Indonesia drafts new domestic coffee export rules

Indonesia drafts new domestic coffee export rules

JAKARTA - Indonesia is drafting new rules to force coffee exporters to register trades with a domestic exchange, a government official said, as the world's second-largest robusta producer bids to have a greater say in the prices of the commodities it produces.

The Southeast Asian nation introduced a similar rule for tin in August, which has cut exports and supported global prices, but it is no longer a global price setter for coffee and any fall in exports would likely be filled by ample supplies from top robusta producer Vietnam. "The trade ministry will require all coffee exporters to report or register their coffee exports in volumes to a local commodity exchange," Bachrul Chairi, director general of foreign trade at the trade ministry told Reuters. "This rule will be an initial step for rules which will then require exporters to trade physical and futures coffee contracts at the exchange before exporting," he added, without giving a timescale for the new trading rules.

Indonesia has launched several commodity contracts in recent years, but has had only limited success due to a failure to attract liquidity. The Jakarta Futures Exchange won government backing to launch coffee and rubber futures contracts in December.

Coffee exports from Indonesia, the world's third-biggest producer behind Brazil and Vietnam, are expected to rise to about 575,000 tonnes in 2014, the Indonesia Coffee Exporters Association (GAEKI) said last week.

GAEKI welcomed the planned changes to trading rules, saying they would provide greater transparency and help prevent speculation.

Indonesia's coffee production has been hampered in recent years by wet weather, while exports have fallen due to rising domestic consumption.

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