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ARABICA PRODUCERS WANT US TO REGULATE FUTURES CONTRACTS AND COULD WITHHOLD STOCK

ARABICA PRODUCERS WANT US TO REGULATE FUTURES CONTRACTS AND COULD WITHHOLD STOCK



Coffee producer organisations in Brazil and Colombia are consolidating an alliance and lobbying for significant change in the coffee industry.

Producers from the two countries – which are the world’s largest producers of Arabica – said they are planning a number of ‘joint actions’ to address the coffee price crisis.

They said more details will be presented at the Second World Coffee Producers Forum, which takes place 10-11 July in Campinas, Brazil, but have already said they want the US to make changes to futures contracts that would reduce volatility that adversely affects coffee farmers. That ICE or the US government would do so seems unlikely, however.

In a joint statement issued after representatives of coffee producing organisations met in Brasilia on 14 June 2019, the producers said they “consider it essential that Intercontinental Exchange and the US government regulate the participation of non-commercial actors in coffee futures contracts,” and “take other measures to increase transparency in price discovery.”

Producers argue that speculation has exaggerated movement in the ‘C price,’ the futures contract for Arabica coffee, and has played a significant role in the coffee price crisis, which has seen the C price fall below 100 cents/pound and to a 13-year low. It briefly rose above 100 cents/pound earlier in June but has fallen again and was at circa 97 cents/pounds as this was written.

Brazil and Colombia said they also discussed “the viability and impact” of managing coffee stocks at origin, by which they are assumed to mean withholding supply.

The producer organisations said the response from the rest of the supply chain to the coffee price crisis had been “unsatisfactory,” despite multiple attempts at dialogue.

They also discussed action on several other fronts, including bringing producers closer to consumers and increasing value at origin, so that the value generated in the coffee supply chain “can be better distributed,” guaranteeing the economic sustainability of producers and the achievement of the Sustainable Development Goals.

The producers also discussed actively promoting what they described as a “global project” to increase consumption in producing countries.

The participants at the meeting included the Federación Nacional de Cafeteros de Colombia, Conselho Nacional do Café, Minasul Cooperativa dos Cafeicultores da Zona de Varginha, Confederação da Agricultura e Pecuaria do Brasil, Brazilian Specialty Coffees Association, Associação dos Sindicatos dos Productores Rurais do Sul de Minas, Sistema OCB-ES, Sociedade Rural Brasileira and Frente Parlamentar do Café.

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