International Coffee Agreement 2007 – Benefits of membership

TANGIBLE AND INTANGIBLE BENEFITS TO BE A SIGNATORY OF THE INTERNATIONAL COFFEE AGREEMENT AND TO BE A MEMBER OF THE INTERNATIONAL COFFEE ORGANIZATION 

 

I. Introduction and background

The International Coffee Agreement (ICA) is an international treaty under which governments of countries engaged in the production, transformation, trade and consumption of coffee, work together and are committed 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 ICA is based on and contributes to the implementation of the United Nations Development Agenda: first the Millennium Development Goals (MDGs) and now the Sustainable Development Goals (SDGs). 

 

The ICA is the only international policy mechanism under which countries that produce and export coffee, and countries that import coffee, such as the United Kingdom, work together towards the common goals of prosperity for all those engaged in the coffee value chain, with a special focus on the livelihood of farmers. 

The International Coffee Organization (ICO) is established under the ICA as the depository of the Agreement and its mandate is to help all member countries to implement the ICA. The ICA and the ICO were established in 1962 under the auspices of the United Nations with the objective to “Achieve a reasonable balance between supply and demand in the coffee market.” 

 

Until 1989, the ICA and the ICO focused on regulating the market by establishing the shares (quotas) of coffee to be exported by each exporting country. Through these export quotas, consumers were subject to an invisible “tax” in support of producers to promote economic, social and political stability. The ICA is considered to have been reasonably effective for larger exporters to accrue rents, however, changes in the global political climate during the 1980s and internal rows about quota distribution led to the collapse of the quota system. As the quota system was no longer considered an effective and operationally sound model to regulate trade, ICO member countries changed the nature of the agreement but agreed, as with other international commodities (cocoa, sugar, grains, timber, rubber etc.), on the strong need for an international forum and a body, the ICO, at the intergovernmental level where all coffee matters could be discussed and joint solutions shared among all coffee stakeholders and development partners. The International Coffee Council established in 2018 a Working Group on the Future of the Agreement (WGFA) that is working towards more effective governance and decision-making mechanisms and the greater integration of the private sector in the Agreement and in the work of the Organization, based on SDG17 “Partnerships for the goals.” As is common practice, until a new ICA has been agreed among ICO members, the existing ICA is extended. Therefore, the current ICA (2007) has been extended for one year until February 2022. 

To guide the ICO in the implementation of the ICA, the International Coffee Council (ICC), the supreme decision-making body of the Organization, approved a 5-year Strategic Action Plan in 2017. The ICO is responsible for executing the Plan through annual programmes of activities (PoA), which are approved by the ICC and implemented by the Secretariat. The 5-year Plan and the PoA focus on three strategic axes: (I) Statistics and analytics/research; (II) Policy dialogue among members, non-members, intergovernmental organizations (IGOs), academia, the private sector and NGOs; (III) assistance to members in the development of technical cooperation projects and the promotion of coffee consumption through public-private memberships. 

 

II. Tangible and intangible benefits of being a signatory to the ICA and a member of the ICO 

The work of the ICO is currently governed by the International Coffee Agreement 2007 (ICA 2007), whose main objective is to strengthen the global coffee sector and promote its sustainable expansion. Under the ICA 2007, the Organization serves as a forum for intergovernmental consultations, facilitates international trade through increased transparency and promotes a sustainable coffee economy for the benefit of all stakeholders, particularly smallholder farmers in coffee-producing countries. As was the case with the 1994 and 2001 Agreements, the ICA 2007 has no market-regulatory clauses. 

 

Close multilateral collaboration on coffee matters is, therefore, important economically and politically for all participants in the coffee value chain, in order to foster a diversified global coffee sector, the economic and social development of coffee-producing countries, the sustainable development of coffee production and consumption, and improved relations among stakeholders. Access to a range of services, data, knowledge, strategic, commercial, and development partnerships—among producing and importing countries as well as with development organizations and financial institutions—are also key factors that Members value as part of their participation and integration in the International Coffee Agreement. 

 

International Coffee Agreements were signed in 1962, 1968, 1976, 1983, 1994, 2001 and 2007. 

In its work, the ICO aligns itself with the 2030 Agenda for Sustainable Development of the United Nations, including its Sustainable Development Goals (SDGs), especially SDG1 “No poverty”; SDG2 “Zero hunger”; SDG5 “Gender equality”; SDG6 “Clean water and sanitation”; SDG7 “Renewable and clean energy”; SDG8 “Decent work and economic growth”; SDG9 “Industry, innovation and infrastructure”; SDG12 “Responsible consumption and production”; SDG13 “Climate action”; and SDG17 “Partnerships for the goals”. 

 

At present, ICO Members account for 97% of world coffee production and exports and over two-thirds of coffee imports. As of January 2021, the United Kingdom with the signing of the ICA 2007 has become a member of the Organization. The Government of Nigeria recently (August 2020) ratified the ICA 2007 and is expected to conclude accession procedures soon. Negotiations with the Republic of Korea and China on membership continue and are expected to be intensified in the post-coronavirus era. Steps are also being made for the U.S.A. to re-join the ICO during the incoming administration given the strong and continued support to the ICO by the National Coffee Association (NCA) of the U.S.A. 

 

II.1 Intangible benefits of ICO membership 

Membership in the ICO has a positive impact on the policy and performance of the coffee sectors of the Organization’s Members. Membership in the ICO provides unique opportunities, as presented below. 

  • International representation. Members are entitled to appoint representatives to the International Coffee Council, the governing body of the ICO, which meets twice a year to review the coffee market situation, develop coffee policies and establish priorities for the work of the Organization, as well as to the committees and other advisory bodies. Interaction with all government officials responsible for coffee production, trade, transformation and consumption allows Members to act collectively towards a shared vision and solutions.
  • Cooperation with international governments, non-governmental organizations and the private sector. Members participate in the only worldwide forum for discussion, at an inter-governmental level, on coffee policy, trade and development issues and related matters, thereby gaining access to the know-how and experience of other countries in structuring their coffee economies. To facilitate cooperation and access to knowledge and human and financial resources, the ICO has intensified in the last few years its partnership and cooperation with leading national, regional and international public and private institutions and actors.
  • The ICO has signed Memorandums of Understanding with relevant private sector initiatives such as the Global Coffee Platform, the African Fine Coffees Association, the Sustainable Coffee Challenge and the International Women’s Coffee Alliance (IWCA) to join forces and address issues affecting coffee-producing countries, as well as to access technical support.
  • The ICO has signed cooperation agreements and Memorandums of Understanding and/or is working closely with key development partners such as the Common Fund for Commodities (CFC), United Nations Food and Agriculture Organization[1] (FAO), United Nations Conference on Trade and Development (UNCTAD), the International Trade Centre (ITC), United Nations Industrial Development Organization (UNIDO), the International Fund for Agricultural Development (IFAD), the World Bank, The African Development Bank (AfDB), Afreximbank, the Central American Bank for Economic Integration (BCIE) and the Global Environment Facility (GEF) among others.
  • ICO works closely with international and regional coffee organizations, such as the InterAfrican Coffee Organization (IACO), PROMECAFE, European Coffee Federation (ECF), National Coffee Association of the USA, Specialty Coffee Association (SCA) and many others to respond to the structural and contingency challenges such as the current green coffee price crisis and the covid-19 pandemic.

Membership in the ICO also facilitates close contacts with the private sector.

  • Through its Private Sector Consultative Board (PSCB), composed of high-level representatives of trade associations in exporting and importing countries, it advises the International Coffee Council on matters of practical relevance to the world coffee sector, such as positive communication on coffee, food safety and sustainability. Members of the PSCB include the European Coffee Federation, the National Coffee Association of the USA, the All-Japan Coffee Association, Rusteacoffee, and the India Coffee Trust.
  • Through the Coffee Public-Private Task Force (CPPTF). The CPPTF is the most important element in the Sector-wide Dialogue organized by the ICO to respond to Members requests to address the coffee price crisis. It engages key stakeholders and the broader international community in a discussion on coffee price levels. The process culminated in the development of a Joint Declaration of Intent of stakeholders from both the private and public sector in the form of the “London Declaration” which was signed in September 2019 by 12 leading coffee firms (traders and roasters). The London Declaration was welcomed by the ICC, which also requested that the ICO set up a Coffee Public-Private Task Force (CPPTF). The Task Force consists of 16 private sector ‘sherpas’— representatives of the signatory companies—and 16 public sector representatives of ICO Member countries. The aim of the CPPTF and its related Technical Workstreams is to implement and advance the work of the Sector-wide Dialogue initiated and led by the International Coffee Organization (ICO). The objectives of the Task Force are to drive the discussion on a joint long-term vision beyond 2020 for the sector in order to achieve transformational solutions towards sustainable, inclusive and resilient global coffee value chains; build consensus among public and private sector coffee stakeholders on a roadmap for the implementation of the commitments and concrete actions contained in the London Declaration and in line with the International Coffee Agreement to achieve the long-term vision; define new joint concrete, practical, actions that build on local initiatives, and allocate resources; and to monitor and report on progress and measure impact. The ultimate objective of the Task Force is to build consensus on priority issues and actions to be submitted for consideration to the International Coffee Council (ICC) and the CEO and Global Leaders Forum (CGLF). The Task Force is an innovative public-private mechanism unique in the world of commodities and the multilateral system. 

The ICC and the CGLF agreed in November 2020, for the first time, on a Joint Communiqué and a Road Map that focused on closing the living and prosperous income gap through the implementation of pilot projects in selected countries, making policy recommendations on the reform of the futures market, improving the transparency of coffee prices and establishing a system for monitoring the volatility of coffee prices. 

 

A Consultative Forum on Coffee Sector Finance facilitates discussions on topics related to finance and risk management in the coffee sector, with particular emphasis on the needs of small- and medium-scale producers and local communities in coffee-producing areas. Sharing best practices and technologies allows Members to establish contacts with key public and private sector technical solutions providers.

  • Opportunities for access know-how, networking and resources: ICO Members have their own channels and bilateral negotiations, however, thorough membership in the ICO they can meet, discuss and network globally and to interact with all coffee stakeholders including potential commercial partners, technology providers and donors and the private sector, as well as academia, development and financial partners and non-governmental organizations (NGOs). 

II.2 Tangible benefits of ICO membership 

Access to information and analysis:

  • The ICO is the world’s independent and neutral provider and most respected authority on coffee statistics. Members have access to the latest coffee market information and analysis from experts with an independent viewpoint as part of their membership.
  • The whole coffee sector, including coffee industry, private investors and traders, use ICO data as a reference and benchmark to help monitor coffee trends and make well-informed business decisions.
  • All the world’s generalist and specialized media (Bloomberg, BBC, Financial Times, Global Coffee Report, Communicaffè etc.) utilize ICO data (from daily prices to the Coffee Development Report) for their publications on the coffee sector, providing the sector with a powerful voice on the international stage.
  • The United Nations, and its specialized agencies, such as FAO, UNCTAD and ITC, base their analysis and reports on the coffee sector on statistical data and both institutional and ad-hoc reports provided by the ICO.
  • Academia, research institutions and students, as well as project development agencies, access ICO statistics and reports daily for their research work and for developing technical cooperation projects. 

Regular statistical publications of the ICO

  • Indicator Prices (daily)
  • Coffee Market report (monthly)
  • Monthly Trade Statistics (monthly)
  • Green and Processed Coffee Trade Statistics (quarterly) – by subscription o Annual trade statistics – by subscription
  • Arabica/Robusta details – by subscription 

Research and analysis

In partnership with leading academic and research institutions such as the University of California -Davis, London School of Economics, Kiel Institute for the World Economy, Universities of Göttingen and Newcastle, International Food Policy Research Institute and more, the Organization conducts extensive research and studies on all matters related to coffee, including key production, trade and consumption trends; climate change; pests; diseases, gender equality, ICT and more. 

 

Main analytical publications

  • The ICO flagship report: The Coffee Development Report (since 2019)
  • Regular reports: Obstacles to Consumption/Tariff and non-tariff barriers to trade; Mixtures and substitutes; Status of coffee development projects.
  • ICO/Conservation International Guide to Access Green and Climate Funding for the Coffee Sector: The Global Environment Facility (GEF)
  • Ad hoc studies: Coffee and health; consumption trends in Asia; the African coffee value chain; benchmarking of production costs; women in coffee; coffee price crisis, impact and mitigation of covid-19. 

Promotion of coffee consumption: The Organization continuously engages with public and private agencies to promote the consumption of coffee, which is a key element in achieving a balanced and more sustainable world coffee economy. ICO Membership allows countries

  • To take part in initiatives to promote consumption.
  • Regional projects for promoting coffee consumption (Africa, Central America and Asia/Pacific)
  • A Step-by-Step Guide to Promote Coffee Consumption in Producing Countries, which provides practical guidelines to increase demand for coffee and will be transformed into an online market access toolkit.
  • Conceptualisation and provision of promotional material for celebrating International Coffee Day (ICD). 

Assistance in the development and funding of coffee development projects: The ICO provides a convergence platform for all initiatives stimulating the growth of the world coffee economy, particularly development projects aimed at promoting the sustainability of coffee. Given the current limited availability of project funding to coffee farmers, the Organization organizes networking events to bring together donor institutions and government agencies in producing countries to discuss possible sources of finance for projects designed to enhance the sustainable production of coffee.

  • In the last two years, ICO Members, mainly Germany and Switzerland, provided funding for the Programme of Activities covering the sector dialogue, the CPPTF and the Coffee Development Report, as well as issues related to living income and gender (from zero contributions in 2017 to an expected £400,000- 800,000 in 2021.
  • Projects under development include:
    • Africa Coffee Facility, in partnership with the InterAfrican Coffee Organization (IACO), CABI and Afreximbank.
    • Covid-19, together with IACO, CABI, the African Union and the European Commission.  Assistance in the
      development of project proposals for CFC co-financing.
    • Assistance to the government of Gabon (self-financed) and Ethiopia (with UNIDO and Italian Cooperation Agency).
    • Assistance in accessing the Global Environment Facility’s Food Systems, Land Use and Restoration (FOLUR) Impact Program, together with the World Bank and FAO.
  • The ICO has already facilitated funding for 34 projects in producing countries, with a value greater than US$100 million. 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), which was a major problem at the time.

 

[1]  A new and more extensive MoU between ICO and FAO is being finalized and is expected to be signed in early 2021 after being delayed by the impact of covid-19.

For more information please contact the Depositary:

Depositary Office
International Coffee Organization
222 Gray’s Inn Road
London WC1X 8HB
United Kingdom

Tel: +44 (0) 20 7612 0600

depositary@ico.org