Bogota, Dec. 13 - The maximum price at which a subsidy is paid on Colombian coffee has been increased 5% to 420,000 Colombian pesos ($209) for a 125 kg bag of parchment coffee, the country's Minister of Agriculture Andres Felipe Arias announced Wednesday.
If local purchasing prices trade in a range of 410,000-420,000 COP ($204-$209), Colombian producers will receive a subsidy of 10,000 COP ($5) per 125-kg of parchment coffee, rising to 20,000 COP ($10) if the price falls below 410,000 COP, Arias said at a press conference.
The subsidy is to protect Colombia's 560,000 coffee-growing families from falls in the coffee price or in the dollar, Arias added.
Before Wednesday, the price had to fall below 400,000 COP ($199) for producers to get the subsidy.
On Wednesday in the city of Medellin, the official price was 512,250 pesos per bag, 22% higher than the level needed to trigger the subsidy.
Daily purchasing prices in Colombia are based on 125-kg bags of parchment coffee delivered to dry mills through Fedecafe's central buying system.
The price subsidy was last applied in September 2004, after first being introduced at the beginning of the 2001-02 crop cycle when Colombian producers suffered a severe social crisis brought on by historically low prices.
Coffee is Colombia's third largest legal export revenue earner after oil and coal, and the most important source of employment to the country's 42 million people.