Colombia, the world's top supplier of washed arabica, is creating a special fund to subsidize coffee farmers when international prices fall below production costs. The stabilization fund, announced by President Ivan Duque late on Thursday, is the country's latest bid to help farmers struggling as coffee prices have fallen to their lowest in more than a decade and many are operating at a loss.
The global price crisis has pushed large numbers of them out of business, with potentially wide-ranging implications in Colombia, where coffee is the chief alternative crop to coca, a plant used to produce cocaine in regions controlled by rebels.
Colombia is the world's third largest producer of coffee after Brazil and Vietnam. It was not yet clear how much money would be put into the stabilization fund. But Duque's office said it would be paid for through a mix of sources, including the general budget, state-backed debt securities, proceeds from royalties and contributions from international organizations and others.
Duque called the law that passed to create the stabilization fund as "one of the most longed for by Colombian coffee growers." "This is going to bring great relief to the coffee sector when we have price shocks," Duque said as he signed the measure into law at an agricultural event.
The stabilization subsidies will kick in when the price of coffee falls below production costs, Duque's office said. The fund will be administered by the National Federation of Coffee Growers through a government contract.