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Tea & Coffee's Business Classifieds!

Coffee and Tea Reports
from the Front Lines

Coffee Producers Moving Toward Agreement
SAN JOSE, COSTA RICA - Coffee producers are entering a critical phase of talks aimed at agreeing on a scheme to boost prices by withholding stocks from the world market, reported London's The Financial Times recently.

The Association of Coffee Producing Countries (ACPC), which represents 14 of the main producing nations, has said it would recommend a retention scheme to the ACPC's ruling council on May 8 and 9. Brazil and Colombia, the largest producers, have thrown their weight behind the plan, and ACPC leaders say it could be implemented in June.

However, coffee officials say there is still much work to be done to ensure that all the main producers are behind the retention scheme. In a surprise announcement, the idea of withholding coffee stocks was backed by Central American producers El Salvador, Costa Rica, Colombia, Honduras, Nicaragua and Guatemala, as well as by Mexico, a non-member of the ACPC and the world's fifth largest coffee grower.

Initially, Mexico had opposed the idea, and among the Central Americans only El Salvador had expressed support. The seven countries, which account for about 30% of world Arabica production, were swung round by Jorge Cardenas, Colombia's coffee chief, and will meet again in Mexico this month to work out a detailed proposal.

"There was unanimous agreement to work together," said Arnoldo Lopez, president of the board of Icafe. "We did not talk figures. This was about politics." He admitted that the technicalities could be difficult to negotiate, and could revolve around staggering supply as much as quotas.

"We have to avoid the big fluctuations of price. We also need to reduce stocks in the consuming countries. We are not aiming for $2 a pound but we want to protect out producers from 60 a pound," he said.

However, for a coffee retention scheme to stand any chance of success, the ACPC must also bring on board Vietnam, the third largest coffee grower and the largest Robusta producer, but not a member of the organization.

Vietnam indicated its willingness to consider holding back exports, and Brazilian officials held informal talks in Hanoi.

The ACPC has also declined to set out price targets, or indicate how much coffee should be held back, in order to allow more freedom to negotiate with non-members such as Vietnam, Silva said. "If we state the amounts of coffee to be retained, and especially the price targets, it will make it much more difficult to reach agreement. This way, we can come to the meeting with a package that includes non-members."

Meanwhile, one of the ACPC's strongest selling points for its retention scheme is likely to be the commitment of Brazil, whose production dominates the market.

"The fact that Brazil is serious sends an important political message to other producers," said Caroline Eagles at Commodityexpert, the internet-based coffee group. "There is a sense that the scheme could work."

"We have the chance of making this plan work. When the other countries see Brazil doing its work, they will join, " said Silas Bazileiro, Brazilian representative.

University Illy Do Cafe
SANTOS, BRAZIL - Dr. Ernesto Illy, president of the Italian roasting firm Illycaffe and recognized father of espresso coffee, founded in partnership with the University of Sao Paulo what is probably the first Coffee University.

The University with the name "ILLY DO CAFE" was officially launched on April 9, 2000 with the presence of Dr. Illy and Dr. Jacques Marcovitch, Rector of the University of Sao Paulo. The central objective of the University will be to offer courses, symposiums and workshops for growers and those interested in the planting and preparation of top quality Arabica.

The studies will be conducted by technicians and professionals of Illycaffe, PENSA, an Agroindustrial Research Institute and members of FEA, the Faculty of Economy and Administration of the University of Sao Paulo. The University "ILLY DO CAFE" will be funded jointly by Illycaffe s.p.a. and the University of Sao Paulo.

Dr. Illy has been interested for some years in promoting the upgrading of Brazilian Arabica coffees by sponsoring a yearly contest for growers of top quality espresso coffees. In most years prizes were won by growers from the South and Cerrado zones of Minas Gerams. However, in 1999, due to price incentives and new preparation technology - principally the semi-washed method - selected participants ranged from the usual Minas areas to the Mogiana and other regions of Sao Paulo and even to areas of Bahia and the north of Parana.

Dr. Illy stated: "Brazil is the largest coffee producer with over 300 thousand growers and with only about 1,300 farmers producing fine quality coffee." He also stated that specialty quality coffees are growing at an annual rate of 20% and that Illycaffe blends are composed of about 60% Brazilian coffees, which he believes are essential to produce the body and flavor of a good espresso coffee.



Tea & Coffee - April 2000
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