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)