Coffee backbone of devastated E. Timor

Coffee backbone of devastated E. Timor

ERMERA, East Timor (AP): High in East Timor's hills, hundreds
of poor farmers lead donkeys laden with sacks of freshly picked
red coffee cherries down muddy tracks to a local factory.

On the ground, piles of green coffee beans dry in the tropical
sun, as farmers squat in the dirt and haggle over the value of
their harvest.

This pastoral scene in Southeast Asia may seem from a bygone
era, but for the East Timorese, it's their best shot at economic
self-sufficiency.

Soon after the independence ballot that led to East Timor's
violent break from Indonesia last August, many observers had
predicted the new nation might never sustain its own economy and
remain reliant upon foreign aid.

Nearly a year later, East Timor's U.N. administrators are
optimistic that the tiny half-island state may eventually have a
chance at economic viability through its one cash crop: high
quality, organically grown coffee.

After centuries of colonial misrule by Portugal and 25 years
of the Indonesian occupation, East Timor is one of the poorest
parts of Southeast Asia.

Much of its infrastructure lies in ruins, destroyed by angry,
pro-Indonesian militia gangs after last year's referendum
supported independence.

Outside the capital, Dili, electricity and water supplies are
sporadic at best. In the cities and towns, unemployment runs at
about 80 percent. Gangs of youths roam the streets looking for
ways to make money. Little foreign investment is coming in due to
an uncertain political future and messy land disputes.
Yet the outlook for coffee is bright.

East Timor's coffee factories and crops weren't destroyed in
the violence. Starbucks Corp., the U.S.-based coffee giant,
already is one of East Timor's best clients, and there is hope
the territory's beans will end up in many of the world's
cappuccinos, lattes and espressos.

More broadly, the United Nations is drawing up an economic
blueprint aimed at providing East Timor with a strong, albeit
small, economy - centered around coffee - before pulling out in
about two years.

Offshore oil and gas reserves, still relatively undeveloped,
bring in about US$5 million a year. That figure should multiply
several times when new fields are tapped by 2003. East Timor is
negotiating with its neighbor, Australia, to increase its share
of royalties from oil projects.

U.N. economist Fermada Borges said the world body also is
looking into a possibly lucrative fishing industry and has
started to replant valuable sandalwood trees that once quilted
the island's mountains and hills.

But the biggest cash crop should be coffee. The Portuguese
established plantations in East Timor's highlands several
centuries ago. With cheap labor and a thirsty coffee market, the
industry thrived.

When Indonesia invaded in 1975, the military took control of
the lucrative trade, but prices, processing standards and exports
slumped.

The monopoly continued until 1994, when New York-born trader
Sam Filiachi arrived. With a little political help from
Washington and some seed capital from the U.S. Agency for
International Development, he set up an export cooperative that
loosened the Indonesia government's tight grip on the coffee
business.

The price paid to farmers increased as the world snapped up
East Timor's organically grown Arabica and Robusta beans. The
smooth flavor and low acidity was an instant hit with coffee
lovers and roasting companies seeking to soften their blends.

Seattle-based Starbucks buys much of East Timor's coffee
exports, which increased with every harvest until last year's
violence.