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International
Coffee Organization
Organización Internacional del Café
Organização Internacional do Café
Organisation Internationale du Café
ACTION TO AVOID FURTHER COFFEE PRICE CRISES
By Néstor Osorio, Executive Director, International Coffee Organization (ICO)
Submission to the G-8 Summit, Gleneagles, Scotland, July 2005
The Coffee Crisis
1.
In June 2003 I submitted a short document to the G-8 Summit in Evian in which I
indicated that coffee prices had been at historically low levels for the preceding two and a
half years, and in many countries were insufficient to cover production costs. I pointed out
that this had led to great social and economic hardship in many developing countries. Sadly
this situation only changed with a partial upwards correction in price levels at the end of
2004.
2.
For several countries in Africa, Asia and Latin America that are dependent on coffee
for a large percentage of their exports it has been estimated that losses in earnings from
coffee have more than nullified total aid inflows in terms of value. In general the coffee price
crisis led to increased poverty, social unrest, incentives to plant illicit drugs, rural
unemployment, and illegal emigration in many developing countries.
3.
The challenge continues to be the development of policies and actions to avoid a
recurrence of the type of imbalance between supply and demand that gave rise to the crisis.
In view of the continuing economic importance of coffee, and in the context of the analysis
presented in the report of the Commission for Africa, I believe that this is a crucial element
for sustainable development.
Policies for sustainable solutions
4.
In looking for policies to avoid a recurrence of the problems encountered from 2000
to 2004 it is crucial to understand that there are severe constraints in many coffee-growing
areas which inhibit the development of alternative economic activities. These constraints
arise from environmental and in