86 THE TROPICAL 
" On the other hand those large plantations along 
the line of the Tehuantepec railroad in Mexico have 
a rate of freight of ■' 0 cents per hundred pounds from 
the plantation to New York, as ajiainst 250 cents for 
the planter in Sao Paulo. These Tehuantepec plan- 
tations claim that they can put washed Oaxaca coffee 
in New York at a cost of five and one-half cents 
per pound. Now suppose the Brazilian planter 
receives nothing at all for his coffee on the plauta- 
tion. It still coats him two and one-half cents per 
pound in New York in actual transportation expenses. 
It is probable that no one will dispute the statement 
that washed Oaxaca will always briug at least 
three cents per pound more than the average Brazil 
coffee. Consequently, while the Brazilian was getting 
two and a-half cents per pound for his coffoe which 
wonld only pay the transportation expenses, the 
Tehuantepec planter would obtain five and one-half 
cents for his coffee at which price he could live, 
but not pay any dividends on his stock. There is 
no plnce in the world that can compete with him 
in coffee production, la.rgely on account of hi? 
superior transportation facilities, and the superior 
quality of his product. Moreover, he can also raise 
rubber, pineapples, sugar, oranges, lemons and other 
products which pay a profit to reduce the cost of 
coffee production. A rubber tree shades his coffee 
tree and it costs him five cents per pound to produce 
the rubber after the tree is matured. The rubber 
sells for 65 cents. A handsome profit surely. 
"Fortunately for the Brazilian the area suitable 
for coffee planting in this region ia limited or the 
Braailian would have harder competition than he 
ever had before. There is no doubt but that, were 
there area enough in Mexico aloug the line of this 
railway, all other coffee planters would be driven 
out of business, and no one in the world could compete 
with such plantations aa the " Doa Rios " and 
" Uberos," run by Amerii an capital on American 
business principles, with a stable government and a 
railway depot on the plantation itself. Moreover 
they have two outlets, one by way of Coatzaooaloos 
to New York and Europe, and theotner via Salina 
Cruz to San Francisco and the Pacific Coast. This 
road ia now being four-tracked so that it will be 
able to handle all the freight which ia presented to 
it with facility, even to the extent of competing 
with a Panama canal, because the saving in ocean 
travel is several days in favour of the more northern 
route. 
''The practical question of decrease in coffee is : 
" How long is the purse of the planter ? and how 
long ■will he fight against what appear to be hopeless 
odds ? and how can he pay his labourers for pickmg 
his product 7 
Note by Ed. B. E. — Th« cost of production of coffee 
as of everything else is a relative and not a positive 
quantity, and is a fuuotion of general local pricsa. 
The price of any commodity it autirely distinct from 
Its cost of production, and is determined by the ratio 
of supply to demand. But if price decline in such a 
manner as to fall under the cost of production, it ia 
clear that either the cost must be reduced or pro- 
duction fall off. If, on the contrary, as is the case with 
Brazilian coffee, production instead of decreasing 
increase, the only logical conclusion that can be 
arrived at ia that, however low prices may have fallen, 
they have not yet reached the limit at which produc- 
tion becomes impossible. 
Because the cost of production may have ruled 4, 
5 or 6 cents per lb. at one time, it does not follow 
that it will always do so, or even that it does so 
now. As exchange rises the cost of production 
declines, and the fact that Brazilian coffee has been 
sold as lowas 5'centainNew York without stopping 
but rather stimulating production shows that the 
premises on which the whole argument of this corres- 
pondent is founded are unreliable. We do not pre- 
tend that at 5 or 5,1/2 cents planting can be very 
profitable. Indeed, if it leaves any profit at present 
it must be a very bare margin. But it does not, 
AGRICULTURIST. [Aug. 1, 1901. 
therefore, follow that it must be always bo, or that, 
by reduction of cost the margin may not be 
considerably widened in a manner that would be 
probably, impracticable elsewhere. 
In the first place a readjnstment of charges to the 
altered circumstances created by the rise of exchange 
is ultimately inevitable. Not only must the current 
rates of wages be reduced, but railways and inter- 
mediaries of all kinds will be forced to reduce 
their charges also Half a loaf is better than no 
bread : and if, as is stated, coffee at current prices 
is so unprofitable to the planter as to leave him 
only losses, the time cannot, evidently, be far off 
when they must be reduced or he must give up 
planting altogether and there will be nothing for the 
railway to carry ? Long before that could happen, 
if, as the correspondent of the •' Journal of Commerce " 
states, railway freights really represent a chargf of 
2 1/2 cents per lb or 100 % on the prime cost of the 
coffee, there must be a tremendous margin for 
reduction in that item alone. 
The interest of the railways are indentified with 
those of the planter to the extent that they depend 
exclusively on coffee for their traffic, and would work 
at the bare cost of maintenance rather than shut up 
altogether. The very causes that are at present 
prejudicing the planter, viz, the rise of exchange and 
overproduction ", are a source of profit to the 
railways and make it easier for them ultimately to 
reduce their charges. 
As regards the cost of delivery from the plantation 
in Mexico at New York, we have no means of 
verifying the statement that it rules only 50 cents 
per hundred lb, but it seems extremely low and 
probably, if correct, applies only to a limited are» 
and does not include the cost of handling at all. 
Anyhow, the cost of delivery from Sao Paulo planta- 
tions which ia put down at 250 cents per 100 lbs. ii 
grossly exag:gerated. The maximum freight charged 
in the Paulista railway, for example, is only IS 500 
per arroha of 15 kilos, equivalent, at even the 
relatively high exchange of 12d., to o»ly 112 centa 
per loo lb, whilst, at 35 cents a bag, ocean freight 
amounts to 26 cents, thus bringing up the total to 138 
in lieu of 250 cents per 100 Iba. We do not include 
duties and other charges as they have evidently not 
been included in the calculation of the comparative 
cost of delivery estimated for Mexico. 
The railways engaged here in this traffie nearly all 
earn handsome dividends of 12 to 14 % and could, in 
Sao Paulo at least, probably reduce rates to half 
without losing money. On the other hand, coffee 
has been constantly carried to New York at 10 cents 
per bag without loss and could be again if necessary. 
So that, altogether, a reduction of carrying charges 
from 112 to e:0 or 70 cents per 100 lb. is by no means 
an impossibility. The method of estimating the 
cost of production followed by the correspondent of 
the " Journ- 1 of Commerce " is, however, misleading 
and arbitrary. Brazilian coffee is now selling in 
New York at little over 6 cents, or 1/2 cent under 
what he estimates to be the cost of delivery, and has 
before been sold at 5 cents, the price he estimated aa 
the cost of delivery at Santos. In spite of such low 
prices, however, coffee does not cease to he produced nor 
to be shipped, which certainly would be the case had the 
price really fallen under the cost of delivery. At 5 
or 6 cents per lb, coffee may not leave much profit 
to planters, but before Brazilian coffees could be 
driven from the markets, there are wide' margins 
jet to be reduced not only in the prime cost of 
production but of freight aud handling. Should 
extensive cultivation prove too costly, . it must be 
made intensive and labour replace planters as 
proprietors, as was the case with cotton in the 
Southern States. But, come what may, coffee will 
never cease to be profitably produced, becaaao 
B.uzil possesses an almost unlimited area and climato 
suitable for growing coffee such as no other country 
enjoys. — The Brazilian Review. 
