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.