RI applies coffee retention plan to boost prices<\/p>\n
JAKARTA (JP): The government has ordered a cut back of up to
\n20 percent in the country's coffee exports in line with the
\nAssociation of Coffee Producing Countries' second retention plan,
\nwhich is designed to prop up prices on the world market and
\nreduce stocks in importing countries.<\/p>\n
Spokeswoman of the Ministry of Trade Lily Rosyana said over
\nthe weekend that under the Minister of Trade's Decree No.
\n49\/KP\/III\/95, dated March 31, Indonesia, a major Robusta coffee
\nexporter, will follow the association's retention plan for
\nRobusta only.<\/p>\n
The retention plan is the second of its kind to be introduced
\nby the Association of Coffee Producing Countries (ACPC).<\/p>\n
Lily explained that if the prices of Robusta coffee on the
\nworld market drop below US$1.35 per pound, under the new ruling
\nIndonesian exporters will be required to stockpile 20 percent of
\ntheir exportable coffee.<\/p>\n
The rate of retention will decrease to 10 percent if Robusta
\nprices range between $1.351 and $1.50 per pound. No retention
\nwill be called for if Robusta prices range between $1.501 and
\n$1.60.<\/p>\n
When prices exceed $1.60 per pound, exporters will be allowed
\nto release their retained coffee on the world market.<\/p>\n
Under its first retention plan in late 1993, for comparison,
\nthe ACPC required its members, including Indonesia, to retain 20
\npercent of their exportable coffee if market prices did not
\nexceed 60 U.S. cents and 10 percent if prices ranged between
\n60.01 cents and 65 cents. No retention was required when prices
\nranged between 65.01 cents and 70 cents, while the release of
\nstocks was allowed when prices exceeded 70 cents.<\/p>\n
Lily noted that exporters, who usually enjoy more profits when
\nworld prices are high, will bear the costs of the retention plan
\nand are required to store their retained coffee at appointed
\nwarehouses which will be supervised by state-owned surveyor
\ncompany PT Sucofindo.<\/p>\n
Penalty<\/p>\n
Exporters who violate the retention rules will be penalized by
\nhaving to retain twice or three times their actual due, depending
\non the degree of their faults, she said.<\/p>\n
The retention plan was first introduced by 29 members of the
\nACPC in October 1993, when coffee prices dipped to their lowest
\nlevels.<\/p>\n
Indonesia applied the first plan in April last year, but
\nIndonesian exporters had difficulty retaining their coffee due to
\nthe increasing prices of Robusta coffee.<\/p>\n
Last year's highest price of Robusta was recorded at $1.82 per
\npound or $4,140 per ton, occurring in September, while last
\nyear's lowest price was $1.29 per pound, recorded in December.<\/p>\n
Over the weekend, prices for Robusta on the London futures
\nmarket reached $3,095 per ton for May delivery, almost the same
\nas those of early this year.<\/p>\n
According to the Minister of Trade's ruling No. 49\/KP\/III\/95,
\ncoffee farmers are entitled to receive 60 percent of free on
\nboard (FOB) prices of coffee.<\/p>\n
Exporters who are convicted of buying coffee from farmers
\nbelow 60 percent of FOB prices will face severe penalties,
\nranging from the cancellation of export documents to the
\nrevocation of their licenses as coffee exporters, Lily said.<\/p>\n
Indonesia is a major Robusta producer in the world,
\ncontributing about 23 percent to the world's Robusta market.
\nRobusta accounts for about 90 percent of Indonesia's total coffee
\noutput.<\/p>\n
Indonesia's coffee production reached 450,000 tons for 1994-
\n1995 coffee year (beginning in October). The Association of
\nIndonesian Coffee Exporters predict that the country's production
\nin 1995-1996 will likely fall to 375,000 tons.<\/p>\n
Indonesia's revenues from coffee exports in the January-
\nSeptember period of last year reached $617.08 million, indicating
\na 135 percent increase over the same period of 1993. (rid)<\/p>",
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