By Leslie Josephs
April 10, 2012
NEW
YORK (Dow Jones)--The quasigovernmental agency that oversees Colombia's coffee
industry is weighing an increase in a fee on exported beans amid a surge in the
local currency, an official said Tuesday.
The
Colombian Coffee Growers Federation, known as Fedecafe, currently collects 6
U.S. cents for every pound of coffee that is exported from the Andean country,
one of the world's largest producers of washed arabica beans. But a stronger
peso has meant lower revenue for the agency once the fee is converted into
local currency.
"The
[fee] readjustment would be an increase. That's the most likely
[outcome]," Luis Fernando Samper, spokesman at Fedecafe, told Dow Jones
Newswires in an e-mail. "Today it is 6 [US] cents per exported pound, but
converted into Colombian pesos, that amount is barely half of what it was a few
years ago."
The
peso has appreciated around 8% this year against the dollar.
The fee
increase would need to be approved by Colombia's Congress for it to take
effect. Samper wouldn't say how large of an increase Fedecafe would propose.
Samper
said the fee is a "contribution," not a tax, because it is used for a
specific fund. Fedecafe pools the money it receives from the fee into a fund
for programs aimed at increasing yields and fighting coffee diseases.
Colombian
coffee growers and Fedecafe have complained that the stronger Colombian peso
has eaten into their earnings, even though benchmark coffee prices are still
above the 10-year average price of $1.2415 a pound. Arabica coffee for May
delivery on ICE Futures U.S. settled 0.1% higher Tuesday at $1.7815 a pound.
Most of
Colombia's coffee producers grow coffee on small plots of land. Farmers said an
increase in the export fee would hurt their already thin margins.
"It's
very bad," said Pedro Echavarria, who runs the Santa Barbara farm outside
of Medellin. "It will increase farmers' poverty."
Fewer
pesos for farmers often mean lower investments in the high-maintenance plants,
even though the beans they produce fetch high prices on international markets.
The
cost of the fee is usually passed down the supply chain to roasters. But a
higher price could send buyers to other origins with similar high-altitude
beans, such as Guatemala, traders said.
This is
a thorny issue for Colombia, where heavy rainfall has damaged three consecutive
harvests.
"The
worst thing for Colombia is that it loses market share and then its harvest
recovers," said a U.S.-based commercial coffee trader who does business in
Colombia.
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By Leslie Josephs, Dow Jones Newswires; 212-416-4055;
leslie.josephs@dowjones.com