AICE cuts back high costs caused by retention

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)