WASHINGTON – Mexico’s Secretariat of Agriculture (SAGARPA) through the Supports and Services Agricultural Marketing organization (ASERCA) has launched the “Basic Hedging Mechanism of Coffee” for the Marketing Year 2013/14, in order to boost marketing of Arabica coffee and support coffee growers who will soon be harvesting their crop.
On September 6, 2013, InfoASERCA published on their website information for basic coffee hedging, which is valid from September 6 to October 18, or until the authorized budget runs out.
Registered coffee producers will be able to access it. The authorized budget is $90 million pesos ($6.7 million dollars at the exchange rate of 13.25 pesos per dollar) With this mechanism, ASERCA aims to provide individual and organized producers with more certainty on international market prices.
This mechanism seeks to facilitate placement of coffee, according to market conditions of the new harvest that begins in November-December 2013, and in this way, find the best commercial conditions for Mexican producers.
Participants can choose from a “call option” or a “put option”. The purchase price of these options will be supported by SAGARPA. The call option can only be used by producers that already have a contract between a buyer and a seller; and the put option is for producers that do not have confirmed sales of their crop and therefore do not have a contract.
Iit is not yet clear how widely used this program will be used by Mexican coffee producers. SAGARPA has had the legal authority in place for the hedging program for the last few years but had not initiated its operation until now.
1. Publication Date: September 6, 2013.
2. Effective Date: September 6 to October 18, 2013 or until the budget gets used up. Source: USDA – Foreign Agricultural Service