ver since a severe frost in July of 1975 spirited the price of coffee to an historic E peak, coffee-producing nations have been attempting to retard, if not completely halt and turn around, the natural decline in prices following recovery from the physical devastation and improved production.
This crisis in the coffee market coincided with the establishment by the Congress of the United States of the Commodity Futures Trading Commission, an independent federal regulatory agency charged with the responsibility of overseeing all domestic commodity futures trading, including the trading of contracts for the future delivery of coffee, and enforcing the Commodity Exchange Act.
During the past year, PANCAFE, successor to the less formal Bogota Group, was formed by major coffee-producing nations reportedly for the purpose of coordinating strategy and resources in order to increase world coffee prices and s u p port these prices at levels above those warranted by fundamental determinants of price. Producer efforts to achieve the aforementioned goals have included purchasing futures contracts on the New York Coffee and Sugar Exchange (now the Coffee, Sugar and Cocoa Exchange, Inc.) and taking delivery of actual coffee pursuant to the futures contracts. Such conduct raises a most delicate question of regulatory policy and international diplomacy-whether the activities of PAN-CAFE constitute manipulation of a commodity price, within the meaning of Section 9(b) of the Commodity Exchange Act, and if so, what should or can be done. This article will review the difficulties that the Commodity Futures Trading Commission has encountered in its efforts to regulate the coffee futures market thus far, and explore certain policy approaches that would allow producers to continue trading on United States futures markets within the parameters of an open, yet equitably regulated, marketplace.