Pressure grows for coffee pact

Press, 14 July 1987, Page 25

Pressure grows for coffee pact

By

PETER MILLERSHIP

NZPA-Reuter London Pressure on major coffee growing and consuming nations to clinch a pact assigning export quotas intensified recently with world prices around lows for the last four and threequarter years, coffee-market analysts say. A row between Brazil, the world’s biggest coffee producer, and the United States, the biggest consumer, dashed hopes of agreement in the past, but last week the American position appeared conciliatory. In what appeared to be a major concession, the United States said it could accept a formula which gave Brazil an unchanged coffee export quota under the accord which seeks to stabilise prices and guarantee income for debt-laden growers. The United States news was welcomed by the Brazilian Coffee Institute.

The Americans’ chief coffee negotiator, Mr Jon Rosenbaum, said in Washington that he was optimistic quotas could be re-intro-duced at a crucial September meeting of the International Coffee Agreement council in London. The ICO executive board will meet there from July 20 to 24. If quotas were re-intro-duced in September to regulate supply in a glutted market, the world coffee price slide could be arrested and supermarket price tags would remain the same, coffee analysts said. But, if prices continued to slump, supermarket tags would also fall. It can take months for any world price movement to get through to consumers. The influential Londonbased trade house, E.D. and F. Man, Ltd, in its latest monthly report, reckon quotas will be re-introduced later this year although some analysts say they still

hang in the balance. Brazil, which is also the Third World’s biggest debtor, looks headed for a bumper crop this year and there have been no forecasts of frost. Frost in Brazil sends coffee prices soaring. Without a frost, prices would then be low enough to force so-called dissident producers to support Brazil’s demands for no change in its 30 per cent share of the ICO global quota, Man said. When the ICO council met in March this year a splinter group of producers sided with consumers in pressing for a reallocation of quotas based on “objective criteria.” If producers arrived at a unified position, the only other obstacle to restoring quotas would be consumers. Brazil’s refusal so far to accept new formulas for calculating quotas reflects the country’s concern about limiting its quota in future years, the report says.