Coffee farmers worry as price plummets

Oyos Saroso H.N.,

INDONESIA. The Jakarta Post, Bandarlampung, 12 Oct. 2008

Another coffee farmer, Suharno of Sumberjaya, West Lampung, said he was ready to "change" his coffee plantation if the price continued to drop. "If it's no longer profitable, why we should keep on with it? We may change over to cassava. After all, the demand for cassava is on the rise because of the opening of an ethanol factory in Lampung," Suharno said.


Lampung coffee farmers and exporters claim the U.S financial crisis has contributed to the fall in the price of the commodity.

The price of robusta coffee fell from around Rp 18,000-20,000 (US$1.8) per kilogram in August to its current price of Rp 13,000-15,000 per kilogram.

"We are afraid that the price will drop below Rp 10,000 like what happened in 2001," Mukardi, a farmer from Way Tenong, West Lampung, said Friday.

"In the past, 2001-2002, when the price fell to Rp 3,000 per kilogram, many frustrated farmers cut down their coffee trees."

The 40-year-old farmer admitted he could do nothing to stop the declining price of the commodity.

"We will try not to sell our harvest. But if the situation forces us, we will sell it even though the price is down," he said.

Another coffee farmer, Suharno of Sumberjaya, West Lampung, said he was ready to "change" his coffee plantation if the price continued to drop.

"If it's no longer profitable, why we should keep on with it? We may change over to cassava. After all, the demand for cassava is on the rise because of the opening of an ethanol factory in Lampung," Suharno said.

Lampung is one of the few major coffee-exporting provinces in the country. The U.S. financial crisis has also dealt a severe blow to Lampung coffee exporters.

Without giving the exact amount of money involved, exporters claimed to have suffered losses of 30 percent because of the decline in price of coffee at the London terminal. The price has fallen from US$2,200 to $1,600 per ton in the past two days.

"The exporters suffered big losses. In two days, the price dropped about US$700. It's never happened before in history," chairman of the Lampung chapter of the Indonesian Coffee Exporters Association (AEKI), Suherman Harsono, said Friday.

According to Lampung AEKI data, as of August, the volume of coffee exported from Lampung to various countries had reached 34,061 million kilograms. Main export destinations were Germany, Japan, Belgium and the United States.

"In this situation, only disasters such as failed harvests in main coffee-producing countries, such as Brazil, could increase the price," Harsono said.

"While we're waiting for the price to move into equilibrium, we hope the government can issue a policy that eliminates the losses."

Lampung is the largest robusta coffee producer in Indonesia. Currently the province has 163,837 hectares of coffee plantations with 218,447 workers.

At the London terminal, Lampung coffee (and coffee from other areas in Indonesia) must compete with coffee from Vietnam. Brazil, Vietnam, Columbia and Indonesia are the world's largest four coffee producers.

Brazil produces 32 million packs of coffee (one pack is equal to 50 kilograms) per year. Vietnam produces 14 million packs, Columbia 12 million packs and Indonesia 5.7 million packs.

According to the data, last year Indonesia exported 312,086 tons of robusta coffee and 135,373 tons of arabica coffee at an average price of US$3.2 to US$3.5 per kilogram.