By Dan Bolton
China and the International Coffee Organization (ICO) have been discussing membership for decades.
ICO is the world’s leading inter-governmental organization concerned with coffee. It was established in 1963 under the auspices of the United Nations and is the sole administrator of the International Coffee Agreement (ICA), a document that has evolved during the past 50 years from enforcement of coffee quotas to a commitment to improve coffee quality, sustainably increase farm productivity, and enhance farm profitability.
Key to accomplishing these tasks is the collection of statistics to better understand the global market. The coffee industry has largely avoided turmoil the past decade with demand and supply in sync but given the impact of climate change and rising demand in emerging markets that balance will soon end.
Annually ICO compiles coffee production and consumption statistics for 44 of the world’s coffee exporting countries. ICO also tracks coffee consumption in the European Union’s 28 member nations, the United States, Russia, and Japan. Membership includes 78 countries that, in aggregate, produce 98% of the world’s coffee and consume 83% of the coffee produced each year.
In 2017 China produced 2.65 million 60-kilo bags. If it were an ICO member, China would rank 12th globally in arabica production. Demand in Asia and Oceania is currently growing faster, at 2.16% per year, than any other region. China does not export much coffee, but to simply meet domestic demand, coffee production has doubled and doubled again, following an early-stage pattern of growth identical to Japan.
So why isn’t China on the list?
In 1994 ICO’s promotion committee singled out China and Russia as good prospects, spending $4 million over three years from a fund set aside to promote coffee in emerging markets. ICO sponsored coffee festivals in Beijing and Shanghai from 1998 to 2000 and made it known China was welcome to join.
ICO presented itself as a resource to grow the industry. Coffee consumption at the time was minuscule for a country with 1 billion residents, but it had climbed quickly from less than 250,000 60-kilo bags in 1998 to more than 2.5 million bags by 2014. In December 2006 ICO’s executive director Nestor Osorio visited Beijing. There he met with officials in China’s Ministry of Commerce that screen which international organizations China should join. China is an economic powerhouse. Thousands of organizations would be delighted to include China as a dues-paying member.
During his visit, Osorio described the process of renewing the ICA (2007) and met with members of the China Coffee Association (CCA) a Beijing-based national organization responsible for promoting coffee consumption. Programs include public events, conferences, and coffee competitions. CCA is part of the China Federation of Supply and Marketing Cooperatives (ACFSMC) a body overseeing 20,000 rural cooperatives and 19,431 cooperative enterprises that employ 3.5 million workers. CCA offered to help ICO navigate the formidable bureaucracy necessary for China to join.
The coffee agreement of 2007 appeared closely aligned with China’s plans. The ICA called on ICO to spur coffee consumption, facilitate trade, promote gender equity, and reduce poverty in producing countries.
In 2012 ICO executive director Robério Silva returned to China. In his remarks at the China Food Expo in Chengdu, Silva pointed to the fact that China imported 1.1 million bags of coffee in 2011, “an increase of almost 347% since 2000, representing an annual average growth of 14.6%.” His presentation led to an invitation for CCA representatives to attend ICO’s twice-annual meetings.
Four years later the European Union representative to ICO nominated China to the Private Sector Consultative Board (PSCB), a decision Silva called “a huge step toward participating within an ICO Board.”
Fu Jingya, secretary general of the CCA, has attended ICO meetings since 2013. She explained the next step in the process is for the top administrator at ACFSMC to meet with officials in the Ministry of Agriculture and Ministry of Finance. Once agreed, the case for joining ICO is presented to the Ministry of Foreign Affairs and the Ministry of Finance before submission to the State Council.
“It is time to be a member,” she says, “CCA has been working on this 10 years.”
Jose Sette, the current executive director at ICO, agrees. China will soon be one of the top 10 arabica producing countries in the world.
He described 10 benefits of membership, the most important of which is a seat at the table. ICO is “a unique forum where producing and consuming countries can discuss key issues, develop timely policies and solutions,” he writes. “Most importantly, access to coffee-related information and market-based risk management strategies can help avoid imbalances in the production and consumption of coffee that may give rise to pronounced market volatility that can be harmful to both producers and consumers,” according to Sette.