Govt to maintain clove monopoly amid protests

Govt to maintain clove monopoly amid protests

JAKARTA (JP): President Soeharto, in response to recent
protests, said yesterday that the government will maintain the
private monopoly on clove trading for the immediate future in
order to protect clove prices.

Soeharto said that if the Clove Marketing and Buffer Stock
Agency (BPPC) is disbanded under present conditions, clove prices
at the farm level will fall drastically.

"If it is disbanded now ... nobody will purchase the farmers'
cloves," Soeharto was quoted by Minister of Cooperatives and
Small Enterprises Subiakto Tjakrawerdaya as saying.

Subiakto yesterday met with Soeharto to report on the
development of cooperatives, which includes their involvement in
fertilizer distribution and clove trading, as well as on a recent
demonstration against the clove monopoly.

Some 20 youths from the Savior Front of Clove Growers held a
demonstration here on Tuesday, calling on the government to
disband BPPC because, they said, it had failed to help clove
farmers.

BPPC, set up in 1990 by Soeharto's youngest son, Hutomo
Mandala Putra, holds the sole right to buy and sell the commodity
in the country.

"What do they (demonstrators) know about clove problems?,"
Soeharto said, arguing that the maintenance of the agency is to
help salvage sagging clove prices.

"Someday, BPPC will be disbanded, but not for the time being
because currently, an oversupply of cloves still exists,"
Soeharto continued.

The government earlier this month raised the price of cloves
-- with a water content of 10 percent and a dirt content of 3
percent -- from Rp 7,900 to Rp 8,000 (US$3.4) a kilo.

Subiakto said the government-set clove price is quite high by
international standards. In Zanzibar, one of the world's main
producers of cloves, prices are equivalent to Rp 2,500.

Under the new clove price arrangement, however, farmers will
only receive Rp 5,000 a kilo. The other Rp 3,000 will go to
village cooperatives purchasing cloves as a bumper fund and to
the BPPC as a conversion fund.

Conversion

"President Soeharto has called for the diversification or
conversion of the clove plantations with other crops, especially
in areas which are not suitable for clove growing, in order to
balance the supply and demand," Subiakto said.

Subiakto noted that the current situation is still not
favorable on account of the clove oversupply. BPPC's current
stock stands at 280,000 tons, which are enough to cover the
country's needs for the next three years.

He said that 1995 clove production exceeded 100,000 tons, all
of which were absorbed by BPPC, while this year's output is
estimated at 80,000 tons as a result of periods of heavy rain.

The country's production level of cloves should ideally reach
60,000 tons a year, he said, adding that Indonesia's largest
clove consumer, the cigarette industry, could absorb only about
80,000 tons a year.

"When production reaches that level, BPPC will not be needed,"
Subiakto quoted Soeharto as saying.

In 1992, Hutomo provoked farmers' anger when he called on them
to burn half of that year's harvests in an effort to reduce the
oversupply in the market, which was straining BPPC's financial
resources.

In 1991, BPPC was given a total Rp 700 billion (US$300 million
at current rate) in low-interest loans by the central bank, Bank
Indonesia, to help in its purchases of cloves and to cover stock
costs.

BPPC has just repaid Rp 251 billion of the Rp 430 billion it
owes to clove farmers from compulsory savings collected from
sales in the last three years, Subiakto said.

The government earlier this month abolished the compulsory
savings scheme, as it had created many problems regarding
repayments to the farmers. (rid)