Talk of defaults by Indonesian exporters resurfaced in Europe late last week, and some dealers said they had refrained from doing business with the world's second-largest robusta producer after Vietnam due to uncertainties in shipments.

   A lawyer representing PT Tripanca Group, a major exporter in Indonesia 's growing province of Lampung on the island of Sumatra , said two banks had seized beans kept in the company's warehouses due to a problem with loan repayment.

   "Some beans belong to suppliers but they have not been paid yet. Some suppliers have also kept their beans at Tripanca's warehouses, waiting for the price to recover," said Albert Tiensa.

   "Tripanca owes about 304 billion rupiah ($26 million) to suppliers. It used the beans as a collateral to pay for the loan," told Reuters by telephone.

   London coffee prices tumbled to a 17-month low of $1,581 a tonne in late October as fears of global recession spurred selling in soft commodities complex, including coffee, sugar and cocoa.

   "We can say there are about 70,000 tonnes of beans at Tripanca's warehouses, and at least 30,000 tonnes have been defaulted," said a senior industry official.

   In Indonesia , coffee exporters normally agree on export commitments but delay decisions on prices until after beans have been delivered. Sumatran bean prices track London robusta futures.

   Dealers in Lampung said the defaults only affected PT Tripanca and other exporters were struggling to fulfil their contracts despite a drop in coffee prices.

   "There's a real default of 30,000 tonnes of beans by Tripanca. The company is suffering from big losses because of sharp drop in coffee prices," said a regional dealer. "There are delays from other exporters but I think the amount is not that much," he said.

   Many exporters bought beans from farmers when local prices hovered around 18,000 rupiah a kg ($1.54) in August. The price has since dropped more than 20 percent to 14,000 rupiah, meaning exporters would suffer losses if they shipped out the beans now.

   The provinces of Lampung, South Sumatra and Bengkulu account for 75 percent of Indonesia 's coffee output.    

   Coffee bean exports from Sumatra nearly doubled in the first 10 months of 2008 supported by bumper harvests, but overseas sales are likely to slow until the end of the year as the main harvest has ended, data showed on Monday.

   The main robusta harvest in Sumatra normally starts from March and peaks in August. Robusta accounts for 85 percent of Indonesia 's coffee bean output, while aromatic, higher-value arabica makes up the rest.

 

 

 

 

 

 

 

By Lewa Pardomuan and Aloysius Bhui