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)