March 07, 2013
Colombia Says Deal Near that Would End Coffee Strike
By Dan Molinski
BOGOTA, Colombia–A top Colombian official said Thursday a two-week-old strike by coffee growers upset over falling prices is nearing an end, though he said negotiators from the two sides are yet to strike a deal on the key issue of subsidies.
“There’s moderate optimism that today we’ll reach an agreement,” Agriculture Minister Juan Camilo Restrepo told Caracol Radio. A deal he said, “is now a question of hours, not days.”
Coffee farmers, meanwhile, said they want to end the strike and get back to work, but only if the government offers subsidies that enable them to stop losing money on the coffee they produce.
“I can’t make a living anymore,” Tiberio Nieto, who has a 30-acre coffee farm in the southern state of Huila, said by telephone. “And the subsidies they’re offering so far don’t fix that.”
Some 570,000 Colombian families make a living from coffee farming, and Colombia is among the world’s top coffee exporters. Tens of thousands of growers began protests at the beginning of last week, saying the government subsidies are insufficient to cover falling global prices. The protests have sometimes turned violent and many farmers have set up highway blockades that have led to food and fuel shortages in many towns and smaller cities.
The farmers have seen the price they receive for each 275-pound bag of parchment coffee fall 38% over the past year. In mid-February the price they received, which varies day to day based on global prices, was as little as $270 a bag, compared with $437 a bag a year ago.
To make up for this, the government has been bumping up its subsidy little by little, and a few days ago started paying farmers an extra $63 per bag.
Mr. Tiberio said his production costs for a 275-bag of coffee, including labor, insecticides and other costs, is $300. On Wednesday, the market price for a bag was $284. So, including the $63 subsidy, he made $47 over production costs.
“The problem, though, is that prices could keep falling. What we need is a promise from the government to give us a support price, a base price for each bag,” Mr. Tiberio. The protesters have said the government should guarantee farmers at least between $360 and $415 per bag.
But the government, apparently concerned that global coffee prices could fall further, has said it won’t offer any support price.
Mr. Restrepo, the agriculture minister, said those who are negotiating on behalf of the coffee farmers indicated a willingness Wednesday night to give up their demands for a support price, which he said could mean the subsidy amount is all that needs to be decided. The government minister said farmers are asking for a subsidy of about $100 per bag, while the government has offered to bump the subsidy up to $72 a bag from the current $63.
Beyond the dollar-amount for subsidies, Mr. Tiberio also said he and other farmers would also like to see changes in how coffee subsidies are doled out. Colombia’s coffee industry and exports have long been tightly managed by the powerful Federation of Colombian Coffee Growers, or Fedecafe, a quasi governmental agency that many protesters say is corrupt.
“Right now all the government funds that go to the coffee sector are channeled first through Fedecafe and there’s a lot of bureaucracy and other problems there,” Mr. Tiberio said. “This needs to change.”
Fedecafe has denied any wrongdoing. It acknowledges coffee farmers are struggling, and says part of the problem is that Colombia’s currency, the peso, rose 10% against the dollar last year, which has further cut into coffee farmers’ profits.