Coffee (Hansard, 19 May 2003)

§ Mr. Lazarowicz
To ask the Minister of State for International Development how the Department is helping producer countries capture more value from agricultural commodities, including coffee. [114328]

§ Hilary Benn
I refer the hon. Member to the response I gave to the hon. Member for Edinburgh, West (John Barrett) to PQ113512, on 19 May 2003.

§ John Barrett
To ask the Minister of State for International Development what steps the Department is taking to help small coffee producers in developing countries(a) to diversify into alternative livelihoods following the decline in world coffee prices and (b) to gain organic certification for their coffees. [113508]

§ Hilary Benn
UK development assistance is provided on a bilateral basis to a significant number of coffee producing countries including Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda. UK bilateral assistance to these six countries in 2001–2 amounted to £200 million. Additional financial resources are also provided through multilateral channels including the European Commission's external aid programme and the Common Fund for Commodities. UK support to poverty reduction strategies, and other national strategic planning processes, provides an important contribution to livelihood diversification in many coffee dependent countries.
Through our membership of the International Coffee Organisation (ICO) the UK is also supporting the development of an ICO diversification programme. The aim is to undertake specific projects to generate other sources of earnings for growers, such as by the introduction of new crops, without eliminating coffee growing itself.
It does not necessarily follow that organic certification will deliver improved livelihoods for poor coffee producers. It is important that careful consideration is given to ensuring that any additional premium generated from the production and sale of organic produce justifies any additional costs that may be incurred, including associated certification costs. In 2000, DFID financed a study to examine the opportunities and constraints for resource poor farmers in organic production and trade. DFID is also supporting a coffee certification feasibility analysis in Uganda.
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§ John Barrett
To ask the Minister of State for Internationa] Development what representations he will make to EU Commissioner Nielson on the use of unspent EU aid money to compensate poor countries for the fall in coffee prices through(a) assisting the International Coffee Organisation in monitoring coffee quality, (b) increasing aid to boost coffee farmers' market power and (c) helping them diversify to the production of other crops. [113510]

§ Hilary Benn
The funds in question refer to resources available from the now expired Lome Convention. However, it is important to recognise that these funds, while not disbursed, are currently allocated to other activities. Until such commitments are actually spent, financial resources remain with Member State Treasuries. In the case of the UK, they are spent on poverty reduction activities elsewhere. The European Commission does not maintain a fund of unused finances beyond normal balances needed for cash management purposes.
However, from an efficiency point of view, the Commission needs to provide more information about old and undisbursed commitments that could and should be recommitted elsewhere to fund other development activities through bilateral or multilateral channels. The mid-term reviews of EC Country Strategies starting in 2004, will give each country an opportunity to reassess their own priorities and requirements, and could allow reallocation of existing commitments. The Secretary of State will make this point at the General Affairs and External Relations Council on 19 to 20 May 2003, at which Commissioner Nielson will be present.
We would be willing to support, within the framework of poverty reduction programmes or other appropriate national planning processes, efforts by the Commission to direct any released funds to activities that facilitate livelihood diversification in poor countries including those dependent on coffee.
The market power of coffee producers is partly a function of their capacity to negotiate improved terms with other market participants. There are a number of ways in which EU aid could be applied to achieve this. This includes support provided within the framework of poverty reduction programmes.
The EU is supportive of the ICO Quality Initiative. Progress with implementation of the Quality Initiative is currently being discussed by the Working Group on Commodities (PROBA) at which the UK is represented by DEFRA. At this point in time, the priority must be to encourage the full participation and commitment of all major coffee consuming and producing countries to the Initiative.

§ John Barrett
To ask the Minister of State for International Development if the UK Government will financially support moves taken by producer countries to reduce stocks on the coffee markets in order to raise the market price. [113511]

§ Hilary Benn
The UK Government remain sceptical about proposals to finance the reduction of stocks of surplus coffee. A voluntary cut in total global production that results in a better balance between coffee supply and demand is the only feasible means to achieve an improvement in coffee prices. It is also important to 513W recognise that any arrangement that promotes an increase in market prices in the absence of strict disciplines on production is likely to be short-lived as producers will respond to increased prices through an expansion in output. For these reasons we do not intend to finance or compensate producer countries in respect of any stock reduction programme they undertake.
The Coffee Retention Scheme agreed by the Association of Coffee Producing Countries was intended to raise coffee prices, by retaining a set proportion of coffee supplies destined for export. The Scheme was formally abandoned in 2002 as producer members were unable to work out a mechanism of control over coffee prices. The International Coffee Organisation also used to operate a quota system whereby coffee supplies in excess of consumer requirements were withheld from the market. However, changes in the pattern of supply and demand, resulting in an increase in prices, also led to the collapse of this quota system. This highlights the problems with stock retention schemes.

§ John Barrett
To ask the Minister of State for International Development what steps he is taking to help producer countries capture more value from agricultural commodities, including coffee. [113512]

§ Hilary Benn
We are working to ensure that a greater proportion of "value-added", including through processing, is retained in the developing country of origin. This is reflected in the pressure we are applying to secure a reduction in tariff escalation in developed countries, especially within the European Union. We also provide support to initiatives that contribute to improvements in essential infrastructure (e.g. energy and transport) and we are working to ensure that appropriate legal regulatory frameworks exist to promote investment.
The UK is also a member of the Common Fund For Commodities (CFC). The CFC finances development projects covering a range of agricultural commodities produced in developing countries, including initiatives to promote vertical diversification in developing producer countries.

§ Mr. Lazarowicz
To ask the Minister of State for International Development whether the Government plan to support financially moves taken by producer countries to reduce their stocks of low-quality coffee in order to raise the world market price. [114329]

§ Hilary Benn
I refer the hon. Member to the response I gave to the hon. Member for Edinburgh, West (John Barrett) to PQ 113511, on 19 May 2003.

§ Mr. Lazarowicz
To ask the Minister of State for International Development what assistance the Department is giving to coffee farmers and workers in developing countries; and whether it plans to increase existing levels of support in view of the international coffee crisis. [114330]

§ Hilary Benn
The UK has development programmes in several coffee producing countries with bilateral assistance to Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda amounting in 2001–02 to £200 million.
The UK supports countries in the development and implementation of their poverty reduction strategies, including nationally owned agricultural diversification 514W plans to help deal with commodity dependence. The UK also supports research in several coffee producing countries aimed at improving the competitiveness of smallholder production.
We remain concerned about the plight of those whose livelihoods have been, and continue to be, affected by the depressed producer prices that have prevailed in the coffee market over the last few years. Commodity dependence is a complex problem and there is no simple solution.

§ Mr. Lazarowicz
To ask the Minister of State, Department for International Development how the Department is helping coffee producers in developing countries to gain organic certification for their coffee. [114331]

§ Hilary Benn
In 2000, DFID financed a study to examine the opportunities and constraints for resource poor farmers in organic production and trade. DFID is also supporting a coffee certification feasibility analysis in Uganda. It does not necessarily follow that organic certification will deliver improved livelihoods for poor coffee producers. It is important that careful consideration is given to ensuring that any additional premium generated from the production and sale of organic produce justifies any additional costs that may be incurred, including associated certification costs.

§ Mr. Lazarowicz
To ask the Minister of State for International Development what discussions he has had with the EU Development Commissioner regarding the use of unspent EU aid money to compensate African, Caribbean and Pacific countries suffering as a result of the world coffee crisis. [114333]

§ Hilary Benn
I refer the hon. Member to the response I gave to the hon. Member for Edinburgh, West (John Barrett) to PQ 113510, on 19 May 2003.

§ John Barrett
To ask the Minister of State for International Development what assessment she has made of the role of(a) financial support for agricultural extension services and (b) the formation of cooperatives, to assist in increasing coffee farmers' market power in developing countries. [113509]

§ Hilary Benn
UK development assistance is provided to a significant number of coffee producing countries. More generally, the UK has supported the strengthening of agricultural research and extension systems over many years both nationally and internationally, including in coffee producing countries. At the developing country level, support to agricultural extension is being integrated into sector-wide reform programmes that receive support from multiple donors, for example in Ghana, Uganda and Mozambique. The UK is also a supporter of the Neuchatel Initiative, a multi-donor group established to achieve convergence on the objectives, methods and means of support for agricultural extension policies. The Neuchatel Group has produced studies on alternative financing mechanisms for agricultural extension involving public and private actors.
Improved market knowledge and access to information can help to strengthen the negotiating power of farmers. There are a number of routes through 515W which this can be achieved other than through support to formal government agricultural extension service structures.
The decision to establish a co-operative, or indeed any other organised grouping of people, must be entirely voluntary and based on a shared commitment to particular ideals or objectives. Activities must be bound by agreed rules including those relating to the behaviour and conduct of members and accountability. The lessons from past experience, particularly of the state-led drive to establish co-operatives in Africa in the '70s, highlight the difficulties that can arise when decisions to form a co-operative are imposed by external agents. Having said that, UK development assistance lends support to a range of institutional arrangements as deemed appropriate.