AEKI seeks foreign funds to finance retention plan<\/p>\n
JAKARTA (JP): Indonesian coffee exporters are looking for
\nforeign funding to enable them to participate in the Association
\nof Coffee Producing Countries' (ACPC) plan to curb world coffee
\nsupply.<\/p>\n
An executive of the Association of Indonesian Coffee Exporters
\n(AEKI) said here on Saturday that foreign loans would be the
\nassociation's last hope to enable it finance the retention
\nprogram imposed by ACPC.<\/p>\n
The executive, who asked not to be named, said AEKI would
\nformally submit its request during a visit of ACPC's executives
\nto Indonesia next month.<\/p>\n
\"We want to participate in the plan, but we're in a very
\ndifficult financial situation here ... We expect ACPC will help
\nus get the loans so that we can still participate in the plan
\nwithout having to burden the government,\" he told The Jakarta
\nPost on Saturday.<\/p>\n
Separately, another AEKI executive, Hassan Widjaja, said the
\nassociation was currently seeking foreign loans of between US$80
\nmillion and $100 million to cover the retention cost.<\/p>\n
AEKI earlier predicted Indonesia would need to have at least
\n$47 million to cover the extra costs for storage, insurance and
\nmaintenance of about 60,000 tons of coffee to be kept under the
\nretention scheme.<\/p>\n
Hassan said it was important for Indonesian coffee exporters
\nto get the loans and participate in the retention plan so that
\nthey could correct the local price, which recently decreased amid
\nreports of the government's refusal to finance the plan.<\/p>\n
But he did not disclose whether AEKI had contacted any foreign
\nlenders.<\/p>\n
According to AEKI executive secretary Noer Madjid, ACPC
\nsuggested in June that its members try to negotiate with
\ninternational lending company Louis Dreyfuss to get financial
\nsupport for the retention plan.<\/p>\n
He said AEKI had approached the company, which offered to
\ncover up to 50 percent of the cost of the total coffee retained
\nusing local interest rates.<\/p>\n
\"No deal has been made yet as some of our members said they
\ncould not afford it. The offer of a loan is still valid, I guess,
\nbecause we haven't formally called it quits,\" he said.<\/p>\n
ACPC members, which together control about 85 percent of the
\nworld's coffee supply, agreed in June this year to introduce a 20
\npercent retention program to cut the supply.<\/p>\n
The association's members, under the program, are required to
\ncut their exports by about 20 percent.<\/p>\n
Indonesia pledged commitment to the plan during an ACPC
\nmeeting earlier in June, but later said that it was not able to
\nparticipate in the program due to a lack of funding.<\/p>\n
ACPC secretary-general Roberio Silva was reported by Reuters
\nas saying that a delegation from the group would visit India this
\nweek and Vietnam and Indonesia in early September to monitor
\nprogress in meeting the retention deadline on Oct. 1.<\/p>\n
India is committed to the plan and is currently studying the
\ncost and methods of retention before eventually implementing it,
\nwhile Vietnam's coffee exporters are still waiting for government
\napproval regarding several issues surrounding the plan.<\/p>\n
Silva said he was upbeat that Vietnam, a major coffee producer
\nwhich was not an ACPC member, would meet the deadline, but was
\nunsure about Indonesia.<\/p>\n
Indonesia is the world's third largest coffee producer after
\nBrazil and Colombia, and the world's second largest producer of
\nrobusta coffee.<\/p>\n
The AEKI source said Indonesia would unlikely be able to meet
\nits export target of about 300,000 tons this year due to a
\nshortfall in production and the fact that many coffee growers
\nwere stockpiling their products amid plunging prices.<\/p>\n
He predicted Indonesia's total coffee exports would only reach
\n270,000 tons this year. (cst)<\/p>",
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"sponsor": "Okusi Associates",
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