EUROPEAN COFFEE TRADE PROPOSES NEW QUOTA FORMULA
European coffee roasters and traders
have agreed to propose a new formula for calculating
International Coffee Organization, ICO, quotas, Dutch Coffee
Trade Association chairman chairman Frits van Horick said.
    Van Horick, who is a council member of the European Coffee
Federation, was speaking at the end of the ECF annual meeting.
    The new formula is based on six-year moving averages and
would give Brazil, the world's biggest coffee producer, an
unchanged quota for the remaining two years of the current
coffee agreement, van Horick said.
    If accepted by the consumer and producer members of the
ICO, the formula could also be a basis for negotiating a new
agreement, van Horick said.
    Coffee quotas were suspended in February last year when
prices shot up on fears of a drought-induced crop disaster in
Brazil.
    Although prices are now considerably lower, consumers and
producers have been unable to agree on re-introduction.
    "Brazil has been the most strongly against any change in the
formula because it feared a lower quota. But our proposal
leaves it very little to object to," van Horick said.
    "The existing quota system is far too rigid and does not
reflect supply and demand reality," he said. "Our formula
builds flexibility into the system and will benefit almost
everyone."
    Although full implications of the new formula have still to
be worked out, initial estimates suggest countries such as
Colombia, Kenya, Indonesia and Costa Rica would get slightly
higher quotas, while others such as the Ivory Coast, El
Salvador and Nicaragua would lose quota share, van Horick said.
    Because the proposal provides that future quota
distribution must reflect current demand and actual supply, it
should also prevent under-shipment of quota as countries doing
so would automatically prejudice their following year's quota.
    "If the ICO consumers accept our proposal it stands at least
a fair chance of being accepted by the producers at the
September meeting, most of whom are generally in favour of a
new quota formula, " van Horick said.
    At the same time much will depend on Brazil's attitude.
    "Brazil is increasingly isolated on the producer side. If
there is no frost damage to its coffee crop over the next two
months and most other producers favour our proposal, we might
just get an agreement," van Horick added.
 Reuter
