Clove farmers demand Rp 200b fund

M. Taufiqurrahman, The Jakarta Post, Jakarta

North Sulawesi clove growing representatives demanded on Monday that the government provide money to compensate for a potential loss from the plunge in the commodity price ahead of the harvest season.

North Sulawesi clove farmers solidarity forum vice chairman Ernest Weley said that Rp 200 billion (US$24 million) in interest-free loans would be adequate to cope with declining clove prices.

"Farmers in North Sulawesi are in dire need of funds to prepare themselves for the coming harvest period because they are already short of money," he told reporters after a hearing with the House of Representatives' Commission V for trade and industry.

He said the funds would be allocated to pay laborers, to buy new machines and to finance storage of the commodity.

Clove growers in North Sulawesi -- who account for 70 percent of the population in the province -- are facing a severe blow from the drop of the commodity price.

Currently the price stands at Rp 12,000 per kilogram and is still declining. In comparison, the price peaked at Rp 85,000 per kilogram in mid-2001.

North Sulawesi produces around 15,000 tons of cloves per annum, or 25 percent of the total national production of around 60,000 tons. Currently, the domestic demand for cloves -- mainly from cigarette manufacturers -- reaches 110,000 tons per year.

Ernest said that as the domestic market was still short of supply, it did not make any sense that the price had dropped to its current levels.

"We suspect that there are certain parties who have illegally imported cloves to close the gap between the demand and supply in the domestic market," he said, adding that imports of the commodity had been banned by a decree from the minister of trade and industry last year.

He also suspected that major cigarette manufacturers had used unfair practices by purchasing the cloves directly from farmers while the crops were still half-grown.

"To supply their own needs, cigarette manufacturers also grow the commodity on their own plantations. It has also contributed to the price decline," Ernest said.

He said farmers' welfare in Indonesia's northernmost province could further deteriorate in the wake of the harvest period, when there would be an abundant supply of cloves. He said the price could fall to Rp 10,000 per kilogram.