Coffee industry agrees to code of conduct

Hamburg - Four of the world's biggest coffee companies agreed to a voluntary pact last week to improve conditions in growing countries, but critics said cutting oversupply would help more.

The pact agreed to by coffee giants Nestlé, Tchibo, Sara Lee and Kraft is designed to end the use of child labour, slavery or forced labour, and to prevent the use of dangerous pesticides in growing countries.

Producers involved include Brazil, Vietnam, Kenya, Colombia, Indonesia and the main Central American exporters.

The pact was worked out by the companies in conjunction with the German coffee industry association DKV over a year and a half.

It responds to complaints by consumer and environmental groups that the companies exploit low prices and poor working conditions in a world market with excess coffee.

The pact provides a voluntary commitment by the companies to "intensify business relationships with producers of good quality".

Industry would provide a voluntary commitment to "provide a price differential for high quality coffee", it says.

Roland Vaessen, the chief executive of the industry association European Coffee Federation, said coffee produced under the terms of the code would probably cost more.

"However, it will not be possible to put a figure on the level the price could increase by," Vaessen explained.

The first coffee produced under the new code should come on to the world market following the harvest of 2005/06, said Annemieke Wijn, a director of the sustainability programme at Kraft Foods in Germany and a member of the DKV board.

Angus Downie, an economist at London's Economist Intelligence Unit, said it was good to see big companies involved, although he doubted it would help boost world prices, which have made only a marginal recovery since hitting a 30-year low in 2002.

"The only way to get prices back up is to cut supply. These schemes do have a habit of not working in the medium to long term," he said.

But involvement of the leading roasters meant it could make a difference.

"They're riding on the back of the organic movement," he said.

"Consumers want to know more about where their food comes from and can be prepared to pay more."

Ian Bretnam, the deputy director of the Fairtrade Foundation, said: "Anything that improves workers' conditions is welcome but it seems to be largely focused on plantation workers and doesn't address the fundamental problem of the slump in prices.

"Pricing must be addressed and the commodities market must be better managed and that's what consumers are concerned about."