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)