Clove trade's monopoly still needed: Minister

JAKARTA (JP): Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya reaffirmed his support for the private sector monopoly in clove trade yesterday, saying it was still needed to accommodate clove supplies from farmers.

Subiakto said it was "wrong" to think the monopoly -- held by the Clove Stock Management Agency (BPPC) -- had aggrieved the people.

He said if the private monopoly was disbanded, farmers' clove production would be priceless and no one would want to buy it.

"Consumers would opt for imports which are higher quality and cheaper," Antara reported Subiakto as saying in Kendal, Central Java.

Subiakto said import prices were now about Rp 3,000 (US$1.3) per kilogram, while local prices were Rp 5,000 per kg.

He said the present trade system would be maintained because it helped farmers.

BPPC, chaired by President Soeharto's youngest son, Hutomo Mandala Putra, was granted the clove-trading monopoly in early 1991.

Since then, farmers have been obliged to sell their cloves to the agency, through village cooperatives, and producers of clove- blended cigarettes have had to buy their cloves from the agency.

The government set the floor price for standard-quality cloves at Rp 8,000 per kilogram.

However, farmers only receive Rp 5,000 per kilogram for the cloves they sell to BPPC. The agency stores up the remaining Rp 2,000 as equity shares in cooperatives and transfers Rp 1,000 to a special account for crop diversification funds.

Money from the diversification fund, introduced by the government last year, is used to convert clove plantations into other types of crop. The conversions are expected to help raise falling clove prices.

Last month the government started the clove conversion program, estimated to cost Rp 400 billion.

A total of 212,500 hectares of clove plantations in 10 provinces were to be converted this way, slashing the area of Indonesia's clove plantations to almost half of its current size of 515,500 hectares.

Subiakto said yesterday BPPC and the Federation of Village Cooperatives (Inkud) currently held 250,000 tons of cloves in their warehouses worth Rp 1.2 trillion.

He said there was three years' supply for use by cigarette companies.

Subiakto said it was difficult for BPPC to repay farmers' compulsory savings -- collected through village cooperatives during the 1992-1996 period -- because the clove stocks were still unsold.

During 1992-1996, the government stipulated the floor price of cloves at Rp 7,900 per kg. From this total, 4,000 was paid to farmers immediately, while Rp 2,000 was held as equity shares in village cooperatives and the other Rp 1,900 as compulsory savings in cooperatives.

The compulsory savings, which must be repaid to farmers, was eliminated from the new price scheme introduced last year.

Until last April, BPPC had repaid only Rp 251 billion of the Rp 430 billion it owed to the farmers from three years of collecting compulsory savings.

"How can (BPPC) pay farmers their (compulsory savings) if the funds are still in the form of unsold clove supplies?" Subiakto said.

The government's crop diversification program, he said, was seen as a way to balance the current clove supply and demand. (pwn)