Frequently Asked Questions

Is the ICO a cartel ? Does the ICO operate a quota system ?

No. The ICO operated a quota system, whereby coffee supplies in excess of consumer requirements were withheld from the market, on and off from 1962 to 1989, when the system was suspended because of failure to agree on quota distribution. However, even during that time decisions required the agreement of consuming Member countries. The 1962 and 1968 International Coffee Agreements contained provisions for the application of a quota system, as well as other activities such as promotion. The operation of these Agreements helped prices to remain relatively stable throughout the years 1963 to 1972 and production and consumption became more evenly balanced. Changes in the pattern of supply and demand, resulting in an increase in prices, led to the collapse of the quota system in 1973, and the 1968 Agreement was extended with all economic provisions deleted. The 1976 Agreement included a new feature allowing for the suspension of quotas if prices were high, and their reintroduction if prices became too low. Under this system, quotas were reintroduced in 1980 and remained in effect for most of the 1983 Agreement. While in effect, this Agreement was largely successful in maintaining prices within the agreed range of 120 - 140 US cents/lb. However, the present Agreement has no provision for this type of regulatory mechanism.

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