Clove farmers lose Rp 2.3t in sales revenue

JAKARTA (JP): Clove farmers have lost Rp 2.36 trillion (US$761 million) in sales revenue over the past five years due to the monopoly in the clove trade, an Institute for Development of Economics and Finance (Indef) study says.

Indef's chairman, Faisal Basri, said here yesterday that the losses occurred because farmers had to set aside a large amount of funds to cooperatives either as savings or equity.

They had to pay Rp 2,000 for each kilogram of cloves they sold as equity in cooperatives and another Rp 1,900 for each kilogram of cloves they sold as compulsory savings in the cooperatives, he said.

He said the Clove Stock Management Agency (BPPC), which has a monopoly in the clove trade, always bought cloves from farmers at prices lower than those set by the government.

He said farmers had sold 483,497 tons of cloves worth Rp 4.42 trillion to BPPC from 1992 to 1996 but only Rp 2.06 trillion were received by farmers from the agency throughout the period.

The remaining Rp 2.36 trillion went to cooperatives as their equity or compulsory savings.

The government granted BPPC the clove trading monopoly in 1991 in an effort to increase farmers' welfare, but the agency failed to carry out its task, he said.

"Farmers have become poorer because of BPPC as they lost most of their revenue," said Faisal during a one-day workshop on the clove trading monopoly.

BPPC is controlled by President Soeharto's son Hutomo Mandala Putra, also known as Tommy.

Farmers must sell cloves to BPPC through village cooperatives at prices set by the government. The official price of high quality clove is currently about Rp 5,000 a kilogram.

Faisal called on the government to replace BPPC with a state- controlled agency to protect clove farmers.

He said the agency could control prices by buying cloves from farmers in case of an oversupply and selling them in case of a supply shortage.

Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya said earlier the government would maintain BPPC's monopoly because the agency had managed to protect farmers from price speculation by big traders. (jsk)