Coffee Post World War II

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After World War II, demand for coffee increased significantly. Although demand remain fairly constant, the price for it did not and fluctuated erratically for a number of reasons. During wartime, coffee was considered a luxury that very few could afford to indulge. After a huge post-World War II high, coffee prices dipped to very low levels during the Korean War. Prices soared once again when a huge frost hit Brazilian coffee farms in 1953.

Meanwhile, Brazil and Colombia formed another alliance in order to take advantage of the high coffee prices. This time they created a cartel among the Latin American countries to maintain the high prices. By doing this, Brazil and Colombia believed that they had built significant resistance against overproduction and competition.

In the 1960s, the burden on consumers from the high coffee prices was showing, and people began to complain about the expensive prices. Worried about the unstable coffee market, governments began to look for remedies. As a direct result, the International Coffee Agreement (ICA) was formed. The ICA contained provisions that called for a systematic way to regulate the flow of production and consumption. It also stated the need for a neutral body to govern the administration of these provisions. The last thing countries wanted were collusion and corruption within the industry. This led to the creation of the International Coffee Organization (ICO).