RI to reduce coffee exports to prop up prices

JAKARTA (JP): Indonesia will reduce its coffee exports by 150,000 60 kg bags in the first half of this year under a plan to lift robusta coffee prices, Association of Indonesian Coffee Exporters vice chairman Mustafa Sulaiman said yesterday.

Mustafa said the reduction was part of a plan adopted by key producers grouped in the Association of Coffee Producing Countries (ACPC) in Brazil last month.

Under the plan Indonesia reduces exports from association members by 1.3 million bags. One million bags coming from robusta producers and the rest from arabica producers.

African countries had pushed for the cuts in a bid to lift robusta prices. The plan will reduce exports by the association's 14 members to 24.98 million bags between January and June this year.

"We have decided to reduce our exports of robusta by 150,000 bags. The remaining 850,000 bags will have to be allocated among African and other robusta producers," Mustafa was quoted by Reuter as saying.

"Our decision is final. It is not open to negotiation," he said from Nusa Dua, Bali, where the International Coffee Organization (ICO) is holding a three-day meeting which opened Monday.

He said Indonesia's decision was made known at the ACPC meeting in Brazil on Jan. 23.

The group had previously decided to limit members' exports to 26.28 million bags.

ACPC decided in Brazil that arabica coffee producers would export 300,000 fewer bags and the remaining export cuts would come from countries producing the robusta variety.

"We hope robusta producers, such as Vietnam, will share the allocation (of export cuts) along with the Ivory Coast, Uganda, Brazil, Ecuador and others," Mustafa said.

Indonesia last year exported 320,000 tons of coffee worth US$607 million. This supplied about eight percent of world demand.

Most of the coffee went to the United States, Japan and Europe.

Executive director of the International Coffee Organization (ICO) Celsius Lodder said ACPC's move to reduce exports would not cause price volatility.

Lodder said the move was aimed at making robusta prices stable.

Lodder said he expected coffee prices to be stable in 1997, with sporadic fluctuations. He said he expected prices to average between 1.25 and 1.30 cents a pound.

He said stocks in importing countries were about six million to seven million bags.

"Stocks are quite low, about six percent of demand compared with 10 to 14 percent last year. Certified and noncertified stocks are six to seven million bags," he said.

He said strategic stocks, which are used by countries to supply their domestic markets, are being kept near zero.

"The cost of keeping the stocks is very high, so they are reducing them to minimum levels. Roasters' strategic stocks allow them to supply their market for up to one month," he said. (pwn)