Govt decides to stop cutting clove trees

Govt decides to stop cutting clove trees

JAKARTA (JP): The government has decided to stop the
conversion of clove trees into other crops as cigarette makers'
demand for the spice is on the rise.

Minister of Cooperatives and Small Enterprises Subiakto
Tjakrawerdaya said here yesterday after meeting with President
Soeharto that the government would now pursue the clove
intensification program to boost production.

"The clove crop conversion program will be stopped and we'll
emphasize the intensification program instead," Subiakto told
journalists at Bina Graha presidential office.

At the meeting, Subiakto was accompanied by Minister of
Industry and Trade Tunky Ariwibowo and Minister of Agriculture
Sjariffudin Baharsyah.

Subiakto estimated clove production this year at 70,000 tons,
while consumption by cigarette producers would reach 115,000
tons.

"Demand for clove is projected to increase steadily in the
coming years. Therefore, we need a new policy to cope with the
new supply-demand equation," Subiakto said.

Last year, the government launched a massive clove conversion
program to reduce clove oversupply as annual clove production was
estimated at about 110,000 tons, while consumption was about
80,000 tons.

The controversial conversion program, proposed by the
privately run Clove Stock Management Agency (BPPC) which holds
the clove marketing monopoly, had met strong opposition from
farmers.

But the government went ahead with the program aimed at
halving clove plantation areas of 515,500 hectares at the time by
chopping down more than 50 million clove trees and replacing them
with other crops, including coffee, vanilla, cocoa and other cash
crops.

Through Presidential Instruction No. 4/1996, the government
stipulates that clove-cigarette producers must pay Rp 1,000 (38
U.S. cents) to the "conversion fund" for every kilogram of cloves
they buy from the agency.

Subiakto said the government would use the existing conversion
funds to finance the intensification program in 10 major clove
producing provinces.

The 10 provinces are Aceh, Lampung, West Java, Central Java,
East Java, Bali, Southeast Sulawesi, South Sulawesi, North
Sulawesi and Maluku.

If local clove production could not meet increasing clove
consumption by cigarette producers, Indonesia might import the
commodity from Zanzibar, Subiakto warned.

The minister also reaffirmed his support for BPPC's monopoly
in clove trade, saying it had benefited all parties involved,
especially 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 must buy their cloves from the agency.

In 1991, BPPC was given Rp 700 billion in low-interest loans
by the central bank, Bank Indonesia, to help it procure cloves
from farmers and cover stockpiling costs.

The government has set the floor price for standard quality
cloves at Rp 8,000 per kilogram.

But farmers only receive Rp 5,000 per kilogram for the cloves
they sell to BPPC. The agency keeps Rp 2,000 of the price in
compulsory farmer savings funds and Rp 1,000 in conversion fund
money.

Subiakto said the government would likely increase the clove
producer price to Rp 5,500 a kilo, starting next year.

"But that is for next year. For this year, farmers will still
get Rp 5,000 a kilo," the minister said. (rid)