United States - Ted Lingle, executive director of the Specialty Coffee Association of America (SCAA) testified before the Committee on International Relations' Subcommittee on the Western Hemisphere at hearings entitled "The Coffee Crisis in the Western Hemisphere." recently. The hearing was called to focus on the effects of the current global coffee market on the economies of Central and South America.
In written testimony, Lingle characterized the coffee market as being in "grave danger" - threatened by a vast and growing oversupply of ever-lower quality coffee that have driven green coffee prices to historic lows." He added, "This is not the temporary boom and bust coffee cycle of the past. It is structural...and will not be corrected by market forces in the short run."
To support this point, Lingle mentioned the growing imbalance between the behavior of export and retail prices. "In the 1980s, the final consumer spent about $30 billion annually on retail coffee sales; of this total, exporting countries took in $9-10 billion, representing 30-33%. Today the latest estimates indicate that final consumption now accounts for around $55 billion in annual retail sales, with exporting countries receiving approximately $7 billion, representing only 15%."
Keeping the topic close to home, Lingle related that the crisis has political implications for the U.S., potential for elimination of traditional coffee sources in Latin America for the U.S. coffee trade, and that it has the potential to cost jobs for those Americans working in export oriented markets. He added that U.S. taxpayers in the southern border states from Texas to California pay "billions of dollars annually in order to deal with crime, health care, and educational demands" of displaced coffee workers who illegally immigrate here.
Lingle spoke on the reasons for the current coffee crisis as they relate to an abundance of low-quality Robusta beans from Vietnam and Brazil. He also described the worst of these low quality coffees as "sick, dying and dead coffee beans, along with sticks, stones leaves and other foreign matter." He noted, "the United States has no laws or regulations governing purity of coffee." Current FDA standards allow coffee containing up to 30% defects to be imported and, said Lingle, "sold as pure coffee." In contrast, Lingle pointed to Hawaii. Hawaiian coffee growers are not allowed to export coffee containing more than 5% defects, and that is their lowest standard.
Lingle's primary focus was to urge the United States to adopt a policy pertaining to coffee other than what he described as its current "laissez-faire" posture. "We are precipitating a worldwide economic and political crisis with ramifications far beyond the impoverished farmers in Latin America."
He spoke of SCAA's involvement with USAID to form a Global Development alliance for market access and development assistance in coffee producing countries. "We feel very strongly that for all of Latin America, except for Brazil, coffee needs to become a value-added agricultural product similar to grape production for the wine industry." The crisis not only threatens these countries, he said, but U.S. coffee roasters and retailers as well, who count on a reliable supply of high quality beans not contaminated with defects and impurities.
He mentioned the SCAA's support for the Quebec Declaration, in which Presidents of 12 Latin American countries outlined strategies for correcting the situation, which included a point that the U.S. and Canada be invited to rejoin the International Coffee Organization (ICO), and "to reach an agreement with multilateral global, and regional credit organizations that they will not grant loans or donations intended for further expansion of world coffee production." He concluded that "We feel it is a good plan with a high likelihood of success, IF the U.S. government will support it as well."