Colombia Probes Coffee Federation’s $120M Loss in Futures

By Marvin G. Perez
(Bloomberg) -- Colombia’s government is investigating the
country’s Federation of Coffee Growers after the group lost
millions in futures trading, El Pais reported.
* The Comptroller General’s Office is probing administrative
omissions that led to losses of as much as $120m, which hurt the
National Coffee Fund coffers and many growers and cooperatives,
it said
** Events led to ouster of Roberto Velez, who led led the group
at the time, report says
** There’s a tax audit for possible capital loss in future
coffee sales contracts
** Finance Minister José Antonio Ocampo was quoted as saying the
“process has not advanced”
* Federation in late 2020 and 2021 negotiated coffee purchases
from Colombian growers at an average of 950,000 pesos per load
of 125 kg (~$1 a pound)
** Those agreements were established verbally or by chat, not in
signed contracts, according to the Comptroller’s Office: report
* Meanwhile, the federation had negotiated contracts with
international buyers at around $1.30 a pound, but prices in New
York later shot up after bad weather hurt crops in top-producer
Brazil
** When it came time to deliver, thousands of growers chose to
default on deliveries and sell elsewhere, at higher prices
** American buyers demanded delivery, or payment of the
difference between the agreed price and the higher one, creating
the loss for the federation
* Colombia is the world’s second-largest producer of arabica
beans, and a key US supplier