Budget Constraints Force Colombian Government To Stop Aid to Coffee Producers

The Colombian government will not be offering immediate subventions to coffee farmers due to budget constraints this year. This comes at a time when coffee producers are plagued with low prices and heavy rains, said the head of the Coffee Growers’ Federation.

As stated by Reuters, the National Federation of Coffee Growers of Colombia had appealed to the government for help for coffee farmers due to the lower prices both in the domestic and international markets, as well as the strong peso currency that has brought about a reduction in export income.

The head of the federation, Roberto Velez, told journalists after a meeting with the country’s Finance Minister, Mauricio Cardenas that they have “proposed to the government the possibility of direct aid” but “the government told us it does not have the fiscal space for it.”

According to Velez, the situation of coffee growers is in a “very complicated situation and the government [has] expressed its willingness to see how they can help us.”

Reports from the federation shows domestic prices fell to 13.7 percent during the first quarter of 2018, when compared with that of 2017 in the same period.

Also, the Colombian peso strengthened 6.8 percent during the period December 2017 – March 2018. This led to a reduction in export profits. The heavy rain is also said to have brought down output to a 6 percent low in the first quarter, when compared to the same period last year.

The Finance Minister, Cardenas, called for a meeting with coffee-producing countries, including Vietnam, Brazil and other countries to analyse the current situation of demand as well as look for ways to put back things in order. That is, to regulate demand, and curb a bigger reduction in the price of coffee in the international market.

Colombia is the world’s number one producer of washed Arabica coffee bean. Its government, in the past, helped coffee growers by giving out subsidies as well as easing a way for them to acquire expensive fertilizers.