For decades the price of coffee was set by fears of Nazi and communist influence in Latin America. When World War II and U-boat patrols sealed off European markets, coffee prices collapsed, and Washington worried that ruined economies in Brazil and Colombia would turn to hostile ideologies. The 1940 Inter-American Coffee Agreement capped U.S. imports at 15.9 million bags while producers limited output, and by the end of 1941 prices had nearly doubled. Producers wanted that stability made permanent, leading to the first International Coffee Agreement in 1962 and the International Coffee Organization in 1963, which tracked an indicator price from hubs like New York and Bremen and tightened or loosened export quotas like a thermostat.

The system held through agreements in 1968, 1976, and 1983, but by 1989 American drinkers wanted milder Arabica, the volume-based quotas could not adapt, and producers were dumping surplus beans on non-members at steep discounts. Brazil, whose market share had slipped since black frosts in the 1970s, refused to give up any quota, and with the Soviet threat fading the U.S. lost interest in paying for stability. Quotas were suspended on July 4, 1989, and the average indicator price fell from $1.34 a pound to 77 cents, pushing farmers into poverty while opening the door for the 1990s specialty coffee boom.

• Every legal bag under the quota system needed a certificate of origin stamp to be unloaded.
• Jorio Dauster of the Brazilian Coffee Institute insisted Brazil could thrive in a free market.
• Later agreements came in 1994, 2001, 2007, and 2022, all without hard quotas.
• Today the ICO covers 98 percent of world production, with the European Union counting as a single importing member.
• The United States formally withdrew from the agreement on June 27, 2018.