The International Coffee Agreement (ICA) is an international commodity agreement between coffee producing countries and consuming countries. First signed in 1962, it was originally aimed at maintaining exporting countries' quotas and keeping coffee prices high and stable in the market, [1] mainly using export quotas to steer the price. [2] The International Coffee Organization, the controlling body of the agreement, represents all major coffee producing countries and most consuming countries.
The current 2007 agreement has 42 exporting members and 7 importing (the European Union represents all its member states as one member). [3]
The original agreement was signed in 1962 for a five-year period, and since then there have been six subsequent agreements, ratified in 1968, 1976, 1983, 1994, 2001 and 2007.
The precursor to the ICA was the Inter-American Coffee Agreement (IACA) established during the Second World War. The war had created the conditions for a Latin American coffee agreement: European markets were closed off, the price of coffee was in decline and the United States feared that the declining price could drive Latin American countries—especially Brazil—towards Nazi or Communist sympathies. [4] [5]
In 1940, the United States agreed to restrict its imports to a quota of 15.9 million bags, and other Latin American countries agreed to restrict their production. [6] The agreement had an immediate effect, the price almost doubled by the end of 1941. [4] After the end of the war in 1945 the price of coffee rose continuously [5] [7] until 1955–57 when a degree of equilibrium was reached.
Producers sought ways to maintain the price, [8] this led to the first International Coffee Agreement. [7] A target price was set, and export quotas allocated to each producer. [9] When the indicator price set by the International Coffee Organization (ICO) fell below the target price, quotas were decreased; if it rose above it, quotas were increased. [9] Although the system had its problems, it was successful in raising and stabilizing the price. [9]
The International Coffee Organization was established in 1963 to administer the clauses of the agreement and supervise the mechanisms in place. Until 1986 the Coffee Council, the decision-making body of ICO, approved export quotas. [1]
In 1989, ICO failed to reach an agreement on new export quotas, causing the 1983 ICA to break down. [10] The disagreement was triggered by consumers' change in taste towards milder and higher quality coffee. [11] With the retained quotas from the 1983 agreement, the change increased the value of milder coffee at the expense of more traditional varieties such as robusta. [12] Brazil in particular – the world's most powerful coffee producer – refused to reduce its quotas believing it would lower their market share. [11] [13] The consumers, led by the United States, demanded higher quality coffee and the end of selling coffee to non-members at reduced rates. [14] [15]
The US criticized Brazil for not being willing to accept a reduction of the country's quotas despite falling share of the world market since 1980. [13] Jorio Dauster, head of the state-controlled Brazilian Coffee Institute, described Brazil as an "extremely efficient producer" and believed it could survive without help from ICO. [11] [13]
The 1983 ICA was set to expire on 1 October 1989, but realizing that it would be impossible to enter into a new agreement before the termination date, the Coffee Council (ICO's highest body) effectively decided to suspend the export quotas on 4 July 1989. [14] Without an extended agreement producing countries lost most of their influence on the international market. [16] ICO's average indicator price for the last five years previous the end of the regime fell from US$1.34 per pound, to US$0.77 per pound for the first five years after. [16]
According to Yves Engler's Canada in Africa, "no longer worried about the prospect of poor coffee producers turning towards the Soviet Union, the US withdrew its support from the International Coffee Agreement in 1989."
The current 2007 ICA entered into force on 2 February 2011 when it was approved by two-thirds of the exporting and importing signatory governments. [17] As of 2013 [update] , it has 51 members, of which 44 are exporting members, and 7 importing (the European Union represents all its 28 member states). [3] According to ICO, its members represent 98% of all coffee production and 67% of the consumption. [18]
|
|
The United States exited the International Coffee Agreement after a 90-day notification period ending 27 June 2018. [19]
Fair trade is an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. The fair trade movement combines the payment of higher prices to exporters with improved social and environmental standards. The movement focuses in particular on commodities, or products that are typically exported from developing countries to developed countries but is also used in domestic markets, most notably for handicrafts, coffee, cocoa, wine, sugar, fruit, flowers and gold.
Non-tariff barriers to trade are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
Trade can be a key factor in economic development. The prudent use of trade can boost a country's development and create absolute gains for the trading partners involved. Trade has been touted as an important tool in the path to development by prominent economists. However trade may not be a panacea for development as important questions surrounding how free trade really is and the harm trade can cause domestic infant industries to come into play.
Coffea canephora is a species of coffee that has its origins in central and western sub-Saharan Africa. It is a species of flowering plant in the family Rubiaceae. Though widely known as Coffea robusta, the plant is scientifically identified as Coffea canephora, which has two main varieties, robusta and nganda.
A voluntary export restraint (VER) or voluntary export restriction is a measure by which the government or an industry in the importing country arranges with the government or the competing industry in the exporting country for a restriction on the volume of the latter's exports of one or more products.
Coffee is a popular beverage and an important commodity. Tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world daily that amounts to 2.5 cups of coffee consumed per person on average. Over 90 percent of coffee production takes place in developing countries—mainly South America—while consumption happens primarily in industrialized economies. There are 25 million small producers who rely on coffee for a living worldwide. In Brazil, where almost a third of the world's coffee is produced, over five million people are employed in the cultivation and harvesting of over three billion coffee plants; it is a more labor-intensive culture than alternative cultures of the same regions, such as sugar cane or cattle, as its cultivation is not automated, requiring frequent human attention.
The fair trade movement has undergone several important changes like the operation for ten thousand villages to open their businesses since early days following World War II. Fair trade, first seen as a form of charity advocated by religious organizations, has radically changed in structure, philosophy and approach. The past fifty years have witnessed massive changes in the diversity of fair trade proponents, the products traded and their distribution networks.
Agriculture in Colombia refers to all agricultural activities, essential to food, feed, and fiber production, including all techniques for raising and processing livestock within the Republic of Colombia. Plant cultivation and livestock production have continuously abandoned subsistence agricultural practices in favour of technological farming resulting in cash crops which contribute to the economy of Colombia. The Colombian agricultural production has significant gaps in domestic and/or international human and animal sustenance needs.
The International Coffee Organization (ICO) was set up in 1963 in London, under the auspices of the United Nations (UN) due to the economic importance of coffee. It administers the International Coffee Agreement (ICA), an important instrument for development cooperation.
Agriculture continued to be the mainstay of the economy of Haiti in the late 1980s; it employed approximately 66 percent of the labor force and accounted for about 35 percent of GDP and for 24 percent of exports in 1987. The role of agriculture in the economy has declined severely since the 1950s, when the sector employed 80 percent of the labor force, represented 50 percent of GDP, and contributed 90 percent of exports. Many factors have contributed to this decline. Some of the major ones included the continuing fragmentation of landholdings, low levels of agricultural technology, migration out of rural areas, insecure land tenure, a lack of capital investment, high commodity taxes, the low productivity of undernourished animals, plant diseases, and inadequate infrastructure. Neither the government nor the private sector invested much in rural ventures; in FY 1989 only 5 percent of the national budget went to the Ministry of Agriculture, Natural Resources, and Rural Development. As Haiti entered the 1990s, however, the main challenge to agriculture was not economic, but ecological. Extreme deforestation, soil erosion, droughts, flooding, and the ravages of other natural disasters had all led to a critical environmental situation.
Angola is a potentially rich agricultural country, with fertile soils, a favourable climate, and about 57.4 million ha of agricultural land, including more than 5.0 million ha of arable land. Before independence from Portugal in 1975, Angola had a flourishing tradition of family-based farming and was self-sufficient in all major food crops except wheat. The country exported coffee and maize, as well as crops such as sisal, bananas, tobacco and cassava. By the 1990s Angola produced less than 1% the volume of coffee it had produced in the early 1970s, while production of cotton, tobacco and sugar cane had ceased almost entirely. Poor global market prices and lack of investment have severely limited the sector since independence.
The role of agriculture in the Bolivian economy in the late 1980s expanded as the collapse of the tin industry forced the country to diversify its productive and export base. Agricultural production as a share of GDP was approximately 23 percent in 1987, compared with 30 percent in 1960 and a low of just under 17 percent in 1979. The recession of the 1980s, along with unfavorable weather conditions, particularly droughts and floods, hampered output. Agriculture employed about 46 percent of the country's labor force in 1987. Most production, with the exception of coca, focused on the domestic market and self-sufficiency in food. Agricultural exports accounted for only about 15 percent of total exports in the late 1980s, depending on weather conditions and commodity prices for agricultural goods, hydrocarbons, and minerals.
Fair trade coffee is coffee that is certified as having been produced to fair trade standards by fair trade organizations, which create trading partnerships that are based on dialogue, transparency and respect, with the goal of achieving greater equity in international trade. These partnerships contribute to sustainable development by offering better trading conditions to coffee bean farmers. Fair trade organizations support producers and sustainable environmental farming practices and prohibit child labor or forced labor.
An international commodity agreement is an undertaking by a group of countries to stabilize trade, supplies, and prices of a commodity for the benefit of participating countries. An agreement usually involves a consensus on quantities traded, prices, and stock management. A number of international commodity agreements serve solely as forums for information exchange, analysis, and policy discussion.
Coffee production in Ethiopia is a longstanding tradition which dates back dozens of centuries. Ethiopia is where Coffea arabica, the coffee plant, originates. The plant is now grown in various parts of the world; Ethiopia itself accounts for around 3% of the global coffee market. Coffee is important to the economy of Ethiopia; around 60% of foreign income comes from coffee, with an estimated 15 million of the population relying on some aspect of coffee production for their livelihood. In 2006, coffee exports brought in $350 million, equivalent to 34% of that year's total exports.
Brazil produces about a third of the world's coffee, making the country by far the world's largest producer. Coffee plantations, covering some 27,000 km2 (10,000 sq mi), are mainly located in the southeastern states of Minas Gerais, São Paulo and Paraná where the environment and climate provide ideal growing conditions.
The coffee production in Mexico is the world's 8th largest with 252,000 tonnes produced in 2009, and is mainly concentrated to the south central to southern regions of the country. The coffee is mainly arabica, which grows particularly well in the coastal region of Soconusco, Chiapas, near the border of Guatemala.
Sustainable coffee is a coffee that is grown and marketed for its sustainability. This includes coffee certified as organic, fair trade, and Rainforest Alliance. Coffee has a number of classifications used to determine the participation of growers in various combinations of social, environmental, and economic standards. Coffees fitting such categories and that are independently certified or verified by an accredited third party have been collectively termed "sustainable coffees". This term has entered the lexicon and this segment has quickly grown into a multibillion-dollar industry of its own with potentially significant implications for other commodities as demand and awareness expand.
The Cup of Excellence is an annual competition held in several countries to identify the highest quality coffees produced. It is organised by the Alliance for Coffee Excellence, which was founded by George Howell, Susie Spindler and Silvio Leite. The winning coffees are sold in internet auctions. The concept was developed by the Gourmet Coffee Project of the International Coffee Organization (ICO). This project was devised by Pablo Dubois, Head of Operations of the ICO and Frans Bolvenkel, of the International Trade Centre (ITC) at a meeting in Geneva in late 1994. This project, supervised by the ICO, managed by the ITC and largely financed by the Common Fund for Commodities, ran from 1995 to 2000, and aimed to develop methodologies for the creation of new "gourmet" or high-quality speciality coffees. The Cup of Excellence competition has been dubbed as the 'Oscars of the coffee world'.
Coffee is Uganda's top-earning export crop. In 1989 Uganda's coffee production capacity exceeded its quota of 2.3 million bags, but export volumes were still diminished by economic and security problems, and large amounts of coffee beans were still being smuggled out of Uganda for sale in neighbouring countries. Uganda is one of the few countries in the world with indigenous coffee, with Robusta coffee growing wild around Lake Victoria.
