Colombian coffee production up in first 3 months of 2014, so is grower discontent

Posted on Apr 3 2014 - 6:28pm by Rico
Coffee

Colombia’s coffee federation publicized a 28% increase in Colombian coffee production during 2014′s first trimester when compared to the same period in 2013 on Wednesday in the shadow of impending strikes from coffee growers.

The Colombian Coffee Growers Federation (CFC) published a report Wednesday showing a 28% increase in coffee production during the first three months of 2014 when compared to the same period in 2013. This translates to an additional 600,000 bags of coffee produced during the first three months of 2014.  These bags contain 132 pounds of coffee.

The CFC also noted that over the last 12 months Colombian coffee production has increased by a full 40%. Total coffee produced increased by 3.3 million bags over this period, to 11.4 million 132 pound bags.

Additionally, Colombian coffee exports showed a correlating 37% increase over the last 12 months. Colombia exported 10.4 million of the 132 pound bags, up 2.8 million bags from the same period in 2013.

Increased production and exports not enough

These production and export increases do not, however, reflect an increase in profitability for small and medium scale coffee growers. Despite a brief rise in prices during the first months of 2014, internal Colombian coffee prices saw over a week of daily price drops at the end of March. Continued losses caused Coffee Grower’s Dignity (Dignidad Cafetera), a Colombian coffee union, to announce its intent to strike beginning April 28.

According to the CFC, Thursday’s internal coffee price was at about $350 for a 275 pound bag. A spokesman for Coffee Growers Dignity Victor Correa told Colombia Reports last month that production costs ran about $320-340 for a 275-pound bag of coffee. For much of the last year internal coffee prices fell below $340, representing a loss on every bag sold for Colombia’s coffee growers.

In August last year a 275-pound bag fell to $319, a five-year low. This translated to a $24 dollar loss on every bag of coffee sold, according to Correa.

Correa added that for growing coffee to remain profitable for the farmers the internal cost of a 275-bag must be at least $500. This means that even during March’s high of $425 coffee farmers were not making enough money to support themselves. Some coffee farmers had already sold their harvests by the time prices began to be profitable as well.

MORE: Why better prices doesn’t mean better conditions for Colombia’s coffee farmers

High prices during the first months of this year were predominately attributed to a drought in Brazil, the largest coffee producer in the world. A reduced global supply allowed Colombia to produce more coffee at a temporary price increase but only at the expense of suffering Brazilian coffee growers.

Improved climate in Brazil and the devaluation of the US dollar during the second half of March dropped prices back down to unprofitable levels and evidenced the lack of economic security faced by Colombian coffee growers.

MORE: Colombia reactivates subsidies after coffee prices fall 20% in week

Social and economic protests to haunt Santos

In August and September last year coffee farmers held strikes across Colombia alongside other agricultural workers and miners in an attempt to gain greater economic stability from the government. Throughout the two months of strikes the protesters were able to close regional highways making transportation and product shipping nearly impossible.

President Juan Manuel Santos managed to end the protests by guaranteeing the coffee farmers a seven point plan of support. Correa told Colombia Reports that the coffee farmers will restart strikes this month because the president has only followed through on one of these agreements. “We are forced to carry out the strikes because it is the only way to put pressure on the government,” said Correa.

MORE: Agrarian Strike only way to ‘put pressure’ on Colombia Govt: Coffee strike leader

One of the main points of the agreement last year was the institution of a subsidy program to protect coffee farmers when internal prices fall below $350 for a 275-pound bag, or roughly production cost. Only 80% of farmers have received these subsidies, said Correa. He added that the president can end the strikes before they start by following through on his promises made last year.

The April 28 strikes are planned to start less than a month before Colombia’s May 25 presidential elections. The coffee growers and other agricultural workers planning to strike could put extreme pressure on Santos to compromise if the strikes cause problems similar to the widespread stagnation of regional transport seen last summer. If he fails to find a solution to the protests he could risk losing support at the polls.

The coffee farmers are likely to be more difficult to pacify this time around given Santos’ failure to stand behind his promises last year.

Sources

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