Coffee in Retrospect: Ethiopia disputes its coffee quota (1962 to 1964)

In 1962 the countries that grow coffee and the countries that drink it agreed to share out the market by quota. Ethiopia's first act under the new system was to dispute the figures it had been given, and it had good reason to.

On September 28, 1962, the International Coffee Agreement was signed at the United Nations in New York, and President Kennedy put out a statement welcoming it. It is three short paragraphs. The United States bought half the world's coffee, he said, so the agreement could not take effect until the United States ratified it. Coffee was the main source of foreign income for many poor countries, "particularly in Latin America," and a fall of one cent a pound cost Latin American producers fifty million dollars, enough to undercut the Alliance for Progress. Africa is not mentioned.

I do not read that as a slight. Kennedy was speaking to Americans about a Latin American policy, and Latin America grew most of the world's coffee. But it is an honest picture of where Ethiopia stood in the new arrangement: inside it, and almost entirely out of view.

The State Department's own record of the negotiation is more candid than the statement. The export quotas were bargained out among the producing countries, and the production figures they bargained from came from the U.S. Department of Agriculture. On August 27, 1962, the Department told its embassies in the coffee-producing countries to stress that the American delegation "did not intercede in quota negotiations for any country." The historians who edited the record explain why. Because American figures had been used, the Department wanted to head off any attempt by countries unhappy with their quotas to blame the United States for a wrong estimate. Voting in the new Coffee Council was weighted by trade, which gave the United States and Brazil what the editors call "a virtual veto" over its major decisions.

Ethiopia did complain, though as far as the record shows, its complaint was aimed at the numbers rather than at Washington. A World Bank report on the Ethiopian economy, dated September 30, 1963, tells the story in a footnote. Ethiopia "was initially given a quota of 51,000 tons." It argued that the production figures behind that number were wrong, and at the August 1963 meeting of the International Coffee Organization the members agreed to revise it, subject to a study that autumn. Ethiopia told the United Nations that it intended to ratify the agreement, given a revised quota of 1,020,000 bags, or 61,000 tonnes, for 1963/64. The difference was 10,000 tonnes, about a sixth of what the country had exported in 1962.

Ethiopia was right to argue. The same report puts the country's coffee production at "between 70 and 140 thousand tons," the higher figure assuming that about half the crop was drunk at home. Nobody knew, within a factor of two, how much coffee Ethiopia grew. A quota built on an estimate like that was built on a guess.

The Bank also printed the numbers that show what was at stake.

	1954	1955	1956	1957	1958	1959	1960	1961	1962
Exports, thousand tonnes	31.6	42.1	31.5	50.7	39.9	45.2	51.3	56.0	62.5
Exports, E$ million	99.5	90.2	80.1	123.0	84.1	74.6	94.4	93.9	107.2
Export price index (1958 = 100)	156	104	131	115	100	78	83	84	76

Source: World Bank, The Economy of Ethiopia, 1963. E$ is the Ethiopian dollar.

Between 1954 and 1962 Ethiopia nearly doubled the amount of coffee it sold abroad, from 31,600 to 62,500 tonnes. Its earnings rose by about eight percent. The export price index fell by half. The country was running harder and harder to stay in roughly the same place, and coffee was half of everything it exported. The United States took 60 to 70 percent of the coffee.

The Bank gave three reasons for the growth in volume. Trees planted during the high prices of the mid-1950s had come into bearing. New roads had opened up more wild coffee to harvest. And the National Coffee Board, set up in 1957 to enforce the rules on cleaning and grading, had cut the number of shipments rejected overseas. Better grading may have firmed prices a little, the Bank thought, but in July 1963 Jimma coffee was still quoted at 31.75 cents a pound, about two cents below the comparable Brazilian coffee.

Those mid-1950s plantings had a history of their own. In May 1954 the Associated Press reported from Addis Ababa that Ethiopia was "launching a vast expansion program" for coffee, which already brought in almost exactly as much as the national budget. The aim was 500,000 tons a year within about ten years, with American capital, and Emperor Haile Selassie was due to make the case to American investors in New York. The State Department, the report said, was "getting a headache over Ethiopian coffee because of probable reaction from Brazil, jealous of its dominant position." That November a Washington columnist reported that Harold Stassen, who ran the American foreign aid program, had urged that Ethiopia be tried as a new source of coffee, "with American aid, of course." The Brazilians, he wrote, "exploded at that." I reprinted both pieces here years ago, the AP report in 2011 and the column in 2012. Read next to the quota papers, they show how early Ethiopian coffee became a question for Washington, and how quickly it ran into Brazil. Eight years after the 500,000-ton plan, Ethiopia was exporting 62,500 tonnes and arguing over 10,000 more.

The dates need some care. The Bank's report says Ethiopia "has signed the Agreement." The United Nations treaty record shows no signature. It shows a notification on August 17, 1963, which under the agreement's terms allowed Ethiopia to take part until the end of that year, followed by accession on December 2, 1964. Ethiopia joined by acceding, after its quota had been revised.

In the end, the quota fight was about a production figure that nobody could pin down. Ethiopia made its case for 10,000 more tonnes in front of the world's coffee governments. In none of the papers I have found from that argument is there a figure for what the growers in Jimma, Sidama or Harar were paid for the coffee being counted.

The Kennedy statement and the State Department note are reprinted in full in this series. The World Bank report and the United Nations record are linked below.

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Sources.

• John F. Kennedy, "Statement by the President on the Signing of the International Coffee Agreement," September 28, 1962. American Presidency Project.
• U.S. Department of State, Foreign Relations of the United States, 1961 to 1963, Volume IX, Document 360 (Editorial Note). Office of the Historian.
• International Bank for Reconstruction and Development, The Economy of Ethiopia, Volume I, Report No. AF-12a, September 30, 1963, pp. 13 to 14 and 40. World Bank Documents.
• "Ethiopia Boosts Coffee Production," Associated Press, St. Petersburg Times, May 23, 1954, reprinted in Coffee in Retrospect, October 2011. Poor Farmer.
• Ray Tucker, "Coffee and International Situation," St. Joseph News-Press, November 24, 1954, reprinted in Coffee in Retrospect, December 2012. Poor Farmer.
• United Nations Treaty Collection, International Coffee Agreement, 1962, status of participants. UNTC.