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US to Rejoin International Coffee Organization - 2004-09-15


After an 11-year hiatus, the United States announced Wednesday it will rejoin the International Coffee Organization, which represents 97 percent of the world's producers of the commodity, along with key consuming nations in Europe and elsewhere. The move comes after years of hardship for coffee growers in Latin America, Africa and elsewhere who have seen wholesale prices for their crops plummet to near-record lows.

The United States is the world's largest consumer of coffee, and with size comes clout. In 1993, the United States left the International Coffee Organization over concerns that the body was manipulating the market against consumers by artificially boosting prices through a supply quota system. The years since have seen new coffee producers like Vietnam emerge even as established producers raised output. The result? A global glut in coffee leading to a 65 percent drop in worldwide coffee export earnings that has devastated agricultural sectors from Nicaragua to Ethiopia to Indonesia.

Wednesday, the Bush administration announced its intention to rejoin the ICO, saying the organization has undertaken free market-oriented reforms. Assistant Secretary of State for Economic and Business Affairs Anthony Wayne, said "[the United States is] the largest importer of coffee in the world. And, given our interest in the coffee trade and our interest in the development and prosperity of coffee producing countries, it is reasonable that we should make our voice heard in international discussions."

In recent years, falling coffee prices have been a boon to food processing corporations and retail coffee chains in the United States and elsewhere, allowing them to boost profit margins without passing steep price increases to consumers. But U.S. lawmakers and others have grown concerned that the low wholesale prices were creating adverse conditions abroad, leading untold numbers of farmers to turn to drug crops or other activities in order to survive.

In 2002, both houses of Congress passed a resolution calling on the Bush administration to negotiate America's return to the ICO as part of a plan to combat the global coffee crisis.

Wednesday, Colombia's ambassador to the United States, Luis Moreno, was one of many officials from coffee producing nations who welcomed the U.S. announcement.

"560,000 Colombian families depend on coffee for their sustenance. Safeguarding the livelihoods of these families is a national priority. Having the U.S. as the largest consumer [back in the ICO] will create an environment in which we can address issues of poverty, and in which we can address challenges like what we have seen in Colombia, with coca production [the raw material used to make cocaine] mixed in with the production of coffee," he said.

In his remarks, Ambassador Moreno stressed that the days of quotas are over, and that the free market will prevail.

But others hinted that the free market might not be enough to save coffee producers. Cameroon's ambassador to the United States, Jerome Mendouga, said farmers in his country continue to suffer from prices that do not cover the cost of production. "Definitely it has been a difficult time for the Cameroonian producer," he said.

The ambassador said price stability is a clear necessity, but that something else is also needed. "Along with stability we need to have fair prices for the producer," he said.

But what is fair? Robert Nelson heads the U.S. National Coffee Association, whose board of directors includes representatives from a plethora of corporations that sell coffee products in the United States. Mr. Nelson said American companies and consumers have a clear and obvious interest in seeing that coffee producers do not abandon their crops. But, asked what role the ICO should play, Mr. Nelson said nothing about determining "fair" prices.

"The economic driver behind coffee and behind the economic viability of the industry, quite frankly, is the free market," he said.

Perhaps there is middle ground. Assistant Secretary of State Anthony Wayne said economic viability for coffee producers and a vibrant, free market for the commodity need not be mutually exclusive goals.

"There are development interests, there are cultural interests. And by sharing information you can maximize the development and prosperity benefits of a free market system, and the discussion in the ICO can be a contributor to that," he said.

For their part, ICO officials have said that producers need, as they put it, "better remuneration" and that U.S. involvement is key to wielding the political leverage needed to accomplish that goal.

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