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African coffee producers meet with exporters.

African coffee producers, alarmed by low world prices for their crops, met with Latin American and Asian exporters in Nairobi during the end of June for talks to press for new market stabilization policies, including the restoration of export quotas in order to boost world prices.

After three days of meetings between the 25 nation inter-Africa Coffee Organization (IACO) and the leading coffee producers, Brazil, Mexico, Colombia, and Indonesia to review the coffee market and make proposals on future policy, there was a failure to reach agreement on a conference to negotiate export quotas, but agreement was reached on the convening of a producers meeting for further consultations before September.

Uganda's Minister of Co-operative, James Wapakhabulo, said before the meeting opened that it would study and discuss a report by the IACO contact group which had compared Africa's stand with that of other producers and consumer countries in a bid to hasten a return to quotas.

He added that African producers, many of whom were dependent coffee production and exportation for the bulk of their foreign currency earnings, were looking for ways to boost prices and close ranks with Latin American exporters.

The minister said that Africa's revenue from coffee exports has fallen by about US $1 billion per year since the International Coffee Organization (ICO) price support mechanism collapsed in July 1989, with producers failing to agree on a redistribution of export quotas.

IACO, which is based in Abijan, Cote d'Ivoire, held a meeting there in May discuss the need to re-introduce export quotas, but at the same time it wanted to compare Africa's strategy with that of other coffee producer groups. Wapakhabulo said that African producers were agreed on a new sales arrangement and were ready to negotiate new arrangements without conditions, but the problem lay with Brazil, the world's leading coffee producer, insisting on maintaining its traditional 30% share of the world market. The U.S., the largest consumer of coffee, wanted quotas to be based on criteria such as exportable production and stocks.

Wapakhabulo added that the objective of the Nairobi meeting was to form a common platform of world producers to press for a re-introduction of quotas at the next ICO executive meeting in London early in July. He concluded by saying that it would seek to convince producers such as Brazil, who were reluctant to return to the export quota system, the importance of doing so.

At a press conference after the meeting, Elijah Mwangle, the Kenyan chairman of the IACO, said that although there was failure to reach agreement on a conference to renegotiate export quotas, the fact that all major coffee market players came to Nairobi showed the urgency and solidarity producers had in this summer.

Nestor Asorio, from Columbia, said that supply still had to be controlled, taking into consideration the current imbalance in supply and demand, but how to do it was the major problem. He added that different aspirations of producing countries had created problems on reaching an understanding, however, everyone hoped that there would be a system to control prices, but it had to adapt to new circumstances and new market values.

The Brazilian delegate, Valdemar Leao said that his country was studying action for future control of world prices, but declined to specify whether it wanted export quotas restored. He added that Brazil was prepared to go with consultations with a view to imprving the coffee trade. It was concerned about the prevailing low prices and was sensitive to the difficulties farmers were facing. Leao concluded by saying that the real question was the mechanism for the reallocation of quotas.

Mwangle said that all producers agreed that prevailing coffee prices were unacceptable and required urgent attention. There were conflicting interests between producers and consumers, he added, but the long-term interests converged. A price stabilization pact with mutual obligations between both sides was the best reflection of this convergence of interests.

Africa's share of the worlds market has dropped to a current level of 24% from 30% in the 1970's. due to drought, civil wars, poor marketing and switch in consumer taste to mild Africa coffee from the mainly Robusta crop produced in Africa.
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Title Annotation:Inter-Africa Coffee Organization meeting in Nairobi with Latin American and Asian exporters press for price stabilization
Author:Kille, Turville
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1991
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