Sydney Morning Herald Tuesday, December 19, 2000

Hard grind: weak coffee prices add to fledgling nation's woes By Mark Dodd, Herald Correspondent in Dili

Income from East Timor's coffee harvest - on which a quarter of the population depends for its basic income - has fallen by up to 35 per cent because of glut on the world market, placing further pressure on the country's devastated economy.

Until cash starts to flow from Timor Gap gas production, coffee is East Timor's biggest export earner. As many as 40,000 families depend on it as their main source of income.

Last year's political violence destroyed about 80 per cent of East Timor's infrastructure, with the bulk of the damage inflicted on major towns and district centres.

East Timor is a tiny player on the world market but the half-island territory does occupy a niche market for quality gourmet coffee, especially its high-value, mild-washed arabica.

"There is simply too much coffee on the world market right now," said Sam Filiaci, director of the Dili-based National Co-operative Business Association.

"Right now, prices for arabica and robusta are low - extremely low - and down about 35 per cent compared to average prices over the past several years."

Mr Filiaci said he was confident of a bumper crop for 2001 and forecast a 10,000 tonne crop of green beans worth about $US13 million ($23.86 million). This compares with 8,000 tonnes for the current calendar year.

During most of Indonesia's 24-year occupation of East Timor that ended last year, the Army controlled the coffee exports through a single company, PT Denok, whose owners were officers.

The industry is now liberalised, although the UN transitional administration is known to be keen to establish a coffee board or association to manage and advise on policy.

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