Coffee growers in Colombia Call To Soon Regulate Price Stabilization Fund To Ensure Sustainable Prices
Coffee growers in Colombia Call To Soon Regulate Price Stabilization Fund To Ensure Sustainable Prices
Coffee Network (Bogota) – Coffee growers requested the national government to regulate the coffee price stabilization fund, which has COP300 billion Colombian pesos in funds in ($75 million), to ensure a minimum price now that coffee prices are lower than production costs, Oscar Gutierrez, general manager of coffee Dignity, during a coffee summit in Pereira.
In December 2019, the former government created the coffee price stabilization fund. It was created with COP180 billion Colombian pesos ($53 million) injected by the government and a contribution by coffee growers.
But three years later, the government and FNC have failed to establish the regulation, which will determine whether the price stabilization fund will create hedging mechanisms or if the producer will ensure a minimum price when coffee prices are low. Consequently, the regulation will also set a benchmark price that triggers the bailout to the coffee price stabilization fund.
According to Gutierrez, the incumbent national development plan, the roadmap of President Gustavo Petro for the next three years, has mandated to regulate the fund to ensure that the price stabilization fund begins to disburse money to growers at times of low coffee prices.
The reference price for two bags of 125kg of parchment coffee is being paid at COP1.295 million pesos ($323), but coffee growers claim that production costs are ranging from COP1.450 million and COP1.55 million, resulting in losses to growers.
Coffee prices were close to reaching as high as COP2.5 million pesos for two bags of parchment coffee last year but prices have slumped to around 1.295 million on Friday.
Gutierrez told the attendees of the coffee summit in Pereira that if the government nor FNC provide solutions to low coffee prices, coffee growers will block roads as they did in 2012 when they blocked roads for several months.
“If life obliges us we will block roads, but before this situation emerges, we need to resolve this situation,” he said.
Some directors at Coffee Dignity are calling to protest on 17 August, while Coffee Dignity held a meeting with top officials from the Agriculture Ministry yesterday.
Coffee Dignity also requested global coffee consumers to pay a higher price for Colombian beans that recognizes at least production costs.
Gutierrez also requested the government to export coffee beans at a differential exchange rate to ensure higher revenues for their exported beans.
The Coffee Forum in Pereira had the participation of the Minister of Agriculture, a delegate from the Ministry of Finance, the executive director of Dignidad Agropecuaria, some representatives of the FNC and delegations of coffee growers from many parts of the country.
Coffee Dignity said the slump of commodities including coffee is a fact that cannot be controlled. The average price for Arabica beans in the NY market was 133 cents per pound in 2019, 158 cents per pound in 2020, 218 cents per pound in 2021.
In January-June, the average price was 215 but since June until now, it has dropped to 161 centavos.
In Colombia, the reference price for parchment coffee has also dropped associated to the sharp appreciation of the Colombian peso, which is one of the most appreciated currencies in the world so far this year.
Other clouds that are threatening the coffee sector in Colombia include the massive importations of low- quality beans, called pasillas, the poor financial statements of some cooperatives, the absence of relationships between FNC and the government, Gutierrez said.
By Diana Delgado
