How Many Pounds of Coffee Do You Need to Trade for a Russian Fighter Jet?

Indonesia is the fourth largest coffee producer in the world at more than 800,000 tons a year. A fourth of their exports are high quality Arabica coffee beans and three fourths are lower quality but higher in caffeine content Robusta. As you enjoy your cup of Java remember that Java is an island in the Indonesian archipelago and was such a dominant producer in the early days that the island’s name came to mean coffee to many people. Indonesia is also a country with an army, navy and air force and recently they wanted to buy fighter jets from Russia. However, the EU and USA imposed banking sanctions on Russia because of its annexation of Crimea and meddling in Eastern Ukraine. So, how could Indonesia get the fighter jets it wanted? They resorted to barter and thereby bypassed the international banking system. Now the only question is how many pounds of coffee do you need to trade for a Russian fighter jet?

Russian Fighter Jet

Russian Fighter Jet

Green Coffee Beans

The business site Bloomberg reports that Indonesia barters coffee and palm oil for Russian fighter jets.

Indonesia said Monday that it will barter coffee, palm oil and other commodities for 11 Russian-made Sukhoi fighter jets, calling U.S. and European sanctions against Russia an opportunity to boost the Southeast Asian nation’s trade.

Indonesian Ministry of Trade spokesman Marolop Nainggolan said that a memorandum of understanding for the barter was signed Aug. 4 in Moscow between Russia’s Rostec and PT. Perusahaan Perdagangan Indonesia, both state-owned companies.

Both sides are staying quiet about the exact details but a Russian Sukhoi Su-35 jet sells for $40 million to $65 million depending on the number of options included. Assuming that Indonesia goes with the low cost $40 million option how many pounds of coffee do you need to trade for this Russian fighter jet?

The Price of Coffee

As of this writing, Arabica coffee trades at about $3.30 a pound. Robusta trades at about $2.31 a pound.  How does that translate into Russian fighter jets? If the Russians only want lots of caffeine and less flavor they will barter for Robusta. $40 million divided by $2.31 a pound for Robusta comes to 17.3 million pounds of Robusta coffee which is almost 9,000 tons. If the Russians go for the better tasting Arabica, this comes to $40 million divided by $3.30 or 12.1 million pounds of Arabica which is 6,000 tons. Indonesia produces 200,000 tons of Arabica a year and 600,000 tons of Robusta. If the country decided to trade all of its Robusta coffee for fighter jets they could trade for 600,000 tons/9,000 tons = 66 Russian fighter jets. If they traded all of their Arabica coffee for jets that would work out to 200,000 tons/6,000 tons = 33 Russian fighter jets. Of course there is palm oil in the bargain but our calculations only concern themselves with how many pounds of coffee they need to trade for Russian fighter jets of which they are buying 11.




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