Colombian coffee up, but not everything is positive

The weather has caused a number of problems for coffee growing countries as extended dry spells and the presence of drought has seen widely fluctuating coffee futures as production levels appear to rise and fall on a daily basis.

But amidst the uncertainty, coffee levels in Colombia appear to be booming at a time when most other nations are struggling due to the inclement climate.

Earlier on the Colombian Coffee Growers Federation (CFC) published a report that showcased a 28% increase on production levels during the first quarter of the year when compared to the same period in 2013. This translates as an additional 600,000 bags of coffee that have been available for export.

As for the calendar year of 2013 Colombia’s production levels had increased by a monumental 40%, providing further proof that the South American nation contains a resurgent coffee industry.

Export levels have been pegged in the region of 10.4 million bags, which, unsurprisingly, is yet another increase when made to comparable time-frames the year prior.

However, whilst these figures paint a confident picture a little digging underneath the surface seems to showcase that the increased levels of production and exportation are superficial and that none of the profit and positivity has trickled down to the small and medium sized growers, plantation owners and farm workers.

Problems

Despite a momentary rise in prices during the opening weeks of this year, internal prices in Colombia dropped through until the end of March.

After prolonged losses, the Coffee Grower’s Dignity, a Colombian coffee union, has announced its intention to strike next month.

According to Victor Correa, a spokesman for the Coffee Grower’s Dignity, said that production costs would be roughly $330 per bag whilst internal prices dipped below that figure, forcing growers to continuously sell at a loss. Last August for example, the price fell to $319.

Correa also added that a cost of $500 must be introduced to ensure profitability. Even during the year high of $425, farmers, it is claimed, could not support themselves.

Future

The high price that Colombian coffee has been attaining has, largely, been attributed to the misfortune of other coffee growing regions. With a reduced global supply, Colombia has been enjoying a privileged market position, but the climate in Brazil is improving and so the momentum will swing back towards the traditional market powerhouse.

Couple with the devaluation of the dollar, prices are set to drop and further expose growers to financial insecurity.

The timing of the strike, planned for April 28^th, comes just a month before the Colombian presidential elections and is seen as a power play by those in the agricultural sector. It is expected, analysts report, that the coffee farmers will enter the industrial action in a strong position with Juan Manuel Santos in desperate need of support.