ACPC predicts coffee output will fall 25%

SURABAYA, East Java (JP): The Association of Indonesian Coffee Exporters (ACPC) predicts the country's coffee output will fall about 25 percent to 350,000 tons this year from 469,000 tons in 1996 because of bad weather.

"It will be very difficult to reach an output of 350,000 tons," the association's chairman, Oesman Soedargo, said Monday on the sidelines of a ceremony to celebrate the coffee plant of PT Aneka Coffee Industry in Sidoarjo, west of here.

The decline in output predicted for the harvest in April/May was blamed on last year's strong winds and heavy rains. The bad weather has hindered the flowering of trees in coffee producing areas.

Analysts earlier predicted the bad weather would cause Indonesia's coffee production to drop 40 percent.

They feared the bad harvest would further boost world coffee prices which had rallied over the past two months.

The price of robusta, mainly produced in Asia and Africa and used to make instant coffee, hit US$1,800 a ton last week in London before slipping back to $1,650 a ton. Robust prices were only $1,200 early this year.

Indonesian farmers sell coffee for between Rp 3,000 ($1.2) and Rp 3,500 a kilogram, the highest level in the last two years.

Indonesia is the world's largest robusta producer and the third overall coffee producer after Brazil and Columbia.

Indonesia's coffee output rose to 467,000 tons in 1996 from 455,000 tons in 1995 and 450,000 tons in 1994.

Last year, Indonesia exported 320,000 tons of coffee, which represented 8 percent of world demand.

Oesman did not say how much Indonesia planned to export this year.

The Association of Coffee Producing Countries (ACPC) gives Indonesia an export limit of 360,000 tons a year. But, Indonesia has requested the limit be reduced to 351,000 tons, said Oesman.

Speculation

Oesman said the coffee price surge was caused by speculative traders at the New York and London commodity bourses, rather than because of news of failed harvests in many countries.

Analysts said coffee prices started to pick up in the second week of January on reports that crops in Brazil, the world's largest coffee producer, might fall to 20 percent because of bad weather.

"Speculators always determine the prices whatever the harvest is. If they want the price up, they will take it up. If they want it down, they will take it down. Coffee stock does not count," he said.

ACPC's technical committee will hold a meeting later this week in London to discuss ways to keep prices high.

In its meeting in Rio de Janeiro in January, when prices were still low, the association agreed to reduce exports from its 15 member countries this year by 1.3 million 60-kilogram bags.

Oesman said the coming meeting would discuss if export limits were still necessary with current prices.

Some members wanted the association remove export limits so member countries could export as much as they want, Oesman said. (jsk)