Key Government–FNC Meeting Set for 11:00 a.m. as Future of National Coffee Fund Hangs in the Balance

Key Government–FNC Meeting Set for 11:00 a.m. as Future of National Coffee Fund Hangs in the Balance

Bogotá (Coffee Network) – A critical meeting between Colombia’s National Federation of Coffee Growers (FNC) and the government is scheduled for 11:00 a.m. today to discuss the future administration of the National Coffee Fund (FoNC), according to sources familiar with the matter.

The talks come amid growing concern over the impending expiration of the administration contract governing the fund, which finances many of the services and programs that support Colombia’s coffee sector.

Sources who requested anonymity said the government is considering transferring the approximately US$120 million held by the National Coffee Fund to Fiduciaria La Previsora, a state-controlled trust company that manages public and private resources, including funds related to infrastructure, education, disaster management, and pension programs.

It remains unclear whether the resources would continue to be used exclusively for coffee-sector purposes if transferred. Two sources expressed concern that the funds could potentially be redirected toward other government priorities. They also cited unconfirmed speculation that part of the resources could be allocated to indigenous organizations and community action boards. No evidence has emerged to substantiate those claims.

FNC General Manager Germán Bahamón said last week that the meeting would include an extensive agenda and the participation of the Minister of Agriculture. The objective, he said, is to reconcile outstanding issues and define the terms of a new administration contract for the fund.

Sources also indicated that the Minister of Finance is expected to participate in the discussions.

According to individuals familiar with the process, the government commissioned an international consultancy to evaluate which institution would be best suited to manage the National Coffee Fund. The study reportedly concluded that the FNC remains the most qualified institution for the role.

Sources said the government seeks to renew the contract under revised conditions. Should the Federation reject those terms, the government could pursue direct administration of the fund.

The current administration contract must be renewed before July 7 or extended to avoid a period of uncertainty that industry leaders warn could disrupt key functions throughout Colombia’s coffee sector.

"If a new contract is not signed or the current one is not extended, fundamental activities financed by the National Coffee Fund could be paralyzed while negotiations continue," said Óscar Gutiérrez, leader of the coffee growers’ organization Dignidad Cafetera. "The damage to producers, marketers, exporters, and the national coffee economy would be enormous."

The National Coffee Fund finances a broad range of programs and services, including Colombia’s coffee purchase guarantee, technical assistance programs, and research conducted by Cenicafé, the Federation’s internationally recognized coffee research center.

Although the resources are contributed directly by coffee producers through export levies, they are legally classified as parafiscal funds and therefore remain subject to government oversight.

One coffee trader warned that prolonged uncertainty surrounding the fund’s administration could undermine confidence in Colombia’s coffee sector, potentially affecting domestic coffee prices and the premium Colombian coffee commands in international markets.

The National Business Association of Colombia (ANDI) warned that failure to renew the contract on time could have far-reaching consequences. The organization said delays could jeopardize the coffee purchase guarantee, technical assistance programs, scientific research, market stability, and the cooperative network and social institutions built by coffee growers over nearly a century.

"In short, a significant portion of Colombia’s coffee-growing community would be put at risk," said ANDI President Bruce Mac Master.

Hiring of negotiators

Petro ordered the hiring of two Government Advisors for Coffee Affairs, instead of just one as stipulated in Clause Six of the contract, at a combined monthly cost of 50 million pesos plus taxes ($14,700). He also added 10 regional advisors (who are likewise not included in the contract), at a monthly cost of 85.5 million pesos ($25,150), well-known journalist Melquisedec Torres said.

The government advisors are Jimena Velasco, sister of former minister Luis Fernando Velasco. Two years ago, Colombian prosecutors and courts ordered his detention in connection with the major corruption scandal involving the Unidad Nacional para la Gestión del Riesgo de Desastres (UNGRD). Prosecutors alleged that Velasco and other officials participated in a scheme that directed public contracts and funds to politicians in exchange for legislative support.

The other advisor is Jenny Velásquez Alzate, an economist from Quindío, who worked for the Federation until three years ago. After leaving, she became a key ally of Petro and his Agriculture Ministers in efforts to challenge the Federation by organizing opposition groups in some departments.

Velasco is a communications professional, while Velásquez, an economist from Quindío, worked for the Federation until three years ago.

 In addition, Petro ordered the hiring of 10 regional advisors—positions that do not exist under the National Coffee Fund contract—with monthly fees of 8.5 million pesos each. Together, this amounts to 1.289 billion pesos over nine months each year. That payment must by paid by FNC using the FoNC funds.

Furthermore, according to the text, in at least two cases these regional advisors do not come close to meeting the expected qualifications or having ties to the coffee sector. One of them, Sandra Otálora Quiza, was appointed for Huila, the country's leading coffee-producing department. She holds a degree in Spanish language education and has no known background in the coffee industry.

Another, Adriana Jaramillo, was appointed for Tolima, the country's third-largest coffee-producing, Torres added.

Debate Over Future Management

The future of the fund has become increasingly uncertain following repeated calls by President Petro to reform the coffee sector’s institutional structure. The president has previously argued that coffee growers’ resources are being consumed by bureaucracy and administrative expenses and has advocated for greater state involvement in the management of the sector.

In 2025, Petro reiterated his proposal to restructure the administration of the National Coffee Fund and reform the federation’s role within Colombia’s coffee industry.

The Federation has emphasized that these funds are not part of the General Budget of the Nation, as they are contributed by coffee producers. However, since they are parafiscal contributions, they are treated as public funds, and therefore the Government exercises oversight and control over their administration.

The decisions to be made regarding the administration contract for the National Coffee Fund remain an enigma. But in recent days, controversy has arisen about what might happen, as it should be remembered that the president has spoken on several occasions about a possible restructuring of the National Federation of Coffee Growers and changing the management of the National Coffee Fund. At the time, Colombian President Gustavo Petro stated that coffee growers' money was being spent on bureaucracy and travel. He asserted that the coffee revenue was in the hands of the "bureaucracy" and that the State needed to take control. In 2025, he reiterated his call to restructure his administration.

Fund Financed by Coffee Growers

The National Coffee Fund is financed primarily through a coffee levy paid by Colombian producers on coffee exports. According to the FNC, growers contribute US$0.06 per pound of exported green coffee, US$1.08 per pound of roasted coffee, US$0.48 per pound of soluble coffee, and US$0.36 per pound of coffee extract.

The Federation maintains that these resources are generated by coffee growers and, by law, must be used exclusively to support the welfare, sustainability, and competitiveness of the sector.

Analysts Warn of Risks

Coffee-sector analysts say uncertainty has increased as the expiration date approaches.

Guillermo Trujillo, a former FNC executive and current coffee-sector columnist, said there is widespread speculation that the government may seek changes to the administration agreement, although the details remain unclear.

"There are rumors that modifications to the agreement are being considered," Trujillo said. "The focus appears to be on incorporating broader public-policy objectives into the administration of the fund."

Another senior industry expert, who requested anonymity, warned that allowing the contract to expire without a replacement could create significant legal and operational challenges.

"If the contract expires without a new agreement in place, the fund's resources could effectively be frozen and the Federation would lose access to them," the analyst said.

Such a scenario could disrupt coffee purchases, export support programs, technical assistance services, and research activities financed through the National Coffee Fund.

The uncertainty comes at a critical time for Colombia's coffee sector as growers continue to navigate volatile international markets, rising production costs, and mounting climate-related challenges.

By Diana Delgado
Sources: Undisclosed sources, German Bahamon, analysts