Indonesia, Vietnam eye coffee pact

Indonesia, Vietnam eye coffee pact

Adianto P. Simamora, The Jakarta Post, Jakarta

The world's largest robusta coffee producers, Indonesia and
Vietnam, are planning to cooperate to lift the commodity's price,
the Indonesian Coffee Association (AEKI) said Friday.

Both governments plan to sign a memorandum of understanding to
cooperate next month.

Under the program, the two countries would adjust the coffee
export schedules to avoid oversupply in the markets.

AEKI vice chairman Nuril Hakim said the program also aimed to
improve the quality of local coffee beans and cutting robusta
output.

"The main purpose of the program is to prop up the price to $1
per kilogram in a bid to improve the income and living standards
of local growers," Nuril told The Jakarta Post.

Today, robusta costs about 76 U.S. cent per kilogram, as
against 41 cents in July.

Nuril said Rini would lead the Indonesian delegation
comprising top ministry officials and the association's members
next month. The time table for the signing, however, is being
arranged. It will be followed by discussions over details on
export scheduling.

Over the past year, both countries have also been trying to
clinch a deal with India to control output in a bid to push up
the prices. India, Vietnam and Indonesia account for 22 percent
of total world coffee production, and 45 percent of robusta
output.

In late July, the three countries agreed to form a joint
consortium to buy and stock coffee from the local markets to jack
up the price to around 90 cents per kilogram.

Under the retention plan, Indonesia earlier agreed to withhold
some 100,000 tons of coffee, while Vietnam and India agreed to
withhold 300,000 tons and 50,000 tons respectively.

But, thus far, the consortium has yet to be built, while the
three countries have postponed their talks indefinitely.

In Indonesia, coffee growers have long complained about losses
as revenue is much lower than production costs.

Many of them have neglected their crops, which resulted in a
drop in the country's coffee output.

Indonesia produces about 500,000 tons of coffee a year. The
provinces of Lampung, Bengkulu and South Sumatra account for 75
percent of the country's coffee output.