Abstract
From 1962 to 1989, the coffee-producing and coffee-consuming nations created a commodity agreement limiting the amount of coffee a nation could export in order to correct two structural deficiencies: global overproduction of coffee and drastic price movements associated with weather-related phenomena. During the 27 years of this quota agreement, Guatemala had a unique opportunity to get farmers to diversify from coffee to other export commodities and allow farmers to use new technology to improve their profitability. The Asociación Nacional del Café (ANACAFE) administered these diversification and technification programs, while the London-based International Coffee Organization (ICO) regulated the international coffee trade. However, the ICO achieved more success in reducing overproduction of coffee and stopping downward price movements than ANACAFE did in implementing diversification and technification. Because ANACAFE failed to disseminate technification to the vast majority of the small coffee-producers, when the ICO allowed quotas to expire in 1989 the vast majority of the Guatemalan coffee growers found themselves not as price-competitive as their Central American neighbors.
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