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ECONOMY: U.S. Welcomed at Global Coffee Table

Sanjay Suri

LONDON, Sep 27 2004 (IPS) - The United States is back at the international coffee table, and about time since it drinks about a quarter of world coffee. And about time also because 25 million coffee growers in developing countries are still reeling from low prices.

The decision of the United States to rejoin the International Coffee Organisation (ICO) will not immediately raise prices or change the lives of producers. But ”it is a sign that it is willing to look at ways of addressing problems facing the producing countries,” Pablo Dubois from the ICO told IPS Monday.

The United States was a founder member of the ICO in 1963. But it quit in 1993 after officials said the ICO was impeding the flow of a free coffee market. The ICO has since moved steadily towards an open market policy.

The London-based ICO was market regulator until 1989. But now it plays a role in bringing member countries together in exchanging views and addressing policy issues. Its other activities include a quality improvement programme, provision of information and statistics, projects to benefit the coffee economy and promotion of coffee consumption in traditional and emerging markets.

Improved sales and prices are critical to growers particularly in Brazil, by far the largest producer of coffee, and to producers in several Latin American countries such as Colombia, Guatemala, Peru and El Salvador. Vietnam, Indonesia, India and Ethiopia are also among the bigger producers.

Delegates from the 73 member countries of the ICO welcomed the U.S. decision at a meeting in London last week.

”The United States is very important for the balance of world coffee consumption,” Dubois said. One consequence of the return of the United States could be that it ”provides financial resources for coffee development projects.” Another could be work on ”improving consumption, and increasing demand in countries such as China and Russia.”

The United States sent an observer delegation to the coffee conference last week. It is expected to formalise entry to the ICO through the United Nations by the end of the year. The ICO was set up under UN regulation.

In other developments that could bring new hope to producers, members are now debating a code of good practice proposed by Germany for production and trade. The ICO is also considering ”a partnership of organisations interested in sustainability issues,” Dubois said.

But finally only better coffee prices and increased consumption can help producers. The composite price for different qualities of coffee that include primarily the upmarket Arabica and the lower priced Robusta fell in July and August, but has recovered now to around 64 cents a pound. But that is still low compared to around 120 cents a pound in the 1980s.

Arabica accounts for about 70 percent of world production, which is expected at 112 million to 114 million bags for 2004-2005 (the coffee year begins Oct. 1). Brazil will produce more than a third of this. The world of coffee looks at end level prices per pound of weight, and measures production in bags of 60kg each. The average world imports of coffee are worth about 10 billion dollars a year.

Consumption is at present considerably below production. In 2003 it was around 85 million bags. The ICO wants to increase consumption substantially, and is considering strategies particularly to get young people into the coffee drinking habit. U.S. membership is expected to advance such strategies significantly.

”There can be no solution to global economic problems without the U.S.,” Seth Petchers, coffee programme coordinator for Oxfam America said in a statement. ”We look forward to working together to develop programmes that can help alleviate the crisis for more than 25 million small coffee farmers throughout the world.”

Oxfam says the price of coffee still remains below production cost for millions of farming families. Many coffee farmers have been forced to abandon their land and migrate elsewhere in search of employment, it says.

Robert Nelson from the National Coffee Association in the United States said in a statement that the U.S. decision was historic. ”U.S. membership, through taking an active leadership role, can very much ensure future sustainability of the worldwide coffee industry,” he said.