ICO rounds in on coffee crisis

With coffee prices at a 30-year all time low, the International
Coffee Organisation and World Bank ended their round table last
week with a call to rich countries to share the burden of the
present coffee crisis.

With coffee prices at a 30-year all time low, the International Coffee Organisation and World Bank ended a round table last week with a call to rich countries to share the burden of the present coffee crisis while also urging the US government to rejoin the organisation.

The International Coffee Organisation (ICO), an intergovernmental organisation set up in 1963 to serve the international coffee community, and the World Bank round table brought together over 250 delegates including producers from developing countries, government officials, experts from international organisations, advocacy groups and industry representatives to discuss alternatives such as diversification, quality, added value and market development.

The principal outcome of the meeting was the demand that rich countries reduce their internal agricultural subsidies and tariffs in order to allow potential diversification in those coffee-producing countries willing to move to other crops. It also highlighted the importance of the US government's participation in these moves.

Coffee prices reached their lowest levels in 30 years last year (and in 100 years in real terms), and have risen only slightly with the ICO composite indicator price at 52.89 US cents/lb on 16 May 2003. According to the ICO, in almost all coffee-producing countries, such prices are unable to cover production costs and have led to serious social and economic problems, including increased poverty, indebtedness and abandonment of coffee farms.

In October 2001, the latest International Coffee Agreement entered into force, with new objectives including promoting quality, promoting coffee consumption and encouraging the development of a sustainable coffee economy. The World Bank and the ICO have thus been working together to analyse the problems arising from the present coffee crisis in line with the preoccupations of governments and civil society groups.

Commenting on the proceedings Néstor Osorio, ICO executive director, said: "The round table has given us some important concrete proposals which we will take to the ICO executive board and council later this week. In particular, we will need to decide whether there is still a role for supply management to address the crisis."

He also suggested that "in the light of the universal acknowledgement of an imbalance in the market, we will also need to pursue the promotion of consumption through various means, including the improvement of quality, and to reduce dependence through diversification".

"We will need to establish the capacity of international agencies and the private sector to work on concrete actions in areas like credit and risk management, and what measures can be taken to bring producers once again into the profit-zone. The ICO is ready to coordinate the successful implementation of these ideas,"​ he concluded.

According to the ICO, participants agreed that a long-term solution of the crisis needs to be part of an integral strategy for the agricultural and rural sector. Innovative solutions such as the facilitation of access to price risk management products to groups of small farmers in several Latin American and African countries, and new marketing strategies for quality improvement and increase of consumption were showcased.

However, for Kevin Cleaver, director of the Agriculture and Rural Department (ARD) of the World Bank, "there is no simple solution, there is no silver bullet. There is a consensus that an integrated package which includes improvement in coffee quality, increase in consumption in non-traditional markets, strengthening of the bargaining and marketing powers of producing countries and support to diversification should be implemented".

The ICO was to present the outcome of the round table to its International Coffee Council meeting later on last week and also to the G-8 Summit, taking place in early June in Evian, France. It aims to gather and distribute information on the different initiatives on sustainability and other concrete solutions to the present crisis.

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