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Coffee producers confident of plan to withhold beans to prop up prices

LONDON, England (Reuters) -- The leading world coffee producers group said on Friday that it was confident of unanimous support from producers at talks in London to withhold beans from the market and boost depressed global prices.

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Leaders of the 14-member Association of Coffee Producing Countries (ACPC) said the scheme, set for launch on Sunday, had drawn the full support of its members and five other producers even though earlier in the day Indonesia had announced it was pulling out and Vietnam said it hadn't made up its mind.

"It's going on in a quite positive way and I'm confident that we will have good results to announce," Sergio Amaral, the head of the ACPC, said during a break in the negotiations.

"There are no question marks at all," said Secretary-General Roberio Silva.

Earlier on Friday Vietnam, the biggest producer of robusta beans used in instant coffees and blends, said it was undecided on the plan and the agriculture ministry was too busy to attend the London meeting. It did send its ambassador.

And Indonesia said it would not join the scheme because Vietnam was not taking part, but added that it would reconsider if Vietnam and India joined in.

The ACPC agreed in May to hold back 20 percent of exportable coffee from world markets until an indicator price reached 95 cents.

The official start date was set for October 1 but it was not clear who would participate.

London-traded robusta coffee prices are trading near eight-year lows and New York arabicas near six-year lows due to ever increasing stocks in consumer countries and oversupply.

The market takes a dim view of the retention plan's likely success.

Coffee prices have fallen since the deal was struck, with the International Coffee Organisation 15-day average falling to 57.5 cents a pound as of Thursday from 69 cents in May.

"It's very important to start now and show the market it is working," said Jorge Cardenas, head of Colombia's National Coffee Growers' Federation.

"Indonesia, India and Vietnam are working together and making all efforts to participate in the programme," he added.

Asia a stumbling block

Asia has been a stumbling block as major producers there search for funding, but ACPC chairman Sergio Amaral headed a recent delegation to Asia and said he was confident they would comply, although not necessarily by October 1.

Vietnam said it was still discussing a proposal by its coffee and cocoa association to retain 35,000 tons of beans.

"Until now, as far as I know, there is nothing concrete on that plan," a government official in Hanoi said on Friday. "Everything is still being discussed at the experts' level.

"Given the complicated situation with floods in Vietnam, all senior officials have been very busy and we will not be able to join the meeting," he said.

Also on Friday, the Vietnamese Agriculture Ministry proposed stockpiling 140,000 tons of coffee from October 1 and joining the ACPC but said the stockpile plan needs government approval.

Indonesia on Friday withdrew from the scheme, saying Vietnam's output was twice Indonesia's, making Hanoi's participation essential for the plan's success.

Indonesia had earlier committed itself to the scheme but said it lacked funds to implement the plan.

Up until now, only the two top producers, Brazil and Colombia, have been holding back coffee.

Brazil, the driver behind the plan and the world's top coffee producer, has been holding back coffee since June and is reported to have retained around 750,000 60-kg bags to date.

Number two producer Colombia had retained 350,000 bags by end-August and will store an extra 1.0 million by December 31. Central and Latin American countries such as Mexico, Guatemala and Costa Rica will be next to come on board as their new crop seasons start.

Copyright 2000 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



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