The European Commission calls for diversification

The EC called on coffee-producing countries on April 11th 2003 to diversify in response to the 30-year low in coffee prices. Indeed, the Commission sees this as a pressing need in all traditional commodity sectors, where 'alternative non-traditional product chains' need to be developed. It pointed out that countries affected by the commodity crisis could apply for compensation under an EU fund set up for countries whose export earnings are being harmed. Comment: Calling on coffee-dependent economies to diversify raises the question: into what products should ACP producers diversify? It has been diversification into coffee by countries such as Vietnam which has contributed to the depth of the coffee crisis. With diversification being seen as a challenge across a range of traditional commodity exports, a situation could well arise where non-traditional agricultural product markets (such as cut flowers and horticultural products) become glutted, leading to price collapse and further calls for diversification. The challenge faced in this context is compounded by the EU's CAP-reform policies which are systematically lowering prices for temperate agricultural products on EU markets. It needs to be borne in mind that small-scale producers face much greater difficulty in diversifying, as their marketing opportunities are severely limited. There are growing call for the European Commission to make more targeted assistance available to identify new market opportunities for small-scale producers. This needs to focus on the specific supply-side constraints they face by virtue of the small scale of their production and their distance from reliable transport routes.The EC called on coffee-producing countries on April 11th 2003 to diversify in..