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|ICO backs coffee groups as Colombia protests mount
By Agrimoney.com - Published 27/02/2013
The International Coffee Organization took the unusual step of lending its support to national coffee bodies after the strike by Colombian growers escalated into clashes with police armed with tear gas and stun grenades.
The ICO, an intergovernmental group, on Wednesday took the unusual step of releasing a statement in support of the Colombian Coffee Federation, terming it a "role model" for producer organisations.
The 85-year-old federation, which represents some 500,000 growers, "has ensured sustainability and a better life for coffee growers in Colombia throughout its existence," said the ICO, which typically reserves its comments to trade and prices.
The statement represented an effort to support national coffee groups amid market discontent which, while most obvious in Colombia, where coffee farmers have gone on strike over the slump in prices, has been evident in other countries too.
Earlier this week, the agriculture ministry in Brazil - where growers have blamed speculators for the plunge of more than one-half since May 2011 in arabica coffee prices, as quoted on New York's Ice exchange – floated the potential for options, backed by government minimum price guarantees, to support farmers' returns.
'What is the point'
"There could be many people questioning what is the point" of national coffee groups, Mauricio Galindo, the ICO operating director told Agrimoney.com.
Bodies such as the federation, whose functions include promotion of farming best practice and of coffee exports, lack the powers of guaranteed pricing that some institutions, such as Colombia's National Coffee Fund, have had historically.
However, attempts by such funds to smooth out price volatility by intervention – paying out extra when prices fall, and making below-market payouts when values fall – had proved of little success.
In Columbia itself, there was "no way the fund could cope" in 2001 when prices fell below 42 cents a pound in New York, from 145 cents a pound two years earlier, and the fund was left paying a multiple of market prices.
The comments follow the escalation of a strike and protests by Colombian coffee workers, at whom police fired rubber bullets, tear gas and stun grenades on Tuesday, according to local press.
The United Nations, under whose auspices the ICO was formed 50 years ago, has called for talks between coffee workers, who are demanding higher subsidies, and the government "to arrive at an understanding".
The ICO said that the drop in coffee prices was a concern for "the global coffee community", but stopped short of pitching blame for the market slide on any one actor.
"This is a market situation that cannot be controlled by any single player in the market," the organisation said.
Colombian growers – who have claimed a cost of production of \$366 a bag - have been particularly badly affected by the slide in prices as they have suffered a series of weak harvests too, undermined by a replanting programme, poor weather and outbreaks of roya fungus.
The ICO estimates Colombian production in 2012-13 at 8.0m bags, below figures above 12m bags reached some five years before.
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