UPDATED NEWS ON SITUATION IN COLOMBIA
Colombia has registered over 26,000 daily new COVID-19 cases in the past week, with a peak of 30,000 on June 4th. We are over 92,000 accumulated deaths with a daily average of 525 in the past 7 days. ICU occupancy rates in the main cities remains on average at 98%. As mentioned in our previous report, the protests on the streets which continued throughout last week, are the reason behind this very prolonged and deadly third peak of the pandemic.
Government continued to regain control of main roads, where barricades setup by a few dozen people were preventing the normal transit of people and goods. Most of the country has returned to a relative normality except the southwest (Valle del Cauca, Cauca and Nariño), which is still disconnected from the rest of the country. Huila and Tolima have regained mobility. The main highway connecting Bogotá with the eastern planes and the city of Villavicencio has been blocked for most of this week. Meta province and Villavicencio are the source of supply of cattle and countless fresh foods for Bogotá. It is clear that in the case of southwest Colombia a combination of drug cartels, mafia and guerilla terrorist groups are behind the road blocks and violent disruptions. This will take longer for the Government to control. But in the case of Villavicencio and the southern access to and from Bogotá, it is unclear why the Government continues to cope with this clear violation of the law. Roadblocks are disrupting the flow of goods and having a direct impact on the economy and as in many parts of the world, in Colombia too these are forbidden by law.
The port of Buenaventura continues to be very isolated. According to official information, not more than 10 to 15% of the normal cargo volume is being moved into and from the port. Truck caravans are attacked with rocks and sticks, and we have seen a few cases of trucks being burnt by protestors. Cartagena and Santa Marta have managed for the most part to deal with the spike demand for export cargo volume. As mentioned before, the biggest issue is the availability of containers to load goods and process from storage warehouses to container patios. The warehouse capacity is limited, but exporters are having trouble securing enough containers from shipping lines, coffee included.
Yesterday the strike representatives unilaterally decided to suspend the dialogue sessions with the Government. They claim the Government is not taking into consideration some of their main requests, such as suspending the use of force and military presence to intervene barricades and road blocks. Some of their claims are unreasonable and would require constitutional reforms. I had a chance to participate in a small group talk with former Finance Minister Mauricio Cardenas this week. I coincide with several of his points which I would like to share with you. In the past two decades, Colombia had been successful in consolidating a growing and prosperous middle class, which was almost non existing until the turn of the century. Colombia’s middle class doubled to 32% from 2002 to 2019. Since the COVID-19 pandemic began, we’ve lost 2.7 million Colombians that had grown into this middle class, back to a low income class. Which translates in a 6% drop. As we all understand, any country’s middle class is the engine of growth for an
Head Office: LOHAS BEANS S.A.S. Administrative Office: Carrera 20 No. 54 – 47, Bodega A19 Carrera 7A # 69-99 Santa Marta, Colombia Bogotá, Colombia Tel 575 438 0117 Tel 57 310 478 9055 www.lohasbeans.com economy. We have to keep this in mind, as we process the current outcry of the youth claiming better opportunities for them and demanding guaranteed free education, a basic guaranteed minimum wage for all non-employed among others. The business community is committed with the Colombian society and the Government to continue to carry the heavier part of the tax burden. And has been stepping up in the domestic dialogue to play a leadership role to continue to generate jobs and economic growth. It is estimated that the budget deficit now amounts to $80 billion COP (USD 21.6 Billion). This is taking into consideration the losses derived from 40 days of protests and disruptions. As I shared with you in a previous update, only 5% of Colombians file tax returns and over 50% of our economy is cash based. This means that no transactions go through the financial system or get reported for tax purposes. This poses a serious issue for a Country that struggles to control illegal crime activity and now faces a growing social unrest problem. It will take no less than 5 years of hard coordinated work between the Government and the business community to regain track and return those 2.7 million Colombians back to a growth trend. This is the magnitude of the impact we will see from 15 months of Covid-19 and the recent protests.
Getting back to coffee! At lohas beans we are back to 60% of our normal flow of coffee into our Agroeco Mill in Santa Marta. Our partner Associations in south Tolima continued to deliver parchment coffee to our Almacafé Ibague transit warehouse through this past week. Still we have been unable to move coffee from Pitalito in Huila, as well as from Nariño and Cauca. Shipping line bookings are all over the place. We have been doing our best to work with your logistics teams to accommodate to the best alternatives available, which we appreciate. Qualities and volumes from south Tolima are sound. Our Team continues to work closely to monitor certification renewals and to support in specific governance and administrative aspects where we’ve identified needs.
Domestic coffee prices remained at record highs with Carga parchment price over $1,400,000 COP, translating into U$ 0.30/lb farmgate price with the COP trading over $3,700 per 1USD for most of the week. Coffee and crude oil are the two main export commodities in which the Colombian economy will be relying on for short term growth.
Juan Pablo Campos
Head Office: LOHAS BEANS S.A.S. Administrative Office: Carrera 20 No. 54 – 47, Bodega A19 Carrera 7A # 69-99 Santa Marta, Colombia Bogotá, Colombia Tel 575 438 0117 Tel 57 310 478 9055