Rentability Concerns Loom in Colombian Coffee Industry: FNC Speaks Out

The coffee industry, a backbone of Colombia’s non-mineral exports, is facing challenges of rentability, as prices approach production costs in various regions. Germán Bahamón, the new General Manager of the Federación Nacional de Cafeteros (FNC), sheds light on the strategies they are employing to sustain the country’s primary agricultural export and strengthen ties with the government. In this blog post, we explore the current state of Colombia’s coffee industry, the impact of market dynamics, and the measures being taken to protect and promote this vital sector.

The Vision of the New FNC General Manager:

As the first non-insider General Manager of the FNC, Germán Bahamón brings both corporate experience and a deep understanding of coffee farming to his role. He aims to make the organization less centralized and more connected to the regions, recognizing that coffee’s social impact extends beyond international markets. Bahamón emphasizes the need for harmonious relations with the government, particularly with the new administration under Gustavo Petro, to protect the livelihoods of over 500,000 coffee-growing families and millions of jobs linked to the industry.

The Challenge of Imports and Falling Domestic Consumption:

Colombia’s domestic coffee consumption has been impacted by increasing imports in recent years due to high international coffee prices. As local prices surged, importation became a cost-effective solution to meet the domestic demand. However, with the recent drop in coffee prices on the New York Stock Exchange, the need for imports has decreased. Despite this development, ensuring steady demand and local consumption remains an ongoing concern.

The Impact of Brazil’s Recovery on Colombian Coffee:

The recovery of Brazil’s coffee production raises concerns for Colombian coffee producers. As coffee cultivation is cyclical, the current low prices coupled with the arrival of harvests from two years ago, during a period of high costs, are contributing to a profitability crisis in the coffee sector. Coffee’s importance in Colombia’s economy, accounting for 1% of the total GDP, necessitates effective communication with the government to protect the industry.

Dialogue with the Government and Identified Challenges:

The FNC has sought dialogue with the government to address the challenges faced by coffee farmers. The focus areas for intervention include infrastructure development, improvement in living conditions, and rural land formalization. To protect coffee farmers from economic hardships, a joint effort is needed, where the government matches the FNC’s contributions to stabilize coffee prices, shield contracts, and encourage capitalization for farm renewal.

Renewal and Quality Enhancement:

Renewing the coffee plantations is essential for maintaining productivity and quality. The FNC aims to revitalize at least 10% of the coffee farms annually, with an ideal target of 20%. However, this requires government support, particularly through incentive programs like the Rural Capitalization Initiative (ICR).

Addressing Climate Change:

The coffee industry faces the challenges of climate change, with El Niño expected to affect coffee crops. The FNC has been proactive in introducing coffee varieties that are more resistant to climate fluctuations. While short-term benefits from El Niño may boost productivity, extended periods of drought could lead to issues like the coffee berry borer infestation, necessitating careful monitoring and management.

The Colombian coffee industry is a vital economic and social pillar of the country. As the new General Manager of the FNC, Germán Bahamón recognizes the significance of building a stronger relationship with the government to safeguard the interests of coffee growers and workers. With a focus on addressing challenges in production, quality, and market diversification, Colombia aims to sustain its position as a leading coffee producer and exporter in the international market.