Region: Indonesia, Vietnam reeling from downturn

The global economic uncertainty is having a detrimental impact on the coffee industry in Southeast Asia - particularly in Indonesia and Vietnam.

The worst affected growers are those planting Robusta coffee, who tend to be the poorest of the region's farmers. According to reports, while prices have been slumped, stockpiles have been building up - meaning that even if there is a rise in demand, prices are likely to remain low. The director of the Central Queensland University's Centre for Plant and Water Science, David Midmore, told Radio Australia's Connect Asia program, that this could be an opportunity for farmers."The price of coffee's probably gone down about 20 per cent over the last six weeks," he said."But on the other hand, it may open up some opportunities because over the last year or so, the price of other agricultural commodities such as cereals has more than doubled."

Associate head of the Purdue University Agricultural Economics Department, Gerald Shively, has studied the impact of falling coffee prices on Vietnamese smallholders.He explains though, that it is not always easy for farmers to switch."One of the fundamental problems with perennial crops is that they often go through boom and bust cycles because farmers who are responding to higher prices plant the crops," he said."But in a case of coffee, it takes two to three years for the crop to begin producing and then when the coffee prices decline, farmers are somewhat locked in to the fact that they have coffee plants in production."

Professor Shively says these farmers had been attracted by high prices in the mid-90s, which transformed rural life in parts of Vietnam.However, because of seasonal differences, in Indonesia, the poorest farmers are being shielded from some of the impact. "In Indonesia, we have so far Arabica and Robusta and the harvest seasons are inverted, so fortunately the Robusta farmers, who are the ones producing the cheaper coffee, their main crop was when the price were at the highest," said coffee exporter Olivier Tichit from IndoCafe."Fortunately for them they could sell most of their products, maybe 85, 90 per cent of their coffee at very good prices."You can find the full story at the Connect Asia website: http://www.radioaustralia.net.au/connectasia