Colombia reactivates subsidies after coffee prices fall 20% in week

Posted on Mar 25 2014 - 12:03pm by Rico
Colombia coffee region

Subsidies to Colombian coffee farmers restarted after national coffee prices dropped 20% in seven straight days of falling prices.

By the end of Friday, Colombian coffee prices had fallen to $342 per 275 pound load of coffee. This is a 19% drop from the previous weeks’s high of $425.

When internal Colombian coffee prices fall below $340, government subsidies approved after coffee strikes last year are automatically activated to ensure that coffee growers are not in deficit.

Victor Correa, a coffee strike leader, told Colombia Reports that production costs are between $320 and $340 per 275 pound load, in interview earlier this month.

MORE: Why better prices don’t mean better conditions for Colombian coffee farmers

The massive price drop is due to two factors, said El Universal newspaper. Firstly the exchange rate for one US dollar is now 1,995 COP, in a notable drop from recent rates well over 2,000 COP.

Another cause is the improved coffee growing climate in neighboring Brazil, both a market competitor and the largest coffee producer in the world.  If Brazilian coffee farmers are able to produce a better harvest than predicted, competitor nations like Colombia will continue to see lower prices.

Colombian markets were closed on Monday for a national holiday.

MORE: Colombia coffee farmers to join new agricultural strike on April 28

Following the sharp drop in prices, Colombian coffee farmers announced Monday their intent to strike, starting on April 28.  Coffee farmers held strikes alongside other agricultural workers over summer last year, demanding better economic protection.  The new strikes, set to be held less than a month before Colombian Presidential elections, will reportedly protest the failure of the government to stand by its commitments made during the last strikes.


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