Poducers to withhold coffee to boost prices

Poducers to withhold coffee to boost prices

SALVADOR, Brazil (AP): The world's two largest coffee
producers plan to withhold about six million bags of their
upcoming harvests in efforts to bolster frazzled coffee prices, a
top Brazilian official said Wednesday.

Brazil and Colombia are among a handful of key producers that
have been working to form a global consensus to reverse the trend
of falling coffee prices by limiting supply.

"Details of how the plan will work will require agreement from
the principal producing countries," said Paulo Cesar Samico, of
Brazil's Agriculture Ministry's Food Supply Department. "The
important thing is we need to support coffee prices in order to
remunerate producers' investments and guarantee future supply."

Samico spoke at a conference on coffee in Salvador, about 740
miles (1,200 kms) northeast of Rio.

Despite an expected reduction in Brazil's and Colombia's 2000-
2001 production, Samico said prices have fallen an average of 10
to 15 percent since January, "mainly because of pressure from
Mexican supply."

Coffee future prices on the New York Board of Trade on
Wednesday stood at US$1.03 a pound.

Samico said the retention plan should go into operation at the
end of April or beginning of May with the start of Brazil's
robusta coffee harvest, which could reach a record 7 million 60-
kilogram bags, considerably higher than the previous season's 4.4
million bags.

Samico said representatives from Brazil,Colombia, Vietnam,
Indonesia, Mexico and the Ivory Coast will meet over the next few
weeks to discuss details of the retention plan.

"The immediate effect (of the retention plan) is to boost
prices," said one exporter, who asked not to be identified. "But
in the long term it is self-defeating as higher prices encourage
higher production which will eventually push prices down."

Brazil is the world's largest exporter and producer,
harvesting an estimated 27.2 million bags for the 1999-2000
period, down from 34.6 million in the previous year. The 2000-
2001 harvest has been estimated at nearly 29 million bags.