Coffee Crisis Policy Report

WHEREAS:
We believe Procter & Gamble faces a serious threat to the stability and quality of its coffee supply and the long-term sustainability and profitability of its coffee business;

Procter & Gamble told online publication Eldis: "One of our biggest concerns is the long-term supply of high quality coffee beans. At this point the farmers are unable to reinvest funds into improving quality, they're not getting a strong return for their coffee beans. That's a concern for us, we have the no. 1 coffee brand in North America, we did that by giving consumers very high quality coffee and we're concerned that that might not be available.";

House Resolution 604 and Senate Resolution 368, both passed unanimously in November 2002, stated that world coffee prices have declined nearly 70% since 1997, recently reaching their lowest level in a century;

Coffee farmers, mostly poor smallholders, are now often forced to sell their coffee for less than it costs to produce;

Millions of coffee farmers now cannot afford basic necessities, including medicine and education for their children;

In nations dependent on coffee exports, governments lack funds to maintain basic infrastructure, including hospitals and schools;

The Wall Street Journal reported in July2002 that the coffee crisis has forced many farmers to abandon their traditional land and even to emigrate;

Fair Trade Certified coffee guarantees farmers a decent price, allowing farmers to feed their families, educate their children, and avoid cost-cutting practices that sacrifice coffee quality;

College students are increasingly organizing to switch their campuses to our competitors' Fair Trade Certified coffee;

We believe our company's lack of leadership in addressing this coffee crisis damages shareholder value by hurting its reputation with important stakeholders, including customers and key U.S. government officials concerned about stability in coffee-producing regions, and even threatening the reputation of Procter & Gamble's other products;

THEREFORE BE IT RESOLVED that the shareholders request the Board of Directors of Procter & Gamble to review its policies related to the effects of the steep decline in coffee prices and publish a report prepared at reasonable expense, omitting proprietary information, and made available to shareholders by March 1, 2004.

SUPPORTING STATEMENT

To ensure the continued quality of its coffee, the sustained profitability of its business, and its reputation for corporate responsibility, we believe that Procter & Gamble must help ensure a sustainable livelihood for the farmers who grow its coffee.

We believe that the proposed report should address potential policy commitments, including the:

· Purchase of at least 5% of the company's total coffee as Fair Trade Certified within three years and development of plans to include Fair Trade Certified Coffee in its premium coffee lines

· Purchase of only coffee that meets current International Coffee Organization (ICO) quality standards, defined by ICO Resolution 407, and an agreement to independent monitoring of this policy

· Support of multilateral, multi-stakeholder initiatives addressing the structural causes of the crisis in forums that include participation by representatives of coffee-producing countries and smallholder farmers