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M.R. Subramani

The Government's stand not to curb production or export is in variance with Indonesia's proposal.

CHENNAI, Feb. 27

THE Government has asked other major Asian coffee producers, Vietnam and Indonesia, to consider a proposal to fix a minimum price for export of robusta coffee.

"Our Government has told Vietnam and Indonesia that robusta should not be undersold and we could fix a minimum price for exports," official sources told Business Line.

The sources were responding to queries on what common marketing strategy had the Government mooted to Indonesia and Vietnam to help the growers from the current situation arising out of low prices.

However, industry sources are. "We doubt if it would work. Countries such as Vietnam sell aggressively and even undercut prices. How can we face that, especially when our robusta prices are high on quality grounds?" a grower asked.

Pointing out at the failure of the International Coffee Organisation (ICO) export quota system, sources said: "you can't do anything if a member country oversells, pointing out at their economic condition."

The Government's proposal comes in the wake of Indonesia and Vietnam mooting a tripartite meeting. The Government has welcomed the idea and has asked the Coffee Board to get in touch with the coffee export associations of Indonesia and Vietnam.

During the India International Coffee Festival in Bangalore recently, Mr L.V. Saptharishi, Additional Secretary in the Commerce Ministry, had said the tripartite meeting would evolve various innovative strategies on non-traditional lines.

However, the Government is firm that mere cutting of production or holding back of stocks will not help in improving the current situation. This stand is in variance with Indonesia's proposal to curb production and exports.

The tripartite meeting proposal has been in the pipeline since December, when AEKI (Indonesia Coffee Exporters' Association) mooted it. But no date has been fixed for it. In fact, the domestic coffee sector wonders if the meeting would come through in view of aggressive sales by Vietnam. The meeting was proposed in view of robusta prices nosediving to a 30-year low in July last year. The prices have improved since then, though they are still lower.

On Wednesday, Indian robusta cherry was quoted at $550 a tonne f.o.b. Indonesia's EK1 robusta ruled at $400 a tonne f.o.b and Vietnam 2 5 per cent black and broken robusta at $390-410 a tonne f.o.b.

The Asian coffee industry feels it can control the situation through a coordinated plan as it accounts for 45 per cent of the global robusta production and 22 per cent of total coffee output.

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