Indonesia, Vietnam eye pact to lift coffee prices

Dow Jones, Singapore

A meeting between coffee exporters from Vietnam and Indonesia next week may lead to a draft trade agreement to boost sagging coffee export prices, according to the Association of Indonesian Coffee Exporters, or AEKI.

In an interview with Dow Jones Newswires Tuesday, Nuril Hakim, vice chairman of AEKI, said the association will ask members of the Vietnam Coffee and Cocoa Association, or Vicofa, to reduce coffee production.

The meeting will be held on Oct. 25 or 26 in Dak Lak province - Vietnam's biggest coffee producing area. AEKI said several of its members will attend the meeting as well as a representative from Indonesia's trade ministry.

"The big problem is production. (If there's less supply) the export prices will be better," Nuril said, adding that exporters and farmers in Vietnam and Indonesia will continue to suffer if world prices remain depressed.

AEKI and Vicofa might draft a bilateral trade agreement to solve this problem, he said. No further details were provided.

Vietnam and Indonesia are among the world's biggest coffee producers and exporters.

Vietnam, which exported a record 874,676 metric tons of coffee in the 2000-2001 crop season, has been widely blamed for causing a global glut which has pressured prices.

On the London International Financial Futures and Options Exchange and the New York's Coffee, Sugar & Cocoa Exchange, coffee futures have been trading at near historical lows for the past few days.

Nuril said AEKI would like to know more about the Vietnamese government's policies and projects which helped improve coffee yield in Vietnam.

Based on this information, AEKI will send a proposal on improving domestic yield to Indonesian Trade Minister Rini Soewandi, he said.

AEKI will also study the farming techniques of Vietnamese growers to try to improve coffee yield in Indonesia, Nuril said.

In a separate interview, a senior Vicofa official said several Indonesian exporters will visit Vietnam's biggest coffee producing area.

But the official said, "we don't have any scheduled meeting with AEKI so far." He said the group hasn't received any "official information" on the matter.

Some industry sources said the Vietnamese Trade Minister will attend the meeting but an official of Vietnam's trade ministry denied this report.