Totality Of Coffee Cooperatives Agree To Deliver 32 Million Kilos of Coffee in Colombia
Totality Of Coffee Cooperatives Agree To Deliver 32 Million Kilos of Coffee in Colombia
Bogota (Coffee Network)- The totality of coffee cooperatives in Colombia agreed to deliver some 32 million kilos of coffee pending to the coffee growers federation (FNC) as all coffee cooperatives became part of the Federation's solidarity action plan, PAS, FNC said.
That means 33 coffee cooperatives have agreed to deliver the pending beans to FNC instead of the National Coffee Fund in different timeframes.
The chapter on delays by cooperatives with the National Coffee Fund has been closed, FNC said.
Earlier last 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.
Meanwhile, in the next two weeks work will be done to strengthen the corporate governance of the cooperative solidarity system, FNC added
"We have supported them and at the same time we ensured the Purchase Guarantee, a public good that has been provided since 1959. This once again demonstrates the management capacity of the National Federation of Coffee Growers as administrator of the National Coffee Fund" highlights Germán Bahamón, manager of the National Federation of Coffee Growers.
Two weeks ago some of the cooperatives that reached the agreement were: Coocentral, Cafisur (Tolima), Cafitolima, Caficauca, Cafilibano, Cafeoccidente, Cafi Sevilla, cooperative de Caficultores de Manizales, cooperativa de caficultores de Antioquia, Cafioccidente, Caficultores de Anserma, cooperative de Caicedonia, cooperative de caficultores del Quindio and cooperativa de caficultores de Salgar.
It is estimated that some 32 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 began to skyrocket since 2021.
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.
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 FNC has given a solution to the sector, he recently said.
The other two proposed strategies: change in corporate governance and support from the government will likely be announced in the coming days.
Coffee cooperatives of Nariño, Salgar, Anserma and the cooperatives of the departments of Huila and Cauca were the first to reach an agreement with FNC.
The de los Andes coffee cooperative is not part of this agreement as this cooperative is now managed by the government’s regulator Superintendencia de Economia Solidaria.
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.
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 said 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 coffee experts Eduardo Lora and Felipe Robayo recently said in an editorial that FNC 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 FNC 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).
By Diana Delgado
