17 Of 19 Colombian Troubled Cooperatives Agree to Deliver Pending Parchment Coffee to FNC
17 Of 19 Colombian Troubled Cooperatives Agree to Deliver Pending Parchment Coffee to FNC
Bogota (Coffee Network) – After the third day of the implementation of a rescue plan, 14 of the 17 cooperatives that were experiencing delays to deliver beans agreed to deliver coffee to the Colombian coffee growers federation instead of the national coffee fund.
“14 of the 17 cooperatives have enthusiastically welcomed the Solidarity Action Plan (PAS). The legal representatives of each cooperative, supported by their boards of directors, have signed the corresponding agreements,” German Bahamon, general manager of the coffee growers federation said on his X account.
“Once again shows its commitment to the promotion and strengthening of cooperativism."
Some of the cooperatives that reached the agreement are : Coocentral, Cafisur (Tolima), Cafitolima, Caficauca, Cafilibano, Cafeoccidente, Cafi Sevilla, Cooperativa de Caficultores de Manizales, Cooperativa de Caficultores de Antioquia, Cafioccidente, Caficultores de Anserma, Cooperativa de Caicedonia, Cooperativa de Caficultores del Quindio and Cooperativa de Caficultores de Salgar.
Earlier this week, some coffee cooperatives of Colombia signed the agreement to start fulfilling with the delivery of 22 million kilos of parchment coffee in two years to 10 years in an agreement in which the coffee cooperatives will deliver the beans to the coffee growers federation (FNC) instead of the national coffee fund.
It is estimated that some 33 million kilos of parchment coffee have failed to meet future contracts as coffee growers did not deliver the beans to the cooperatives and others when coffee prices skyrocketed.
The Cauca coffee cooperative will deliver 500,000 kilos of parchment coffee to FNC in two years.
But sources told Coffee Network that the coffee cooperatives of Antioquia, which are the ones that have the highest unfulfillment of beans, will deliver the beans to FNC in 5 to 10 years.
The Antioquia coffee cooperatives have failed to deliver up to 30% of the total 33 million kilos of parchment coffee unfulfilled since 2020, sources told Coffee Network.
The plan seeks to rescue some of the cooperatives and focuses on three actions: financial support, corporate governance and a call to the national government to support them financially, FNC said.
FNC added that the plan seeks to enable cooperatives to deliver the pending coffee, 33 million kilos, which at today's prices would be impossible for the solidarity sector, it added.
“The strength of the National Federation of Coffee Growers allows coffee cooperatives to support their future outstandings contracts. Today, 69% of the pending coffee was settled on the first day of the opening of Solidarity Action Plan,” the coffee growers federation said.
FNC presented this solution to the national coffee committee on February 12 to protect the general interest represented in the purchase guarantee, which allows these cooperatives to take the first step to one of the actions announced by the Federation that gave financial support to the solidarity sector.
Edgar Meneses Muñoz - Manager of the Cauca coffee growers cooperative, highlighted that FNC has the ideal solution so that finally the cooperatives can feel the relief of being able to work calmly without the weight and burden of the future. The Cauca cooperative has come today with its President of the Board of Directors, the Executive Director and the representative of the steering committee, convinced that this is really a great opportunity for the coffee growers of the department to have a cooperative that has already resolved a good part of their difficulties and in the certainty that we will find solutions in the future” he highlighted.
Álvaro Jaramillo Guzmán - Executive Director of the coffee growers committee of Antioquia, one of the departments with the highest production in the country, said the PAS is an innovative and creative way, the FNChas given a solution to the sector.
The other two proposed strategies: change in corporate governance and support from the government will likely be announced in the coming days.
The department of Nariño -with the first cooperative to reach the agreement- also made an agreement with the cooperatives of Salgar, Anserma and the cooperatives of the departments of Huila and Cauca, which in total represent 69% of the pending future coffee deliveries.
In a separate release, the FNC admitted closing the positions that supported future contracts, thereby freeing up liquidity to meet the growing need for resources demanded by the purchase guarantee, while still having to address the consequences arising from delays in deliveries by coffee growers' cooperatives, a situation that adds to their financial difficulties.
The solidarity plan for Cooperatives also contemplates a crucial advance in Corporate Government, so that good practices and principles of good governance ensure efficiency and transparency in management by its administrators, for which the accompaniment of the Superintendency of the Solidarity Economy would be requested.
Sources with knowledge in the situation said 18 of the 22 coffee cooperatives are in serious liquidity troubles. Authorities have begun carrying out legal actions against six of them. The “unfulfillment of contracts” is massive across the board in all coffee growers, said a person familiar with the situation. “Coffee cooperatives were in serious trouble with the coffee traded at $2.50. Imagine now with coffee prices above $4.25”, added the source.
Oscar Gutierrez, director of Coffee Dignity, a group that advocates for improved living conditions to told Coffee Network, the government should likely lend money to the National Coffee Fund, which lost around US$200 million in the futures coffee market, to then support financially the indebted coffee cooperatives. FNC declined to provide details.
Colombian President Gustavo Petro recently said the coffee future sales program, promoted since 2017 by the National Federation of Coffee Growers as administrator of the National Coffee Fund (FoNC), has faced partial delays in agreed deliveries due to better coffee prices, resulting accumulated debts of $200 million debts to FoNC.
The Finance Ministry recently these breaches of contracts represent a risk to the assets of the Coffee Growers' Cooperatives, the FoNC and the services that guarantee the purchase of coffee.
Now Petro blamed the speculative positions that the Coffee Growers Federation authorized, resulting in debts of around $200 million.
By Diana Delgado
