Lampung traders import coffee from Vietnam

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)