The International Coffee Organization ended a weeklong meeting here today with producing countries more united than at any time in recent years. With winter arriving in the northern hemisphere, and demand again rising, this is likely to mean continued high prices for the American coffee drinker.
World coffee prices increased dramatically after a frost devastated Brazilian coffee-growing areas in July 1975. The International Coffee organization board, with representatives from eight consuming and eight producing nations, was meeting here in an effort to stabilize prices at levels acceptable to both groups.
Both producers and consumers representatives agreed, after tours of coffee fields and empty warehouses in the principal Brazilian coffee state of Parana, than an increase is necessary in the minimum export price - called the reference price - of 77 cents a pound set earlier by the organization. What they could not decide however, was just how much that increase should be.
The reference price is important to producers because it sets a mark under which prices cannot fall in what is otherwise a violatile market. It guarantees them at least a minimum for what is often their key export item and the underpinning of their economics. Market prices can often rise for above the reference price, with Brazilian coffee beans, for example, now commanding about $2.45 a pound.
Camilo Calazans de Magalhaes, president of the Brazilian Coffee Institute and principal spokesman for the prodicing countries, has been saying that changed market conditions call for a new reference price of $2.20 a pound. That is a dollar above the price representatives of consumer countries seem willing to accept.
Calazans has been strongly supported by African and Central American producers. "We in Central America share the Brazilian point of view," El Salvador's representative. Rafael small producing nations to act alone would be like "an ant dancing on the nose of an elephant."
This climate of harmony on the producers side is due in large part to a recent agreement between Brazil and Columbia. Last month, after two days of secret meetings in the Amazon city of Manous, the world's two largest coffee-producing countries declared that they would "jointly execute a policy of sustaining prices, in order to favor the interests of producing countries."
Prior to the announcement of what is known here as the Manaus Accord. Brazil and Columbia were following contradictory price policies.
When coffee market prices began theri fall in March from an all-time high of more than $3.50 a pound. Columbia responded by lowering its export price three times to attract buyers. Brazil maintained its official export price at $3.20 - and sold virtually nothing.
For the first half of the year, Brazil's export sales of coffee had totaled a record $2.15 billion, raising hopes for a balance-of-payments surplus this year. During the next five months, however, exports totaled less than $250 million, and muchof that says a broker here, "actually was to fulfill orders placed much earlier in the year."
Following the Manaus meeting, Brazilian attitudes on coffee prices did a sudden about-face. Early this month, Calazans lowered the Brazilian export price to $2.10 pound - far below this year's high, but significantly above the 48 cents a pound that Brazil was getting early in 1975.
The result has beenan upsurge in demand for Brazalian "Arabica" bean and prices have been rising steadily, last week hitting $2.45 a pound.
That has been welcome news for the Central American and African producers, who acted late in October after prices had dipped to $1.50 a pound, to halt exports until prices rose again. They are active again on the London and New York commodities exchanges.
The producers' main concern now that prices have returned to what they term a "satisfactory" level is to kep them from slipping anew, In pursuit of that goal, they have shown an unusual willingness to speak and act jointly.
Even aside from the reference price issue, the producers have been pondering ways to strengthen their hand. According to press reports here. Brazil soon will begin selling some coffee on the London commodities exchange instead of in New York as it has tradionally done.
South and Central American producers have been dissatisfied with the New York exchange since the Federal Commodity Futures Trading Commission intervened late last month to prevent what was termed "concerning and manipulation" of coffee futures contracts. That action followed two earlier moves this year by the commission to restrict dealings in coffee futures.
These actions are seen by coffee producers as part of a campaign to maintain prices at a low level. The effect of each decision was to remove pressure from futures dealers who were being forded to buy coffee as hgih price because of an apparent scarcity of the product on the market.
Brazil has already been active on the London market, but as a buyer in an attempt to bolster prices of African and Central American coffee.
Consuming nations have viewed these and other producers maneuvers as speculation. U.S. Assistant Secretary of Treasury Frod Bergsten expressed concern here over reports that "Brazil and other producing countries have been entering the market in ways that would destabilize prices and maintain them at artificially high levels."
[In Washington, a U.S. Agriculture Department official pointed out that the crop Brazil will harvest in April-May should be close to the abundance of those before the 1975 freeze, a factor that could lower prices. He also said any shift in the international price now takes two to three months to be reflected in retail levels, currently running almost $4 a pound in the Washington area.]