FEATURE Price Stabilisation
A source of stability THE COLOMBIAN GOVERNMENT HAS LAUNCHED A COFFEE PRICE STABILISATION FUND TO SHELTER PRODUCERS FROM THE EFFECTS OF LOW COFFEE PRICES, WHICH HAVE MASKED A DEFICIT IN THE MARKET.
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n the face of sustained low coffee prices and continued uncertainty in the market, the Colombian Government has acted to protect its producers from volatility. On 11 July 2019, Colombian President Ivan Duque announced the creation of a Coffee Price Stabilisation Fund (FEPC), worth COL$218 billion (about US$64 million), which launched in February 2020. The fund has been a long-time aspiration of the nation’s coffee producers, Colombian Coffee Growers Federation (FNC) CEO Roberto Vélez Vallejo tells Global Coffee Report. “The fund will help coffee growers when prices come down to stabilise their income,” Vélez says. “There has been a desire from coffee growers to have a less volatile coffee price. Moreover, they want something that supports internal prices when the market falls below the cost of production.” He says it’s important to note the FEPC will not simply maintain an artificial price when the market falls. Instead, it will be used to launch a set of mechanisms that will stabilise the income of growers. While decisions have not yet been made of how to allocate fund, Vélez suggests subsidies
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for agricultural products like fertiliser or insurance premiums as one alternative. “Colombian producers are pretty excited about the fund, although I’m not sure everybody understands what this stabilisation fund is and what actions it will take,” he says. “There’s a little bit of confusion as there is not a clear image of what the stabilisation fund will do just yet. A secretariat will be appointed to propose mechanisms that can be implemented with the fund.” The FNC will play a role in handling and decisions regarding the FEPC. The federation will also contribute money from coffee growers through the National Coffee Fund (FoNC) it administers.
