THE PROCESS IN MOTION

A stock is time bought

Start the scene or choose a stage. The animation simplifies the mechanism; what follows gives the details and the available references.

▶ Play the process01A target price, quotas02July 1975: the black frost03The stock holds the price for a year04The stock empty, the price catches up051989: the end of quotas

A target price, quotas

The International Coffee Agreement of 1962 sets a target price and gives each exporting country a share, the quota. Below the target, quotas are reduced; above it, relaxed. They are suspended from 1972 to 1980, because prices are high.

Read the stages without animation

1. A target price, quotasThe International Coffee Agreement of 1962 sets a target price and gives each exporting country a share, the quota. Below the target, quotas are reduced; above it, relaxed. They are suspended from 1972 to 1980, because prices are high.
2. July 1975: the black frostOn July 17 and 18, 1975, the black frost strikes Paraná and destroys, according to estimates at the time, a billion and a half coffee trees. The price does not soar right away, however: Brazil has stocks.
3. The stock holds the price for a yearThe stock goes in place of the missing crop. It takes all of 1976 for the price to go from 1 to 2 dollars a pound.
4. The stock empty, the price catches upWhen the stock is exhausted, the price catches up at once with what it had not done: three months to reach 3 dollars, and 339.86 cents a pound in New York in April 1977, a record that will stand until 2024.
5. 1989: the end of quotasThe quotas are abandoned in July 1989, for lack of agreement on how to allocate them. The market recovers the amplitude of the 19th century: the average price of the 1980s, around 120 cents a pound, falls to 50 cents at the turn of the century.

To remember: a stock cushions a supply shock for as long as it lasts; when it is empty, the price catches up all at once.

Read the full article and its sources ↓

After the Second World War, the instrument changes scale: it is no longer a state and its bankers, but producers and consumers together. The International Coffee Agreement of 1962, signed under the auspices of the United Nations, creates the International Coffee Organization (ICO, London) with the objective of “a reasonable balance between supply and demand.” The tool is the export quota: a target price is set, each exporting country receives a share, quotas are reduced when the price falls below the target and relaxed when it exceeds it.

Quotas are active in the 1960s, suspended from 1972 to 1980 because prices are high, reintroduced in September 1980 and maintained until February 1986, reinstated afterward, then abandoned in July 1989 for lack of agreement on how to allocate them: Brazil refuses to cut its share, consumers want more mild arabicas, and the political context of the end of the Cold War removes the United States' interest in supporting the prices of producing countries. The agreements of 1994, 2001 and 2007 that follow no longer have an economic clause.

ICO, FAQ and International Coffee Agreement 2007 (ico.org, accessed Sept. 7, 2026); Herrmann, Burger and Smit, International Commodity Policy, ch. 9; professional training document, Histoire et économie du café, p. 22

In the middle of the quota period, a frost is going to settle the price better than all the international agreements put together.

On July 17 and 18, 1975, the black frost strikes Paraná. It destroys, according to estimates at the time, a billion and a half coffee trees.

The price does not soar right away, however, and the reason deserves to be noted: Brazil has stocks. It takes all of 1976 for the price to go from 1 to 2 dollars a pound. Then three months to reach 3 dollars. In April 1977, the New York contract touches 339.86 cents a pound, a record that will stand until 2024.

A stock is time bought. When it is exhausted, the price catches up all at once with everything it had not done.

After 1989, quotas disappear, and the market recovers the amplitude of the 19^th century. The average price of the 1980s, around 120 cents a pound, collapses to 50 cents at the turn of the century.

Covoya, A Brief History of the Price of Coffee, and Spilling the Beans, Coffee Prices 1972-2016 (trade press, accessed Sept. 7, 2026); ICO, The Global Coffee Crisis (2002), p. 1