Coffee, pepper price plunge upsets farmers in Lampung

Oyos Saroso HN, The Jakata Post, Bandar Lampung

With prices of coffee and pepper plummeting over the last three years, farmers in Lampung have been forced to destroy their plantations.

In West Lampung, many farmers have had to diversify their crops to support themselves.

The government has carried out a coffee retention program, but it has failed to boost coffee prices, which remain at Rp 2,000 per kilogram, as compared to between Rp 15,000 and 20,000 per kg three years ago.

Indonesian coffee prices have dropped on the international market due to the flooding of number one robusta coffee from Brazil and Vietnam.

Mu'ar, a coffee grower in the village of Padang Dalom, West Lampung, has removed half or around 3,000 of his coffee plants and replaced them with corn and betel nuts.

"One kilo of coffee is only worth the same amount as rice, which is not enough as the crop maintenance cost is high," he complained, hoping to receive some soft loans.

In several villages in Liwa, coffee plantations are neglected and some local farmers have entered woodland to fell trees. The illegal timber trade is now more profitable to them, according to Mukri Friatna of Lampung's Environment Forum.

Coffee growers on Panggung island, Abung district, North Lampung, abandoned their crops in August, when the coffee price reached an all-time low of Rp 1,200 per kg.

Lampung farmers are frustrated as the coffee price slump to Rp 1,500 per kg in May has not yet recovered. Some of them, however, still retain a few coffee plants for their own consumption.

Pepper farmers have had a similar experience, with the price of pepper falling to as low as Rp 8,000 per kg.

Kasturi in the village of Sumurbandung, Way Jepara, East Lampung, has cleared his two hectares of pepper plantations.

Arpani, another Way Jepara pepper grower, has replaced his pepper with cacao and other estate crops, in view of the relatively higher price of the commodity and the shorter harvest periods of the substitutes. Farmers who cannot afford to convert their plantations neglect their land.

Black pepper is Lampung's major commodity, which was sold at Rp 40,000 per kg three years ago. In 1998, the region produced 16,946 tons of black pepper, which increased to 18,122 tons the following year. In 2000, its output even reached 20,603 tons due to fertilizers and intensive care.

Coffee trading has been scarce in Lampung's coffee centers since coffee and pepper prices crashed. But some middlemen believe that farmers purposely hoard their coffee to anticipate a price surge.

"It's been hard to collect much coffee in one day over the last two months," said a coffee trader from Bukitkemuning district, North Lampung.

The coffee price plunge has also hit coffee exporters with limited stocks in Lampung. An exporter with a short-term stock admitted he lost Rp 2 billion because he was not able to store the commodity any longer as a result of his contract commitment.

"The coffee price also tends to further decline, so that it's better to give up the stock to avoid a bigger loss," the exporter asserted.

With the coffee price difference in July reaching US2$600 per ton and $460 per ton in August, exporters have lost Rp 1,600 per kg, which is coupled with losses incurred due to the rupiah's appreciation against the dollar.

According to the chairman of the Indonesian Coffee Exporters Association (AEKI) in Lampung, Nuril Hakim, only 48 of the 218 coffee exporters in the province have been active since the price crash.

"Exporters usually have large stocks, such as PT Indra Brothers and PT Aman Jaya Perdana, who have stored 25,000 tons," he said. They mostly retain coffee stocks from purchases in 1999, when the commodity was priced at Rp 9,000 per kg.

Lampung has so far become the country's largest coffee exporting region, which from October 2000 to June 2001 exported 134,000 tons. During the same period, North Sumatra only exported 33,900 tons, Central Java 7,300 tons and East Java 5,600 tons.

Coffee middlemen also suffer losses, "because we buy coffee at Rp 2,600 per kg and after an hour the price may have dropped to Rp 2,000 per kg", said Amir, a coffee trader in Liwa, West Lampung, who considered himself a lucky man in deals when he is able to recover his capital.