International Coffee Agreement 2007 - Benefits of membership
The International Coffee Agreement (ICA) 2007 is a key instrument for international cooperation in the field of coffee and membership of the Agreement is in the best interests of Governments and the world coffee industry, for political, social and economic reasons.
The ICA 2007, the seventh Agreement since 1962, was agreed by the 77 Members of the International Coffee Organization (ICO) in London on 28 September 2007. It entered into force definitively on 2 February 2011 and will last for ten years, with the possibility of extension for a further eight years.Its main objective is to strengthen the global coffee sector and promote its sustainable expansion in a market-based environment for the betterment of all participants in the sector.
The 2007 Agreement strengthens the ICO’s role as a forum for intergovernmental consultations, facilitates international trade through increased transparency and promotes a sustainable coffee economy for the benefit of all stakeholders and particularly of small-scale farmers in coffee producing countries. As was the case with the 1994 and 2001 Agreements, it has no market-regulatory clauses.
The ICA 2007 is an important instrument for development cooperation: a third of the ICO’s exporting Members are least developed countries (with low incomes and high economic vulnerability), and the Preamble specifically acknowledges the contribution of a sustainable coffee sector to the achievement of internationally agreed development goals, including the Sustainable Development Goals, particularly with respect to poverty eradication.
Important innovations include a Chapter on the development and funding of coffee development projects, and the establishment of a Consultative Forum on Coffee Sector Finance, responding to the need for increased access to information on topics related to finance and risk management in the coffee sector, with particular emphasis on the needs of small and medium-scale producers. The range of statistical data is expanded, enhancing market transparency, and a Promotion and Market Development Committee oversees activities including information campaigns, research, capacity-building and studies related to coffee production and consumption.
Importance of international cooperation on coffee
Coffee is one of the world’s most important commodity exports, produced in more than 50 developing countries. It makes an important contribution to socio-economic development and poverty alleviation and is of exceptional economic importance to exporting countries, some of which rely on coffee for over half their export earnings. With some 94% of the world’s coffee produced by 25 million smallholder farmers and their families, coffee is an important source of cash income and responsible for significant employment.
During the coffee crisis which lasted from 2000 to 2004, coffee prices fell to their lowest levels in 30 years, and producers saw their export earnings halve since the early 1990s, from around US$12 billion to US$5.5 billion. This had devastating social, economic and political consequences for countries throughout Africa, Asia and Latin America, leading to coffee farms being neglected or abandoned, and increasing poverty and migratory pressures.
The economic value to consuming countries can be gauged by the fact that the value of retail sales has more than doubled since the early 1990s. Coffee is responsible for significant employment, and also plays an important social role with over 600 billion cups consumed every year. If farmers are forced to neglect their farms because of low prices, the supply of quality coffee to the coffee industry in consuming countries is jeopardized.
Working towards securing a healthy world coffee economy is therefore important economically and politically in importing countries as well as being desirable from the viewpoint of encouraging sustainable socio-economic development, both to improve living standards in producing countries and to increase markets for goods produced in consuming countries.
As the only International Commodity Body for coffee, and a respected intergovernmental organization which speaks for both producers and consumers, in consultation with the private sector, the ICO has a focal role to play in channelling international cooperation by almost 80 Governments and developing effective political solutions and coffee policy. Its exporting Members account for over 98% of world coffee production and its importing Members are responsible for around 83% of coffee consumption in importing countries.
A streamlined decision-making structure and low annual membership costs enable Governments to contribute to developing policies on global issues affecting their coffee industries, from sustainability to food safety, coffee quality and market transparency.
Benefits of ICO membership
We want membership of the ICO to have a positive impact on the coffee policy and performance of the coffee economies of our Members.
Membership of the ICO provides:
Contact with international Governments and the private sector: Members have access to the only world-wide forum for discussion on an inter-governmental level on coffee policy, coffee trade policy and related matters, giving access to the know-how and experience of other countries in structuring their coffee economies.
International representation: Members are entitled to appoint representatives on the International Coffee Council, the governing body of the ICO, which meets twice a year to review the coffee market situation and develop coffee policies and establish priorities. Membership also facilitates close contacts with the private coffee sector through the Private Sector Consultative Board, made up of high-level representatives of exporting and importing associations, which advises the Council on matters of real practical relevance to coffee such as positive communication on coffee, food safety and sustainability.
Influence on coffee policy: Membership of the ICO increases the weight an influence of a country in the international coffee context.
ICO Members have access to a unique forum where producing and consuming countries can discuss key issues and difficulties relating to international coffee trade, and develop timely policies and solutions.
For example, consideration of contamination from mould formation resulted in a multi-year
US$6 million project to reduce mould formation and the incidence of Ochratoxin A (OTA) in coffee. This project was designed to increase both the safety of coffee and farming income in the developing world. Joint implementation of the five-year project by the ICO with the Food and Agriculture Organization in Asia, Africa and Latin America has already led to a decline in average OTA intake from coffee in Europe. This, in turn, convinced the EU to abandon a proposal to impose a maximum limit for OTA in green coffee, saving the coffee industry in excess of US$100 million annually. In the case of the 2000-2004 crisis of low prices in the sector, the ICO developed an approach to improve the world supply and demand balance which included promoting initiatives to increase consumption, improving quality and establishing a diversification programme which could encompass efforts to undertake specific projects to generate complementary earnings for growers, such as the introduction of new crops, without eliminating coffee growing itself.
Consultation on finance and risk management: A Consultative Forum on Coffee Sector Finance facilitates consultations on topics related to finance and risk management in the coffee sector, with a particular emphasis on the needs of small- and medium-scale producers and local communities in coffee-producing areas. The Forum addresses topics ranging from aggregation as a platform through which access by small farmers to finance and risk management can be achieved more effectively, to assisting producing countries to engage with multilateral institutions and donors and leverage resources for growers.
Funding for coffee development projects: The ICO is the designated commodity body for projects sponsored through the Common Fund for Commodities (CFC). Priority is given to projects from Member countries.To date the ICO has enabled countries to participate in coffee development projects, currently totalling US$104 million. These are examples of practical assistance by the ICO to the world coffee economy, contributing to sustainable development and poverty reduction in coffee-producing countries. Projects include coffee market development, where the ICO has sponsored activities to promote coffee price risk management access to credit, the development of commodity exchanges, and the strengthening of the commercial and management capacity of producers. The ICO has also promoted projects designed to reduce the incidence of major pests and diseases affecting coffee, such as the coffee berry borer, tracheomycosis and coffee white stem borer, thereby increasing crop quality and revenue for small farmers. In the light of changes at the Common Fund for Commodities, the ICO is reviewing its role on projects which may in the future include assistance with designing projects, matching projects with the priorities of multilateral donors and ensuring that donor agencies are aware of the requirements of the global coffee sector.
Support for quality coffee: Quality coffee is essential to the world coffee industry and is widely seen as a key means of increasing global coffee consumption. The ICO Coffee Quality-Improvement Programme establishes target standards for exportable coffee such as maximum moisture content, and plays an important role in improving the quality of coffee on the world market in the interests of both producers and consumers. The consumer benefits from higher overall quality standards in coffee blends, and producing countries benefit from the reduction in the current surplus through elimination from the market of sub-standard coffee, as well as higher prices for better quality coffee. Membership of the ICO enables countries to contribute to efforts to improve the quality of coffee which is in the long-term interests of their coffee sectors.
Promotion of coffee consumption: Efforts to promote consumption are key to achieving a balanced and more sustainable world coffee economy. ICO Membership allows countries to take part in initiatives to promote consumption, such as the Step-by-Step Guide to Promote Coffee Consumption in Producing Countries, which provides practical guidelines to increase demand for coffee. Under the 2007 Agreement, Members recognize the benefits, both to exporting and importing Members, from efforts to promote consumption, improve the quality of the product, and develop markets for coffee, including in exporting Members.
Positive communication on coffee: Members benefit from the ICO’s ability to mobilize cooperative initiatives with representatives of the private coffee sector in producing and consuming countries. One example is positive communication on coffee – with the ICO working with the private sector to disseminate positive information on coffee to the media and other interested parties.
Training: ICO Members have access to topical workshops and seminars with leading experts, and high-level World Coffee Conferences held on a regular basis.
Information and resources: The ICO is the world’s leading and most respected authority on coffee statistics. Members receive the latest coffee market information and analysis coming from expert analysts with an independent viewpoint.
Becoming a Member of the ICO
To become a Member, a Government must accede to the International Coffee Agreement (ICA) 2007, the international treaty that governs our work.
For more information please contact the Depositary:
International Coffee Organization
222 Gray’s Inn Road
London WC1X 8HB
Tel: +44 (0) 20 7612 0600