January, 31, 2005  -   Press release

Report on the Sustainability Discussion at the ICO meetings, January 2005

The private sector has been presented with two proposals to increase the sustainability in the coffee business. The Common Code informed that it is preparing the pilot project phase, that it has clarified that its practices fit into WTO rules and that the word about 4C has been further spread. The presentation of the Common Code was also given to the Executive Board.

The Worldwide Sustainable Coffee Fund presented its entire concept over 30 minutes. It pointed out that this proposal is a golden opportunity for the coffee business to become a modal industry by solving its sustainable issues with a transparent and neutral concept from WITHIN the coffee world. It was pointed out, that to the contrary, an international official tax might be imposed to create a governmental, bureaucratic solution on sustainability imposed from outside the coffee world. In hindsight, it is very interesting to note, that Messrs Chirac and Blair announced plans for precisely this type of tax at the World Economic Forum in Davos the following day.

Members of the Private Sector Consultative Board were given the opportunity to appreciate how the Coffee Fund proposes to foster the sustainability in both, the coffee producing and the consuming countries. Clear measurements referring to quality, environmental and economic matters for the origin as well as to promotional matters, coffee educational steps in defined market segments were analyzed. The presentation also included the promising concept for financing the fund that is through an initial investment of the processing industry in the developed nations with recovery of it through the profits achieved with additional sales in traditional and non-traditional coffee consuming countries. 

The most astonishing on this fact is that the Brazilian delegation at the Executive Board reported on the success of their promotional program for the last year. With a total investment of US$ 6 million an increase in consumption of 1 million bags (60 kg) was achieved, hence for a promotion worth US$ 6 one additional bag was consumed. The Coffee Fund had informed that in order to recover the fund contribution of US$ 70 million, only half a million bags of additional sales were required. Compared to the ratio that Brazil achieved, 6:1, the Coffee Fund based its calculation on a ratio of only 140:1.  That is the conservative figure of investing US$ 140 to achieve one additional bag to be consumed; Brazil confirmed that in their case only US$ 6 was required.

Several coffee organizations from the producing countries have submitted an official confirmation to the ICO on their full support to the Coffee Fund. This backing from Vietnam, OAMCAF, Tanzania, Uganda and ORCECA (all Central American states) accumulates 36% of all coffees produced worldwide. Next to Brazil and Colombia, the remaining states who are still considering issuing such an official statement amount to only 23%.   

Both proposals were discussed openly and with critical interventions after the respective presentations. The representatives of the processing industry showed their reserves towards the proposal of the Coffee Fund, whereas several delegates of the producing countries expressed their opinion that the proposal of Coffee Fund should continue to be explored. The executive director of the ICO concluded with his suggestion that the multinational roasting companies should be informed of the proposal of the Coffee Fund and they should discuss its content, addressing himself directly to the industry representatives.

The Common Code was discussed at the Executive Board and received severe critics from the delegates from all three coffee producing continents. In particular the delegate from Brazil gave a clear statement that the approach of the pilot phase of the Common Code lacked transparency and openness for discussion with the producing nations.

Both sustainable proposals will remain on the agenda.

Stand: 16. Dezember 2005