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Colombia coffee harvest, profits at risk in 2018 -federation

BOGOTA, Jan 23 (Reuters) - Heavy rain and a strengthening peso could complicate the harvest and sale of coffee from Colombia, the world's biggest producer of mild arabica beans, the growers' federation said on Tuesday.

Colombia produced just under 14.2 million 60-kg bags of washed arabica in 2017, almost steady from the year before, despite wet weather and cloudiness that affected crops in the final quarter of the year. The federation has said rain will cut output by 20 percent in the first half of 2018.

"The climate has not been on our side, based on flowering we think that for the first half of the year we won't have a good harvest," Roberto Velez, the head of the national growers federation, told journalists. "If the rain doesn't stop we could be at risk."

The increasing value of local currency could also damage growers' profit margins, Velez said. International coffee prices are holding steady at around $1.20 per pound, but the Colombian peso has risen by 4.34 percent since the beginning of the year, decreasing income from exports. The peso closed 2017 at 2,984 to the dollar and now sits at around 2,850.

"What worries me, what has growers sounding the alarm, is the strengthening of the peso - 2,850 pesos to the dollar will begin to be a big problem," Velez said.

Growers typically receive 750,000 pesos ($262.70) per 125-kg shipment, a price which just covers production costs, Velez said.

"Hopefully we will have better international prices, hopefully the dollar will return to levels of 3,000 pesos, while we have a dollar at 2,850 and a price of $1.20 per pound, coffee growers are not making money, are almost losing money," Velez said.

If the peso strengthens to 2,800 to the dollar Colombian growers will need at least $1.30 per pound to make a profit, Velez said.

($1 = 2,854.20 Colombian pesos) (Reporting by Luis Jaime Acosta; Writing by Julia Symmes Cobb; Editing by Helen Murphy and Lisa Shumaker)