Coffee Price Fall Leaves Farmers Earning Less than a Cent per Cup

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The steady fall in the price of coffee, which recently dropped below the US $ 1 per pound on the New York Stock Exchange, threatens to worsen the financial impact that people who depend on this crop have received. In this regard, the steering committee of the National Federation of Coffee Growers (FNC) called for actions to keep this industry afloat.

Part of the requests of the Federation are focused on the national government and the global industry adopt urgent measures in favor of people who live on the production of grain.

“The national government, the steering committee calls for work immediately, hand in hand with the federation, to find structural solutions to the plight of coffee farmers in the country and directly impact the national economy and social conditions of more than 500 thousand coffee families and more than 3.5 million people who live off coffee, “they said in a statement.

It is worth remembering that different actions have been carried out recently to address the urgency of this guild. An example of the above is the provision of $ 100,000 million to assist the internal price of coffee, which was the result of the National Committee of Coffee Growers, a working group made up of representatives of the union and the Government.

The Federation also said that a fall in prices like this is worrisome if one takes into account that the first half of the year represents the harvest of 45% of the national harvest.

Among the actions requested from the Government supports for the price of grain, incentives for the renewal of coffee plantations and the search for fertilization alternatives that allow the cultivation of healthy and productive crops.

All this situation, according to the federation, has put “against the wall” to the farmers, who manifest problems to be able to fulfill their credit obligations and acquisition of fertilizers, an input that, they assure, has been increasing its value.

“The steering committee of the FNC insisted on the need for real commitment on the part of all the actors in the chain to participate with equity and co-responsibility in determining a reference price, which response to production costs and hard work and dedication of coffee producers, today the most fragile link in the chain, “they said.

The coffee growers also made a special call to President Iván Duque to put the current concerns of the union on the international agenda. Turning to the international arena, the FNC stressed the importance of continuing to emphasize that the industry is committed to improving the remuneration of producers, because being the base, it is of vital importance for the rest of the chain.

It is expected that next month the general manager of the federation, Roberto Vélez Vallejo, attend the meeting of the annual council of the International Coffee Organization (OIC) to show the effects of the industry that are falling on the coffee producers in all the world.

The FNC made a timeline on the behavior of the price of coffee both abroad and in the interior of the country. This is the report:
The international reference price for soft coffees (Contract C) completes 27 months systematically falling, which has taken it from 160 cents per pound in November 2016 to one dollar on February 19, 2019.

This situation has intensified since September 2018, with a drop of 26% compared to September 2017, registering an average of 98 cents per pound and a minimum of 92, Since August 2006, Contract C did not fall below the dollar per pound.

The domestic base purchase price (composed of the price of Contract C, the differential for quality and the exchange rate) has fallen by 4.2% in the first two months of the year and by 16% in the last two years. This means that producers have received on average about 163 thousand pesos per load less, going from $ 859 thousand in February 2017 to $ 696 thousand on February 19, 2019.

As a result of the fall in the domestic price of coffee, by 2018 coffee farmers stopped receiving about 1.3 billion pesos, compared to the value registered in 2017 (7.5 billion pesos), which has an economic impact negative in the coffee regions and for the country as a whole.

The exchange rate has cushioned the fall in the external price of coffee, avoiding that its impact on the domestic price is much higher. However, the volatility of this variable and its close correlation with the behavior of the oil price is a source of instability for coffee income.

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