Business Briefs: Sugar, beer, coffee and the Peso

No sugar coating

Authorities have fined Colombian sugar producers over COP$320 billion (USD$110 million) for anti-competitive practices. The head of the Superintendent for Industry and Commerce (SIC), Pablo Felipe Robledo, announced the sanctions, saying that for several years, business cartels had collaborated to block sugar imports from other countries – particularly Bolivia, Guatemala, El Salvador and Costa Rica.

The Association of Sugarcane growers hit back at the decision in a public letter to President Santos, calling it an “outrage”, accusing the SIC of “shameful irregularities” and saying that the fines are “exorbitant”. The companies involved will challenge the ruling.

Colombian bottleneck

The Santa Domingo family, the richest in Colombia, have so far blocked Anheuser-Busch InBev’s takeover bid for SABMiller. The family own a 14% stake in SABMiller and have two seats on the board, after selling Bavaria to them in 2005. If the deal is successful it will see the creation of Megabrew, a mega-company that would own eight out of ten of the world’s top beer brands and have a combined market cap of over US$200 billion.

At the time of going to print, Anheuser had upped its offer to £43.50 from £42.15 per share, after three previous offers had been rejected. Analysts said that it looked like the deal had been accepted in principle and was now likely to go ahead.

Coffee

The Colombian Coffee Growers Federation said that coffee production was up 16% year on year, from 912,000 bags in September 2014 to 1,058,000 this year. However, production will be hit by the drought with 18% of the country’s plantations affected to some degree.

Roberto Vélez, head of the federation also told media that they plan to take Juan Valdez to market in 2018.

Peso

Colombia’s Finance Minister, Mauricio Cárdenas continues to stress that the weakening peso “is sending a signal to producers to produce more for the export market and for consumers to buy more Colombian goods and less imports”. In an interview with Wall Street Journal, the minister insisted that the exchange rate helped to boost exports and made the country more competitive as an investment destination.

However, experts remain sceptical as to whether the Colombian economy is adequately prepared to take advantage of the improving trade terms of trade. Inadequate investment in domestic infrastructure continues to hinder domestic competitiveness, limiting the extent to which they can be expected to fill the void created by the anticipated fall in import volumes.

Meanwhile, the World Bank has approved a US$700million loan to Colombia designed to support the National Development Plan. Gerardo Corrochano, World Bank Director for Colombia and Mexico, said the loan was particularly aimed at improving “environmental conditions that improve the health situation and well-being of the poorest”.


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