The Jakarta Post, Jakarta
While many cafes like Starbucks and Coffee Bean are enjoying an ever-increasing number of clients, Indonesian coffee production is in fact on a decline, apparently missing the commodity's high prices on the global market.
Starbucks Indonesia uses Sumatran and Javanese Arabica coffee as a part of its coffee blend, which also make up the bulk of Coffee Bean coffee although only after being processed abroad.
The declining trend in coffee production and export was voiced by more than 350 exporters grouped under the Association of Indonesian Coffee Exporters (AEKI), who purchase coffee beans from the farmers from between Rp 7,000 and 21,000 per kilogram.
AEKI executive secretary Rachim Kartabrata said recently the exporters were in fact struggling to procure more coffee from Indonesia, with international demand outweighing supply.
"The prices are good, but exporters can't get enough, so they can't sell much," he said.
He explained that the lack of beans from coffee growers had much to do with the country's production capacity which recently declined by 18.1 percent, from 550,000 tons in 2006 to 450,000 in 2007.
With domestic consumption also on the increase, exports of coffee last year were estimated to drop by 7 percent from 307,880 tons valued at US$497.613 million in 2006, to 286,237 tons worth US$589.494 million, he said.
"The shortage will force us to increase our imports because the domestic market is growing along with the development of coffee shops and cafes," he said, adding that most traders imported coffee from Vietnam.
Rachim said domestic consumption this year could reach up to 200,000 tons, a 33 percent increase from 2007, meaning the Indonesia could import up to 100,000 tons, 50 percent more than in 2006.
"Due to high demand and a limited supply, exporters and domestic coffee producers are jostling to meet their clients' needs."
According to data from the Agriculture Ministry, in 2007, 12 percent of trees were defective in the country's total coffee plantation area of 1,312,030 hectares.
From the remaining area, 73 percent is supposed to be able to produce around 700,000 tons of coffee beans, with the remainders not yet productive.
"In fact," Rachim said, "our plantations only produce around half as much as Vietnam's 600,000 hectares."
Herman, a researcher of coffee and cocoa at the Indonesian Plantation Research Institution (LRPI), said a lack of comprehensive measures to revitalize the industry had led to this gradual shortage of domestic supply.
Coffee for instance, is excluded from three major export commodities -- rubber, oil palm and cocoa -- which the government pledged to revitalize. These commodities have enjoyed, among other things, Rp 40 trillion worth of assistance in the form of interest rate subsidy between 2006 and 2010.
According to the association and LRPI, Indonesia saw the worst price of coffee in 2002, when coffee farmers in Indonesia had to sell their crop for as little as Rp 2,500 a kilogram, hitting more than 170 exporters in Lampung, the country's biggest coffee-growing province.
After this, many coffee farmers became reluctant to plant coffee and turned instead to cocoa or corn, which are simpler to cultivate and bring more profits.
Their reluctance has also been driven by the increasingly unpredictable weather, such as extended dry or wet seasons, which dramatically affect the harvest.
Rachim said in order to encourage farmers to grow coffee, the government should provide assistance for them in the form of easy bank loans.
"I hope the regional administration ... will pay some serious attention to the mainstream coffee industry," he said.
Indonesia is currently the second biggest producer and exporter of Robusta coffee after Vietnam. When combined with its Arabica exports, Indonesia is the fourth biggest exporter in the world, after Brazil, Columbia and Vietnam.
"We actually have a strong selling advantage because we grow two types of coffee," he said.
Up to 80 percent of Indonesia's total production is Robusta and the remainder is Arabica, with America, West Europe and Japan being its main export destinations.
He said exporters saw increasing demands from other emerging markets like Russia, China, Taiwan, South Korea and Malaysia.
Indonesian coffee is mainly traded in London and New York. (ind)