Coffee exporters ask govt to impose quota scheme

JAKARTA (JP): Local coffee exporters called on the government to introduce a quota scheme to limit the market share of foreign exporters operating in the country.

Chairman of the Association of Indonesian Coffee Exporters (AEKI) Hassan Widjaja said a quota for coffee exports was crucial to enable local exporters to compete with foreign coffee traders.

"We desperately need a quota system to protect local coffee exporters as about 70 percent of the country's current coffee exports are controlled by foreign traders," Hassan said in a hearing with House of Representatives Commission V for industry and trade affairs.

Hassan said that without a policy, local exporters would be sidelined and in the end the country's coffee exports would be fully controlled by foreigners.

However, he could not yet provide specific details, saying the association was still drafting the criteria and guidelines for the proposed scheme.

Hassan said that foreign coffee traders had strong capital and a network, but most had no interest in investing in the country to help create jobs.

Coffee exports from here stood at 310 million tons last year.

Hassan said the association had predicted the country's exports would fall short of the targeted 320,000 tons this year.

"Our exports will plunge by 30 percent to 240,000 tons this year, mainly due to a fall in the country's production," Hassan said.

He attributed the plunge in coffee output to the growers' lack of proper cultivation of trees following the continued pressure on coffee prices.

Many coffee growers have suffered losses due to low international prices for the commodity, which in turn has forced them not to cultivate their trees properly.

"They are no longer able to afford a higher cost of production," he said.

He said coffee prices were hovering at about Rp 2,000 (22 U.S. cents) to Rp 2,500 (27 U.S. cents) per kilogram, while the cost of production ranges between Rp 3,000 and Rp 3,500 per kilogram.

Coffee prices have been under protracted pressure amid an oversupply in the market following higher coffee supplies coming from the world's largest coffee-producing countries, Brazil and Vietnam.

Brazil's output accounts for 1.95 million tons per year, followed by Vietnam with 720,000 million tons per year.

Brazil and Vietnam control 38 percent of the world's coffee production at 6.84 million tons.

Hassan said coffee prices would recover if Brazil and Vietnam were willing to cut their supplies on the international market.

The association also plans to campaign for supply reduction measures during the upcoming meeting of the Association of Coffee Producing Countries (ACPC), to be held in London next September, in an effort to prop up prices, Hassan said.

He did not, however, specify as to how far Brazil and Vietnam must limit their coffee supplies, saying only that they should be curtailed "until supply and demand on the international coffee market have reached its equilibrium level."(dmr)