Colombia to Open Coffee Futures Market,
Growers Say (Update1)

Sept. 25, 2005 (Bloomberg News) -- Colombia will establish a coffee futures market and make it easier for investment funds and farmers to buy and sell derivatives as it moves to boost farm income, the head of the coffee growers' federation said.

To promote the market, the government plans to establish rules easing the way for investment funds to get into coffee futures and to allow farmers to more easily trade derivatives, said Gabriel Silva, general manager of the National Federation of Colombian Coffee Growers in a speech to the second world coffee conference in Salvador, Brazil.

``We are setting up a domestic futures market in conjunction with the National Agricultural Exchange of Colombia, to combine protection from international price volatility and a changed rate situation,'' Silva said. ``The balance of price allocation between producing countries and consuming counties must go beyond the coffee sphere.''

Silva and Colombian President Alvaro Uribe are looking for ways to increase the income of farmers, many with plots of three hectares or less, to bolster the country's democracy and secure support against illegal drugs and armed revolutionaries.

Silva said he expects the measures to attract investment in coffee futures with a nominal value of about $500 million. Colombia is the world's third-largest coffee producer.


To contact the reporter on this story:
Jeb Blount in Salvador, Brazil at jblount@bloomberg.net

Last Updated: September 25, 2005 13:57 EDT