Local Coffee Exporters Worry about Dominance of Foreign Traders

Local Coffee Exporters Worry about Dominance of Foreign Traders
Monday, 20 June, 2011 | 22:09 WIB

TEMPO Interactive, Jakarta:Coffee exporters worry that foreign traders will dominate the local coffee trading in the absence of export levies which makes coffee, one of Indonesia's mainstay commodity, easily shipped overseas.

Benny Hermanto , the Association of Indonesian Coffee Exporters and Industries (AICE) Research chief, said that the government has removed export levies through Trade Minister Regulation No. 10/2011. Prior to that, the coffee export duty was Rp30 per kilogram.

"Now, foreign traders only need to come, bring their dollars, rent a warehouse, and export coffee," said Benny yesterday. According to Benny, the absence of the levies will result in more Indonesian coffee being exported in raw form.

According to Benny, coffee exporters' fee is still needed to be paid to the International Coffee Organization (ICO). This fee is charged to the government because members of ICO are countries instead of companies.

Benny said that the coffee export levies paid to the government is beneficial for the businessmen because the shifting of the coffee export value will sometimes result in a surplus of export levies. This surplus will be returned to the AICE.

Currently, coffee production is declining. Last year, production only reached 640,000 tons, while this year the yield is estimated to be only about 600,000 tons.

The decline in coffee production also impacted exports. In 2010, exports reached 410,000 tons and this year, the number is estimated to be about 390,000 tons.

Suyanto Husein, the AICE chairman, said that the government cannot limit coffee purchases by foreign traders, so, the market is more open to Indonesian products compared to coffee products from other countries.

Earlier, exporters must report their export value to the AICE to obtain recommendation when paying the export levies. Now, foreign traders can go directly to farmers without having to be an AICE member.

Therefore, the exporters ask the government to limit purchases by foreign buyers such as by implementing a regulation which requires the foreign traders to work with local businessmen.

Bayu Krisnamurthi, the Agriculture deputy-minister, said that the coffee supply needs to be well-managed in order to maintain the price. He hoped that the Indonesian farmers will grow more coffee for direct consumption because the price is higher.

EKA UTAMI APRILIA