No coffee cutbacks are required yet<\/p>\n
JAKARTA (JP): Although the plan to cutback coffee production
\nis still in effect, exporters will not be required to hold to up
\nto 20 percent of their export volume -- at least for the next 10
\ndays.<\/p>\n
This change in export policy came as coffee prices went as
\nhigh as 65.16 U.S. cents per pound on the world market.<\/p>\n
General Secretary of the Association of Indonesian Coffee
\nExporters (AICE) Noer Madjid told The Jakarta Post on Saturday
\nthat this price would likely be effective for at least 10 market
\ndays, regardless of the minor fluctuations that might occur
\nduring that period.<\/p>\n
\"However, if the moving average of the prices at the end of
\nthis 10-day period shows that prices have fallen below 65 cents,
\nthen the cutbacks will be put into effect,\" he said, adding that
\nthis length of time prevented exporters from having to block
\ntheir licenses right away.<\/p>\n
Export licenses can only be obtained under the approval of the
\nappointed PT Sucofindo consultant agency, as stipulated by a
\nministerial decree issued by the Minister of Trade last month.<\/p>\n
The coffee retention plan was announced by the Association of
\nCoffee Producing Countries (ACPC) last year. While other ACPC
\nmember countries have been carrying out the plan since Oct. 1,
\n1993 Indonesia has only started to implement the program on April
\n1.<\/p>\n
Under the retention program, exporters are required to retain
\nup to 20 percent of their export volume if prices fall to 60 U.S.
\ncents per pound for Robusta coffee.<\/p>\n
Decrease<\/p>\n
The cutback system is based directly on the current price of
\ncoffee. With prices between 60.01 to 65 cents, the retained
\namount decreases to 10 percent and at 65.01 to 70 cents, no
\nretention needs to be made. When prices exceed 70 cents per
\npound, the retained stock is released.<\/p>\n
The retention plan was designed by the ACPC as a move to
\nprevent further drops in coffee prices. The drop in coffee prices
\nstarted when the quota system of the International Coffee
\nOrganization (ICO) collapsed. This quota system was abandoned as
\na result of squabbling over market share between several Latin
\nand Central American producer countries.<\/p>\n
Both of these two producers were and are supported by their
\nmain consumer, the U.S.<\/p>\n
The ICO was established in 1962 by industrialized countries to
\nset limits on coffee production. This was to protect producers
\nand exporters in developing countries from creating an over-
\nsupplied market.<\/p>\n
\"The cutbacks have improved world coffee prices, although not
\nall producing countries, such as India, Mexico, Thailand and
\nVietnam, have put it into effect. I think that, as more countries
\nget involved, prices will continue to improve,\" Noer Madjid said.<\/p>\n
\"Since the US resigned from its membership in the ICO last
\nyear, the body has become more of a consultative forum rather
\nthan a policy maker. The ACPC has now filled the void as the
\ndominating policy maker,\" he said.<\/p>\n
According to the AFP news agency, ICO's 56 members -- 40
\nproducers and 16 consumers -- met earlier last month in London to
\napprove a new five-year pact to begin in October.<\/p>\n
This new International Coffee Agreement (ICA) was said to be
\npurely administrative and had no power to intervene in the
\nmarket. However, ICO members have said that they are keeping open
\nthe option of making a pact to stabilize prices at some point in
\nthe future.<\/p>\n
The sum of Indonesia's coffee exports during the previous
\ncoffee year (October 1992 to September 1993) reached 353,000
\ntons, 93 percent of which is the Robusta type. Coffee prices here
\ncurrently range between US$1.35 to $1.40 per kilogram although
\nthe finest type -- which is the Toraja Arabica coffee and mostly
\nexported to Japan -- may reach as high as $13 per kilogram. (10)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/no-coffee-cutbacks-are-required-yet-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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