Lampung traders import coffee from Vietnam
JAKARTA (JP): Many coffee growers and traders are keeping their coffee beans in storehouses due to low prices, forcing several exporters to import the commodity to cover their export obligations, the Association of Indonesian Coffee Exporters (AEKI) said.
AEKI's deputy chairman Nuril Hakim told The Jakarta Post that several exporters in Lampung, which is the country's largest coffee producer, had bought coffee beans from Vietnam to cover their obligations to buyers.
"Due to the shortage in coffee supplies, they purchased coffee beans from Vietnam to meet its contract obligations," Nuril said on Saturday.
Nuril said exporters bought coffee from Vietnam because it was cheaper there than in other countries.
"Vietnam's coffee beans are about Rp 300 (3.3 US cents) to Rp 500 cheaper per kilogram than local ones," he said.
Nuril, however, said the "exporters-turn-importers" were small in number.
Most traders in the province still have a lot of coffee in their warehouses. They are waiting for the price of the commodity to recover, he said.
He said in Lampung alone, which accounted for 60 percent of the country's total coffee exports at 320,000 tons, growers as well as exporters had stockpiled about 50,000 tons to 60,000 tons.
"Once the coffee prices increase, they would sell them," he said.
Nuril, however, did not specify how long the growers and traders were prepared to keep their coffee at the warehouses.
Coffee prices have for years been under pressure due to a market glut.
Nuril blamed abundant supplies from the world's largest coffee producing countries Brazil and Vietnam for the continued pressure on the price.
Brazil is the world's largest coffee producer with an output of 1.95 million tons per year, followed by Vietnam with 720,000 million tons per year.
Both Brazil and Vietnam account for 38 percent of the total world production of 6.84 million tons.
Nuril said the coffee prices could rebound if Brazil and Vietnam were willing to cut their supplies.
The Association of Coffee Producing Countries (ACPC) launched in October last year the so-called retention plan to prop up the sagging price of the commodity. However, the retention scheme has thus far failed to bring results because many members could not implement the plan for various reasons, including a lack of finances.
Nuril said AEKI would insist in the upcoming ACPC meeting, which was slated for next month in London, that Brazil and Vietnam cut their supplies.
He did not specify the how much of coffee supply Brazil and Vietnam ought to cut, saying only that both the countries ought to cut their supplies "until the supply and demand in the international coffee market reached a sustainable level."
In addition to low prices in the international market, Indonesian coffee exporters have also suffered from the strengthening of the rupiah against the U.S. dollar over the past weeks.
"Over the past two weeks, exporters suffered a loss of Rp 3,000 per kg as they had to sell coffee to foreign buyers at Rp 8,400 per kg, while buying it at Rp 11,400 per kg," he said.
AEKI predicts the country's export will fall by 12 percent to 270,000 tons this year from 310,000 tons last year. The output was initially targeted at 320,000 tons this year. (dmr)