RI, Vietnam to cut coffee exports

RI, Vietnam to cut coffee exports

Agence France-Presse, Hanoi

Vietnam and Indonesia, two of the world's biggest coffee producers, pledged Thursday to regulate their exports of robusta beans to ease the global glut that has driven down prices and farmers' incomes.

The memorandum of understanding (MOU) was signed in Hanoi by Doan Trieu Nhan, chairman of the Vietnam Coffee and Cocoa Association (VICOFA), and Hassan Wijaya, his counterpart at the Association of Indonesian Coffee Exporters (AICE).

It was signed on the sidelines of the three-day state visit by Indonesian president Megawati Soekarnoputri, who arrived in the Vietnamese capital on Wednesday.

The deal contained no concrete commitments but the industry bodies of the two countries, which account for around 65 percent of the world's robusta production, pledged to "strengthen their close cooperation".

"It needs further discussion about to how to implement the measures," said Mansjur Tandiono, AICE vice-chairman. "We have agreed to further discussions in the near future, maybe in Indonesia for more concrete measures."

VICOFA chairman Doan Trieu Nhan said the MOU could result in both countries stockpiling robusta beans intended for export when prices dropped below a certain level.

"This deal will help increase international robusta prices," said Indonesia Minister of Industry and Trade Rini Soewandi who oversaw the signing ceremony.

"This is a very good sign because if we can improve the price of coffee, which has gone down in recent years, we can improve the plight of our farmers, which is very important," she added.

In the past decade Vietnam has gone from being barely a blip on the international coffee radar to the world's biggest producer of robusta beans.

Vietnamese coffee production leapt from around 413,600 tons in 1997-1998 to 900,000 tons in 2000-2001. For the 2002-2003 crop year, VICOFA has forecast output of 520,000 tons.

However, the country's massive growth in production has prompted rival producers to blame it for the global glut that drove down prices to three-decade lows in 2001.

Market experts say Vietnam was unfairly faulted for the over- supply. They say some blame must lie with the buyers that bought the low-grade robusta beans, prompting farmers to retain their production levels.

Indonesia produces around 500,000 tons of coffee each year, of which more than 85 percent is exported.

Coffee prices have risen over the past year but have to yet reach their pre-crisis levels.