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)