Govt to maintain clove agency, foreshadows 'improvements'

Govt to maintain clove agency, foreshadows 'improvements'

JAKARTA (JP): The government will maintain its policy of
assigning the Clove Stock Management and Marketing Agency (BPPC)
as the agency with a monopoly over clove trading in Indonesia,
Trade Minister Satrio B. Joedono said yesterday.

"We still need the clove buffer stock agency, but its trading
mechanism has to be improved," Joedono told the press after
opening a workshop being held by his ministry.

He said that the government had recommended to farmers that
they grow cloves some 20 years ago in view of shortages of the
commodity. However, increased supply of cloves in the past few
years had caused its price to fall, he said.

He said that, consequently, the government was now advising
farmers to gradually stop growing clove trees in order to reduce
supply.

The BPPC, chaired by businessman Hutomo Mandala Putra, was
granted the clove-trading monopoly in early 1991. Since then
farmers have been required to sell their cloves only to the
agency through village cooperatives, while producers of clove-
blended cigarettes are obliged to procure cloves only from the
monopoly.

A panelist told a seminar on the clove trading monopoly, held
by the Saraswati Foundation and the University of Indonesia here
last week, that the clove-trading monopoly should be dissolved
because it had not served its economic objective of ensuring
stable prices.

Farmers' revenues from the sale of cloves has fallen steadily
from Rp 4,392 per kg in 1991 to Rp 2,825 last year. Furthermore,
farmers have been required to provide compulsory savings of Rp
1,900 for every kilogram of cloves sold to the monopoly.

At present the BPPC sells cloves to cigarette companies at
more than Rp 10,000 per kilogram.

Many clove growers have recently been declared
administratively unqualified to withdraw their own compulsory
savings, with Minister of Cooperatives and Small Enterprises
Subiakto Tjakrawerdaya saying that only 24 percent of the
compulsory savings of Rp 157.7 billion collected in 1992 could be
returned to the farmers who paid them in because, he said, many
of them could not meet the administrative requirements for
reimbursement.

Joedono said yesterday that to balance clove supply and
demand, the trade ministry would cooperate with the Ministry of
Agriculture and the Ministry of Cooperatives and Small
Enterprises.

In a related development, Jeff Mustopha Atmaja, the president
of the Federation of Indonesian Cooperatives (Inkud), said
yesterday that his organization required additional capital of Rp
750 billion (US$337 million) in order to take over clove stock
management from the BPPC.

"We will be able to collect such an amount of funds within
three years, so we expect to take over the functions of the BPPC
by 1998," Atmaja said.

He added that Inkud now has Rp 748 billion in compulsory
equity funds, collected from the clove farmers over the past five
years.

According to a government ruling, only Rp 4,000 of the
government-mandated floor price of Rp 7,900 per kilogram is paid
directly to the farmers, while Rp 2,000 is withheld as the
farmers' equity shares in cooperatives and Rp 1,900 as compulsory
savings.

However, Atmaja did not refer to the hundreds of billions of
rupiah in compulsory savings which, while apparently the property
of the clove farmers, is now accounted for as being among the
assets of cooperatives.

Inkud, a shareholder of the BPPC, has been involved in clove
stock management since 1992. It is mainly responsible for
managing new stock procured from the farmers, while the BPPC is
primarily responsible for selling its old stock.

Besides Joedono, the workshop also featured yesterday
Coordinating Minister of Industry and Trade Hartarto and Governor
of Bank Indonesia J. Soedradjad Djiwandono as speakers. State
Minister for Research and Technology B.J. Habibie and Minister of
Manpower Abdul Latief are scheduled to address the meeting today.
(kod/vin)