RPT - EUROPEAN TRADE MAY PROPOSE NEW ICO FORMULA
European coffee traders and roasters
may propose a new formula for calculating International Coffee
Organization (ICO) coffee quotas at the end of their meeting
here this week, traders and officials told Reuters.
    Although traders were unwilling to reveal details of the
possible new formula, they said it would give Brazil, the
world's biggest coffee producer, unchanged ICO quotas for the
next two years and could be a basis for renegotiation.
    "The main sticking point on quotas has been Brazil's
attitude, and this compromise could be a solution, " one said.
    However, the European coffee trade federation meeting,
which began here today and is to continue to the end of the
week, has revealed gaps in the European position on
re-introducing quotas.
    Traders said that, as a whole, the trade side was against
re-introduction of ICO quotas, while roasters were generally in
favour with the single proviso that there had to be some
formula basis for re-allocating quota shares among producing
countries.
    The roasters said the positions were generally fairly
close, and problems with some Government officials.
    Germany and Italy were cited as the extremes of polarized
Government attitudes, with most other countries on the fence.
    Sources said Germany was the most extreme against quota
re-introduction, while the Italians were most in favour.
    "Nevertheless, we expect to find enough common ground by the
end of the week to at least present a common European Community
(EC) view at the next meeting of consumer members of the
International Coffee Agreement (ICA) in July," one trader said.
    "We hope we can present the compromise proposal and that not
only the consumer side, but the producer side will accept it,"
one official said.
    "We have learned that we can live without the quotas that
were suspended in February last year, but would prefer the
stability they can bring to the market as long as we do not
simply return to the old and outdated status quo as far as
quota allocation is concerned," he added.
    Overall, however, trader and roaster opinion on the
likelihood of a successful re-negotiation was mildly
pessimistic, varying between a 50-50 chance and 60-40 against.
    "Our main difficulty will be to persuade the U.S. On the
consumer side and Brazil on the producer side to agree to quota
re-introduction, " he said.
    "The U.S. Position has, if anything, hardened, while the new
Brazilian Coffee Institute president has adopted the least
negotiable position of any of his predecessors," one trader
said.
    "However, with many producers starting to swing in favour of
the consumer position that quotas have to be re-allocated under
a new formula, Brazil is becoming increasingly isolated, which
gives at least some hope of a compromise at the ICO quota
meeting in September," the official said.
 Reuter
