Indonesia seeks to increase coffee output amid world glut

Jakarta

THE world has more than enough coffee, and Indonesia is looking to add to the glut.

The coffee industry in the No 3 producer of robusta is on a mission to boost output at a time when production is soaring and prices are tumbling. Farmers are expected to reap 50-60 per cent more beans within the next five years, said Pranoto Soenarto, deputy chairman of the Association of Indonesian Coffee Exporters and Industries.

"I'm calling all the stakeholders, especially roasters, to work together to help the farmers" with funding and increasing productivity, he said in an interview on the sidelines of an industry seminar in Bandung.

An increase in supply from the Southeast Asian nation may pressure robusta futures that have tumbled to the lowest since 2008, when trading began. Indonesia will also be vying with producers from Vietnam and Brazil, which is already the king of arabica coffee and may be poised to claim that title for robusta beans too.

The Indonesian group is preparing a road map for boosting yields with several other stakeholders including the Indonesian Coffee and Cocoa Research Institute and the agriculture ministry. The plan envisages helping farmers to properly use fertiliser and good-quality seeds, finding ways to protect crops from pests and diseases and providing financial assistance.

Although robusta coffee futures rose 2 per cent to close at US$1,251 per ton in London on Friday, they have plunged more than 27 per cent in the past year.

Peatland's coffee robusta accounts for about 72 per cent of the country's total output, while arabica makes up about 18 per cent and the rest comes from liberica and excelsa beans. About two million farmers are engaged in coffee cultivation in the country, where the plantation area is estimated at 1.2 million hectares. Total output this year is estimated at 700,000 tons.

The country's vast peatland areas in Sumatra and Borneo islands provide a good opportunity to increase liberica output, said Myrna Safitri, a deputy at the Peatland Restoration Agency. The nation has about 15 million hectares of tropical peatlands, she said.

The coffee association expects overseas demand to increase, especially in China where the western lifestyle of youngsters drove a "coffee culture" in the world's second-biggest economy, Mr Pranoto said. Farmers should not stop planting coffee as there's China's impending coffee boom, he said. When that happens, the world will be in deficit and Indonesia should have the scope to fill the gap, he said.

China's coffee consumption surged more than ninefold in the past decade to 189,300 tons in 2018-19, according to data from US Department of Agriculture. BLOOMBERG