‘Today is a historic day,’ the FNC CEO says
- This instrument, which today becomes a reality, had been an aspiration of coffee growers for a long time to protect their income from the market’s volatility.
- This new fund starts with a budget of COP 218 billion ($64.4 million), with resources allocated by the Government from the national budget and by coffee farmers themselves through the National Coffee Fund (FoNC), the parafiscal account fed on the coffee contribution.
Bogotá, February 19, 2019 (FNC Press Office) – On a historic day, the Coffee Price Stabilization Fund (FEPC) was launched today, with the aim of shielding Colombian coffee growers against the ups and downs of international coffee prices.
At its inaugural session, the National Committee of the FEPC, made up of the ministers of Finance; Agriculture; and Commerce, Industry and Tourism, and the National Planning director, as well as the 15 FNC departmental representatives, approved the regulations on the Fund, the operation of its governing body and the functions of the Technical Secretariat.
This novel price protection instrument will start with a budget of COP 218 billion, with resources allocated by the Government from the national budget and by coffee farmers themselves through the National Coffee Fund (FoNC), the parafiscal account fed on the coffee contribution (a tax paid for each pound of coffee exported).
Other financing sources contemplated are contributions by third-party industry actors interested in sustainability of Colombian coffee farming and the Nation’s royalties.
“Today is a historic day. We must take advantage of this time to be creative in price protection instruments,” said the CEO of the Colombian Coffee Growers Federation (FNC), Roberto Vélez, who thanked the national Government’s commitment to support the creation of this Fund.
“It is an instrument that gives certainty (…), tranquility to coffee growers that their production already has predetermined prices, and they can focus on growing the best coffee in the world and not worry about those price fluctuations,” the Minister of Finance, Alberto Carrasquilla, said.
“This Government always supported the creation of this Fund. (…) The FNC and the Departmental Committees (of Coffee Growers) have to work closely with Governors so that they can help with royalty resources,” the outgoing Minister of Agriculture, Andrés Valencia, said.
The price stabilization fund, which today becomes a reality, had been an aspiration of coffee growers for a long time to protect their income from the ups and downs of the market, often not caring for sustainable coffee production.
This Fund will allow coffee growers to cover their production costs, to be determined based on methodologies according to the specific conditions of the country’s different coffee regions.
As another way to improve producers’ income, the FNC, as part of its value creation strategy, bets increasingly on high quality and differentiation of Colombian coffee, which committed customers are willing to buy at premium prices.