International Herald Tribune Friday, August 27, 1999

Coffee Industry Embroiled in a Tug of War

East Timorese Vote /Militias Interfere With a Cash Crop

By Michael Richardson International Herald Tribune

ESTADO, East Timor - Beneath the shade of the forest, the steep hillsides are quilted with the dark green leaves of the coffee trees. Mist curls through the canopies, and a fine rain soaks the undergrowth.

Despite the cold, damp weather, Eusebio Diaz Quintas is happy to show a reporter part of a flourishing industry that has helped raise living standards in one of the poorest places in the world.

The industry could continue to flourish, no matter which way the East Timorese vote Monday to determine whether their disputed territory should remain part of Indonesia with wide-ranging autonomy or should secede and become independent.

But parts of the highlands are strongholds of militias, many formed with the encouragement of the military, that have mounted a campaign of murder and intimidation against suspected supporters of independence to try to ensure that the province does not secede.

The coffee industry is caught in this tug of war. Some members and employees of the local cooperative have been killed. A number of its trucks have been robbed and their drivers beaten.

''We've gone to great pains to remain politically neutral,'' said Sam Filiaci, president of Cooperative Business International Indonesia. ''Even so, it's been a very risky business for us. We are the main ones buying coffee.''

CBI Indonesia, a unit of the National Cooperative Business Association of the United States, started its operations in East Timor in 1995, using seed capital from a U.S. aid agency. The company buys and processes about 25 percent of East Timor's coffee and works closely with the local cooperative.

In 1995, the coffee cooperative had just 700 farmers as members. Today, group officials say there are 17,000.

''Farmers have flocked to us because we have shown we are honest,'' said Anthony Marsh, CBI Indonesia's agribusiness adviser. ''We are paying them about 40 percent more than other buyers. Our average farmer earns a couple of hundred U.S. dollars a year. That's not much, but it's the basis of a decent sustainable income in a place where there are not a lot of other options.''

East Timor's per capita gross domestic product is about $100.

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IRONICALLY, the chronic violence present since Indonesia invaded and annexed the former Portuguese colony in 1975-76 has helped East Timor become the largest producer of organic coffee in the world - by making it impossible for farmers to use more modern and invasive production techniques. A bumper crop from the 1999 harvest that ends this month is expected to yield about 8,000 tons, with a value of about $20 million. In 1995, the harvest produced no more than 5,000 tons.

''This is all organic coffee,'' said Mr. Quintas, a field manager for CBI Indonesia. ''There are no pesticides, insecticides or other chemicals used here. The farmers just can't afford it.

''We teach the farmers to grow and clean their coffee better,'' Mr. Quintas said.

Much of the coffee is exported to the United States, Europe, Japan and Australia. About 90 percent is the high quality arabica bean. The smooth flavor and low acidity make it ideal for premium specialty coffee and for use by roasting companies to soften their commercial coffee blends.

The Portuguese established coffee plantations in the highlands around Estado and the nearby town of Ermera, about 50 kilometers (30 miles) southwest of Dili, the capital of East Timor. When Indonesia took over, the Portuguese were evicted and companies associated with the Indonesian military took control of the coffee trade. Prices, processing standards and exports slumped.

''When we started, the coffee had a lot of bad flavors because it was handled and processed poorly,'' Mr. Marsh said. ''We've upgraded standards so that buyers are now assured of a unique coffee with a clean, fresh and consistent flavor.''

At the Estado coffee processing factory, one of four owned by CBI Indonesia in East Timor, farmers and small traders line up near the entrance to weigh and sell their beans.

They talk in hushed tones, not just about prices but about the dangers of coffee farming.

''Coffee is the main way to get money up here,'' Elias Metaxa said. ''If you are not very careful, your crop will be snatched by the militias or the military.''

Regardless of the outcome of the vote Monday, Mr. Filiaci says he is guardedly optimistic over the future of the territory's coffee industry.

''We have built a quality brand name for East Timor,'' he said. ''The Timorese now say this is their product, and it's making them proud. Hopefully, that is something they can expand and build on, whether they vote for autonomy or independence.''

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