Colombian coffee beans plan to break away from the international futures price system because the pricing of commercial coffee is unreasonable

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Colombian coffee is famous in the world, but that doesn't mean these South American countries will be paid relatively well. In reality, the price of coffee is regulated by the New York Stock Exchange. In response, Colombian producers think it is bringing down the coffee industry as a whole.

"We want to sell coffee beans at a reasonable and fair price, which must include production costs and reasonable profits," Jose Sierra, manager of the Colombian Coffee producers Association (FNC), told Agence France-Presse.

Coffee producers are restricted from setting their own prices because they are linked to international futures prices. Sierra said that the reason to stop using international futures prices as a reference is to be out of the control of traders on the exchange, causing the price of coffee to plummet. Stock market speculators who buy coffee securities often manipulate buying and selling, causing the trading price of raw coffee beans to plummet.

Colombia is the third largest coffee producer in the world, after Brazil and Vietnam, and is one of the coffee producers famous for its high-quality soft beans. The international reference price of coffee fell from a high of $1.50 per pound in 2016 to less than $1 in February this year. Although Colombian coffee has a 20-cent premium because of its high quality, this is not enough for coffee producers.

Sierra, who has been a manager at FNC for 25 years, points out that "125kg of raw coffee beans cost as little as 640000 pesos, but the cost of production is as high as 790000 pesos", with a loss of $53.60 per transaction.

The collapse in prices is the result of an oversupply of coffee. According to the International Coffee Organization (OIC), production (in 60 kg bags) will reach 167 million bags in 2018 / 19, compared with global consumption of 165 million bags.

Colombian coffee is currently priced at $1.20 a pound, down from $1.40 in 1983, and Fernando Morales-De La Cruz from Cafe for Change says it is working to provide more profits for coffee production. A pound of beans can provide 55 cups of coffee, he said, but "in different countries, consumers pay $1 for each cup of coffee, while producers sacrifice a lot of land value for this cup of coffee."

The coffee market consumes about $200 billion a year, but producers get only 10 per cent of that, according to FNC. To get rid of the stock exchange, Colombia needs to find allies among other commercial coffee producers in Central America and Africa and establish its own price system determined by quality.

Coffee prices in Colombia have been based on the New York Stock Exchange for decades. The mutation away from international pricing must first be recognized by coffee growers in the country.

If consensus can be reached, it will need to be discussed at the OIC meeting in Kenya at the end of March and at the producers' meeting in Brazil in July.

In Colombia, 540000 families work in the coffee industry. Coffee is the country's largest export, ahead of oil and mining.

Currently, the Colombian government has promulgated a number of positive measures to help coffee farmers, including debt modification, potential refinancing, support for the purchase of fertilizers and the renovation of coffee plantations, and the restart of subsidy funds.

But coffee farmers insist that this is not enough. "Coffee growers should be paid more than three times the current price," Morales-De La Cruz said. And he thinks producers should unite to form organizations like the Organization of the Petroleum Exporting countries (OPEC) so that Colombia can profit from exporting coffee.

For Jose Sierra, Colombian commercial coffee is the best in the world. He hopes that those who want to drink coffee will realize the value of that cup of coffee and let the coffee producers get what they deserve.

The picture is from: the Internet

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