Possibilities for consumer government actions to support coffee producers

This is the final report of a study commissioned by the Belgian Secretary of State for Development Co-operation, with the purpose of outlining possible actions to be adopted by the European Union to ensure a better share of total coffee revenues to producers in developing countries. The way to improve the participation of coffee producers in the economic gains accrued in the world coffee market translates, ultimately, in their receiving a fair price for the commodity they supply. A fair price is not an abstract entity in itself, but - in the competitive world economy - is perhaps better defined as a market price that results from fair market conditions in the whole coffee producing chain. Because of this, as will be seen below, for improving the lot of coffee producers, this reports outlines proposals to take place in the consuming countries, particularly Europe. At first sight, it might seem a contradiction acting in one region to directly impact others, far away. The key to the logic of the argument lies in the definition in the previous paragraph. As we try to demonstrate, market conditions in the consuming-countries side of the coffee producing chain are not fair; the market failures and distortions ingenuously created there are responsible for the enormous asymmetry of gains in the two sides. Radical positive measures for the coffee farms must begin, ironically, in Brussels. The structure of this report is as follows. Section 2 introduces preliminary background considerations. A summary of the past and present experiences in the application of supply management schemes is the content of Section 3 . Section 4 is an introduction to the main issues in the analysis of the coffee market . Finally, section 5 presents the proposals for consumer government supporting actions, and suggestions for a series of detailed studies to support the actions.