The International Coffee Agreement (ICA) is an international commodity agreement between coffee producing countries and consuming countries. First signed in 1962, it was originally aimed at maintaining exporting countries' quotas and keeping coffee prices high and stable in the market, mainly using export

quotas Quota may refer to: Economics * Import quota, a trade restriction on the quantity of goods imported into a country * Market Sharing Quota, an economic system used in Canadian agriculture * Milk quota, a quota on milk production in Europe * Indi ...

to steer the price. The

International Coffee Organization The International Coffee Organization (ICO) was set up in 1963 in London, under the auspices of the United Nations (UN) due to the economic importance of coffee. It administers the International Coffee Agreement (ICA), an important instrument for ...

, the controlling body of the agreement, represents all major coffee producing countries and most consuming countries. The current 2007 agreement has 42 exporting members and 7 importing (the

European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...

represents all its member states as one member).

History

The original agreement was signed in 1962 for a five-year period, and since then there have been six subsequent agreements, ratified in 1968, 1976, 1983, 1994, 2001 and 2007.

Background

The precursor to the ICA was the Inter-American Coffee Agreement (IACA) established during the

Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposi ...

. The war had created the conditions for a Latin American coffee agreement: European markets were closed off, the price of coffee was in decline and the United States feared that the declining price could drive Latin American countries—especially Brazil—towards

Nazi Nazism ( ; german: Nazismus), the common name in English for National Socialism (german: Nationalsozialismus, ), is the far-right totalitarian political ideology and practices associated with Adolf Hitler and the Nazi Party (NSDAP) in ...

or Communist sympathies. In 1940, the United States agreed to restrict its imports to a quota of 15.9 million bags, and other Latin American countries agreed to restrict their production. The agreement had an immediate effect, the price almost doubled by the end of 1941. After the end of the war in 1945 the price of coffee rose continuously until 1955–57 when a degree of equilibrium was reached. Producers sought ways to maintain the price, this led to the first International Coffee Agreement. A target price was set, and export quotas allocated to each producer. When the indicator price set by the

(ICO) fell below the target price, quotas were decreased; if it rose above it, quotas were increased. Although the system had its problems, it was successful in raising and stabilizing the price. The International Coffee Organization was established in 1963 to administer the clauses of the agreement and supervise the mechanisms in place. Until 1986 the Coffee Council, the decision-making body of ICO, approved export quotas.

Breakdown of the 1989 agreement

In 1989, ICO failed to reach an agreement on new export quotas, causing the 1983 ICA to break down. The disagreement was triggered by consumers' change in taste towards milder and higher quality coffee. With the retained quotas from the 1983 agreement, the change increased the value of milder coffee at the expense of more traditional varieties such as

robusta ROBUSTA (Radiation on Bipolar for University Satellite Test Application) is a nano-satellite scientific experiment developed by the University of Montpellier students as part of a Centre National d'Études Spatiales (CNES) call for student project ...

. Brazil in particular – the world's most powerful coffee producer – refused to reduce its quotas believing it would lower their market share. The consumers, led by the United States, demanded higher quality coffee and the end of selling coffee to non-members at reduced rates. The US criticized Brazil for not being willing to accept a reduction of the country's quotas despite falling share of the world market since 1980. Jorio Dauster, head of the state-controlled Brazilian Coffee Institute, described Brazil as an "extremely efficient producer" and believed it could survive without help from ICO. The 1983 ICA was set to expire on 1 October 1989, but realizing that it would be impossible to enter into a new agreement before the termination date, the Coffee Council (ICO's highest body) effectively decided to suspend the export quotas on 4 July 1989. Without an extended agreement producing countries lost most of their influence on the international market. ICO's average indicator price for the last five years previous the end of the regime fell from US$1.34 per pound, to US$0.77 per pound for the first five years after. According to Yves Engler's ''Canada in Africa'', "no longer worried about the prospect of poor coffee producers turning towards the Soviet Union, the US withdrew its support from the International Coffee Agreement in 1989."

Members

The current 2007 ICA entered into force on 2 February 2011 when it was approved by two-thirds of the exporting and importing signatory governments. , it has 51 members, of which 44 are exporting members, and 7 importing (the

represents all its 28 member states). According to ICO, its members represent 98% of all coffee production and 67% of the consumption. ;Exporting members (42) *Angola *Benin *BoliviaProvisional application *Brazil *Burundi *Cameroon *Central African Republic *Colombia *Costa Rica *Ivory Coast *Cuba *Ecuador *El Salvador *Ethiopia *Gabon *Ghana *Guatemala *Guinea *Haiti *Honduras *India *Indonesia *Jamaica *Kenya *Liberia *Malawi *Mexico *Nicaragua *Panama *Papua New Guinea *Paraguay *Philippines *Rwanda *Sierra Leone *Tanzania *Thailand *East Timor *Togo *Uganda *Vietnam *Yemen *Zambia *Zimbabwe ;Importing members (7) *Japan *Norway *Russian Federation *Switzerland *Tunisia *United Kingdom *United States of America *European Union: **Austria **Belgium **Bulgaria **Croatia **Cyprus **Czech Republic **Denmark **Estonia **Finland **France **Germany **Greece *European Union (continued): **Hungary **Ireland **Italy **Latvia **Lithuania **Luxembourg **Malta **Netherlands **Poland **Portugal **Romania **Slovakia **Slovenia **Spain **Sweden

United States Exits

The

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

exited the International Coffee Agreement after a 90-day notification period ending 27 June 2018.

Notes

References

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External links

Membership
{{DEFAULTSORT:Coffee Agreement International Commercial treaties

International Coffee Agreement The International Coffee Agreement (ICA) is an international commodity agreement between coffee producing countries and consuming countries. First signed in 1962, it was originally aimed at maintaining exporting countries' quotas and keeping coff ...

United Nations treaties Treaties concluded in 1962 Treaties entered into force in 1962 Treaties of Angola Treaties of Bolivia Treaties of Brazil Treaties of Burundi Treaties of Cameroon Treaties of the Central African Republic Treaties of Colombia Treaties of Costa Rica Treaties of Ivory Coast Treaties of Cuba Treaties of Ecuador Treaties of El Salvador Treaties of Ethiopia Treaties of Gabon Treaties of Ghana Treaties of Guatemala Treaties of Honduras Treaties of India Treaties of Indonesia Treaties of Kenya Treaties of Liberia Treaties of Malawi Treaties of Mexico Treaties of Nicaragua Treaties of Panama Treaties of Papua New Guinea Treaties of the Philippines Treaties of Rwanda Treaties of Sierra Leone Treaties of Tanzania Treaties of Thailand Treaties of East Timor Treaties of Togo Treaties of Uganda Treaties of Vietnam Treaties of Yemen Treaties of Zambia Treaties of Zimbabwe Treaties of Norway Treaties of Switzerland Treaties of Tunisia Treaties of Turkey Treaties of the United States Treaties entered into by the European Union Treaties of Benin Treaties of Guinea Treaties of Haiti Treaties of Paraguay Food treaties