Indonesia may lose its title as no. 1 robusta producer
By Sylvia Gratia M.N.
JAKARTA (JP): Indonesia may lose its crown as the world's biggest robusta producer to Vietnam due to the prolonged dry season caused by the El Nio weather phenomenon.
Vice chairman of the Association of Indonesian Coffee Exporters (AICE) Mustafa Sulaiman told The Jakarta Post that Indonesia's coffee production was expected to drop sharply by 35 percent to about 300,000 tons from Oct. 1, 1997 to Sept. 30, 1998 -- due to El Nino.
"Coffee production for the 1997/1998 period will probably only be 300,000 to 320,000 tons against a normal annual output of 450,000 tons," he said.
The El Nino weather phenomenon is an abnormal weather system in the tropical Pacific Ocean which triggers exceptionally warm and long-lived ocean currents which disrupt global rainfall and wind patterns and cause droughts or flooding in far-flung regions.
Peruvian fishermen ruefully christened the phenomenon El Nio -- the Christ child -- because it peaks around Christmas.
The phenomenon, which occurs every two to seven years, has unleashed natural disasters around the world, damaging crops for two successive years and causing turmoil in the world commodities market.
This year, the phenomenon arrived early and nearly matched the century's worst one in 1982 and 1983, which blighted crops in Indonesia, Australia, the Philippines and southern Africa after a blistering drought.
Indonesia is the world's third largest coffee producer after Brazil and Colombia, with an output of 470,000 tons in 1996/1997. Ninety percent of the country's production is robusta and 10 percent arabica.
The country is the world's largest producer of robusta and its harvest runs between April and September. Robusta is extensively used in the instant coffee industry.
Robusta is more bitter in taste than the higher grade arabica, which is predominantly grown in Central and South America, East Africa and India.
Indonesia's main robusta-producing areas are South Sumatra, Lampung and Bengkulu. The three Sumatran provinces -- which traders call "Indonesia's coffee triangle" -- produce up to 70 percent of Indonesia's total production of coffee.
The country's arabica is produced in Aceh, North Tapanuli in North Sumatra, Toraja in South Sulawesi and by state-owned coffee plantations in East and Central Java.
The association's data shows that of the 470,000 tons of coffee produced last year, about 423,000 tons, or 90 percent, was produced by small farmers, while the rest was produced by state plantations and private estates.
Mustafa said Indonesia's coffee production had been declining since the 1995/1996 coffee-production season. In 1995/1996, the country produced 480,000 tons of coffee.
Last year's decline was due to excessive rains and strong winds which hit several high elevation areas in the southern part of Sumatra, he said.
Coffee flowers were destroyed and the fertilization level in the soil decreased in the area that accounted for 50 percent of total production, he added.
Mustafa said 1998/1999 production remained under a cloud due to the severe drought linked to El Nino, but late rains drenching the Indonesian coffee belt in Sumatra would likely trim the losses.
"It looks like the annual monsoon season has arrived. All areas in Sumatra are getting good rains. This is good as long as it lasts," he said.
But he said it would be too early to say if the rains, which ended a drought triggered by El Nino, would boost Indonesian coffee production in 1998/1999.
Export
He said the decline in production had led to a 47 percent decline in export volume.
Indonesian exports would drop sharply to about 200,000 tons this year, he said.
Last year, Indonesia exported about 380,000 tons of coffee, or about 8 percent of world demand. The figure is slightly less than 387,200 tons in 1995/1996.
The country exports its robusta to the United States, Japan, Germany, Singapore, the United Kingdom and several other European countries.
Its high grade coffee is exported to Japan and to the United States.
Reuters reported last week that the United States Department of Agriculture (USDA) estimated Indonesia's coffee production could fall to 7.1 million 60-kilogram bags or 426,000 tons, down 10 percent from 1996/1997.
Due to the drought which had persisted in many coffee- producing areas since June 1997, coffee production for 1998/1999 might decline from the record level set in 1996/1997, the news agency said.
AICE chairman Oesman Soedargo said earlier this year the Association of Coffee Producing Countries gave Indonesia an export quota of 360,000 tons a year. However, Indonesia had requested the limit be reduced to 351,000 tons.
The USDA also estimated that domestic coffee consumption in Indonesia during 1997/1998 was forecast to be 126,000 tons, compared to 120,000 tons in 1996/1997.
This is despite efforts by local roasters to promote coffee in the domestic market and increase coffee shops in big cities. Per capita coffee consumption in Indonesia remained low compared to other countries, the USDA said.
Prices
Mustafa said coffee prices in the world market depended on Brazil's coffee output.
"If Brazil's production is only 34 million bags (2.04 million tons) in 1997/1998, prices will drop. But an analyst predicted El Nio would move to the other side of the Pacific Ocean, which would hit South America," he said.
He said the results of El Nino would be extremely heavy rainfall down the western coast of South America and withered crops from a drought in other parts of South America.
"Analysts predict that Brazil's coffee crop will be hit by a severe drought," he said.
Brazil produced over 930,000 tons of coffee in 1996/1997, followed by Colombia with 778,000 tons.
He said coffee prices in the local market were also kept high by the sharp decline of the rupiah's value against the U.S. dollar.
The rupiah, like other Southeast Asian currencies, has been hit by speculative attacks since early July, losing more than 50 percent of its value against the American greenback.
"Don't underestimate our coffee producers nowadays. They follow price increases in the world market because they receive price information from other countries' traders," he said.
"Most of them even have satellite dishes, and monitor the radio which allows them to receive worldwide information faster," he added.
He said farmers got a windfall from the rupiah's depreciation while exporters faced difficulties due to an increase in transportation and warehouse costs.
He said the government's policy still focused on rehabilitation and intensification of existing areas rather than expanding plantation areas.
Vietnamese coffee
The dry spell haunting Indonesia's coffee belt gave way to intermittent rains recently, but supplies remain tight, giving Vietnamese coffee prices a boost.
"The Vietnamese supply is in full swing. The take-up rate is very good as traders seek to compensate for the sharp fall in the Indonesian supply," Mustafa said.
The USDA estimated that Vietnam's coffee production during 1997/1998 would be 5.8 million bags or 348,000 tons.
Vietnam's export of coffee during the year is forecast to be 5.5 million bags or 330,000 tons, an increase of 12 percent over 294,000 tons in 1996/1997.
As Vietnam's coffee production increases, so does its exports. If realized, the level of exports in 1997/1998 will surpass Indonesia's, making Vietnam the largest exporter of robusta, the USDA said.
Mustafa estimated that Vietnam would most likely be the world's largest producer of robusta in two years.
"Ten years ago they produced hardly anything and look at them now," he said.
Table: Indonesia's coffee exports, coffee year 1985/1986-1996/1997
Coffee year* Volume (tons) Value (000 US$) ----------------------------------------------
1985/1986 303,836 779,536
1986/1987 207,814 629,945
1987/1988 270,336 521,945
1988/1989 377,433 576,223
1989/1990 407,893 338,447
1990/1991 380,355 342,361
1991/1992 254,172 242,597
1992/1993 353,792 335,843
1993/1994 301,844 670,614
1994/1995 188,560 555,143
1995/1996 365,728 699,800
1996/1997 380,812 636,842
* Coffee year starting October 1 until Sep. 30