The Stabilization Fund, announced by President Ivan Duque on Thursday, is the country’s latest bid to help farmers who fight after coffee prices have fallen to their lowest in more than a decade and many are operating in one loss.
The global price crisis has driven a large number of them out of business, with potentially extensive implications in Colombia, where coffee is the main alternative crop for the head, a plant used to produce cocaine in rebel-controlled regions.
Colombia is the third largest coffee maker in the world after Brazil and Vietnam.
It was not yet clear how much money would come into the stabilization fund. But Duque’s office said it would be paid through a mix of resources, including the general budget, government debt securities, royalties, and contributions from international organizations and others.
Duque called the law passed to create the stabilization fund as “one of the most desirable Colombian coffee growers”.
“This will bring great relief to the coffee sector when there is price shock,” Duque said while signing the measure in law at an agricultural event.
Stabilization subsidies will begin when the price of coffee falls below production costs, said Duque’s office. The fund will be administered by the National Federation of Coffee Growers through a government contract.
The Duque government has already allocated $ 79.5 million in subsidies, debt relief and funding for plantation renovations in recent months. This week, at a coffee forum in Brazil, Colombia proposed that coffee producing nations join forces to impose supply constraints and raise prices.
The Federation of Coffee Growers has also proposed that producer countries sell high-quality products that are inadequate to New York’s market price. And this month, he called for an international base price of $ 2 per pound.
Colombian coffee producers currently produce about 795,000 pesos per 125kg coffee, which barely covers production costs estimated at 780,000 pesos, according to the Federation of Coffee Growers.
Despite low prices, Colombia expects to produce 14 million 60kg bags this year, from 13.6m bags last year, thanks to renovations and fertilization programs./Investing.com