Photo by Dan Bolton / STiR
Colombia Initiates Emergency Subsidies for Coffee Growers
Bill of sale at a receiving station operated by the coffee growers cooperative of Manizales, Colombia
Colombia’s agriculture minister Andres Valencia has earmarked around $32 million in new subsidies to help remedy the devastatingly low benchmark prices on international exchanges.
The floor for internal prices to trigger subsidies has been 700,000 Colombian pesos ($215) per 125-kg (275-lb) shipment, but this year, the COP741,000 ($228) price being paid does not cover production costs – farmers need a domestic price of at least COP760,000 pesos ($245.84) just to break even, hence the exceptional move to increase aid to growers in dire straits. Coffee C futures have fallen as low as $237 for a 125-lb lot. Colombia’s president Ivan Duque also iterated his support of coffee growers at a conference in April, urging an end to untenable prices.
Apart from considering pulling Colombian coffee stocks from the main financial markets, the growers’ local and national organizations have encouraged other parts of the value chain to step up and pay above-cost prices, reminding roasters and exporters that if farmers are forced to abandon coffee, everyone along the chain will ultimately suffer.
As well as untenably low prices, output of Colombia’s world-renown washed arabica has been threatened by aging tree inventories. In order to ensure that output remains at about 14 million 60-kilo bags annually, replanting younger, hardier new strains is a major goal. With 81% of the coffee now planted with resistant varieties, productivity is 18.83 bags of green coffee per hectare, and the average age is 6.8 years. Along with a slightly drier, more favorable climate predicted for 2019 compared to 2018, coffee production estimates for the first half of the year are 5.89 to 6.37 million bags, a 2.5% increase over the same period last year.
The “More Agronomy, More Productivity” program aims to lower production costs and boost output and profitability as well as increase domestic consumption of higher-grade coffee.
Colombia’s pioneering coffee research entity Cenicafé (National Coffee Research Center) developed the exclusive rust and coffee borer-resistant variety, which may be responsible for saving the country’s most famous (legal) crop from the devastation seen in other coffee-growing countries in Africa and Asia. Tree replacements would need to increase to 100,000 hectares (247,000 acres) each year, compared to 80,000 hectares. This could raise productivity in the medium term from to 22 bags per hectare by 2024, taking overall output to 17 million bags annually.