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M.R. Subramani

ICO is also in talks with the WTO framework to seek elimination of tariff and other barriers to all forms of coffee.

CHENNAI, Sept. 22

THE International Coffee Organisation (ICO) is ready to work with the Indian coffee authorities, including in the private sector, to set up a project and promote domestic consumption.

"We believe that is imperative (for India) to increase consumption at the domestic level and India is indeed a country with tremendous potential. ICO is ready to find resources and establish a coherent project," the ICO Executive Director, Mr Nestor Osorio, told Business Line in an e-mail reply.

ICO is aware of the "sombre" situation of Indian coffee growers are undergoing currently and, therefore, the London-based coffee body has placed urgent recuperation of fair prices for the producers on top of its agenda, according to Mr Osorio.

Fair prices would be derived by seeking market equilibrium as well as opening up new alternatives, he said.

"Together with promotion, we are encouraging producer members to look at diversification, in coordination with planning agencies, to avoid production of hard-to-sell products," Mr Osorio said.

However, Indian authorities say that growth in domestic consumption cannot translate immediately into higher prices for the growers. "Consumption is low because of constraints relating to consumer attitudes and preference," according to the Coffee Board authorities.

They also say domestic prices cannot be insulated from international price trends and if the gap widens abnormally, the pressure for imports from cheaper origins will gain momentum.

The problem for coffee growers began when the futures price touched an all-time low of 41.50 cents a pound in December 2001 as global production outweighed consumption. Bean prices have improved in recent months to around 56 cents a pound, but the prices remain below the cost of production, especially for Indian growers.

Meanwhile, ICO has also begun carrying out negotiations with the framework of the World Trade Organisation (WTO) to seek elimination of tariff and other barriers to all forms of coffee.

Mr Osorio said currently, the matter was under preliminary discussions and all possible actions were being studied.

"As a first step, we will be soon starting a study where we will be looking at multi-lateral regulations and agreements that affect both trade and environment," he said.

The terms and scope of the eventual proposal would be analysed by the ICO council meeting starting Monday in London. ICO would be taking up the issue with the WTO Committee on Agriculture during discussions on tariff for all farm products in March 2003.

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