Oyos Saroso H.N., Bandarlampung – A number of coffee farmers in Lampung province have cut down their coffee plants in frustration, saying they would not be able to sell their harvests.
Indonesian coffee farmers also cut down their plants in 2001 when the price of the commodity on the local market plummeted to Rp 3,000 (US$1.10) per kilogram.
Although the current price has not dropped so low, traders are unwilling to buy the beans from farmers in North and West Lampung regencies because of low international demand due to the global financial crisis.
"I have chopped down several trees. I would lose more if I sold (the beans on the trees) as I would have to spend more on plucking and transportation. As of today, none of the traders want to buy coffee," said Suparmo, 45, a farmer in Sumberjaya, West Lampung, on Wednesday.
Suparmo said a number of other coffee farmers in West Lampung had also cut down their trees out of frustration. Traders have stopped placing orders with the farmers because of the impacts of the global financial crisis.
Data at the Lampung chapter of the Indonesian Coffee Exporters Association (AEKI) shows the price of the commodity on the global market has dropped to $1,670 per ton from $2,200 two months ago.
During the Asian financial crisis in 1998, Indonesia's coffee farmers reaped windfall profits from exports as the price of the commodity rocketed on the international market.
AEKI chairman Suherman Harsono said the losses suffered by exporters due to the financial crisis could not be recovered in the short term.
"Coffee exports are no longer determined by supply and demand, but more by market sentiment. Coffee exporters who have not yet reached price agreements are at a loss to do anything. That's why they postpone their consignments," Suherman said.
Head of the Lampung office of the Development Planning Agency, Suryono S.W., said he regretted the farmers' action of cutting down their trees.
He said the AEKI and the Lampung Plantation Office should act immediately to prevent further plantations from suffering the same fate.
"The move has instead worsened the condition. Coffee farmers should have continued to harvest their coffee so they could sell it once the condition improves. Coffee farms are long-term assets, so they shouldn't have damaged them," Suryono said.
Based on data at the Lampung AEKI, the volume of coffee exports to various countries as of August this year amounted to 34,016 tons – a value of $69.764 million.
Germany is the biggest buyer of exported Lampung coffee, grabbing 24.29 percent of the total export, followed by Japan at 9.5 percent, Belgium at 9.2 percent and the United States at 9.05 percent.
Trade Ministry data shows the volume of coffee exports in 2007 totaled 312,086 tons, 135,373 tons of which was arabica coffee.
The average export price of coffee in 2007 was set at between $3.20 and $3.50 per kilogram, compared to $2.80 per kilogram in 2006.
The arabica variety of coffee makes up 70 percent of global coffee trade, while the robusta variety makes up the rest. Ten percent of Indonesia's plantations are arabica and 90 percent robusta.