Govt to set reference price for white pepper

Adianto P. Simamora The Jakarta Post Jakarta

The Ministry of Industry and Trade will set a base price for white pepper in a bid to help stabilize the current dwindling price of the commodity on the domestic market, a senior official said on Friday.

"Minister Rini M. Soewandi will issue a new degree regulating the price of white pepper before June," Ferry Yahya, director of agricultural and mining exports at the ministry, told reporters after a meeting with the Association of Indonesian Pepper Exporters (AIPE).

The base price is the price to be used by exporters and a government-sponsored consortium when purchasing pepper from farmers.

The price of white pepper has been decreasing over the past several years. It now only fetches about Rp 22,000 (around US$2.40) per kilogram compared to about Rp 80,000 in 1998.

The government blamed the price decline mainly on the strategies being applied by European traders, who had been releasing their massive stocks during harvest time in Indonesia.

Ferry said that the ministry would also immediately set up a consortium for the white pepper trade, whose main task would be to purchase the commodity from farmers during the harvest season and consolidate local stocks.

"We are in the final stages of the talks (on the planned consortium). Some 80 percent of pepper exporters have agreed to the plan," Ferry said.

Earlier, AIPE called on the government to abort the plan to set up the consortium as it would only further hurt the country's weakening exports.

Indonesia is the world's largest white pepper producer, accounting for between 70 percent and 80 percent of the world supply. Indonesia exports the commodity to Europe and the U.S.

The country's white pepper, labeled on the international market as Muntok White Pepper, is mostly produced on the islands of Bangka Belitung. Muntok is the name of a seaport in Bangka.

The main pepper harvest in Indonesia normally starts around June-July.

AIPE predicted that the country's pepper exports would decline to about 40,000 tons this year from last year's figure of about 45,000 tons due to a decrease in output.