Thu, 13 Jan 2000

Association urges reforms in tea auctions

JAKARTA (JP): The Indonesian Tea Association (ATI) has suggested that private brokers should take part in the tea auctions which are currently run by a joint marketing board as a measure to boost the price of Indonesian tea, an association executive said on Wednesday.

"We (ATI) have come to the conclusion that we need fundamental changes in marketing Indonesian tea," Insyaf Malik, ATI's treasurer, said at the opening of this year's tea auctioning season.

Insyaf, who is also director of state owned PT Perkebunan Nusantara VI (PTPN VI), a tea producing company, said that private brokers help to raise the price of Indonesian tea, which over the past 10 years has dropped in the international market.

At present, the state joint marketing board (KPB) acts as a single body to auction tea on behalf of state-owned tea plantations, through which, however, private plantations also must auction their tea.

KPB as a state body receives no commissions from the tea it sells, a condition that would have to change, Insyaf told reporters.

He said that by allowing private brokers to auction tea, KPB would be forced to set better prices for tea producers.

"To KPB, it makes no difference whether our tea is sold at US$1 or $2, their salary remains the same," he said.

Indonesian tea prices have dropped from an average of 150 U.S. cents per kilogram in 1998, to an average of 110 cents per kilogram during the first five months in 1999, according to data from ATI.

Insyaf said that before 1990, Indonesian tea prices had always been higher than those for Sri Lanka and Kenya, two of the world's largest tea producers.

He said that to investigate the reasons behind the drop in prices over the past 10 years, the association had established a team to make comparative studies on other countries' tea marketing systems.

"Indonesia is the only producing country not to have private tea brokers," Insyaf said, adding that KPB's monopoly would hinder the commitment that brokers could bring.

In India, the world's largest tea producer, nine to 10 brokers press India's tea producers for quality and quantity to meet market demands; thus ensuring higher commissions from better prices, he said.

He said the team was working on a concept for marketing tea that would be presented to the Indonesian tea industry and the State Minister of Investment and State Enterprises Development.

For this year's outlook, Insyaf predicted that Indonesia's tea production would not differ much from previous years.

During the last decade, Indonesian annual tea production hovered between 140,000 metric tons and 166,000 tons with yearly exports reaching about 80,000 tons to 120,000 tons.

Separately, marketing director of state owned PT Perkebunan Nusantara VIII (PTPN VIII), Suwadji Munawar, agreed that introducing private brokers would improve KPB's performance.

"It's possible," he said, but added that the government should regulate their presence.

PTPN VIII is Indonesia biggest tea producer, with plantations located in various parts of West Java.

Suwadji said he was optimistic that prices of Indonesian tea would rise slightly to about 130 cents per kilogram, which he attributed to higher awareness of tea producers and better tea quality.

He was also satisfied with the opening of this year's tea auction, saying that it had been a good start considering that the auction was held during the Islamic holiday season of Idul Fitri.

Yesterday's tea auction offered 1,000 tons of black and green tea, of which 62 percent was sold, according to KPB's sales head, Syarif Abdullah. (03)