Fine Coffee General knowledge International Coffee Organization History

organization's history

In the 19th century, coffee became an important commodity in the international trade market. For a long time after that, the coffee market was often in a state of oversupply, low prices, and occasional price increases in short supply, but this situation lasted only a short time.

During the economic crisis of the 1930s and World War II (1939-1945), coffee market supply rose, demand fell and prices were low. But in the first few years after the war, demand for coffee rose beyond the capacity of the market. Between 1950 and 1953, coffee stocks fell below the minimum required for normal trade, and the outbreak of the Korean War, the Brazilian drought, and subsequent frosts exacerbated the shortage of coffee markets. In 1953, coffee prices rose to unprecedented levels, which led to a worldwide increase in coffee tree cultivation and coffee overproduction. In the late 1950s and early 1960s, coffee stocks increased and prices dropped sharply. Faced with this situation, governments took the initiative to take measures, hoping to stabilize the coffee market and prevent coffee prices from falling. Because of the severe economic and political consequences of falling prices in many coffee-producing countries in Latin America and Africa.

After a series of short-term agreements between coffee-producing countries, a coffee study group was announced to study how to bring coffee-exporting and coffee-importing countries to a convention on coffee, and the United Nations International Coffee Convention was concluded in New York, followed by a five-year 1968 Convention. The two conventions introduced the concept of a quota system. Accordingly, when coffee supply exceeds consumption demand, excess coffee will not be available. In addition, the treaty created coffee production and diversification provisions to limit coffee supply in order to achieve the goal of limiting coffee supply, and coffee promotion activities followed to increase coffee consumption.

The operation of these conventions kept coffee prices relatively stable from 1963 to 1972, and coffee production and consumption also achieved balance. The coffee convention played an important role in promoting the economic development of coffee producing countries and international trade cooperation.

A change in supply and demand patterns led to an increase in coffee prices and the collapse of the quota system in 1973. All the economic provisions of the 1968 Convention have been removed. ICOFI continues to serve as a centre for collecting and disseminating information about coffee, while it continues to work as a forum for consultations on a new convention.

The International Coffee Convention, 1976, was negotiated in 1975 under very different circumstances than when the first two conventions were concluded. When the first two conventions were concluded, oversupply in the coffee market led to a drop in coffee prices, while in 1975 Brazil, the world's largest coffee producer, suffered a severe frost, leading to fears that the world coffee market would soon be in short supply, which caused coffee prices to rise sharply. This affects the member States of OICC. Thus, in negotiating the 1976 Convention, States introduced new provisions to strengthen the role of the organization, in addition to retaining the provisions that had worked well in the two preceding Conventions.

One of the main features of the new 1976 Convention was that it allowed quotas to be terminated when coffee prices were high and reintroduced when prices were low. Under this system, a quota system was introduced in 1980. The experience gained in implementing the 1976 Convention provided a good basis for the negotiation of the fourth Convention, which entered into force in 1983.

The International Coffee Convention 1983 has the following main economic characteristics:

1. When necessary, export quota systems are adopted to ensure price stability within a certain range. The scope is agreed upon annually by the coffee importing and exporting countries members of the organization at meetings of the International Coffee Council.

2. When coffee prices rise above a certain level, the quota system is terminated; when prices fall, the quota system can be reactivated.

3. In establishing individual limits, account is taken of the past export performance of coffee-exporting Member States and coffee stocks.

4. The export quota system is supported by a binding system. Each coffee export from each member country is accompanied by a certificate of origin. Coffee importing countries will not accept coffee from exporting countries unless coffee export labels issued by the International Coffee Organization ensure the validity of certificates. When the quota system came into effect, coffee-importing countries had to limit the amount of coffee they imported from non-member countries. At the same time, coffee exports from coffee-exporting countries to non-member countries will also be tightly controlled.

5. The coffee stocks of each coffee-exporting member country are verified annually, and the verification must involve all coffee depots located throughout the country. This is done at the end of the annual harvest.

6. The Coffee Council coordinates national production policies to achieve a reasonable balance between world coffee supply and demand.

7. The convention also establishes a foundation to be funded by coffee-exporting countries to promote coffee consumption. These include coffee promotion activities in major coffee-importing countries, and sponsoring surveys and studies on coffee consumption. Promotion funds are also used to finance coffee centres, scientific surveys and training projects to help improve coffee quality and overall image. Coffee exporting countries contributed approximately $100 million to the Fund over the 20 years that the Fund financed coffee promotion activities.

The International Coffee Organization collects and disseminates all relevant data on coffee in order to expedite the implementation of the economic provisions of the 1983 Convention and correct imbalances that may arise. It is also a research centre for all aspects of coffee production, marketing and consumption. Statistical information from member states and control systems is fed into the computer for quick query and analysis. The coffee organization has also set up a public database service, CoffeeOnline, which provides extensive information about coffee.

The quota and control system under the 1983 Convention continued to function until February 1986, when coffee prices rose above a critical point. In accordance with the provisions of the Convention, OICC continued to play its full role during the non-quota control period. In December 1986, coffee market prices fell again to a critical point that reactivated the cap-and-control system. After lengthy negotiations, the cap and control regime was reactivated on 6 October 1987 and continued until 4 July 1989. The Council was aware that by 1 October 1989, when the 1983 Convention expired, it would have been impossible to conclude a new convention in time. Decides therefore to propose to Member Governments that the 1983 Convention be extended from 1 October 1989 to 30 September 1991, during which time the quota and control regime will be suspended and the provisions on inventory verification and production policy repealed. In addition, the Council decided to discontinue the activities of the Promotion Fund.

Member States accepted the Council's recommendations and the 1983 Convention was formally extended. The purpose of the extension was to give Member States and the Governing Council time to negotiate a new convention. During the first year of operation of the Extension Convention, members continued to search for solutions to problems in the operation of the 1983 Convention. They launched a new round of negotiations, which, despite the strong political will and constructive spirit of member States, did not yield results. In this context, the 1983 Convention was extended until 30 September 1992 to allow time for member States to continue consultations to establish the framework for a new international coffee convention.

The decline in coffee prices in 1990 - 1991 and 1991 - 1992 gave new impetus to the negotiation process of the new Convention. The Council agreed to extend the 1983 Convention until 30 September 1993 and decided to establish a working group to review and examine all proposals and ideas for cooperation on coffee issues. In addition, OICC had established a consultative group to draft a new convention based on a universal export quota system. Despite extensive consultations on all sides, it was impossible to reach a satisfactory convention by the deadline of 31 March 1993. Accordingly, in June 1993, the Council decided to extend the 1983 Convention for a further period until 30 September 1994 in order to gain time for the conclusion of a new convention. This time, member states are committed to negotiating a new convention that does not start with regulating coffee prices. The consultations were successful and the new International Coffee Convention entered into force on 1 October 1994.

International Coffee Convention, 1994:

Under the guidance of the 1994 Convention, the current areas of work of OICC are:

1. Provide a high-level forum to discuss world coffee economic issues.

2. Improving the transparency of the coffee market through the collection and dissemination of objective information on the world coffee market, including (1) the publication of a new Coffee News (published separately in the four official languages of the organization). (2) Introduction of statistical reading services,(3) Development of an Internet website on coffee in cooperation with Dow Jones (http://www.icoffee.com/),(4) Publication of coffee profile analyses for major coffee producing and consuming countries.

3. Fulfilling the role of the established Coffee International Commodity Consortium by proposing coffee development projects that could be financed by the Common Fund For Commodities.

4. Establish a research project to study issues related to the global coffee boom, such as marketing systems and incentives for consumption.

5. Promote sustainable management of coffee resources and resource use through activities and enhanced communication.

6. Seminars on current major coffee issues.

7. To promote the exchange of information between representatives of the Organization's member States and the private sector, which could take place in regular academic meetings between experts, focusing on coffee-related issues, such as factors affecting coffee markets and surveys on coffee and health.

The organization has been endorsed by the Common Fund For Commodities for a $30 million project addressing issues related to coffee quality improvement, pest control and improved coffee market structure. Meanwhile, a $15 million project is in the works. Research is ongoing in areas such as coffee price determination and change, the establishment of a global network for organic coffee and coffee research, and lectures on coffee and its impact on the environment. A new organization, the Joint Forum on Coffee Industry and Trade, has been established to allow the private sector to express its views and to involve industry associations in coffee producing and consuming countries on coffee issues of common concern.

The International Coffee Organization has also used the remaining wealth of the promotion funds created under the 1976 and 1983 Conventions to launch promotional activities in new markets, particularly China and Russia, which have great coffee consumption potential.