Falling Coffee Prices Hurt Producers World Wide

After Brazil, Colombia is the world largest coffee producer. Half of all of its products go to the United States, meaning the U.S. market is key to the sustainability of the industry. However, lower coffee prices coupled with rising production costs has damaged the Colombian market despite a sudden upswing in coffee production. The result is the current export market has declined due to lower commodity prices squeezing the industry. A boon for U.S based coffee drinkers but worrisome for Colombian coffee producers.

 

While the U.S. consumer market remains an important aspect when assessing Colombia’s coffee sector, increasing local demand has begun to hit producers. A recent GAIN report states that domestic prices in Colombia have declined thanks to the recovery of the Colombian peso and declining world-prices for green coffee.

 

This has cut into local producers profit margins has they struggle to balance a rising demand- lower cost conundrum. Farmers, finding these trends worrisome have reached out the for help from FNC and other government organizations. FNC estimates that 35 to 40 percent of Colombian coffee is annually linked to the specialty market. To thwart a continuing trend of downwards coffee prices and their damage to local producer’s profits, the FNC has discussed opening direct trade negotiations between the local sellers and international buyers, cutting out the middleman and giving Colombian coffee producers a boost with higher prices for lower-volume shipments.

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