CARACAS, Venezuela, May 22 (UPI) -- Coffee producers are facing a crisis that will affect 25 million families worldwide, Colombian Finance Minister Juan Manuel Santos warned late Tuesday.
Speaking at a meeting of the council of the International Coffee Organization in London, Santos said the situation for producers had become unsustainable and called for greater recognition of their plight from the international community.
The minister noted that the proportion of the coffee retail price producers receive has fallen drastically in recent years and was currently as low as at any time in living memory.
In 1997 consumers across the world spent $30 billion on coffee, of which producers received $12 billion, or 40 percent.
This year, however, consumers will spend a predicted $60 billion, but coffee growers will only receive $5.5 billion, slightly less than 10 percent.
Prices are also at record lows. The price of Colombian coffee fell in February to the lowest rate for over 100 years in constant dollar terms, and have temporarily stabilized at a level around 40 percent lower than in 1997.
Santos said that the industrialized countries and organizations such as the United Nations and the World Bank should address the situation of coffee growers as part of their efforts to combat poverty in developing countries.
The Colombian minister warned delegates that without a wide-ranging political agreement, large numbers of coffee producers would face bankruptcy, jeopardizing the long-term future of the entire industry.
"The international community cannot remain indifferent to this tragedy," Santos said. "We (the producer countries) need to begin a crusade to put coffee on the international political agenda."
The International Coffee Organization's Colombian executive director, Nestor Osorio, agreed that the industry "was in the worst state anyone can remember" and said coffee prices were "at their lowest level in 30 years."
Osorio told the conference, which brings 45 producer countries together with 18 consumer countries, that the coffee industry had to take steps to deal with the major problem of balancing supply and demand.
In 2001, producers supplied 109 million sacks of coffee, while consumption only reached 105.3 million sacks.
None of the three largest coffee producers, Brazil, Vietnam and Colombia, cut production levels in 2002, and analysts estimate that supply will increase to 114 million sacks, while demand will fall slightly to 105 million sacks.
Osorio warned that the collapse of the price of coffee was already beginning to generate "serious social and political repercussions" in producer countries in Latin America, Africa and Asia.
"We calculate than 500,000 workers in Mexico and Central America have already lost their jobs because of the fall in prices," Osorio said.
Coffee producers are turning to the vastly more profitable production of illegal drugs or are abandoning the countryside and swelling shantytowns around major cities, Osorio warned.
Osorio said the group backed quality control, diversification and marketing programs as the key to turning the industry around. He did not, however, advocate repeating failed attempts to create a production quota system.
The coffee group chief said it would also be important to introduce environmental safeguards to guarantee the long-term future of the coffee industry.
Osorio backed Santos' call for member governments and the international community to cooperate with the international group to limit the social effects of falling prices.
Osorio said he would be inviting important consumer countries, such as the United States, Canada, Russia and China to join the international group and lend their support to efforts to help coffee producers.
The International Coffee Organization has previously considered asking the World Trade Organization to investigate high tariffs on coffee imports imposed by many consumer countries.
Speaking on a visit to Colombia in February, Osorio said these tariffs made it virtually impossible for producers to market their products directly, forcing them to sell via large foreign corporations, who keep the majority of the profits.
The coffee group's executive secretary warned that unless the coffee industry experiences a radical improvement in prices or carries out drastic production cuts, coffee producers are likely to experience a deepening of the current crisis over the short to medium term.
"All countries, whether they have many or few resources, will have to do something about the issue of coffee, or these circumstances will create a socially explosive situation, which will have serious consequences," Osorio warned.
