Since its inception in 1962, the International Coffee Agreement has been a vital tool for the coffee industry. The aim of the agreement is to help stabilise coffee prices, improve the standard of living for producers, and promote sustainable production across the supply chain.
However, the ICA has been amended several times to accommodate the fluctuating cost of living, innovations in sustainability, and more. Updated for the first time in 15 years, the ICA 2022 could represent a pivotal opportunity to increase private sector participation in creating a more sustainable supply chain. For roasters, understanding the ICA and how it has been changed is important for a number of reasons.
Read on to find out why.
Understanding the International Coffee Agreement
The ICA is a complex agreement with a number of different provisions. Its goal is to stabilise coffee prices by initiating dialogue between producers and consumers. The controlling body behind the agreement is the International Coffee Organization (ICO).
To achieve its goal, the agreement has established a system of export quotas and import tariffs, as well as funding research and development projects.
Beyond this, the agreement aims to improve the livelihoods of coffee farmers by providing them with access to financial and technical assistance, and sufficient training. In turn, this encourages sustainable farming practices, fair trade, and transparency along the supply chain.
What changes were made to the International Coffee Agreement in 2022?
The most recent revision, the ICA 2022, was amended in June 2022 to include several updated provisions:
● A focus on sustainability: The ICA 2022 emphasises the importance of sustainable coffee production and consumption. It includes provisions to promote the use of sustainable practices, such as growing coffee under shade and eliminating certain harmful chemicals.
● A commitment to improving farmer livelihoods: The amended agreement commits to improving the livelihoods of coffee farmers. It includes provisions to provide further financial assistance to farmers, improve market access, and promote the development of coffee co-operatives.
● A focus on climate change: The 2022 agreement recognises the threat climate change poses to the coffee sector. As such, it includes provisions to help coffee-producing countries adapt to climate change and mitigate its effects.
The amended ICA showcases members’ commitment to working together to address the increasing challenges of the coffee industry. The private sector and government entities will coordinate strategies to address those challenges more efficiently. In turn, this will benefit producers across 50 countries as coffee growers and their associations can raise their concerns directly with retailers and manufacturers.
The changes to the ICA 2022 recognise several trends the coffee industry has been discussing for some time. For example, the ICA’s focus on sustainability mirrors consumers’ growing preference for ethically-sourced coffee. Roasters are likely already aware of this – but the 2022 amendments to the ICA are a clear ratification of this trend.
In broader terms, the updated agreement provides a framework to address some of the most pressing challenges the industry faces. These include sustainability, climate change, and low farmer incomes. These changes could affect coffee roasters in a number of different ways; changes to import and export tariffs could mean it becomes cheaper to source coffee from certain producing countries, for instance.
How can coffee roasters adapt?
To adhere to the amended ICA, roasters must know which countries are part of it, as the ICO currently represents 93% of world coffee production and 63% of global consumption. As of February 2022, the agreement involves 42 exporting countries and 7 importing countries. Roaster should note the European Union represents all its 28 member states, and that the US chose to exit the ICA in June 2018.
This can help roasters gain a better understanding of the exact tariffs for individual producing countries. Then, they can review the 2022 agreement in its entirety and determine whether these changes affect their businesses specifically.
More importantly, roasters must keep their eyes on the C market as this may help them forecast supply and demand in the wider market. In turn, roasters can understand where they can mitigate any possible price risks. More so, this can help roasters determine if they need to reduce costs elsewhere in the business.
For instance, an effective way to reduce overall costs is to invest in sustainable coffee packaging. Put simply, sustainable coffee packaging is any type of packaging, whether a flat bottom pouch or a drip coffee bag, that reduces the carbon footprint and environmental impact of a business.
According to the World Packaging Organization (WPO), sustainable packaging must meet the functional and economic needs of the present without compromising the ability of future generations to meet their own needs. This includes the whole supply chain, from basic function and marketing, to end of life and reuse.
For specialty coffee roasters, this means adopting coffee packaging made from renewable resources (such as kraft paper) and/or using recyclable or compostable materials (such as LDPE and PLA). Not only do these materials require considerably less carbon emissions to produce, they contribute to a circular economy in which resources are in continual use and waste is eliminated.
At MTPak Coffee, we appreciate that increased coffee prices can make business challenging. This is why we offer our customers low minimum quantity (MOQ) on both our recyclable and traditional packaging options. Our range of packaging options is made from renewable materials. Our coffee boxes are made using recycled cardboard, while our sustainable coffee bags are made using kraft paper, rice paper, or multilayer LDPE packaging with an environmentally friendly PLA lining.
Our coffee bags and coffee boxes can be customised to reflect your brand’s characteristics, as well as vital information about your product. MTPak Coffee offers a wide range of customisation techniques, including spot UV with a glossy, satin, or matte finish, embossing and debossing, as well as hot foil stamping in a variety of colours.
For more information on sustainable coffee packaging, contact our team.
Note: The information in this article is for informational purposes only and should not be construed as legal or financial advice.