AICE cuts back high costs caused by retention

JAKARTA (JP): The Association of Indonesian Coffee Exporters (AICE), in retaining coffee exports, is seeking ways to reduce high costs resulted from depreciation, storage expenditures and inspection fees, to compensate losses caused by falling prices.

Oesman Soedargo, who was elected Friday night as AICE's new chairman, told reporters that the coffee retention plan, which is aimed at boosting prices on the world market, has forced exporters to spend more on depreciation, storage rents and monthly inspection fees.

"Tackling this problem will be one of the main tasks of AICE's new board members," he said.

However, Oesman declined to give figures on the amount of fees that exporters have had to spend for coffee inspection, saying that they were considered high by small-scale exporters, but insignificant to bigger ones.

"We could, for example, seek ways to increase storage efficiency, such as by gathering the stocks of several small- scale exporters into one warehouse," he said, adding that small- scale exporters are the most hardest hit by high retention costs.

Other AICE board members, who were elected yesterday, include Hassan Widjaja, appointed as deputy chairman for home affairs, Mustafa Sulaiman, as deputy chairman for foreign affairs and F.S. Hartono, as deputy chairman for administration and finance.

Indonesian exporters, due to tumbling coffee prices, were required to retain 10 percent of their exports from April through the first half of June due to a price decline. Further price falls have forced them to retain 20 percent of their exports since June 15.

Coffee prices have been toppling since April, forcing the 13 members of the Association of Coffee Producing Countries (ACPC), of which Indonesia is a member, to follow the retention plan.

The plan requires countries to hold back exports by 10 percent when prices of Robusta coffee--which makes up the bulk of Indonesian exports--drop to a range between 135 and 150 U.S. cents per pound.

Producers must retain 20 percent of Robusta exports when prices, based on the ACPC's calculation of a 20-day moving average, are 135 cents or below. No retention is required if prices are between 150 cents and 160 cents.

Current coffee prices require a 20 percent retention.

Foreign news agencies reported that, on Saturday, prices of Robusta coffee reached a low of US$2,100 a ton, down from $2,500 to $2,600 a week earlier, requiring a 20 percent retention.

The move, last week, by Colombia, Honduras, Costa Rica, El Salvador and Nicaragua, to suspend coffee exports for a 30-day period, failed to keep prices from crashing.

Indonesia, Brazil and the Ivory Coast announced last week that they would not suspend their coffee exports but would stay loyal to the retention plan.

Oesman also said that Indonesia's exports this coffee year (October 1994 to September 1995) are expected to decrease to 210,000 tons from 250,000 tons last year.(pwn)