ACPC predicts coffee output will fall 25%

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)