AEKI urges cooperation with Vietnam

AEKI urges cooperation with Vietnam

Fitri Wulandari, The Jakarta Post, Jakarta

he country's coffee exporters urged the government to talk with
Vietnam, the world's largest robusta coffee exporter, in seeking
ways to lift the current low price of the commodity.

The Association of Indonesian Coffee Exporters (AEKI) said a
stronger price for robusta would help ensure the government's
target of a 30 percent increase in the export value of coffee
this year.

Rachmat Kartabrata, AEKI's executive secretary, said
cooperation between Vietnam and Indonesia -- the two largest
robusta beans producers -- was crucial to revive the falling
price.

Vietnam had been blamed for creating an oversupply in the
world market, which meant the price of the coffee beans had
plunged.

"We want to convince Vietnam that flooding the market is
damaging. If we can do this then we can control the market
price," Rachmat told The Jakarta Post over the weekend.

Vietnam became the world's top robusta producer when its
coffee production leapt from 413,600 tons in 1997-1998 to 900,000
tons in 2000-2001, taking over Indonesia's position. At present,
Vietnam produces around 500,000 tons.

Indonesia produces some 350,000 tons of coffee per year, of
which 85 percent is exported. Robusta beans account for 85
percent of Indonesia's coffee exports. The remaining 15 percent
produced are Arabica beans.

Rachmat said there was a wide 120 percent price gap between
the prices of robusta and arabica beans and that measures must be
taken to correct the situation.

Robusta beans traded on London's LIFFE commodity future market
for May stood at US$737 per ton. While Arabica beans traded on
New York's CSCE commodity future market were around $1,770 per
ton, Rachmat said.

"If the price gap can be narrowed down to 80 percent, the
price for robusta beans could be increased up to $900 per ton,"
Rachmat said.

The Vietnam Coffee and Cocoa Association (VICOFA) and AEKI had
signed a preliminary agreement last year to limit coffee exports
and prop up the price. But no commitment was made on how to
implement the scheme.

"This is why we need government support to follow this up"
Rachmat said.

Vietnam and Indonesia supply the world market about 1.03
million tons of robusta beans a year, more than half the 1.9
million tons annually demanded.

Global coffee demand is primarily for the Arabica bean
considered the high grade coffee bean. But the lesser quality
Robusta is often blended with Arabica coffee.

The government wants the country's coffee export to increase
by 30 percent from $510 million in 2003 to $663 million this
year.

Rachmat said Indonesia's coffee supply was predicted to be
stagnant this year as many farmers had abandoned their
plantations due to the low price.

The World Bank on Saturday warned plunging world coffee prices
would send between 20 to 25 million smalltime growers in
developing countries into abject poverty.

The Bank projects coffee production to slide from 123.2
million bags in the 2002 to 2003 season to 106 million bags this
year. But the slow recovery in prices threaten the sustainability
of the commodity.

Coffee prices have just recovered from a 100-year low. Arabica
beans are set to rise from $68 a bag to $72 next year. While
robusta beans are projected to recover to $40 next year from the
current $38.