The International Coffee Organization helps shape world trade politically and economically
The International Coffee Organization, abbreviated ICO after the English name International Coffee Organization, is the most important global player in world trade for this product. It was founded in 1962 under the auspices of the United Nations (UNO) and is based in London. As of the end of 2016, it has 77 member states: 45 coffee exporting nations and 32 importing countries. The ICO takes care of fair conditions in the global coffee trade with an eye on the interests of all market participants.
Export quotas and minimum prices
Germany – like all countries of the European Union (EU) and Switzerland – belongs to the ICO. Efforts were made as early as the early 1960s to stabilize the strong price fluctuations for coffee on the world market. They ultimately culminated in the founding of the ICO, which agreed on a principle: Growing and consumer countries alike shape global trade agreements. In 1989, a dispute arose over export quotas and minimum prices, which failed primarily due to the resistance of the world’s largest economic power and the temporary exit of the USA led.
The organization is still very influential today because at times almost all of the coffee production and 90 percent of demand were organized under its roof. In 1963, there was the first International Coffee Agreement (ICA), the current one dates from 2007. The original idea of guaranteeing minimum prices with export quotas and restricting the quantity when prices fall has not proven successful. As a result, supply and demand did not find an economically sensible balance and there was an unwanted side effect: too much average coffee came onto the market – but too little good.
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Transparency and fairness
Since the end of the export quotas, the ICO has stood for the promotion of a sustainable coffee industry as well as innovation and the improvement of coffee quality. It achieves this by organizing regular meetings of high-ranking decision-makers from politics and business. A 16-person advisory committee of the ICO guarantees cooperation with the global coffee industry and takes care of issues such as food safety.
The organization is also committed to ensuring transparency in the global coffee market. To do this, it creates statistics and studies on the basis of information that is collected as objectively and independently as possible. This economic, technical and scientific information on the global coffee sector is available to all member countries. The tasks also include creating a different global awareness of the importance of the coffee topic : around 25 million jobs in the growing countries depend on this product. With its work, the ICO contributes to reducing the poverty of coffee farmers in Africa, Asia, the Pacific region and Latin America. It focuses on the working and living conditions there, facilitates access to affordable credit and advises on issues relating to better risk management and technical innovation. For example, climate change is on the agenda, which also affects coffee cultivation.
Affirmation and development
The national budgets of 50 nations around the world depend crucially on the foreign exchange from the coffee trade. Some of these are still politically unstable, socially unstable and economically poor nations. This documents the importance of a fair coffee price that secures livelihoods and opens up prospects for life.
The International Coffee Agreement adopted in 2007 emphasizes the importance of sustainable production relationships and transparency for all partners involved in the global coffee market. Since the USA also expressly supports these demands after its return as an ICO member two years earlier, it has a strong lobby. The signatories commit, inter alia, to striving for a balance between supply and demand at prices that are reasonable for both consumers and producers. They are looking for strategies that allow smallholders to increase their profits.
The ICO members hope that this will lead to success in fighting poverty and more stable societies in the producing countries. They are also striving to increase coffee consumption in the entire world market – expressly also in the producing countries. Therefore, all tariffs and laws, state monopolies and subsidies that hinder the global coffee trade are to be dropped.
The 2007 ICA once again confirmed the original demands of the ICO: An economic, social and ecological coffee industry should emerge. International cooperation and consultations between governments and the private sector serve this purpose.
Conclusion: equalization and poverty reduction
The ICO, with currently 77 member nations, ensures a balance between growing and consuming countries on the global coffee market. The organization, which has existed since 1962, insists on sustainability and transparency, works together with the private sector and thus contributes to the fight against poverty and social stabilization in crisis regions.