BOGOTA (Reuters) - Colombia, the world’s biggest producer of washed arabica coffee, launched a fund worth 218 billion pesos ($63.9 million) on Wednesday, aiming to stabilize coffee prices and shield farmers from volatile markets.
Output of 14.8 million 60-kilogram bags in 2019, boosted by good weather, was Colombia’s highest in 27 years, and the fund will allow coffee growers to cover production costs and avoid losses in case of unexpected falls in prices.
The government will provide the bulk of the resources for the fund, although coffee growers will also contribute financially, Finance Minister Alberto Carrasquilla said.
“It will give certainty and reassurance that prices are secure, so farmers can dedicate their time to growing the best coffee in the world and not worry about fluctuations,” he added.
The fund is a dream come true for coffee growers, and will allow them to protect prices, Agriculture Minister Andres Valencia said.
Colombian coffee closed at $1.06 a pound on the New York Stock Exchange on Wednesday.
The country’s producers receive 930,000 pesos ($272.70) per 125 kg. That compares with corresponding production costs of 780,000 pesos ($228.70) calculated by the National Coffee Federation last year.
The South American country, known for its high-quality smooth coffees, is the world’s third biggest producer, after Brazil and Vietnam.
Coffee is grown across roughly 880,000 hectares (2174527.36 acres) and about 560,000 families depend on the industry.
The National Coffee Federation expects production of around 14 million bags this year.
Reporting by Luis Jaime Acosta; Writing by Oliver Griffin; Editing by Clarence Fernandez
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