Govt will set up trade consortium for white pepper

Adianto P. Simamora, The Jakarta Post, Jakarta

Despite rising criticism from the Association of Indonesian Pepper Exporters (AIPE), the Ministry of Trade and Industry said that it would go ahead with a plan to set up a consortium that would regulate the trade of white pepper.

The planned consortium would purchase the commodity from farmers during the harvest and consolidate the stocks to help stabilize the price of the commodity, said director general for foreign trade affairs Sudar SA.

He added that the consortium would also help protect the interest of local farmers who had suffered from maneuvers made by international traders who have been pushing down the price of the commodity.

"We need a consortium on white pepper to help prop up the sagging price (of the commodity) and boost farmer's bargaining position against the foreign traders particularly from Europe," Sudar said.

The price of white and black pepper has been decreasing over past several years. The price of white pepper, for instance, is now only worth about Rp 22,000 (around US$2.40) per kilogram, compared to around Rp 80,000 in 1998.

Sudar said that the decline in the price was mainly due to the move by European traders who released their massive stocks during harvest season in Indonesia.

"If the price continues to decline, our farmers will be forced to change to another crop," said Sudar.

Indonesia is the world's largest white pepper producer, accounting for between 70 percent and 80 percent of the world's supply.

Indonesia exports pepper to Europe and the U.S.

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

The main harvest of white and black pepper in Indonesia normally starts around June-July.

AIPE on Wednesday called on the government to abort its plan to set up the consortium, arguing the move would further hurt the country's weakening exports.

The association said that the establishment of the consortium would allow other countries to grab a greater share in the international market, diminishing Indonesia's portion.

In 1986, the government formed a marketing body for white pepper called the Indonesian Pepper Marketing Body, which functioned for several years to market the commodity in the overseas markets.

The government later formed two sole agents for European and the U.S. markets, but these were closed down after protest from the association that the agencies were acting as monopolies limiting the number of exporters.

Sudar ensured that the planned consortium would not create monopoly in exports.

"We will involve exporters, local government and state enterprises in the consortium," said Sudar.

He said that the funding for the consortium would be provided by the three parties.