The U.S. Withdraws From the International Coffee Agreement

The International Coffee Organization (ICO) just announced that the U.S. has decided to withdraw from the The International Coffee Agreement settled back in 2007. The agreement was aimed at helping producing and consuming countries by promoting a sustainable expansion of the coffee market. The withdrawal of the U.S. could potentially be very hazardous to coffee producing countries.

José Sette, Executive Director of the ICO expressed his regret for the U.S. leaving the agreement when he stated, “The private sector in the US, represented by the National Coffee Association and the Specialty Coffee Association, is very supportive of the ICO and we will continue to work closely with both associations”. He continued on to say, “With regard to the US Government, a previous US administration took the decision to withdraw from The International Coffee Agreement and later returned… We hope that the international coffee community will once again see the U.S. Government back among our membership and join us in continuing to tackle the complex challenges facing the world coffee sector in which 25 million producers, mostly smallholders, and over 125 million people directly or indirectly depend on coffee for their livelihood.”

These words sound very scary for one involved in this sector, however, what does this actually mean in the lives of coffee producers and consumers?

The overal objective of the agreement is to provide a forum when appropriate for negotiating ways to achieve a reasonable balance between world supply and demand on a basis, which will assure adequate supplies of coffee at fair prices to consumers and markets for coffee at remunerative prices for producers and which will be conducive to long-term equilibrium between production and consumption.

That sounds like a mouthful but essentially it is just people trying to make sure the industry doesn’t get out of hand and hurt either the consumer with overly high prices or the producer with overly low prices. One of the ways this is achieved is through export quotas on producing countries.

The intentions of the U.S. are hard to pinpoint in this instance so it is hard to know whether or not this is a wise decision.

We would love to hear your feedback. What do you all think about the U.S. withdrawing from this agreement?