Cure for Coffee

Among world commodities, coffee ranks second only to oil in export value --and until recently it placed No. 1 in unmanageability. A mere 10-per-lb. price fluctuation means $50 million to the producing countries. In Latin America, where many countries rely on the bean for 45% or more of their export earnings, wild price swings have been known to break treasuries and trigger political upheaval. Yet increasingly, thanks to the U.S. inspired International Coffee Organization, the world's coffee fits are being confined to the conference table.

Taking the Lead. Representatives of the 61 I.C.O. member nations--both producers and consumers--met in London last week to thrash out a solution to the price problems. Because of slack demand, coffee has slipped in the past year from 4310 per Ib. to 3810. To prop the price at a more acceptable level, the I.C.O. in all probability will slash producers' export quotas to bring supply more in line with demand. In the four years since the I.C.O. was set up, such klatsches have helped stabilize the market to the benefit of growers and drinkers alike.

Now the I.C.O. is moving even more directly against the heart of coffee's problem: oversupply. Brazil, the big gest producer, has taken the lead. It grows enough coffee each year to sup ply two-thirds of the world's needs, has enough surplus in storage to supply every coffee drinker for more than a year. Though present quotas allow it to sell only about 60% of its average 30-million-bag crops, the growers could not care less. A beneficent government has always stepped in to buy and store the huge excess. But such generosity is coming to an end. With $70 million in government backing, Brazilian Coffee Institute President Leonidas Borio has pioneered a campaign to "break the old taboo that only coffee is important." More with Less. Under the plan, growers are being offered up to 220 for each of Brazil's 3.7 billion coffee trees that they plow under. The idea is to cut production back by 20% to match what Brazil really needs for exports and home consumption. At the same time, planters are being encouraged through price supports to convert coffee land to rice, beans, corn and other crops in short supply. To put pressure on big operators, the government has put the lid on currency inflation, there by trimming Brazilian shippers' export earnings by 25% -40%. Says one U.S. observer: "This has the coffee people scared as hell." The I.C.O., for its part, is pleased. So far, some 40,000 small growers have promised to plow under 497 million trees, saving the government more in reduced subsidies than the cost of the program. The I.C.O. hopes other over producing countries will follow Brazil's lead -- as well they might. If Brazil could have slashed the $400 million it spent to buy and store last year's surplus, the country would certainly be getting more out of the $700 million it earned on the beans it did sell abroad.

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