The Brazilian government has unveiled measures intended to calm a bearish coffee market and aid farmers struggling with below-cost prices resulting from global oversupply and weak demand.

The government will hand out 690 million reals (US$292m) in credit to coffee growers who agree to store this year's crop until next year, agriculture minister Marcus Vinicius Pratini de Moraes said yesterday [Thursday].

The aid is being provided ahead of a bumper crop expected to reach 39 million bags, up from 28.1 million gabs in the 2001-2002 harvest. Traders reckon that Brazil, the world's leading producer and exporter of coffee, could produce as much as 45 million bags, following plentiful rain and good crop flowering.

A much more modest crop is expected in the 2003-2004 season due to a downturn in the biennial coffee cycle and a cutback in use of pesticides and herbicides because of low world coffee prices, said Reuters.