Farmers' savings uncertain

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.