Food Service
Colombian Coffee Growers Urge Global Industry, National Government To Act On Falling Coffee Prices

Posted On: 8/29/2018

  • Printer Friendly Version
  • Decrease Text SizeIncrease Text Size
  • PDF

BOGOTA, Colombia -- Faced with coffee’s recent international price drop below $1 per pound on the New York Stock Exchange, the Steering Committee of the Colombian Coffee Growers Federation (FNC) is calling on the national government and the global industry to adopt urgent measures to sustain Colombian growers and the 25 million families who make a living by producing coffee worldwide.
The FNC Steering Committee asked that all stakeholders in the chain participate equally in determining a reference price reflective of the hard work and dedication of coffee producers, which it called “the most fragile link in the chain.”
The committee called the current situation “a global price crisis that drastically affects Colombian coffee growers and has a strong impact on the national economic growth and on decline of the social conditions of over 3.5 million coffee growers in the country.”
The international reference price for mild coffee (Contract C) has been steadily falling over the past 22 months, from $1.60 per pound in November 2016 to about $1.08 in July 2018.
The situation has intensified this month, with a 22% drop since August-17, recording an average $1.05 per pound and a low of 97¢. Since August 2006, Contract C did not fall below $1 per pound.
The domestic base purchase price (made up of the Contract C price, the quality premium and the exchange rate) has fallen about 19% in the last year. This means that producers have received on average about 166,000 pesos (COP) less per load, falling from COP 851,000 in August 2017 to COP 685,000 on August 21, 2018.
As a result of the fall in domestic coffee price, by 2018 the coffee crop value is estimated to be1.5 trillion pesos less than that recorded in 2017 (7.5 trillion pesos), which will FNC is warning will have a negative economic impact on the coffee regions and the country as a whole.
FNC said the exchange rate has cushioned the falling external price of coffee, preventing its impact on the domestic price from being much higher. However, the volatility of this variable and its close correlation to behavior of oil prices is a source of instability for coffee growers’ income.
“One cannot continue to allow actors foreign to the industry such as investment funds to be who, in an unbridled desire for profit, determine the price of such an important commodity that is the livelihood of 25 million producing families in the world,” FNC said in a statement. “The coffee crop renewal program must be kept now more than ever. We will continue working on reducing costs and looking for harvesting alternatives. And efforts will be redoubled in specialty and high-quality coffee programs, as they translate into better prices for producers and shield them from the ups and downs of the international price.”
The Steering Committee is holding what it is calling an urgent meeting of its National Coffee Growers Committee meeting today. It is led by the 15 delegates of Colombia’s Departmental Committees and the Ministers of Finance, Agriculture and Commerce, and the Director of the National Planning Department. They will discuss the importance of a Price Stabilization Fund, the possibility of implementing a program of direct price support and a coffee retention program.
Plans call for requesting that Colombia’s Agriculture Ministry provide funds to alleviate producers’ debts, continue to support renewal of coffee plantations, and seek alternatives in fertilizers.
Internationally, FNC said it will continue emphasizing the need for greater industry commitment to a better income for producers, as it is the only guarantee for continuity of coffee supply and sustainability of the industry as a whole.
FNC chief executive Roberto Velez will hold a meeting with Brazil’s coffee leaders to address the price situation, and it will be a key topic at upcoming International Coffee Organization meeting in September in London.