Indonesian coffee exports seen up

Indonesian coffee exports may grow about 8 percent to 325,000 tonnes this year as rising prices push up output by encouraging farmers to take better care of their crop, a senior industry official said on Thursday.
Indonesia, the world's fourth largest coffee producer, exported an estimated 300,000 tonnes in 2007, Rachim Kartabrata, executive secretary of the Indonesia Coffee Exporters Association told Reuters in an interview. "We hope to see an improvement in production. We expect higher coffee prices would attract farmers to take care of their crop so that it can improve productivity and the quality," Kartabrata said.
Smallholdings account for about 95 percent of Indonesia's total coffee plantation area of 1.3 million hectares, making it difficult to increase overall production as farmers often abandon their crop when prices fall.
London robusta coffee futures have gained about 15 percent since early this year on rising consumption and growing demand from investment funds, after gaining 20 percent in 2007. July robusta contract settled down $36, or 1.6 percent, to $2,231 a tonne on Wednesday, retreating from a 12 1/2 year high of $2,815 a tonne hit on March 6.
But the price of robusta - used in instant coffee - has recovered from around 30-year lows of below $400 a tonne in late 2001 due to a coffee glut blamed on aggressive selling by Vietnam, the world's top robusta producer.
Sumatran coffee bean exports for the January-March period jumped to 53,321.03 tonnes from 17,729.32 in the same period in 2007 due to carry over stock, the data showed.
Robusta accounts for 85 percent of Indonesia's coffee beans output, while aromatic, higher value arabica makes up the rest. But Kartabrata said rising prices of other agriculture commodities from palm oil to corn may challenge efforts to boost production as farmers could switch to planting other crops that are easier to maintain but promise better returns.
"It's not just coffee prices that are rising but also corn, palm oil, rubber. Farmers have more choices now. They may switch to grow corn or cassava," Kartabrata said. Indonesia may produce about 450,000 tonnes of coffee this year, unchanged from last year, due to competition from other crops and erratic weather, he said.