Clove trade's monopoly still needed: Minister

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)