Latin-American Studies

Gonzalo and Gabriela Gomez invested the 5 million US dollars that Gonzalo inherited from his aunt in a coffee production business, which they believe is likely tom give them stable profits for the coming years. Both Gonzalo and Gabriela are competent enough to enter the coffee production business because they have the necessary knowledge and skills, as they have university educations. In line with this, they have to give due consideration in the trade agreements that their country has participated in. The home country of Gonzalo and Gabriela is Brazil and the country has entered into a regional trade agreement, MERCOSUR in recent years, which has changed the prospects of doing business.

Adaptation of the Brazil to Free Trade Agreement 
In years of development, Brazil had been one of the most important countries to provide various types of products. For the last few decades, the production of Brazil had increased tremendously and has grown into one of the major states to be invested by the United States and European countries. Hence, its association with the Free Trade Agreement is only relevant to its current status.

The Latin America during the time of 1980 until 1995 had been mostly invested by rich nations such as Europe and the United States. During the time of democratization, the course of the economy also led to the opening of economic and political stability.  After the long military regimes of countries in the Latin America, continuous growth in the economy and politics had been stimulated by different international organizations such as the International Monetary Fund (IMF) as well as the World Bank and led to an active neo-liberalization of the states. Hence, privatization had been actively promoted and applied in different countries. Also, the start of cooperation within countries also became open (Fishlow, 277-279).

In the course of such change, there had been a large increase of production between countries of Brazil and Argentina. Due to this, both Brazil and Argentina became the top producers in Latin America. During this period, it is seen that there is already a need for the Latin America to create integration. The integration was led by Argentina and Brazil which resulted to the creation of MERCOSUR (Mercado Comum do Sul). Through out its active participation in the world, MERCOSUR had been recognized by the world as the 4th largest regional block in the world and is greatly recognized by the European Union (EU) (Fishlow, 277-279).

In Brazil the contribution of the MERCOSUR is immense due to the fact that the changes of the country from the time is was democratized.  To date, the coffee production in Brazil had been one of most important industry that it has. Given that there are other countries where coffee is also exported, Brazil had shown its robustness and high quality in terms of the coffee it is producing. Through the MERCOSUR, the aspects of trading had been active. Due to the aspect of free trade itself, the traders where enabled to trade among themselves without the meddling of different government organizations.  Through this, trading is clearer in a sense that directs association with different producers which results to faster transactions.

Brazils Coffee Industry and MERCOSUR
The creation of MERCOSUR brought about strong institutional innovation, especially for Argentina and Brazil that favored the change of paradigm. Agrifood sector of Brazil has proven to be competitive in the global market, especially in the production and international trade of grain. The main factor of success in this free trade agreement is dependent upon harmonizing the business strategies and public policies, which result in competitive advantages. In relation to this, a structural change in the relationship of the government and the society of Brazil was observed. The state government conducted administrative reforms, which include privatization, deregulation of the market that have a huge impact in the producers of goods and services because these changes have opened the economy of the country for the greater insertion in the world market (Vervaele 394-395).

Due to MERCOSUR, Brazil is an emerging important food supplier in the world, especially with the competence that the country developed in the past years. The competence that comes from both suppliers and farmers such as advanced machineries, education and professionalism as well as the increase in competition and market orientation have paved the way for large multinational companies to invest in the country. The large internal market of Brazil also offers food companies the opportunities to have the necessary scale and patterns for the international market. As a result, Brazil is regarded as the first world exporter of coffee together with other important food products such as sugar, beef, poultry, and orange juice (Ordonez et al. 6).

The coffee industry of the country has largely benefited from the free trade agreement that Brazil participated in because the agricultural sector is given more opportunity to develop. This is proven by the efforts coming from the Embrapa (Brazilian public research agency on agribusiness), which is doing extensive research and development in order to further increase the agricultural productivity of the country. In line with this, the government is also doing a large part in further helping the coffee industry and other agricultural producers of the country by means of improving the public infrastructure of the country for easier transportation of goods. In addition, the Brazilian government is also heightening its diplomatic relationship with other country through economic treaties, which increases the commercial partners of the country. Being the case, the increase commitment of Brazil in free trade agreements allow coffee producers to better participate in global distribution of their products, which further increases their opportunity to gain more from their business operations (Alimonda 31-32).

Challenges of Free Trade Production in Brazil 
Provided the Brazil is one of the top producers of coffee it had already established its stance in the world. However, great challenges are still at hand. The challenges of Brazil mostly happen within it territories and people. Due to the fact that Brazils society is heavily bounded by social classes, people of different social class are given unequal opportunity to rise and attain the same success as the others. Based on the experience of Maria Fiallos, she mentioned that unequal opportunities provided for farmers and land owners are frustrating and devastating.

In the course of her observation, the land owners often have the best opportunities due to the high value of coffee in the market. However, the farmers that work for big land owners often end up simply farming. Hence, farmers who work for the lands in Brazil do not have the opportunity to gain larger income or drift away from farming.

On the other hand, huge land owners overwhelm the smaller land owners. Due to the capability of huge land owners to produce more products for lesser value, the small land owners are over taken by huge land owners which results to unsuccessful establishment of new corporations (A bitter brew for coffee farmers, n.p.).

Another form of challenge in the country of Brazil is environment degradation which is caused by the exploitation of water resources and people. In the 1970s there were aspects in which different neighboring countries had a joint project which enables to attain more water resource to supply different farms. Although this is a good idea at first, different families who were living in the area had to be relocated. The construction of the irrigation had been very excruciating in the part of the people because they are heavily affected by the creation of the huge irrigation. In another view, attaining irrigation is not very ideal for environment protection for it exploits the percentage of water available. Provided that global warming is at hand, different natural resources are seemingly harder to attain (Alimonda, 39).

Overall Assessment
Entering the coffee industry of Brazil requires careful analysis of the factors that affects the operations in this kind of business. The free trade agreements of the country plays an important role in the coffee production of business organizations, may it be small or big. In this sense, both Gonzalo and Gabriela also takes into account the respective opportunities and challenges that are involved in free trade agreements and fair trade agreements. After discussing the relative pros and cons of the these two kinds of agreement, Gonzalo and Gabriela decided that they would produce coffee under a fair trade agreement because this allows starting and small coffee producers like them the opportunity to equally compete in the market. Under fair trade agreements, small coffee producers are given the necessary protection in order to compete in the market because it gives them more profit as compared with the presence of a middleman in a free trade agreement. In addition, the welfare of small coffee producers is given importance because large coffee companies cannot easily monopolize the trade of small coffee growers under the fair trade agreement.  

Millennium Development Goal 
The Millennium Development Goal (MDG) is a program which is built by the United Nations in order for poverty to be reduced. Provided that Brazil is a nation where in poverty is at large, Brazil needed to create actions to adhere to such type of program in order to relieve the percentage of poverty in the country (United Nations).

The main MDGs which had been focused by Brazil are lowering the poverty rate in the country. As a huge country that also has a huge population, it is very likely that Brazil shall have a hard time relieving poverty in the nation. In order to address this Brazil has different programs such that of the development and support of the government to various industries.  In addition to this, the government of Brazil is creating ways to have a stronger global partnership with other nations. Due to Brazils current place in the world it had encouraged different nations to create various types of relations more especially in the economic perspective. Moreover, Brazil is an active participant of the MERCOSUR and United Nations and seeks to have more friendly relations to other countries in order to create a much peaceful and harmonious relations most especially in the view of the world economy (United Nations).