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Jakarta Post

Indonesia coffee exports surge as drought hits Brazil

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Sat, October 11, 2014   /  10:48 am

Despite lower national production, the country'€™s foreign exchange earnings from coffee exports is expected to increase by at least 10 percent this year, thanks to the surge in the commodity'€™s price in the global market.

The Trade Ministry'€™s director general for export development, Nus Nuzulia Ishak, said in Jakarta on Friday that the long drought that had hit the world'€™s largest coffee producer and exporter, Brazil, had resulted in a sharp increase in the global price of coffee.

Nus Nuzulia said that with the surging prices, she was upbeat the value of Indonesia'€™s coffee exports would increase by around 10 percent to US$1.3 billion from $1.17 billion last year.

'€œWe will benefit from the crop failure experienced by Brazilian coffee growers as their markets are switching to our coffee,'€ she said at the 29th Trade Expo Indonesia.

Brazil, which produces about one-third of the world'€™s coffee and about half the world'€™s Arabica beans, has been experiencing an extended drought, which has resulted in a decline in its production this year.

According to Brazil'€™s National Coffee Council, the country'€™s coffee output this year may fall by at least 18 percent to 40.1 million bags this year after a 3.1 percent slide last year.

  • Value of coffee exports expected to increase by 10% to $1.3 billion this year
  • Price of Arabica beans almost doubles, as Brazilian production affected
  • More than 80% of RI'€™s coffee production is exported

The drought-hit harvest in Brazil this year, along with forecasts of more dry weather in the Latin American country, had caused the price of Arabica beans '€” most commonly used in espressos and cappuccinos '€” to hit its highest level in two-and-a-half years, The Wall Street Journal recently reported.

According to Bloomberg, Arabica coffee prices reached US$2,255 per ton, last week, their highest level since Jan. 20, 2012.

Indonesian Specialty Coffee Association (AKSI) chairman Leman Pahlevi said that Indonesia'€™s own Arabica coffee was currently being exported at a price of $100 per kilogram, while luwak coffee was priced at between $150 and $200 per kg for the global market.

More than 80 percent of the country'€™s coffee output was exported, he said.

'€œDomestic coffee consumption is still relatively low. Only 10 to 15 percent of the total coffee output goes to the domestic market,'€ he said, adding that Indonesia'€™s annual coffee consumption was only 600 grams per capita, lower than in Brazil, whose consumption is 3 kg per capita.

Leman said Indonesian coffee could look forward to a bright future, as both production and demand were expected to be relatively stable.

He said that while the country'€™s coffee production between October last year and September this year had fallen to 500,000 tons, down from an annual average output of 700,000 tons, he remained optimistic that output over the coming year would be higher.

'€œThe decline was mainly caused by a longer-than-average dry season last year. For the October 2014 to September 2015 period, we expect our output to increase to 600,000 tons,'€ he said, adding that his association defined the coffee season as running from October through September.

Meanwhile, Deputy Trade Minister Bayu Krisnamurthi previously said that he was pessimistic about the country meeting this year'€™s coffee output target of 450,000 tons.

The country'€™s total coffee exports hit 192,985 tons in the first seven months of this year, 33.05 percent down from the same period last year, according to the ministry'€™s data.

Bayu said on Friday that Indonesia was currently the world'€™s third- or fourth-largest coffee producer, while Brazil and Vietnam were ranked first and second

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