Farmers, coops told to coordinate clove trading

JAKARTA (JP): Farmers and cooperatives are expected to coordinate clove trading after the Clove Marketing and Buffer Stock Agency (BPPC) pulls out from the commodity's trading in July this year, a senior official says.

Minister of Cooperatives and Small Enterprises Subiakto Tjakrawerdaya said yesterday by cooperating with the Confederation of Primary Cooperative Associations, farmers could strengthen their bargaining position with cigarettemakers, the major buyer of the spice.

"We are thinking of steps to form partnerships between the farmers and cooperatives now," he said.

He said the cooperatives would assist in deals made between cigarettemakers and farmers. It would help determine prices so neither party would benefit more than the other, he said.

"We will help them determine a standard price, but the government will not set the price," he said.

Subiakto said the cooperatives would negotiate with cigarettemakers so prices would not be too low.

He denied that the practice would be similar to the current monopoly of BPPC.

In efforts supported by the International Monetary Fund to liberalize domestic trade, the government scrapped the monopoly privilege given to BPPC in domestic clove trading.

The reform measure also ordered the dismantling of the agency, which is headed by President Soeharto's youngest son Hutomo Mandala Putra, by July.

BPPC was granted the clove-trading monopoly in early 1991. Since then, farmers have had 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 (66 U.S. cents) per kilogram.

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

BPPC sells the cloves to cigarettemakers at a far higher price, ranging from Rp 10,000 per kilogram for small producers and Rp 12,000 for large producers.

Farmers also complain they cannot sell cloves to cooperatives because their produce is of low quality or cooperatives have no cash on hand.

This has forced some farmers to sell their product to brokers at much lower prices, mostly below Rp 3,000 a kilogram.

Subiakto said the price of cloves might drop temporarily because of an abundant supply of the commodity at cigarette factories.

He said the funds collected from farmers for equity participation in their cooperatives, amounting to about Rp 1.1 trillion as of last November, would be distributed within a week. (das)