Protests, harsh warning to the National Federation of Coffee Growers, plummeting production and exports: What is happening in the sector?
During his intervention in the meeting of coffee growers that took place yesterday in the municipality of Pitalito, in Huila, President Gustavo Petro announced that if the National Federation of Coffee Growers is not restructured, he would put an end to the contract that gives it the administration of the National Coffee Growers Fund (FoNC).
“We have the existence of a contract between the government and the Federation of Coffee Growers that manages a public resource: the National Coffee Fund. What do we do with that contract? That contract is going to be terminated, it has a termination date, we can… because Santos taught us how to do it, because he did it with the National Livestock Fund, which was also a public resource managed by Fedegán… Do we do the same?”, expressed the President of the Republic in the meeting with coffee growers of Huila.
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And added, as an ultimatum: “I am going to leave this as points, if the Federation of Coffee Growers is not restructured in accordance with the coffee base, the contract of the National Coffee Fund with the Federation of Coffee Growers will be terminated”.
The warning made by the President, Gustavo Petro, comes after frictions with the guild as a result of the election of Roberto Vélez’s successor in the management of the Federation, which led to the election of Germán Bahamón.
It also comes in a context of falling production and exports, and one day before hundreds of coffee growers went out to protest against the crisis of the sector, marked by factors such as the high prices of inputs, the high cost of living and the aging of coffee plantations.
The National Coffee Fund is a fund of public resources administered by the National Federation of Coffee Growers and is fed with the coffee contribution, that is to say, with the contributions of coffee growers. This contribution is paid for each pound of coffee exported: 6 cents (USD ¢) for each pound of green coffee exported, USD ¢ for coffee extract, USD ¢o.48 per pound of soluble coffee and USD ¢ 1.08 per pound of roasted coffee.
Specifically, President Gustavo Petro referred to the administration contract of FoNC 219 of 2016, which was signed by the National Federation of Coffee Growers, headed by Roberto Vélez, with the government of former President Juan Manuel Santos for ten years. This contract ends in 2026 and, if the government does not renew it, the administration of the resources by the National Federation of Coffee Growers would be terminated.
However, while the meeting in Pitalito was taking place, the national government and the directors of the National Federation of Coffee Growers held the National Committee of Coffee Growers. The statement, issued at the end of the meeting, stated that “it took place in an environment of cordiality, unity and team work”.
On behalf of the national government the ministers of Finance and Public Credit, Ricardo Bonilla; of Commerce, Industry and Tourism, German Umaña; the minister of Agriculture and Rural Development, Jhenifer Mojica, and the director of the National Planning Department, Jorge Ivan Gonzales were present at the National Committee of Coffee Growers.
Representing the National Federation of Coffee Growers were 15 members of the Board of Directors of the Federation and the General Manager, Germán Bahamón.
What is happening with the FoNC and its administration by the National Federation of Coffee Growers?
Last night and this morning there have been several voices that have criticized the President’s warning. One of these was that of the former Minister of Agriculture, Andres Valencia, who assured that only the National Federation of Coffee Growers has the capacity to administer the FoNC.
Jorge Restrepo, professor of Economics at the Universidad Javeriana, quoted an analysis of the Financial Times on coffee production in the world: “The increase in temperatures means that up to half of the current coffee growing lands could soon become unusable”.
Faced with this climate threat, the academic questions the tension between the national government and the National Federation of Coffee Growers “What will Colombia do, besides watching the government’s dispute against the Federation over the Fund?”.
However, the crisis in the administration of the National Coffee Fund raises serious questions. One of the main ones has to do with the contracts for the sale of coffee in the future, which the Federation has been promoting for several years.
These contracts have become a headache for the National Coffee Fund, but also for the producers, the cooperatives and the Federation itself. This is due to the non-compliance in the delivery of the agreed coffee by some producers, due to factors such as the increase in production costs, the high indebtedness and the difference between the agreed price and the price at the moment of having to deliver the grain.
The non-compliances have not only had a serious reputational cost at world level for the sector, but have also generated multimillionaire losses to the National Coffee Fund. According to El País, from Spain, the losses amount to $500,000 million.
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Now, President Gustavo Petro’s warning adds to the drop in coffee production, the seasonal shortage of labor and the fall in international prices of the bean.
Colombian coffee growers protested once again
President Petro’s announcement was the prelude to the coffee growers’ protests scheduled for today August 17 in Armenia. These were led by more than two thousand producers from the departments of Tolima, Huila, Risaralda, Quindío, Cauca, Valle del Cauca.
According to the leaders of the coffee growers, the protests seek that their claims have an effect on the administration of the National Federation of Coffee Growers and on the agricultural public policies of Colombia. Furthermore, they warned that if their demands are ignored, they will go on indefinite strike.
“The coffee growers are a single family, integrated by 550 THOUSAND FAMILIES, and we are not beggars, we are coffee growers!”, said the attendees.
The demands of the coffee growers are based on four fundamental points:
- Reform the National Federation of Coffee Growers.
- To protect Colombian coffee growing by means of a support to the internal price of coffee, that assures that sales will not be made at a loss, and an increase in the tariffs on coffee imports.
- Not to implement, on the part of the Federation’s top management, the 94-88 purchase yield factor, due to the fact that this measure reduces the value given to coffee growing families for their production.
- Stop the collection of taxes such as cadastre and property taxes from the agricultural sector.
Situation of Colombian coffee growers
Coffee production has been a constant concern in the last year, during which it decreased 11% compared to the previous year, due to factors such as the low profit margins of coffee growers compared to the high costs of production, the deterioration of coffee plantations, as well as the changes in the climatic conditions of the region whose impact is reflected in the productivity of the bean.
However, figures from the National Federation of Coffee Growers indicate that production in July showed signs of stability for the second consecutive month and reached 947,000 60 kg bags.
On the other hand, exports fell 17% in July, with respect to those reported in the same month of 2022, with the sale of 846 thousand bags of coffee.
Regarding coffee land tenure, data from the National Federation of Coffee Growers indicate that 50% (330,655) of coffee farms are in the hands of coffee growers who are owners, 48% (317,057) of the farms are owned by owners and only 2% (10,813) of the farms are leased.
Regarding land tenure by coffee growers, President Gustavo Petro said in his speech that the government must commit that by the end of his term 330,000 families will have title to their land.
In view of these data, the President assured that his administration seeks to “appropriate the small who do not have the property” and ordered to move forward with a program of massive formalization of small rural property for these families. However, details of how this goal will be achieved are not yet known.
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