and compensate the affected coffee growers.
Rodolfo Zea Navarro
Minister of Agriculture and Rural Development
Juan Gonzalo Botero Botero
Vice Minister of Agricultural Affairs
Ministry of Agriculture
A matter of the utmost importance is going on, in a rather clandestine manner, in the home of Colombian coffee growers.
Colombian coffee growers. Its effects can be so serious that it places many coffee growers' cooperatives in the country at risk of being
many coffee growers' cooperatives in the country and to take away the purchase guarantee system that still accompanies the commercialization of the Colombian coffee bean.
the commercialization of Colombian coffee beans, to a debacle. And, it is pointed out that it is quite
It is also pointed out that it is quite clandestine why, with the exception of some notes in the national press, of a commentary of Duque*, of a little
Duque*, a reference by Aurelio Súarez in Semana and the conversations held in their chat rooms by the
conversations held by interested coffee growers in their chats, the situation has not merited any reference whatsoever from the Ministry of Agriculture.
of the Ministry of Agriculture, precise clarification from the National Federation of Coffee Growers, FNC, or investigations by the control
investigations by the control agencies that should, days ago now, have been clarifying what happened and the reasons for the
and the reasons why it happened.
The crisis that has arisen in the cooperatives has its origin in the contracts for the sale of coffee in the future,
that generated a very serious situation for the coffee growers' cooperatives, a reduction in their income for thousands of producers that
reduction in income for thousands of producers that committed themselves to deliver their coffee at prices that would cover the risks and would
that would cover the risks and would provide profits appropriate to the economic effort made, but which, as it turned out, were much more
much reduced -and even more so now with the increase in the harvesting of the bean and the disproportionate increases in fertilizers
fertilizer increases - compared to the prices at which they are being sold today, and which have increased since the first quarter of this year,
The prices have been rising since the first quarter of the year and increased in the second quarter.
As external and domestic prices have risen and exceeded by far what was agreed upon in the futures contracts, thousands of producers are reluctant to sell,
thousands of producers are reluctant to deliver their coffee at the stipulated prices. As a result, thousands of producers are reluctant to deliver their coffee at the stipulated prices,
convinced them to sell at futures, at prices that, although they do not mean losses for them, it does mean that they are no longer earning
today, it means for them to stop earning 60% or more of the value at which they bought it. And, although no one was
no one was forced to enter into this business, what is certain is that the National Federation of Coffee Growers promoted the
National Federation of Coffee Growers to encourage the cooperatives to buy in the future and the producers to sell their coffee in advance.
producers to sell their coffee in advance.
This was done ignoring the experience of the year 2020, where thousands of producers and several cooperatives, especially in the south of the country.
cooperatives, especially in the south of the country, had already gone through the experience of buying at prices much lower than the market price.
prices much lower than those imposed by the market and receiving the repulse and non-compliance of hundreds of coffee growers.
and non-compliance by hundreds of coffee growers.
The economic researcher, Aurelio Súarez, pointed out in a recent article that: "The coffee cooperatives are in a crucial predicament.
cooperatives are in a crucial predicament. ... They are facing an unusual setback due to the high international prices.
international prices. Having traded beforehand with thousands of coffee growers at values close to one million pesos per load and with
million pesos per load and with delivery commitments abroad, they are facing an unusual setback due to the high international prices.
The producers, seeing prices rise to more than 1,800,000 pesos, decided to default and refuse to move their coffee to the cooperatives,
decided to default and refuse to move their coffee to the cooperatives. The shortage, which could reach
500,000 bags of 60 kilos, with a cost overrun of 200 million dollars, would sink the cooperative system, which already lost in 2020.
system, which has already lost almost 25 billion pesos in 2020".
In a meeting held by the leaders of Dignidad Agropecuaria and Dignidad Cafetera it was decided to
to send this letter, to formulate some considerations and questions and to propose a table to look for solutions.
One consideration is: In an article written in February of this year**, the national executive director of Dignidad Agropecuaria
of Dignidad Agropecuaria stated: "If the predictions about the fall in the production of arabica in Brazil are true, it is possible that the
arabica production in Brazil are true, and we believe they are, shouldn't the producing countries seek, right now, better prices for
should not the producing countries be looking for better prices for their beans? And we also ask, at what price
at what price will purchases be made in the futures market for 2021? What message is the FNC's General Manager sending to the market?
General Manager of the FNC to the market with the affirmation that the price of coffee today does not concern us?
What will be the relationship of the Federation, through the cooperatives, with the futures market in 2021?
Will the situation of the year 2020 be repeated? Will the harvest be bought again at prices that are
Will the harvest be bought again at prices, with huge differences, against coffee growers?
The future is difficult to guess, it is true. However, future purchases, although they are part of the
are part of the speculation game, they have some guidelines that make it easier for those who manage the information and the markets.
those who manage the information and the markets, to buy with a margin, almost always, of winning more than losing.
those who are subject to sell, to the monopolies that buy in the future, it is almost always more to gain than to lose.
forward, it is almost always more that they fail to gain."
The questions are:
1. How many millions of bags does Colombia produce? How many millions of bags of coffee are imported to Colombia?
How many millions of bags of coffee do Colombians consume per year?
How does the FNC differentiate coffee produced in Colombia from imported coffee? And, how do the FNC and the
How do the FNC and the National Government exercise control over the coffee bean market?
2. How many loads committed in futures sales to the cooperatives have not been delivered to the coffee growers?
have not been delivered by the coffee growers? And, how many have the cooperatives not delivered to the National Federation of Coffee Growers, FNC?
of Coffee Growers, FNC?
At what average price did the cooperatives buy coffee for future delivery?
It is said that it was at one million and thirty thousand pesos per load. Is this figure true? And, based on
which market analysis were the cooperatives recommended to offer that average price?
4. Many coffee growers refuse to deliver the coffee sold in the future and others have not been able to comply because of climatic
4. Many coffee growers refuse to deliver the coffee sold in the future and others have not been able to comply due to climatic phenomena that directly affect the decrease in production.
What measures will the Federation take to enforce compliance with the contracts?
5. The question is also asked: Does the FNC have coverage against risk in the delivery of coffee for future contracts abroad?
And, if this is the case, is the FNC justified in its actions?
Why is the FNC executing the cooperatives by notifying them that they must comply with the agreed deliveries or will it advance the
or will it advance legal collection processes? Was it or was it not the FNC that promoted, almost forced, the
promoted, almost forced, the cooperatives to enter into the speculation game,
Was it the FNC that recommended the prices at which the futures contracts were negotiated?
was the FNC the one that recommended the prices at which the futures contracts were negotiated with the coffee growers? Does the FNC aspire to
the properties and assets of the cooperatives, as has already happened in Tolima?
6. If what is stated in the questions formulated in numeral 5 of this letter is not true, we would like to know what did the FNC do in the face of the futures sales records of the FNC,
We would like to know what did the FNC do in response to the records of futures sales by the cooperatives due to the low prices agreed upon?
Does the FNC exercise control over the cooperatives and their economic activity?
Wasn't the FNC concerned about the price at which producers were selling?
Is it not of paramount importance for the FNC to defend the income of coffee growers?
Another consideration that is in the executive director's article of February of this year.
"Shouldn't the formula for defining the internal price be different?" And another one that should be
should explain clearly: "Can we not be concerned about the income of coffee growers and consider that coffee prices
and consider that international bean prices of one dollar and 20 cents or a little more, are
cents or a little more, are remunerative prices"? And how can it be possible that the
manager compares this year with the previous one and affirms that: "As the bean in the international market is traded in the
international market is traded on a forward basis, at this time the prospect of lower supply has led to a small increase.
generated a small increase. The pound of coffee today is between 1.25 and 1.30 dollars, and before we were between 1.0 and 1.30 dollars.
1.0 to 1.10 dollars. This gives us the idea that prices in 2021 will be very similar to those of 2021.
will be very similar to last year's, and perhaps a little higher. We
we wonder: Is the price increase going to be too little in the world market? The
15 million bags shortfall will result in a price "perhaps a little above"? Who is the FNC manager playing with?
Who is the FNC manager playing with: the Colombian producers or the multinationals who
multinationals that manage the world market?"
Let us conclude that the situation is serious, very serious, and, for this reason, Dignidad
Dignidad Agropecuaria and Dignidad Cafetera request that the Ministry of Agriculture and the National Government
the Ministry of Agriculture and the Ministry of Finance, the FNC, the Cooperatives, representatives of coffee growers
Cooperatives, representatives of the coffee growers involved, Dignidad Cafetera and the control agencies, to
control agencies, that will allow the analysis of what is expressed here and the search for solutions to protect, save the cooperatives, safeguard the cooperatives, safeguard the coffee growers and the coffee growers,
to protect, save the cooperatives, safeguard the guarantee of purchase and compensate, in part, those who have to
deliver their coffee at very low prices.
Colombian Agricultural Dignity
National Coffee Dignity
Bogotá, October 17, 2021