Friday 19 July 2024
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COLOMBIA – Government proposes new subsidy system to prevent coffee strike

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BOGOTA – The Colombian market is proposing a new system to deliver subsidies to coffee farmers in an attempt to avoid the second national industry strike this year.

Starting in late February, coffee workers across Colombia engaged in a massive national strike, shutting down coffee production and the entire transportation sector in departments throughout the south and west of the country.

The protests proved costly for the nation — which lost an estimated $44 million out of its economy over the span of just two weeks — and didn’t end until government officials agreed to concessions including the payment of auxiliary subsidies to coffee growers.

Now, after a brief period of calm, protests have sparked again as coffee workers announced a second strike to start August 19th.

The coffee growers subsequently were joined by truckers, health workers, miners and public university students who all threaten to go on strike on the same day as the coffee growers, threatening a major shut-down of the Colombian economy.

Government officials, including President Juan Manuel Santos and Finance Minister Mauricio Cardenas, have called the new threats of strike “unjustified”, maintaining that the agreed-upon funds were allocated as promised to the Coffee Income Protection Program and suggesting that the protests are being instigated by armed militia groups.

The national coffee federation, in turn, has distanced itself from trike plans and has insisted that it is only advocating for what it is already owed.

Regardless, whether the Santos administration believes the coffee workers are negotiating in good faith or not, the prospect of facing a unified front of four of the country’s most powerful labor blocks at once has proved enough to bring the government back to the table, and a plan formulated by both parties in meetings that took place on July 17 looks to end the disruption of the iconic Colombian industry before it starts in full.

Both the government and the FedeCafe have come out in support of a measure that would provide subsidies directly to coffee farmers as part of their immediate business transactions.

Agriculture Minister Francisco Estupinan Heredia has asserted the new mechanism would “not only pay the value of the shipment instantly, but also provide incentive to the farmers,” and Coffee Workers’ Dignity, a vocal critic of the government’s handling of the subsidies, is in support of the initiative.

Here’s how it would work:

– The coffee farmer, as usual, delivers his product to a cooperative.

– The buyer then calls a system provided by FedeCafe and waits for authorization.

– Once the system can verify the identity of the farmer, who is charged with updating his registered production levels, the system sends the buyer a code, authorizing the payment of the subsidy money.

– The buyer then pays the farmer in full, including the government subsidy, which is proportional to the amount of coffee being sold.

– The buyer receives a text message confirming the transaction, the identity of the coffee farmer and the amount of the subsidy being delivered, which he can then use to be reimbursed for the subsidy.

The entire five-step process would take an estimated five minutes, and the government hopes to have it implemented by the second week in August.

The Superintendent of Industry and Commerce has explained the new system would only be a supplement to the current one, which requires an average of five days for payments to be delivered.

Still, the idea has been welcomed by both sides, and should avoid another series of calamitous economic stoppages on the country and the coffee industry.

“We have a meeting on August 2 to clarify any doubts,” said Luis Guillermo Gaviria, a representative of Coffee Workers’ Dignity. “If [the government] follows through on its promises from March 8, the coffee workers won’t have any reason to strike.”

Source : Colombia Reports

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