil using its 'Interbras' Trading Company, seeks to buy a certain amount of coffee in the markets of various countries, or take part in futures trading on the London and New York exchanges, it is doing nothing more than follow the recommendation of the 120 members of the United Nations commission, and acting in legitimate self-defense based on ethical and correct economic principles."
While the ad conceded that the recent upturn in coffee prices which accompanied the expiration of the July and now the September futures contracts was the result of speculative trading. In arcom said Brazil has been unfairly charged with questionable business practices.
"The amounts of coffee that Interbras has been requiring with a view toward keeping our strategic stocks, make up only a small percentage of the coffee traded worldwide. As for the presence of the state trading company in the London and New York coffee exchange, it is a legal and normal action of the coffee business."
The ad concluded, "How can illegality and unfairness be alleged in an action which cannot be criticized on business grounds, and which expresses the right of all people to the fruits of economic development and social well-being."