FNC Asks Coffee Cooperatives Deliver Pending Beans in Exchange for Financial Support in Transactions
FNC Asks Coffee Cooperatives Deliver Pending Beans in Exchange for Financial Support in Transactions
Coffee Network (Bogota)- The Colombia’s coffee growers federation launched a rescue plan so that coffee cooperatives can deliver the pending coffee, which is equivalent to 33 million kilos of parchment coffee, and by doing so the federation is willing to support the required financial operations, FNC said.
“The National Federation of Coffee Growers would be willing to support the required financial operations and for its part the (coffee) fund would make an investment in promoting cooperativism, based on efficiency in commercial operations,” FNC said in a release.
The plan to rescue some of the cooperatives focuses on three actions: financial support, corporate governance and a call to the national government to support them financially, FNC said.
“A healthy and efficient solidarity sector is essential for coffee growing, so we continue to build that ecosystem to safeguard the purchase guarantee,” highlights Germán Bahamón, general manager of FNC.
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 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.
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.
“The current high international price of coffee benefits the coffee family, but completely ruins the national and public coffee fund due to speculative practices on the NY Stock Exchange that were developed by the National Federation of Coffee Growers, administrator of the fund and that should never have been happened,” Petro said.
The coffee experts Eduardo Lora and Felipe Robayo recently said in an editorial that the coffee growers federation during the administration of Roberto Velez instead of halting future coffee contracts when coffee growers unfulfilled contracts, continued contracting future coffee contracts, they said today in an editorial published at the country’s largest newspaper El Tiempo.
“Instead, the Federation continued to seek payment formulas with the cooperatives that had breached the “contracts” signed via WhatsApp to deliver coffee at a price of 1.3 million pesos per load. Although the Federation knew that the cooperatives would continue to breach these fragile promises, it persisted in maintaining a short position – that is, a speculative one – on the New York Stock Exchange, consisting of selling 3,000 lots of coffee for future delivery at prices between 1.10 and 1.40 per pound,” Lora and Robayo said.
Robayo and Lora said the coffee growers federation maintained this speculative position in the hope that the market would one day fall back to these prices. But the Federation was forced to use money from the National Coffee Fund to transfer more than a million dollars for each cent of difference with the effective price on the international market (in order to comply with the obligation to cover futures margins established by the New York Stock Exchange).
“At the end of December, when the price on the stock exchange reached 3.30 dollars per pound and the cost of covering the margin climbed to 150 million dollars, the Federation finally made the decision to close its speculative position, definitively losing those 150 million (a third of this sum had been financed by a Japanese bank, which will have to be cancelled),” they added.
By Diana Delgado
