Farmers' savings uncertain

Clove farmers rejoiced over the announcement last July that their compulsory savings would be reimbursed by the privately- controlled Clove Monopoly Board before the end of this year. After all, they have waited for almost three years for the repayment of the savings.

The farmers became more excited after Hutomo Mandala Putra, the board's chairman, made a series of visits to the major clove producing provinces over the last few weeks aboard a private jet in the company of the cooperatives minister, House members and a troupe of journalists to initiate the handing over of the farmers' savings deposits through village cooperatives.

However, the great fanfare with which the transfer ceremonies were held in the provinces gave way to shocking news after the Savings Control Board, set up to supervise and manage the reimbursement of the savings, announced the administrative requirements for the reimbursement.

The preliminary screening concluded that farmers would be entitled to only about 40 percent of the Rp 251.1 billion (US$115.2 million) in compulsory savings collected from clove sales over the last three years. The Minister of Cooperatives and Small Enterprises, Subiakto Tjakrawardana, himself confirmed at a hearing with the House of Representatives last month that the clove farmers would get little more than 30 percent of the accumulated savings. The remainder would become the assets of village cooperatives and the Federation of Village Cooperatives.

The problem, according to the board, was that a large number of farmers simply could not meet the administrative requirements. The farmers are required to produce documents certifying the size of their clove plantations, the number of their clove trees and the volume of their harvests, cooperative membership cards, clove sales invoices from cooperatives, and property tax receipts.

Although the administrative procedures are meant to ensure that those savings will be returned to the right farmers, those requirements are understandably seen by many farmers as an excuse to cheat them out of their hard-earned savings. The first puzzling question is why the requirements had not been set out and publicly announced at the outset of the monopoly board's operations in early 1991.

When the monopoly board was set up and the government fixed the floor producer price of cloves at Rp 7,900 per kilogram, it was the government that forced the farmers to put the savings into the account of the board. For each kilogram the farmers sold to the board through their village cooperatives, they received only Rp 4,000 because Rp 1,900 in compulsory savings and another Rp 2,000 in compulsory equity shares in their village cooperatives were held back by the monopoly board. The compulsory deductions were not made within a well-organized savings campaign among the farmers, but were prompted simply by the inability of the board to pay the farmers the full floor price.

The elaborate procedures imposed by the Savings Control Board imply an extreme lack of trust in the village cooperatives, which are supposed to be the most knowledgeable with regards to their farmer members. The requirements regarding documents on clove plantations and their produce seem to ignore the problems usually encountered by the farmers in coping with formal procedures. They also show that the government believes more in formal than in material truth. We would not be surprised if the village administration offices were soon inundated by farmers applying for the necessary documents. In such a process, it is the farmers who usually get squeezed by the bureaucrats.

The government also seemed to be oblivious to the fact that the farmers' inability to fulfill the procedures was caused in part by the poor management of the monopoly board. The farmers had often been forced to sell their cloves to middlemen because their cooperatives did not get enough procurement funds from the monopoly board. We also wonder why the government seems to be so blind to the normal practice in the rural areas whereby farm laborers often get their wages in the form of cloves. Obviously, these farm laborers cannot produce documents certifying their clove plantations.

We are afraid that if the government does not properly handle the reimbursement of the farmers' savings, their trust in government policy and even in their own village cooperatives will be adversely affected. The more damaging would be the impact if the Rp 484 billion in equity funds already collected from the clove farmers over the last three years were not well managed and properly accounted for by the village cooperatives.

Such apprehension is not groundless. Sugar cane farmers also have been forced over the last few years to contribute Rp 1,000 from the price of every kilogram of the sugar they sell to the National Logistics Agency for equity shares in new sugar mills. The fate of those equity funds is not clear up to now.