International Coffee Organization-2

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 coffee production, sales 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.