Farmers, coops told to coordinate clove trading

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)