AIPE says govt plan peppered with problems

Adianto P. Simamora, The Jakarta Post, Jakarta

The Association of Indonesian Pepper exporters (AIPE) called on the government on Wednesday to abort its plan to set up a joint marketing body on white pepper, saying the move would hurt rather than improve the country's exports.

Speaking at a press conference, association chairman Sumadhi said the establishment of the body would allow other countries to grab a greater share in international markets, diminishing Indonesia's portion.

"It (the establishment of the body) will hurt our exports and our competitors will use the moment to take over our market share," Sumadhi said.

Indonesia is the world's largest white pepper producer, accounting for between 70 percent and 80 percent of the world's supply. However, the most popular type of pepper in the world is black pepper, which accounts for 80 percent of the world's total market. White pepper controls only 20 percent of the market.

The country's white pepper, labeled on the international market as "Muntok White Pepper", is mostly produced in the islands of Bangka and Belitung in the Riau archipelago. Muntok is the seaport of Bangka.

Indonesia also produces black pepper, but its amount is not significant.

Sumadhi said the plan to establish the body was recently unveiled by a senior official at the Ministry of Industry and Trade with the purpose of boosting the price of the commodity and as such raise farmers' welfare.

The prices of white and black pepper have been decreasing over the past several years, slumping to about Rp 22,000 (US$2.40) and Rp 14,000 per kilogram respectively, from Rp 80,000 and Rp 75,000 in 1998.

Sumadhi noted that Indonesia should learn from its past mistakes.

"Indonesia made similar agencies in the past, but they failed to prop up pepper prices in international markets," he said.

He said the government once formed the Indonesian Pepper Marketing Body, which functioned for 20 years from 1969. It also formed sole agents in several countries, including B.V. Unipro in Amsterdam for European markets and CITC in New York for the United States' market.

Rather than raising farmers' welfare, such agencies led to monopoly practices, limiting the number of exporters.

Aside from Indonesia, the world's major pepper producers are Brazil, India, Malaysia, Vietnam and China.

Indonesia is especially worried about Vietnam, which has become a major producer in just ten years.

Vietnam, which started exporting pepper 10 years ago, exported about 90,000 tons of black pepper last year, larger than Indonesia's black and white pepper exports of 50,000 tons that year. The exports from Vietnam have significantly increased world pepper supplies, contributing to the price drop.

"Vietnam has proven its productivity. We are afraid that someday it will take over our market share in white pepper," he said.

Sumadhi predicted Indonesia's pepper exports would also decline to about 40,000 tons this year from last's year's target of about 45,000 tons as output was projected to fall due to draught.

Indonesia exports white pepper to European countries and black pepper to the United States.