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UPDATE 2-Guatemala to leave International Coffee Organization, sources say

(Adds comment of coffee body Anacafe, details; paragraphs 7-9)

GUATEMALA CITY, July 1 (Reuters) - Guatemala has begun the process of leaving the International Coffee Organization (ICO), spurred by concern over falling prices of the commodity, a government official and an industry representative said on Wednesday.

Coffee, mainly arabica, is one of the top agricultural exports of the Central American nation, which is grappling with the economic challenges of the coronavirus crisis.

The Guatemalan official said central American countries were seeking alternatives to support the coffee industry as global prices are low.

The ICO said it had not been officially informed of Guatemala’s plan to withdraw from the international coffee agreement, but it was aware “some forces in the country” were dissatisfied with ICO’s handling of the pricing crisis.

“We hope that these rumors will not materialize,” ICO said in a statement, urging Guatemala to work with other members to develop a new pact.

It added that it was not able to act as a market regulator.

Ricardo Arenas, head of the board of the directors at Guatemalan coffee association Anacafe, said the group had urged the government to cut ties with the ICO as the international body did not do enough to protect producers’ interests.

“The ICO had lost its way,” Arenas said. “It has needed to be restructured.”

Many of Guatemala’s small farmers, who make up about 97% of producers, have sustained losses in the current harvest despite premiums for the country’s coffee, the U.S. Department of Agriculture said in a report in May. (Reporting by Sofia Menchu; Additional reporting by Maytaal Angel in London; Writing by Diego Ore and Daina Beth Solomon; Editing by Sandra Maler and Clarence Fernandez)

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