RI won't suspend coffee export

JAKARTA (JP): Indonesia has refused to suspend coffee exports despite requests from several coffee producing countries which opted for that course earlier this week in a bid to boost world coffee prices.

Oesman Soedargo, vice chairman of the Association of Indonesian Coffee Exporters (AICE), told reporters during a break in a general meeting of the association yesterday that Indonesia had rejected a request that it suspend its exports because the AICE did not enforce a strict export registration system.

"We oversee a free export system. However, we will continue to participate in the retention scheme introduced by the Association of Coffee Producing Countries (ACPC), in accordance with our obligations," he said.

Five Latin American countries -- Colombia, Honduras, El Salvador, Costa Rica and Nicaragua -- announced earlier this week that they would suspend coffee exports to boost prices, which have been plummeting since April.

Brazil, the world's leading coffee exporter, has yet to follow suit.

According to Reuters, London coffee prices tumbled to a one- year-low on Monday at US$130 per 46-kilogram (100-pound) bag, $40 lower than the level considered an acceptable minimum by the ACPC.

The ACPC, of which Indonesia is a member, requires its members to follow a coffee retention scheme. The scheme requires ACPC's 13 members to hold back exports by 10 percent when prices of Robusta coffee, which makes up the bulk of Indonesian exports, drop to between $1.35 and $1.50 per pound.

Producers must retain 20 percent of Robusta exports when prices, based on the ACPC's calculation of a 20-day moving average, fall to $1.35 cents or below.

Export decline

The current price of coffee requires 20 percent retention.

Oesman said yesterday that Indonesia's exports were likely to decline this year. "That in itself is already a supportive move to boost prices," he said.

He said Indonesia's coffee production for this (October- September) coffee year, was expected to drop to 350,000 tons, from 375,000 tons last year, as a result of the prolonged dry season in 1993 and heavy rains last year.

Exports are also expected to decline to 210,000 tons this crop year from last year's 250,000 tons.

Oesman said that coffee producers had no way of countering the fund managers on the London and New York market.

"Everyone has retained stocks, but still the market is stronger," he said.

Bargaining

The head of the Indonesian delegation to the International Coffee Organization, Paian Nainggolan, said that producers could improve their bargaining position as long as they continued to retain 20 percent of their coffee exports.

Oesman said Brazil might opt to suspend its coffee exports, since that country could be the only force that can affect the market.

Earlier yesterday, Minister of Trade Satrio B. Joedono, who opened the meeting, suggested that the AICE consider restructuring itself to boost professionalism and efficiency.

He said the AICE should trim its membership to allow only those who are active to participate in the association.

Responding to the proposal, Oesman said the AICE "has not gone as far as considering such a measure".

"I think that government regulations still allow the AICE to accept new members. But (the proposal) will certainly become homework for the AICE's new board members," he said.

The meeting, which is scheduled to end today, will elect new board members for the association. (pwn)