26 March 2019 | coffee industry updates | Views:

What's the FNC & why might it take Colombian coffee off the stock market?

Famously (though errantly) thought to be the world’s second-most traded commodity after oil, coffee still has a major presence on the New York Stock Exchange.

We’ve talked a lot about why we’re not a fan of commodity coffee - mainly because it’s the cause of thousands of farmers living in poverty. And that’s why the news that the FNC has suggested removing all Colombian coffee from the commodity market is a big deal.

Read that again, and take it in with the knowledge that Colombia is the second biggest producer of arabica coffee - and a country that closely works with and influences other South American coffee-producing countries too. But who’s the FNC to make such a threat?

Federación Nacional de Cafeteros de Colombia

If you recognise the name Juan Veldaz, or at least his face, then the FNC is to thank for that. A character created to promote Colombian coffee around the whole world, this led to it being awarded Protected Designation of Origin status by the UN and gaining the trademarks “100% Colombian Coffee” and “Café de Colombia”. So the FNC is arguably the reason why you think coffee, when you think Colombia.

The Federación Nacional de Cafeteros de Colombia (or Federation of Colombian Coffee Growers) is a group that represents all coffee growers in the country. Founded in 1927, they do everything from protect the rights of farmers (about 540,000 in total!) and promote their coffee globally to conducting research into cultivation, social issues and environmental factors - to name a few!

Pact Coffee and the FNC: a close relationship

We’re in a fairly unique position of having close personal ties to the FNC, through our Head of Coffee Will Corby. When Pact Coffee first became Pact Coffee, Will started heading to origin to source coffee - building relationships that still exist today.

His first trip to Colombia, he accompanied FNC representative Esteban to visit the San Isidro Group - a group of coffee farms that formed to protect common interests, which includes Buenos Aires and Casa Loma to name but two. And after that, followed by Will’s involvement in founding the ‘Colombia, Land of Diversity’ competition, his relationship with the FNC was forged.

These days, Will works closely with Maria Olano - a logistics expert who connects producers and buyers. She came to the FNC after gaining a Masters in Coffee Economics and Science from the Università del Caffè in Italy, after studying for her undergraduate degree in Business Administration in Colombia. Having to take an internship during her course, she applied to the FNC and the rest is history.

In her words, “more than a business connection, Will is a close friend”. Spending many weeks travelling to coffee farms together, Will’s relationship with Maria and the FNC as a whole has grown closer year by year.

Pact Coffee is proud of having this kind of connection with one of the biggest rural NGOs in the world, and the most important coffee-related body in Colombia. And that’s why we want you to know what they’re saying about coffee on the commodity market.

Colombian coffee and the New York Stock Exchange

The FNC know better than any organisation the damage that staggering low coffee prices can inflict on farmers, their families and the economy. As their CEO has said, the price of coffee on the New York Stock exchange means their “coffee is not sustainable”. And the prices don’t reflect the quality of the product itself.

Unfortunately, the international price of green coffee looks to remain at these low prices for the next four years - meaning emergency measures need to be introduced.

And that is what has led to the suggestion that the entirety of Colombian coffee should be removed from the commodity market:

“The one who wants Colombian coffee will pay the fair, that is, the costs plus a small profitability… The coffee growers of Colombia can not continue to be beggars, that is not our coffee industry”

The FNC’s loose proposal is tied with the promise that farmers would theoretically be paid a rate not only above production, but above Fairtrade rates (sound familiar?). But with the launch of several domestic projects with the aim of dealing with the current challenges, it’s not necessarily a threat that the FNC will follow through with.

They are, however, working with several other players - including other Central American producers and other producing countries - to strategize and discuss potential actions to be taken. And if that does follow the line that the FNC are suggesting for Colombian coffee, the commodity coffee market could cease to exist as we currently know it.

Pact Coffee’s takeaway

Whether the FNC follows through in removing Colombian coffee from the New York Stock Exchange or not, something’s got to give. Coffee farming is becoming an unsustainable lifestyle globally, threatening hundreds of thousands of families and the continued production of coffee generally. Where even Fairtrade rates aren’t guaranteeing the lifestyle that coffee farmers need and deserve, we can only hope that more companies follow the trading standards that we uphold - paying good prices for a great product, and making life better for everyone. From the grower to you, the drinker.


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