ACPC hopes RI will join coffee retention scheme

ACPC hopes RI will join coffee retention scheme

JAKARTA (JP): The Association of Coffee Producing Countries
(ACPC) said it was optimistic Indonesia would join the global
coffee retention plan despite the problems faced by local growers
in obtaining the funds needed to cover the plan.

Visiting ACPC chairman Sergio Amaral said Indonesia must
participate in the scheme to show solidarity to other coffee
producing countries, many of which were also having financial
problems but were still committed to the plan.

"I have every good reason to believe that Indonesia will do
its best to participate in the retention plan... I have received
guarantees from the government and local associations regarding
their participation," he told a media conference.

He said ACPC had received strong commitments from all coffee
growing countries, including Vietnam which was not an ACPC
member. The world's major coffee producers Brazil and Columbia
have started holding back a combined 1.2 million bags, he said.

Amaral said ACPC was upbeat that the scheme would kick off
soon and anticipated no free-riders because it would be very
unfair for participating countries if non-participating countries
effortlessly enjoyed the better market price, which was clearly
the objective of the ACPC.

He ruled out, however, the possibility of imposing a sanction
on Indonesia if it failed to participate in the plan although
under the association's rule there were some possible measures,
ranging from warnings to dismissals, to be imposed on any member
that violated the association's regulations.

"No, we're not considering that. There's no reason to believe
that Indonesia will not participate," he said.

He said in order to ensure that all participating countries
were properly implementing the scheme ACPC members had authorized
the association to hire an independent auditor to make an
assessment of every participating country.

Still, he said, if a country was found not to be implementing
the scheme properly, ACPC officials "will come to the country to
help sort out the problem."

Amaral is in town during his tour to monitor the preparatory
stage of each participating country as they move toward the
implementation of the retention plan.

He met Minister of Industry and Trade Luhut Pandjaitan,
Minister of Agriculture and Forestry Bungaran Saragih and
chairman of the Association of Indonesian Coffee Exporters (AEKI)
Oesman Soedargo.

He said both the ministers and AEKI had pledged their
commitment to work on the financial issues to enable Indonesia
join in the plan.

Financial aid

The Ministry of Industry and Trade's director general of
international trade, Djoko Muljono, said on Thursday the
government would try to provide Rp 30 billion (US$3.42 million)
in financial assistance to retain 5,000 tons of coffee beans
every quarter.

AEKI's Oesman said local producers would share the rest of the
cost, which they earlier predicted would exceed US$47 million,
between themselves and expected to finalize the financial
arrangements in a few weeks.

Amaral said he had no problem with Luhut saying Indonesia
would not be able to start retaining coffee on Oct. 1 as set out
by ACPC because it would need time to obtain the funds.

"This I can understand. What's important is that during
October all producing countries start retaining coffee to
significantly effect the market price," Amaral said, adding that
ACPC unfortunately had no resources to help its members with the
financing problem.

AEKI, which has always expressed pessimism toward its members'
ability to finance the plan, estimated that Indonesia would need
to hold back about 60,000 tons of coffee under the retention
scheme.

Amaral said Indonesia would certainly benefit from its
participating in the retention plan and estimated that Indonesia
would see its export earnings from coffee increase to about $200
million.

He said if the retention plan worked well, ACPC predicted the
price of robusta coffee would jump to reach 90 U.S. cents per bag
from the current 39 U.S. cents per bag.

The ACPC retention plan, which began in June, requires coffee
producing countries to hold up about 20 percent of their exports
in a bid to control the fluctuation of prices in the market.

ACPC members, which together control about 85 percent of the
world's coffee supply, will retain 20 percent of their exports
when indicator prices are below 95 U.S. cents per pound and will
release their stocks when prices rise above 105 U.S. cents per
pound. (cst)