RI starts coffee retention program to prop up prices

RI starts coffee retention program to prop up prices

JAKARTA (JP): Indonesia has started its coffee retention
program with Lampung, the country's largest coffee producer,
already retaining some 10,500 tons of coffee beans.

Coffee exporters in the province said over the weekend that
they had begun holding their stocks in line with the Association
of Coffee Producing Countries (ACPC)'s retention plan, even
though the government had not disbursed funds for the plan yet.

Vice chairman of the Association of Indonesian Coffee
Exporters (AEKI) Nuril Hakim said exporters from Lampung had
prepared at least eight storehouses to keep the retained coffee
beans.

Furthermore, many companies has taken the initiative to retain
their coffee stock, she said.

PT Sari Makmur Tunggal Mandiri has started filling two of its
storehouses with 1,000 tons of coffee beans each. CV Antara
Saudara has retained 2,000 tons of coffee beans and PT Indra
Brother Group another 2,000 tons, Nuril said.

The chairman of AEKI's Lampung chapter said PT Aneka Sumber
Kencana had retained 1,500 tons of their coffee supply, PT Elyana
1,000 tons, PT Aman Jaya Perdana 1,000 tons, and CV Bali Kencana
1,000 tons, in support of the plan.

Antara reported that Lampung would produce 260,000 tons of
coffee between 2000 and 2001, including the 70,000 tons already
held by exporters.

Nuril said the province was ready for an audit by the ACPC
team should they need to verify the coffee stock available in
Lampung.

The decline of coffee prices in the international market to a
seven-year low of 36 U.S. cents per pound for Robusta coffee from
a high of 90 U.S. cents per pound in May 1998, and 80 U.S. cents
per pound for Arabica coffee from a high of $2.58 a pound, has
forced ACPC to reduce coffee supply in the world market.

ACPC's members and key nonmember countries, including
Indonesia, agreed in May last year to cut coffee exports by 20
percent until prices hit 95 cents a pound on the 15-day average
of the International Coffee Organization's (ICO) composite index
indicator.

Coffee prices tumbled to a fresh seven-and-a-half-year low on
Friday. At the New York Board of Trade, coffee for the March
delivery sank below 60 cents a pound for the first time in seven
years and closed at 59.80 cents a pound, down 1.70 cents.

Nuril said Lampung, Indonesia's major coffee producer, needed
to retain about 40,000 tons of coffee beans this year in
compliance with the retention plan

The provinces of Lampung, Bengkulu, and South Sumatra account
for 75 percent of the country's coffee output.

Although the Indonesian government has voiced support for the
plan, it has yet to disburse the funds to implement it.

Last month, the government agreed to support the retention of
up to 40,000 tons of coffee this year, with Rp 55 billion ($5.8
million) funded by the Ministry of Finance for the first phase of
the plan.

At the same time, President Abdurrahman Wahid said state Bank
Mandiri would handle the financing of the retention plan,
estimated to cost Rp 200 billion.

Earlier, Nuril said AEKI would wait until April 1 for the Rp
55 billion to be disbursed, adding that if the association did
not receive the money by then, exporters would sell the retained
coffee beans.

Coffee prices in Lampung is standing at between Rp 3,000 and
Rp 4,000 a kilogram. (tnt)