Jim Burns | Senior Staff Writer | Monday, December 2, 2002
Groups ranging from international trade groups to Members of Congress, the United Nations and the management of the Starbucks Coffee franchise believe lower coffee prices are hurting the economies of Latin American countries that depend on coffee sales. There are also fears that international coffee markets are glutted with poor quality java.
Sen. Patrick Leahy (D-Vt.), departing chairman of the Senate Foreign Operations Subcommittee, sponsored a resolution approved by the Senate and House calling on the Bush administration to work with other nations and with coffee buyers to develop a "global strategy" to combat the coffee crisis.
Leahy said he will continue to push the issue when the 108th Congress convenes in January. "This resolution is a call to action," said Leahy. "It is the first step toward working with the administration, coffee producers and buyers, and non-governmental organizations to find solutions."
The White House did not return phone calls seeking comment on the story.
Leahy cited a World Bank report showing that coffee price declines of almost 70 percent over the past five years have caused 600,000 Central American coffee workers to lose their jobs in the last two years.
"We are seeing the devastating impact that collapse of world coffee prices is having on developing nations in Latin America, Africa and Asia," Leahy said.
The United Nations already has a program in place to help those Central American coffee workers.
Last October, the UN's World Food Program began a $66 million dollar Central American relief operation. "Food insecurity triggered by recurring natural disasters has placed families in Guatemala, El Salvador, Honduras and Nicaragua in a crisis situation," said Zoraida Mesa, WFP's Regional Director for Latin America.
"Regular droughts combined with the recent coffee crisis has affected millions of people over the last five years," Zoraida said.
Leahy's resolution has gained favor with the International Coffee Organization, which insiders call the "OPEC" for coffee.
"The coffee industry in developed countries is generally perceived as prosperous and uncontroversial. But, although the coffee business is booming in consuming developed countries, current rock bottom prices are causing immense hardship to countries where coffee is a key economic activity, as well as to the farmers who produce it," the ICO said in a statement on its website.
The ICO also believes that if something isn't done soon continued lower prices will mean lower quality coffee.
"Although consumers could be expected to benefit from low prices this is not the case in coffee," read an ICO statement. "Excessively low prices lead to lower quality."
ICO also blamed the current crisis on what it called the imbalance between the supply and demand for coffee.
"Coffee production has been rising at an average annual rate of 3-point-6 percent, but demand has been increasing by only 1-point-5 percent. At the origin of this coffee glut lies the rapid expansion of production in Vietnam and new plantations in Brazil, which is harvesting a record crop in the current season," according to IOC.
However, during a recent speech at a Coffee Week convention in San Jose, Costa Rica, Starbucks Senior Vice President Mary Williams called on the global coffee industry and world leaders and governments to stop blaming individual countries for the coffee crisis and start working together to find solutions.
"I challenge you to find a solution," Williams said. "This challenge goes to the presidents, it goes to the governments, it goes to the companies.
Meanwhile, the IOC called on governments to adopt its Coffee Quality Improvement Program that was instituted last October as a way of combating the crisis.
"This sets minimum grading standards and maximum moisture content for coffee exports. The consumer will benefit from higher overall quality standards in coffee blends and the producers from the reduction in the current surplus through elimination from the market of sub-standard coffee," the IOC said.
IOC also vowed to better promote coffee consumption worldwide in cooperation with the private sector and producing countries to reach new markets "such as China and Russia" as well as new and existing markets, and called on the World Trade Organization to eliminate trade barriers on coffee from developing countries.
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