The Role of the International Coffee Organisation in Global Coffee Trade

Coffee is the world’s most traded tropical commodity, with over 125 million people depending on it for their livelihoods and annual global consumption exceeding 130 million bags. But the journey from a coffee farm in Ethiopia or Colombia to a cup on a table in London or Tokyo is shaped by far more than just weather and soil. Behind the scenes, an intergovernmental body established more than six decades ago continues to play a decisive role in keeping that journey fair, stable, and sustainable – the International Coffee Organisation (ICO).

What is the International Coffee Organisation? 🔗

The ICO is the world’s only intergovernmental organisation dedicated exclusively to coffee. It was established in 1963 under the auspices of the United Nations, following the ratification of the first International Coffee Agreement (ICA) in 1962. Its founding reflected the economic weight of coffee: a commodity so significant to developing nations that price instability could threaten entire national economies.

Headquartered in London, the ICO brings together both coffee-producing (exporting) and coffee-consuming (importing) countries under a single multilateral framework. As of 2022, its member governments represent 93% of world coffee production and 63% of global consumption. This broad membership gives the organisation a unique position in international trade governance – it speaks for the full length of the coffee value chain, from farmers to consumers.

The ICO’s stated mission is to “strengthen the global coffee sector and promote its sustainable expansion in a market-based environment for the benefit of all actors in the Global Coffee Value Chain.” In practice, this means tackling everything from price volatility and farmer poverty to climate change and market transparency.

The International Coffee Agreement: the legal backbone 🔗

The ICO operates through a binding international treaty – the International Coffee Agreement (ICA). First signed in 1962, the original ICA was aimed at maintaining exporting countries’ export quotas and keeping coffee prices stable, primarily by managing the volume of coffee entering international markets. Since then, the agreement has been renegotiated multiple times – in 1968, 1976, 1983, 1994, 2001, 2007, and most recently in 2022.

How the quota system worked 🔗

Under the early ICAs, the ICO administered a quota system. A target price was set, and export quotas were allocated to each producing country. When the ICO’s indicator price fell below the target, quotas were reduced to limit supply; if it rose above it, quotas were increased. The system had its complications, but it was broadly effective at raising and stabilising prices during its active years.

The quota mechanism collapsed in 1989 when member countries could not agree on new terms, and the export quota clauses were suspended. The average indicator price, which had been around US$1.34 per pound in the five years before the collapse, fell to US$0.77 per pound in the five years that followed – a stark illustration of what happens when international price coordination breaks down.

The ICA 2022: a new era 🔗

The most recent and most significant update is the International Coffee Agreement 2022. It represents a fresh mandate for the ICO, formally welcoming the world’s biggest coffee retailers, roasters, and manufacturers – together with coffee farmers – to the table for the first time in 60 years.

The ICA 2022 prioritises environmental protection, sustainable farming practices, and climate adaptation, especially for smallholder producers in vulnerable regions. It also encourages value addition at origin – meaning producing countries are supported in developing domestic processing such as roasting and packaging, which increases local economic returns. The agreement establishes a framework to address sustainability, climate change, and low farmer incomes, and updates the ICO’s voting and contribution system to better reflect the current structure of the global coffee trade.

Perhaps most significantly, the private sector and civil society now participate as Affiliate Members – a structural change that allows businesses from major coffee brands to smallholder cooperatives to raise concerns and contribute to decisions directly with governments at the international level.

How the ICO is structured 🔗

The ICO functions through several key bodies. The International Coffee Council (ICC) is the highest authority of the organisation, composed of representatives of each member government. It meets in March and September to discuss coffee matters, approve strategic documents, and consider the recommendations of advisory bodies and committees.

Alongside the ICC, a Finance and Administration Committee oversees budget approvals and financial management. A Private Sector Consultative Board – made up of sixteen leading industry representatives from both producing and consuming countries – provides the organisation with direct input from the trade and industry side. The Executive Director, currently Vanúsia Nogueira (the first woman to lead the ICO), heads the Secretariat and implements the Council’s decisions.

Votes are split equally between producing and consuming countries, with each side holding 50% of voting power. Brazil, as the largest coffee exporter, holds the most producer votes, while the European Union collectively represents the largest consuming bloc.

Key functions of the ICO in global coffee trade 🔗

The ICO carries out several overlapping functions, each aimed at different aspects of the global coffee sector.

Data, statistics, and market transparency 🔗

One of the ICO’s most relied-upon functions is the collection and publication of official coffee statistics. The ICO facilitates improved market transparency through highly regarded statistical and analytical services, in-depth economic studies, and regular reports on the coffee market. This data is used by governments, traders, researchers, and development organisations worldwide to make informed decisions on pricing, production, and policy.

The ICO tracks monthly export and import volumes across all member countries, publishes composite price indicators, and releases periodic Coffee Development Reports that examine sector-wide challenges. Its Annual Review highlights key achievements and challenges facing the global coffee sector, and the organisation has received observer status at the United Nations General Assembly – reflecting its growing influence in international trade and sustainability diplomacy.

Price monitoring and market stability 🔗

While the export quota system is no longer active, the ICO continues to monitor global coffee prices closely and facilitates dialogue when price levels threaten producer livelihoods. In September 2018, the International Coffee Council adopted a resolution on coffee price levels, leading to a sector-wide dialogue and ultimately the “London Declaration” signed by 12 private sector companies committing to action on sustainable production, equitable growth, and market transparency.

The ICO also publishes a Composite Indicator Price that serves as a global benchmark. When prices are volatile – whether from supply disruptions, extreme weather, or shifts in demand – the ICO provides the forum and the data needed for coordinated responses.

Promoting sustainability and farmer livelihoods 🔗

The ICO has placed increasing emphasis on the sustainability of the coffee sector, particularly for the smallholder farmers who produce the bulk of the world’s supply. Smallholder farmers produce around 60% of the world’s coffee, involving some 120 million people. These farmers are disproportionately exposed to price volatility, climate risk, and limited market access.

The ICO’s establishment of the Global Coffee Sustainability and Resilience Fund represents a significant step towards attracting investment focused on the most vulnerable countries and communities, particularly smallholder farmers, women, and youth. The fund, endorsed by the G7, is designed to channel both public and private capital into climate resilience, farm productivity, and community development.

The ICO also supports public-private partnerships (PPPs) as a key mechanism for channelling investment into smallholder farms. These partnerships bring together governments, NGOs, and private companies to provide training, processing equipment, and market access to farmers who would otherwise be unable to access such support. The ICO has cooperated with organisations including the Global Coffee Platform, the Rainforest Alliance, the Sustainable Coffee Challenge, and UNIDO on joint projects aimed at improving conditions across the value chain.

Promoting coffee consumption 🔗

In addition to supporting producers, the ICO works actively to grow global demand for coffee. This includes market development programmes targeting emerging consumption markets – particularly in Asia and Africa – and initiatives to promote coffee quality. The ICO designates 1 October as International Coffee Day, a global platform for raising awareness of the beverage and the communities that depend on it.

Increasing consumption is directly linked to producer welfare: when more coffee is consumed globally, demand supports higher prices and greater market stability for farmers.

Tackling climate change 🔗

Climate change poses an existential challenge to the coffee sector. Rising temperatures, unpredictable rainfall, and the spread of pests and diseases are already affecting yields in major producing regions. Countries producing speciality coffee are particularly vulnerable, as rising temperatures may force farmers further up mountain slopes to find cooler growing conditions, where less land is available.

The ICO’s response has been to embed climate resilience into its core mandate. The ICA 2022 gives the ICO Secretariat a clear mandate to assist members in putting together coffee sector development projects and mobilising resources in areas such as pest and disease control and climate change adaptation. The ICO has also collaborated with the Common Fund for Commodities (CFC) and UNIDO to promote climate-smart agriculture, agroforestry, and water-efficient farming practices across producing regions.

Challenges facing the ICO 🔗

Despite its long history and broad mandate, the ICO faces persistent challenges. The collapse of the export quota system in 1989 left the organisation without its most powerful market-stabilisation tool. Since then, coffee prices have remained subject to significant volatility – the 2018-19 price crisis saw prices fall to near-historic lows, pushing many smallholder farmers out of the sector entirely.

Coffee farmers have suffered much in the wake of the 2019 pricing crisis and extreme weather events including droughts, flooding, frosts, and crop blight, prompting many to quit a business that had been in their families for generations. Smallholders with less than one or two hectares of land earn incomes of just USD $500 a year.

The withdrawal of the United States from the ICA in 2018 – the world’s largest coffee-importing nation – also reduced the ICO’s leverage in shaping global trade policy. The organisation continues to operate without full US participation, though it has strengthened other partnerships to compensate.

Looking ahead, the ICO’s challenge is to translate its new mandate under the ICA 2022 into tangible outcomes for farmers and communities – not just policy commitments. The integration of the private sector as Affiliate Members is a promising structural change, but whether it delivers on its potential depends on the willingness of major coffee companies to act on sustainability commitments rather than simply endorse them.

India’s role within the ICO 🔗

India is an active member of the ICO and participates in its initiatives and governance structures. Coffee cultivation in India is primarily concentrated in Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, and Odisha, with Karnataka alone contributing over 70% of the country’s total coffee output. Indian coffee – both Arabica and Robusta – is highly regarded in international markets, and ICO membership gives Indian producers access to the organisation’s market data, development programmes, and certification frameworks that support export quality and traceability.

What do you think? The ICO’s new 2022 agreement opens the door for the private sector – from large multinationals to smallholder cooperatives – to shape global coffee policy alongside governments. Do you think this inclusion of the private sector will genuinely improve conditions for coffee farmers, or does it risk prioritising commercial interests over producer welfare? And with climate change already shrinking viable coffee-growing regions, is the current pace of international cooperation fast enough to protect the sector for the next generation?

References

1. https://ico.org/what-we-do/faq/
2. https://ico.org/what-we-do/about-us/
3. https://en.wikipedia.org/wiki/International_Coffee_Organization
4. https://en.wikipedia.org/wiki/International_Coffee_Agreement
5. https://www.teaandcoffee.net/news/29627/the-ico-unveils-new-international-coffee-agreement/
6. https://qahwaworld.com/coffee-community/what-is-the-international-coffee-agreement-2022-and-what-has-changed/
7. https://mtpak.coffee/2023/06/international-coffee-agreement-what-it-means/
8. https://dailycoffeenews.com/2022/06/09/landmark-international-coffee-agreement-2022-embraces-private-sector-participation/
9. https://ico.org/
10. https://ico.org/market-development-toolkit/page/index/8/3-p-s-of-sustainability/37
11. https://ico.org/market-development-toolkit/page/index/3/private-public-sector-partnerships/58
12. https://thecooperator.news/ico-unveils-new-international-coffee-agreement-all-stakeholders-to-have-say-on-the-future-of-coffee/
13. https://www.legacyias.com/about-a-international-coffee-organization/