Colombia growers demand action over low coffee price
New York| Thu Jul 4, 2013 12:32pm EDT
* Brazil growers burn coffee at protest, demand gov't
prices near four-year lows on ample supply
growers now paid subsidy after March strike
July 4 (Reuters) - Pressure is mounting on governments
in the world's top arabica coffee nations to come to
the rescue of their growers as prices slump below production
costs, with Brazilian farmers staging a protest on Thursday
and Colombians threatening to strike.
in one Brazilian coffee belt town, Tres Pontas, began
an "Awaken" protest march, borrowing a well-worn
slogan from recent nationwide political protests, to
press for state help after prices halved in the space
of two years.
are in an unprecedented crisis," said Eduardo Chaves,
43, a fourth-generation coffee grower in Tres Pontas
after farmers set fire to a mound of coffee and threw
up roadblocks. "We want other towns to do the same
so that our voice is heard."
growers are threatening a stoppage in August - their
second since February - unhappy over the way a new coffee
subsidy is being distributed. Meanwhile, the country's
farming sector as a whole is calling for more aid against
low prices and cheap imports resulting from free trade
anger is the steady slide in arabica prices, now hovering
near the four-year low of $1.17 per lb hit in July 2009,
with global stocks at five-year highs and likely to
swell with another large Brazil crop being harvested.
market right now is really hurting producers,"
said Brazil-based coffee trader John Wolthers at exporter
Comexim. "It might show in the next crop because
of less fertilizer use and lack of incentives"
to cultivate coffee, he said.
yield more beans when the soil is fed with fertilizer
and chemicals are used to fend off bugs and fungi.
is a smoother tasting, more expensive bean than cheaper-to-grow
robusta, which is used more in instant coffee. Many
roasters flocked to robusta in 2011, when quality arabicas
were scarce and shot to more than $3 per lb. But roasters
are now returning to richer arabica blends as prices
as arabica demand picks up, surplus supplies look unlikely
to unwind soon. The 2013 Brazil crop is estimated by
traders at about 53 million bags, and Colombia's output
is recovering after a run of disappointing, weather-beaten
coffee bushes will become productive in the coming year
or so after a costly renovation program replaced aging
and lower yielding plants, likely boosting output by
several million bags.
intervention aiming to push up coffee prices would need
to be aggressive after the world futures market barely
blinked at forecast losses of 2.7 million 60-kg bags
of Central American coffee, nearly a fifth of its crop,
which fell victim to the "roya" fungus.
by far the world's biggest coffee grower, has still
to offer help to growers months after the government
recognized a need for it. Agriculture Minister Antonio
Andrade's proposal of $176 million in subsidies looks
paltry in the face of exports of roughly $6 billion
a year even in these lean times.
really trading at a level that is not sustainable, at
least not for high quality arabica. No one is making
any money growing that stuff," said Shawn Hackett
of Hackett Financial Advisors in New York.
arabica there will be a big problem if it stays down
here for too long in terms of supply."
government data for 2012 says it cost an average 338
reais ($150) to produce a 60-kg bag of arabica in Minas
Gerais state's town of Guaxupe, where the country's
biggest coffee cooperative is based. But local brokers
are quoting a price of only 320 reais for the best quality
growers, known for their famous Juan Valdez brand, are
now roughly breaking even, data from the country's coffee
federation shows, after the government granted a 145,000
peso ($75.62) subsidy per 125-kg bag following a nationwide
coffee producers' strike that ended in March. The subsidy
expires at the end of 2013, potentially deepening the
crisis in the sector.
the biggest production cost for both countries, which
between them grow nearly three quarters of the world's
forecast to produce about 10 million bags this year,
earns a premium over Brazilian beans because of its
quality produce grown at high altitude. Flatter terrain
that enables machine harvesting has helped Brazil to
cut costs, however.
of low prices for both countries extend beyond lower
investments that could cut output. Coffee remains a
major employer and an important generator of income
in rural areas where some of the poorest segments of
the population reside.
government already on edge after fierce protests over
how it runs the country, averting a crisis in its coffee
sector, which says it is the country's single biggest
agricultural employer, may now have become a bigger
plunge in production does not look plausible in a sector
that has weathered price volatility many times in the
past, thin profits or outright losses are prompting
growers in Brazil at least, to consider alternatives.
already seen a lot of people thinking of switching to
cattle and planting eucalyptus trees," said trader
Lucio Dias from cooperative Cooxupe. "Keeping your
coffee farm means you've got to keep investing just
to keep it going."