Coffee Traders' Forum - A Discussion about Coffee Futures Trading


Coffee Traders Discussion Forum

Coffee Traders' Forum

Colombia Coffee Growers to Strike

Colombia’s Coffee Growers To Strike On 4 May To Call Government’s Attention

CoffeeNetwork (Bogota)- Colombian coffee growers will strike on 4 May in front of the Agriculture Ministry to call the attention of government officials as many coffee farmers are producing beans at a loss with current internal coffee prices.

Dignidad Cafetera (Coffee Dignity), a group that advocates improved conditions for coffee growers, says internal coffee prices are inferior than production costs, eating into margins for growers. In addition, debts are suffocating farmers.

“There are many growers that are going bankrupt. Many are producing at a loss because production costs are higher than the current internal coffee price, “ Oscar Gutierrez, director of Dignidad Agrocuperia, which represents Dignidad Cafetera told Coffee Network. As a result, growers will come from their regions, and will concentrate in front of the Agriculture Ministry to call the government’s attention.

In addition, a government’s mandate that forces coffee growers to receive all types of payments via banking accounts is adding financial costs to cash-strapped growers, Dignidad Cafetera said.

Internal coffee price closed at 714,000 yesterday for a 125-kg bag of parchment coffee, but production costs for the same bag ranges between 700,000 and 750,000 pesos for regular growers, which means many growers, are already producing at a loss.

The internal coffee is rapidly approaching the 700,000 pesos benchmark, and some coffee analysts believe growers might then start blocking roads to call the government’s attention. Prices have dropped 8% since the beginning of the year as the same bag for parchment coffee was trading at 776,000 pesos on January 1.

Gutierrez believes the administration of President Juan Manuel Santos will do very little to help growers as his term ends on 7 August.

“This problem of low internal coffee prices will be inherited by the new President,” Gutierrez told CoffeeNetwork.

Yesterday, the government said it rules out reviving a mechanism called (Protección al Ingreso de Los Caficultores, PIC), in which it provides a subsidy per load of coffee to ensure farmers obtain enough money to cover production costs, but it will study other mechanisms to help coffee growers survive amid low internal prices.

Finance Minister Mauricio Cárdenas said the government does not have funds now to reactivate the PIC.

Cardenas said the government is working on a National Council of Economic and Social Policy (CONPES) for the coffee sector that will guarantee funds for eight years to maintain the goal of renewing 100,000 hectares a year.

The government also studies another proposal that may exempt the coffee growers’ federation from paying pension liabilities of the so-called Flota Mercante Gran Colombiana, a marine shipping agency that no longer exists, but it generates 52 billion Colombian pesos ($18.9 million) in yearly payments. Pension liabilities are currently financed with Fedecafé’s funds, and such funds could be channeled into other activities that will benefit growers, Roberto Velez general manager of Fedecafé said.

Writing by Diana Delgado