Statement Of Senator Patrick Leahy On The International Coffee Crisis

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Statement Of Senator Patrick Leahy
On The International Coffee Crisis
October 23, 2003

Mr. LEAHY. Mr. President, I rise today to speak about the international coffee crisis. With much of the world focused on Iraq and the Middle East, it is perhaps not surprising that a crisis affecting tens of millions people, on virtually every corner of the Earth, has received little attention.

The worldwide price of coffee has plummeted almost 70 percent over the last several years. This has devastated the economies of poor countries in Asia, Africa, and Latin America. It has ruined the livelihoods of millions of people. And, it has damaged our foreign aid and counter-narcotics efforts in these countries.

For example, over the last few years, the United States has provided almost $3 billion to Colombia for counter-narcotics assistance. This has made Colombia the top recipient of U.S. assistance outside of the Middle East.

But, even though this is an extremely generous amount of aid, the goals and objectives are being undermined by the collapse of coffee prices. Last year, Colombia’s President Alvaro Uribe wrote a letter to me, in which he stated:

"[T]he impact of the international coffee crisis on Colombian coffee growers has been devastating. In Colombia, more than 800,000 people are directly employed on coffee farms and another three million are dependent on coffee for their livelihood. Colombian coffee farmers are struggling to cover their cost of production, and the problems of oversupply and a decline in coffee prices as brought poverty and uncertainty to Colombia’s coffee-growing regions, which were previously free of violence and narcotrafficking activity. Additional support from the United States will help improve this dire situation in Colombia and other developing countries around the world which are also being impacted by oversupply and falling prices."

A range of humanitarian relief agencies, with operations around the world, further support President Uribe’s views. For example, an Oxfam report on the topic found:

"The coffee crisis is becoming a development disaster whose impact will be felt for a long time. Famlies dependent on money generated by coffee are pulling their children, particularly girls, out of school, can no longer afford basic medicines, and are cutting back on food. Beyond farming families, national economies are suffering. Coffee traders are going out of business, some banks are in trouble, and governments that rely on the export revenues that coffee generates are faced with dramatically declining budgets for education and health programs and little money for debt repayment."

The United States is, by far, the biggest importer of coffee. At the same time, we provide billions of dollars of foreign aid to nations impacted by the coffee crisis. It is common sense. The United States has a strong interest in finding a solution to this international problem.

A couple of years ago, several of us in Congress started asking questions about what the administration is doing to address this issue. It is safe to safe to say that we were disappointed with the answers.

There are some good programs being run by different agencies within the Government. But, there are so many agencies involved – State, USAID, Agriculture, USTR, Treasury – and there are times when one hand does not seem to know what the other is doing. For example, USAID has programs in Latin America to help coffee farmers find alternative livelihoods, because of the overproduction that exists in the global market. At the same time, we found another program that was encouraging Bolivian farmers to get into coffee production. In other words, two steps forward, one step back.

What’s worse, the administration does not seem to have a comprehensive strategy across agencies to effectively address the international coffee crisis. Nothing to get everyone on the same page and working towards to the same goal. Nothing that outlines a plan on how to deal with the crisis.

This is not just my opinion, this is the bipartisan, bicameral view in Congress.

To address these shortcomings, a number of us have come together across party lines and from different sides of the Capitol. We have pushed hard to move forward on this issue.

During the final days of the 107^th Congress, I along with Senators Specter, Dodd, and Feinstein, successfully sponsored S. Res. 368, which called attention to the coffee crisis and urged the administration to formulate a comprehensive, multilateral strategy to address the problem. Although this measure passed the Senate, the administration has been slow to respond, and, as a result, we were forced to include a provision in the Fiscal Year 2004 Foreign Operations bill that requires the Secretary of State to report to Congress on any progress made in formulating this strategy.

To this day, the administration has not come forward with this strategy. While we should take care to make sure this strategy is done right, it has taken the administration too long. This is not a situation that will just go away. We have to act, and that makes coming forward with a strategy all that more important. I urge the administration to finish the job.

Here in the Senate we are doing what we can to respond to the crisis. We were successful in getting the Senate to serve fair trade coffee. And, I am also pleased to report that we helped USAID and Green Mountain Coffee enter into a public-private partnership to implement development projects to address the crisis. These were smaller, but important accomplishments.

Other accomplishments include working with the private sector, and encouraging major companies such as Procter and Gamble and Dunkin’ Doughnuts to serve fair trade coffee.

Mr. President, much of the recent debate on the coffee crisis surrounds U.S. membership in the International Coffee Organization (ICO). As Chairman of the Foreign Operations Subcommittee, I included $500,000 in the Fiscal Year 2003 Foreign Operations bill for a U.S. contribution to the ICO, if the United States rejoined by June 1, 2003. This move was hailed by a diverse range of groups, including the National Coffee Association, Oxfam International, several Latin American governments, the Speciality Coffee Association of America, and the Colombian Coffee Federation.

Unfortunately, this deadline has come and gone with no decision. However, it triggered a debate within the administration on the issue of ICO membership. That debate continues to this day.

This is not an indictment on those working on this issue in the administration. To the contrary, those in the State Department, USAID, and other agencies working with Principal Deputy Assistant Secretary of State, Shaun Donnelly, are talented individuals. They have been responsive to concerns raised by Congress, and I know they are working hard to resolve this issue and find a solution to the coffee crisis.

To ensure that these funds were not lost, the Commerce-State-Justice Subcommittee, under the leadership of Senators Gregg and Hollings, honored my request to include another $500,000 for a contribution to the ICO in the Fiscal Year 2004 CJS Appropriations bill. I applaud their leadership on this issue. Along with relentless pressure from Representatives Cass Ballenger and Sam Farr, the help of the Commerce-State-Justice Subcommittee sent a clear signal to the administration: Congress is not going to go away on this issue.

We were recently informed that the State Department supports the U.S. membership in the ICO. This is a positive step, but the administration as a whole has yet to endorse this view.

What is the hold-up? This process has been dragging on for months. It should end, and the U.S. should rejoin the ICO. This is something that U.S. industry, humanitarian NGOs, key friends and allies, and a bipartisan group in Congress supports.

Some may recall the way the ICO used to operate in the past, working as a cartel to stabilize coffee prices. But, nobody is talking about rejoining the ICO to establish a cartel over the coffee market. The ICO is a reformed organization and its chartering agreement has been substantially rewritten, specifically to get the ICO out of the business of price-fixing. The idea of a coffee cartel is an idea on the ash heap of history. I would not support it. I suspect no one in this Chamber would.

I support U.S. membership in the ICO, but recognize that is by no means a silver bullet. Membership alone is not enough to solve the international coffee crisis. Rather, it is one arrow in the quiver, and it can be an effective tool, when used as an integral part of a comprehensive strategy that includes funding for alternative assistance for coffee farmers, working with friends and allies, and the deep involvement of other international organizations such as the World Bank. This is the appropriate role for the ICO.

There are some compelling reasons for rejoining that have been put forward by experts who follow this issue closely. I want to briefly summarize a few of them:

–U.S. participation in the ICO would help strengthen the implementation of resolution 407, which establishes quality guidelines on coffee exports. Although not perfect, ICO resolution 407 is a serious, multilateral attempt to help address the international coffee crisis that a number of economists believe could have a meaningful impact. According to some industry leaders, it also enhances competition in the coffee industry.

--US participation would help the ICO become more effective in addressing the coffee crisis. Many European nations have said they would be more willing to invest and commit additional resources to resolving this crisis through the ICO, if the US were participating. The European Community (EC) recently called on the US to rejoin. Because the U.S. and EC are not producing nations, this momentum would help the ICO pursue goals to more effectively address development issues associated with the coffee crisis, while helping the ICO continue to move away from discredited policies of the past.

–U.S. membership in the ICO would focus more senior level attention, and inter-agency cooperation, on this important foreign policy issue within the administration. This would go a long way in overcoming some the problems stemming from a lack of coordination between agencies that I mentioned earlier.

--The ICO engages in projects to help address the crisis: price risk management for Africa, disease control, and market development projects. Moreover, the ICO is also promoting diversification in cooperation with multilateral agencies such as the FAO, UNCTAD and the World Bank. These strategies could all be enhanced through U.S. membership in the ICO.

-- ICO membership would send an important signal to the rest of the world that the United States is committed to working collaboratively on every possible solution to this problem. This would be an important diplomatic step on an issue that many of our friends and allies in the developing world care deeply about.

Again, the ICO is not a perfect solution. But, if a $500,000 contribution can help begin to solve a crisis that is undermining billions of dollars in U.S. foreign assistance, devastating the livelihood of millions of people around the word, and causing severe economic damage to key developing countries, I say its well worth the investment.

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