Association urges reforms in tea auctions

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)