Ban foreigners from buying coffee from farmers: AEKI

JAKARTA (JP): The Association of Indonesian Coffee Exporters (AEKI) has called on the government to ban foreign companies from buying coffee harvests directly from local farmers.

AEKI's chairman Oesman Soedargo said on Monday foreign companies should be required to invest in the local coffee industry to gain direct access to the farmers.

"We are not asking for protection.

"But, it's unfair that with only a leased warehouse, the foreign companies can directly buy the coffee from farmers, while local exporters have invested a lot of money to process the coffee bean," Oesman told Antara on Monday during a ceremony to celebrate the association's 20th anniversary.

However, Minister of Trade and Industry Rahardi Ramelan rejected Oesman's request, saying the government would maintain the existing policy.

The government had previously restricted foreign firms from directly buying coffee beans from local farmers, requiring them to procure the commodity from local importers.

"For a while, we'll let foreign firms buy coffee directly from the farmers. Let the local exporters compete with the foreign firms," he said during the ceremony.

Oesman said conditions favored foreign enterprises as local exporters were financially weaker.

He said unlike foreign firms, local companies could not obtain large funds with low interest rates.

"Local exporters have limited capital due to difficulties in securing loans from the ailing local banks, while local investors restrain themselves from making investments due to political uncertainties."

Rahardi said the government was planning to develop the country's coffee downstream industry to give added value to the country's coffee exports.

He said the price of Indonesia's robusta coffee on world markets dropped 50 percent this year to about $US1.30 and $1.40 per kilogram.

Rahardi said the country's coffee exports were recorded at 221,000 tons during the period between October 1998 and June 1999.

Coffee exports were projected at 310,000 tons for the harvest period of October 1998 to September 1999.

Rahardi said the country's coffee exports in 1998 were valued at $615 million, up 16 percent from $573 million in 1997.

The exports are expected to fall in value by 6 percent to $478.8 million this year, from $509.85 million last year.

Coffee output is projected to reach about 381,000 tons this year.

The United States is the largest market for Indonesian coffee with consumption of approximately 65,000 metric tons per year, followed by Japan and Germany. (cst)