food / travel

Cold Economics For Colombia's Coffee Growers

The country faces dramatic debt levels among small-scale coffee farmers, as prices fall on world markets. Some have suggested a fixed minimum price for this key Colombian export.

Small Colombian coffee growers cannot live solely off the production of coffee anymore
Small Colombian coffee growers cannot live solely off the production of coffee anymore
Santiago Montenegro

-Analysis-

BOGOTÁ — What to do about Colombia's coffee sector? The question arises at a time of low prices on global markets. For good reason, for a long time until the early 1990s, the Coffee Congress was considered almost as important as the National Congress. In those years coffee was by far the country's most important export — a place that has been taken by products like oil, minerals, and cocaine. Since that time, other big changes have occurred, including a shift in production areas from central and north-central zones like Antioquia, to the southern departments of Cauca, Huila, and Nariño. Also, more growers have joined the sector for whom coffee is not the main economic activity or source of income.

While coffee production was fundamentally the work of peasants until some 50 years ago, now many professionals living in cities have turned it into a secondary and often part-time activity or supplementary source of income. Half a century ago, the vast majority of rural families lived exclusively off the production of coffee and subsistence crops. But coffee growers are today fewer in number and are concentrated in the south of the country. One must consider these factors when analyzing policy options and aid to the coffee sector. In the face of low prices on world markets, the director of the Coffee Growers' Federation has proposed withdrawing Colombian coffee from the New York stock market or fixing a minimum sale price. This could be a very costly option and make Colombia lose market share.

The most urgent option is to restore an internal price stabilization mechanism.

The former finance minister, Mauricio Cárdenas, has suggested returning to a pact among producers like it used to happen until the early 1990s, though again its implementation would be very difficult. He has also proposed an interesting information tactic, to show consumers that producers like those in Colombia only receive 3% of the final price, even though they hold the most important position in the production chain.

Perhaps the most urgent option is to restore an internal price stabilization mechanism, like a stabilization fund that saves money in boom times and dispenses it when market prices drop. Two other options used in the past are to subsidize the internal purchase price and refinance or partly condone, the debts of growers. According to media, their debts to the Agrarian Bank stand today at 1.2 trillion Colombian pesos (a little over 338 million euros). As these options are also highly costly, they could be implemented if two objectives are met. One is to concentrate aid to peasant farmers and smallholders, and the second is aid against a program of increased productivity. As most production is now in the south of the country, these measures are also, ultimately, important in containing cocoa farming, which is also expanding in the southern departments.

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Green

In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.


It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park

Xinhua/ZUMA

Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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