Indonesia pulls out of coffee retention program
JAKARTA (JP): Indonesia has pulled out of the coffee retention program designed to shore up world coffee prices after learning that two other major producers, Vietnam and India, would not take part, Antara reported on Friday.
Minister of Industry and Trade Luhut B. Panjaitan told the news agency that neither Vietnam nor India had sent representatives to the meeting of the Association of Coffee Producing Countries (ACPC) in London to discuss the program.
"Indonesia may reconsider its decision if Vietnam and India decide to join the program," Luhut said.
The meeting, which opened on Friday, was held ahead of the Oct. 1 deadline for ACPC countries to submit details of how they intend to cut their exports by 20 percent to prop up prices from 57 U.S. cents per kilogram at present to 95 cents per kilogram.
Luhut said the ACPC retention program would cost Indonesian coffee producers Rp 30 billion (US$3.4 million) to finance the storage, insurance and maintenance of about 60,000 tons of coffee which they would not be able to export.
The government, he added, could not give them any financial support.
Having agreed to take part in the retention program when it was first hammered out by ACPC members in May, Indonesia repeatedly missed the deadlines to provide the details to the association, first on June 16 and later when it was extended to July 31. The association extended the deadline a third time to Oct. 1.
The Association of Indonesian Coffee Exporters (AEKI) said Indonesia failed to meet its commitment because coffee producers failed to secure financial support from the government.
But as recently as last week, when ACPC chairman Sergio Amaral visited Indonesia, the government was still giving assurances of Indonesia's intention to implement the retention plan.
Indonesia exported 380,000 tons of coffee in 1999 compared to 325,000 tons in 1998. AEKI has estimated that Indonesia would produce 420,000 tons and export 300,000 tons this year.
Besides Indonesia, other ACPC members are Angola, Brazil, Colombia, Costa Rica, the Ivory Coast, the Congo, El Salvador, India, Kenya, Tanzania, Togo, Uganda and Venezuela
Vietnam
Vietnam's agriculture ministry made a fresh proposal to the government on Friday that the country should join the global scheme to boost coffee prices by retaining exports.
But it was unclear if it would be approved.
A letter from the ministry to Prime Minister Phan Van Khai proposed stockpiling 140,000 tons of coffee from a Sunday deadline set by ACPC, which is organizing the scheme globally.
"We propose this measure to the government's prime minister to decide on," said the letter, a copy of which was made available to Reuters.
It also proposed Vietnam should consider joining the ACPC.
Vietnam's agriculture ministry first proposed stockpiling coffee months ago, but the government has yet to respond. Earlier on Friday, an official in Khai's office said details of a previous proposal were still being debated.
The ministry letter proposed 60,000 tons of coffee should be stockpiled by three state firms, the Vietnam Coffee Corp. and two in Daklak and Dong Nai provinces.
Under the ministry proposal, the government would utilize a coffee export surcharge fund established in the past to cover bank interest on loans to purchase this amount.
Another 80,000 tons of coffee would be stockpiled by farmers who could use the beans as collateral with banks for further investment in coffee plantations, the letter said.
The agriculture ministry would be the management body of the plan in cooperation with the trade and finance ministries, the government's Pricing Committee and the Vietnam Coffee and Cocoa Association.(02).