Coffee retention scheme burdens local exporters<\/p>\n
JAKARTA (JP): Indonesian coffee exporters want a review of the
\ncoffee retention scheme of the Association of Coffee Producing
\nCountries (ACPC), saying it has increasingly become a burden to
\nthem.<\/p>\n
Mustafa Sulaiman, deputy chairman of the Association of
\nIndonesian Coffee Exporters (AICE) for foreign affairs, said
\nyesterday that the retention scheme has been expensive for
\nexporters as a result of stock depreciation, storage costs and
\ninspection fees.<\/p>\n
Furthermore, banks are unwilling to accept retained stock as
\ncollateral, he added.<\/p>\n
\"AICE members have lately been asking both AICE's central
\nboard in Jakarta and the government to review the retention
\nscheme. Local exporters are crying out every day because
\nretaining exportable coffee has become very burdensome,\" he said.<\/p>\n
Earlier this year, the government, under a 1993 ACPC
\nagreement, ordered the retention of up to 20 percent of
\nIndonesia's exportable coffee in order to prop up prices on the
\nworld market and reduce stocks in consumer countries.<\/p>\n
Indonesia is a major producer of Robusta coffee.<\/p>\n
Under the ACPC agreement, 20 percent of exportable Robusta
\ncoffee must be stockpiled if prices on the world market fall
\nbelow US$1.35 per pound.<\/p>\n
If prices range between $1.35 and $1.50 per pound, producers
\nare required to retain only 10 percent of their exportable
\ncoffee, and if prices range between $1.50 and $1.60 per pound, no
\nretention is required. Exporters may release their retained stock
\nif prices exceed $1.60 per pound.<\/p>\n
Prices are currently $2.20 per kilogram, or less than $1 per
\npound, at the farmers' level, Mustafa said.<\/p>\n
He said growing coffee exports from non-ACPC countries, such
\nas Vietnam, was one of the reasons for the dropping prices.<\/p>\n
Mustafa said Indonesia's retained stock has so far reached
\n16,000 tons.<\/p>\n
\"If prices are estimated at a low $2.20 per kg, this means we
\nhave used up to Rp 80 billion to retain the stock,\" he said.<\/p>\n
Mustafa said AICE has proposed to the government several
\nalternatives to the retention plan but has not yet received an
\nanswer. He declined to elaborate.<\/p>\n
\"We only hope that the government, ACPC or any other party
\nconcerned can figure out some other way of keeping coffee prices
\nup without having to retain stock,\" he said.<\/p>\n
\"Prices now are quite favorable, but it's not what we are
\nconcerned about. The stock retention is our major problem right
\nnow,\" he added.<\/p>\n
Mustafa said that further retention of stocks may cause
\nexporting companies in Indonesia to go bankrupt, or force them to
\nbuy from farmers at lower prices.<\/p>\n
He said that over the past two years, the number of coffee
\nexporters has dropped from 1,000 to only 70, but said that the
\nbankruptcies have not been due to the retention scheme alone, but
\nwas also to other problems, including mismanagement.<\/p>\n
Mustafa said the proposed review of the retention scheme may
\nbe one of the topics discussed in AICE's up-coming International
\nCoffee Symposium in Bali.<\/p>\n
The symposium, which will take place from Nov. 26 to Nov. 29,
\nis the second to be held by AICE. It will be attended by
\nrepresentatives of ACPC member countries, which include major
\nworld producers Brazil, Colombia and Ivory Coast, as well as
\nlocal participants and representatives of the International
\nCoffee Organization.<\/p>\n
AICE estimates that Indonesia's coffee exports for the
\n1995\/1996 coffee year (October-September) is 275,000 tons,
\nslightly higher than the 1994\/1995 exports of 210,000 tons.<\/p>\n
Exports in 1993\/1994 reached 305,000 tons and in 1992\/1993
\n400,000 tons.<\/p>\n
Indonesia is the world's third-largest coffee producer, with
\n350,000 to 400,000 tons, or up to 9 percent of the world's total
\nproduction. Brazil produces 27 percent and Colombia about 18
\npercent.<\/p>\n
Robusta coffee makes up less than 20 percent of the world's
\ntotal coffee production. (pwn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/coffee-retention-scheme-burdens-local-exporters-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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