Tue, 01 Aug 2000

Indonesia fails to meet coffee retention 'deadline'

JAKARTA (JP): Indonesia had failed to meet the July 31 deadline set by the Association of Coffee Producing Countries (ACPC) to decide whether to join the global coffee retention program, an executive of the Association of Indonesian Coffee Exporters (AEKI) said on Monday.

The executive, who wanted to remain anonymous, attributed the failure to the inability of local coffee producers to obtain the government's support to help fund the costs of joining the scheme.

He said the country's coffee producers had to spend at least US$47 million in extra costs for the storage, insurance and maintenance of about 60,000 tons of coffee in line with the ACPC's coffee retention program.

"We can't afford to join the plan without financial support from the government. If the government doesn't have the money, at least it can show us some options so that we can still get the funds," he said.

He said the government should help the country's coffee producers to implement the program just like the governments of other coffee producing countries such as Brazil and India did for their local exporters.

However, Director General of International Trade Joko Mulyono emphasized that the government would not provide financial support for local coffee producers.

"We've told them we don't have the money. It's up to them whether to join the scheme or not," he said on the sidelines of a seminar on the industry sector.

Fourteen members of the ACPC, including Indonesia, agreed on May 19 on a plan to cut coffee exports by 20 percent to support the world's sagging coffee prices.

The ACPC first set June 16 as the deadline for its members to provide detailed retention plans for their respective countries but several members, including Indonesia, failed to meet the deadline.

The ACPC then extended the deadline to July 31.

The AEKI source believed other coffee producing countries would take punitive actions toward Indonesia for its failure to meet the July 31 deadline.

"From what I've seen in earlier cases, no penalty has been inflicted on countries which failed to join the retention plan," he said.

ACPC earlier threatened Indonesia with penalty if it failed to meet the July 31 deadline.

He noted however that the country's failure to join the retention program would create negative sentiments about the local coffee market and depress the price of coffee to below Rp 3,000 (about 32 US cents) per kilogram from Rp 3,500 per kilogram.

Indonesia is the world's third largest coffee producer after Brazil and Colombia, and the world's second largest producer of robusta coffee.

Last year, the country produced 380,000 tons of coffee, of which about 325,000 tons were exported.

This year, AEKI estimated Indonesia would produce 420,000 tons and export 300,000 tons.

The ACPC includes Angola, Brazil, Colombia, Costa Rica, the Ivory Coast, the Congo, El Salvador, India, Indonesia, Kenya, Tanzania, Togo, Uganda and Venezuela. Together, they control about 85 percent of the world's coffee supply. (cst)