By Sanjay Suri
LONDON, Dec 5 2002 (IPS)

The world of coffee needs Brazil to fail – and bold new efforts from the International Coffee Organisation to work – if it is to come out of its crisis.

The crisis is severe. "Twenty years ago coffee was two dollars a pound and a cup of coffee cost 40 cents," Nestor Osorio, executive director of the International Coffee Organisation (ICO) told media representatives in London Thursday. "Now it is 40 cents a pound and a cup of coffee costs two dollars."

There are too many coffee beans around, and a lot of them are just not good enough, Osorio said. In the new coffee year (running from October 1 to September 30, 2002-03) production is projected to be 120 million bags of 60 kg each while consumption is expected to be about 110 million bags. In addition about 40 million bags are lying around as stock. Excess supplies have been pushing prices down for some time.

"For this year the key lies in Brazil," Osorio said. Brazil produced 45 million bags in 2001-02. But in the present year it may produce substantially less because of what is called the stress to trees. If output from Brazil, which is the largest producer could fall to half, there will be hope for the coffee producers around the world, Osorio said.

That means hope to 125 million people dependent on coffee production, mostly in Brazil, the Andean region of Central America, Vietnam, Indonesia and India. The crisis has been causing severe hardship and even suicides among coffee workers and farmers. It will mean relief also to prosperous coffee drinking countries, Osorio said. "You have at present 500,000 coffee workers and farmers who could be raising new pressures on migration into the U.S. and Canada."

Osorio said the pressure is particularly severe on some of the 49 countries classed as least developing countries where 350 million people live on less than a dollar a day. Of these 27 are coffee or cocoa producers, he said.

But it will not be enough to sit and wait for a reduced crop in Brazil, Osorio said. The ICO has launched several attempts to correct long-term imbalances in coffee production and distribution.

"The three pillars of our efforts are improvement of quality, diversification in production and distribution, and promotion of coffee, Osorio said. But with all three it will be a hard haul, and results cannot be expected quickly, he said.

Producing countries have not taken advantage of the brief bonanza periods to diversify production, Osorio said. The ICO is now working with governments and with independent organisations to identify areas that have not traditionally grown coffee and where "planting has taken place only in response to a good price," he said. "We will push for eradication of coffee in those areas," he said. Vietnam produced a million bags of coffee ten years ago; last year it produced 14 million bags.

"But there are no easy alternatives," he said. If a farmer were to begin to grow tomatoes instead, he would run into the "heavy tariffs and tremendous subsidies" that protect farm produce and prices in the developed world. It will be an uphill struggle to see that there is better access in the developed world to agriculture products from other countries.

Coffee growers need also to get involved in the end product that reaches the consumer. Here the farmers are up against the major international coffee companies like Nestle and Proctor & Gamble. But the ICO is trying to promote "joint venture systems for international companies to establish roasting plants and process coffee in partnership with producers," Osorio said. "We want a situation in which coffee producers are not only the suppliers of coffee but of the end product."

At the same time the ICO is working to help improve the quality of coffee, and to take what Osorio called "lousy rubbish" off the market. There are set ways of determining what is rubbish, through an assessment of defects and humidity in beans. At least five million bags of this "rubbish" coffee need to be taken off the market.

Again, it will not be easy. Germans see themselves as discriminating coffee drinkers, and until about five years back high quality Colombian coffee amounted to about 35 per cent of consumption in Germany.

But more of cheaper coffee has been introduced into blends so that the consumption of Colombian coffee has dropped by half. But companies introduce such changes slowly, and coffee drinkers in Germany seem not to have noticed, Osorio said.

"We need more transparency with the final product so that coffee drinkers know what they are drinking," he said.

The mark-ups by the final sellers are huge. The total value of cups of coffee sold around the world is about 70 billion dollars. Of this, the exporting countries get only 5.5 billion dollars. Ten years ago the market was worth 30 billion dollars, of which the exporting countries got 10 million dollars.

The ICO is also launching a move to persuade people producing coffee to drink at least some of it themselves. Consumption of coffee in Brazil has more than doubled in the last five years and other producing countries should follow, Osorio said. The ICO plans to help create new markets and to expand existing ones as a part of the solution to the crisis.

Excerpt:

By Sanjay Suri
LONDON, Dec 5 2002 (IPS)

The world of coffee needs Brazil to fail – and bold new efforts from the International Coffee Organisation to work – if it is to come out of its crisis.

The crisis is severe. “Twenty years ago coffee was two dollars a pound and a cup of coffee cost 40 cents,” Nestor Osorio, executive director of the International Coffee Organisation (ICO) told media representatives in London Thursday. “Now it is 40 cents a pound and a cup of coffee costs two dollars.”

There are too many coffee beans around, and a lot of them are just not good enough, Osorio said. In the new coffee year (running from October 1 to September 30, 2002-03) production is projected to be 120 million bags of 60 kg each while consumption is expected to be about 110 million bags. In addition about 40 million bags are lying around as stock. Excess supplies have been pushing prices down for some time.

“For this year the key lies in Brazil,” Osorio said. Brazil produced 45 million bags in 2001-02. But in the present year it may produce substantially less because of what is called the stress to trees. If output from Brazil, which is the largest producer could fall to half, there will be hope for the coffee producers around the world, Osorio said.

That means hope to 125 million people dependent on coffee production, mostly in Brazil, the Andean region of Central America, Vietnam, Indonesia and India. The crisis has been causing severe hardship and even suicides among coffee workers and farmers. It will mean relief also to prosperous coffee drinking countries, Osorio said. “You have at present 500,000 coffee workers and farmers who could be raising new pressures on migration into the U.S. and Canada.”

Osorio said the pressure is particularly severe on some of the 49 countries classed as least developing countries where 350 million people live on less than a dollar a day. Of these 27 are coffee or cocoa producers, he said.

But it will not be enough to sit and wait for a reduced crop in Brazil, Osorio said. The ICO has launched several attempts to correct long-term imbalances in coffee production and distribution.

“The three pillars of our efforts are improvement of quality, diversification in production and distribution, and promotion of coffee, Osorio said. But with all three it will be a hard haul, and results cannot be expected quickly, he said.

Producing countries have not taken advantage of the brief bonanza periods to diversify production, Osorio said. The ICO is now working with governments and with independent organisations to identify areas that have not traditionally grown coffee and where “planting has taken place only in response to a good price,” he said. “We will push for eradication of coffee in those areas,” he said. Vietnam produced a million bags of coffee ten years ago; last year it produced 14 million bags.

“But there are no easy alternatives,” he said. If a farmer were to begin to grow tomatoes instead, he would run into the “heavy tariffs and tremendous subsidies” that protect farm produce and prices in the developed world. It will be an uphill struggle to see that there is better access in the developed world to agriculture products from other countries.

Coffee growers need also to get involved in the end product that reaches the consumer. Here the farmers are up against the major international coffee companies like Nestle and Proctor & Gamble. But the ICO is trying to promote “joint venture systems for international companies to establish roasting plants and process coffee in partnership with producers,” Osorio said. “We want a situation in which coffee producers are not only the suppliers of coffee but of the end product.”

At the same time the ICO is working to help improve the quality of coffee, and to take what Osorio called “lousy rubbish” off the market. There are set ways of determining what is rubbish, through an assessment of defects and humidity in beans. At least five million bags of this “rubbish” coffee need to be taken off the market.

Again, it will not be easy. Germans see themselves as discriminating coffee drinkers, and until about five years back high quality Colombian coffee amounted to about 35 per cent of consumption in Germany.

But more of cheaper coffee has been introduced into blends so that the consumption of Colombian coffee has dropped by half. But companies introduce such changes slowly, and coffee drinkers in Germany seem not to have noticed, Osorio said.

“We need more transparency with the final product so that coffee drinkers know what they are drinking,” he said.

The mark-ups by the final sellers are huge. The total value of cups of coffee sold around the world is about 70 billion dollars. Of this, the exporting countries get only 5.5 billion dollars. Ten years ago the market was worth 30 billion dollars, of which the exporting countries got 10 million dollars.

The ICO is also launching a move to persuade people producing coffee to drink at least some of it themselves. Consumption of coffee in Brazil has more than doubled in the last five years and other producing countries should follow, Osorio said. The ICO plans to help create new markets and to expand existing ones as a part of the solution to the crisis.

Excerpt: