Govt to force consumers to buy lower quality, higher priced fruit

Govt to force consumers to buy lower quality, higher priced fruit

Adianto P. Simamora, The Jakarta Post, Jakarta

The government was considering a raise in import tariffs on
several types of fruit to curb imports and give local fruit
companies more opportunities to sell their produce at higher
prices to domestic consumers, a top official at the Ministry of
Agriculture said.

Iskandar Nuhung, director general for the processing and
marketing of agriculture products at the Ministry of Agriculture
said the ministry's tariff team was now discussing the plan with
a focus on Indonesia's major fruit producers.

Indonesia's major fruits are oranges, bananas, papayas,
mangoes, pineapples.

"We can't close our market to imported fruits as it is against
the World Trade Organization (WTO) agreement but we are allowed
to raise import tariffs up to 60 percent on the commodities,"
Iskandar, who is also the chairman of the team, told The Jakarta
Post.

He refused to unveil the likely tariff figures, but he said
the current tariff imports were too low.

Today, Indonesia imposes an import tariff of 5 percent on the
commodities while neighboring countries such as Thailand imposes
some 60 percent, the Philippines 15 percent and South Korea 30
percent.

Analysts have said the low import tariff was one of the
reasons behind the influx of fruit imported over the past several
years.

Thomas Darmawan, executive director of the Indonesian Food and
Beverages Association (Gapmi), said local fruits cost higher than
imported fruits because of the low import tariff and the high
costs payable by local producers or traders to bring their
products to customers. In addition, he alleged, a lot of fruit
was smuggled into the country.

Local fruit traders have to pay various taxes and fees to
different regional administrations, thugs and governmental
agencies to transport their products to markets, such as Jakarta,
while fruit importers have to pay only the five percent import
duty.

For instance, traders who want to transport oranges from
Medan, North Sumatra to Jakarta have to pass at least 14 weighing
stations, owned by the Ministry of Transportation, each of which
demands a fee of Rp 20,000 (US$2.2) per truck, and 28
subdistricts, each of which demands a fee of Rp 5,000 per truck.

In addition, truck drivers also are forced, sometimes at
gunpoint, to pay fees to various groups of "thugs" along the road
to Jakarta.

He did admit however, that another big factor was that
consumers overwhelmingly prefer the higher quality, better
tasting imported fruit to local fruit. Many local farmers have
not mastered the techniques of producing good fruit.

"The influx of fruit imports will continue unless the
government is serious in improving the situation," Thomas said.

The ministry's data shows that Indonesia imported 229,604 tons
of fresh and dried fruits worth US$134.4 million last year,
almost the same as the previous year's imports of 229,177 tons
worth $134.7 million in 2000. The imports reached 188,465 tons in
1997, when the economic crisis first hit the country, but dropped
to 70,030 tons a year thereafter.

Aside from the fresh and dried fruits, Indonesia also imports
processed fruits, such as orange juice, with the imports
amounting to 12,011 tons last year, down from 17,572 tons in
2000.

The ministry's data said the total output of Indonesia's main
fruits reached 5.6 million tons in 2000, which is 24 times higher
than fruit imports that year.

However retail analyst Kustarjono Prodjolalalito, the former
executive director of the Indonesian Retailers Association
(Aprindo) believed imported fruits had controlled 50 percent of
markets in towns.

"Buyers from all income levels can now easily get less
expensive, imported fruits with good quality, both in
supermarkets and the traditional markets," Kustarjono told The
Post.

"I estimate about 90 percent of oranges and apples sold in
Jakarta are imported ones," Kustarjono said.

Gapmi's data shows that Indonesia's five main fruit imports
are apples, tangerines, pears, grapes and oranges. Indonesia also
imports papayas, pineapples, durian and bananas.

"China has now become a major exporter of fresh fruits to
Indonesia with the market share of about 44 percent in 2000 up
from 13 percent in 1994," Gapmi said.

It said that China accounts for 86 percent of Indonesia's pear
imports, 57 percent of tangerine imports, 30 percent of apple
imports and 28 percent of orange imports.