The head of Colombia’s National Coffee Federation on Wednesday reportedly denounced producers for taking advantage of government subsidies by exercising extortion and fraudulent activities.
When coffee farmers protested in February, the government responded with a fund that was set to provide $443 million in aid. The Coffee farmer Income Protection Fund originally allocated subsidies of $70 per load for small and medium-sized coffee growers.
Claims of fraud are the latest in a back-and-forth of negotiations over a fund that was set up earlier this year in order to subsidize coffee farmer incomes and help farmers weather lousy price conditions.
“What we have seen in recent days is an increase in fraudulent attempts to scam the resources of the PIC (Coffee farmer Income Protection Fund), which are funds for the producers,” said President of the Federation Luis Genaro Muñoz, according to a local news report.
A rotten deal?
Troubles set in when rust disease wreaked havoc on Colombia’s high-quality arabica crops. Many crops died. On top of that, world demand bottomed out, causing prices to fall in suit. Colombia’s coffee industry fell to its knees when mostly small and medium farmers found themselves struggling to make sales cover their costs of production.
In turn, coffee farmers protested a lack of government support for what many Colombians view to be the country’s flagship industry. Rural protests involving road blockades brought coffee farmers and the government to the negotiating table. But setting up a fund to help growers, growers claim the fund was nearly impossible to access. More threats of strikes ensued.
The frustration has spread beyond the coffee sector. President Juan Manuel Santos‘ administration has fallen under sharp criticism for failing to address deep-seated problems in the agriculture sector. Potato-grower, the new protagonists in Colombia’s farmer strikes that blazed violently in late August, have protested against Santos’ economic policies, saying they can’t find a market for their produce. One potato grower told Colombia Reports that he and his colleagues “don’t receive any type of subsidy” from the Colombian government.
The National Coffee Growers Federation claims it has already dispersed some $387 million in subsidy aid to growers. Colombia’s coffee exports accounted for $1.9 billion in 2012, accounting for 0.5% of GDP, which came in at $336.3 billion.
Denuncian fraude y extorsion por subsidios al cafe (Portafolio)
Colombia GDP data (Trading Economics)