Indonesia still forbids tea plantation expansions

JAKARTA (JP): The government would continue its policy to restrict an expansion of tea plantations despite an increase in the demand on international markets, Secretary General of the Ministry of Agriculture Syarifudin Karama said yesterday.

"The restriction remains effective for an indefinite time," said Karama.

The government has prohibited state-owned and private tea companies from expanding or opening new plantations since 1992 in a bid to uphold tea prices which then displayed a decreasing trend.

"Actually, we did not make any decree for that. We only made a policy to reject any proposal to expand tea plantations or open new ones," said Karama.

The tea demand in the international market has significantly increased in the last few years and the surge in the demand has pushed up commodity prices.

Chairman of the Indonesian Tea Association Rachmat Badrudin said tea prices were increasing due to the decline in the output of some major producing countries like Kenya, India and China. Drought had damaged tea plantations in Kenya and India and flood in China, he said.

Achmad Taufik, a division head at the joint marketing office for the state-owned plantations said average tea prices had increased by 50 percent in two years, to $1.5 a kilogram this year from $1.06 in 1995 at the Jakarta tea auction.

"High quality tea sold for $2.2 a kilogram last week," said Taufik.

The Intergovernmental Group on Tea, in its recent meeting in Bali, said the current increasing trend in tea prices would not last long.

Smallholder

The group predicted a fall in tea prices next year due to the increase in production in some countries like Sri Lanka, Egypt, Indonesia and the decline in demand in European countries as well as developing countries like Pakistan, Egypt, Iran, and Saudi Arabia.

Karama said with the restriction to open new tea plantations still effective, the government hoped to increase the country's tea output by enhancing the productivity rate of the existing tea plantations, particularly tea plantations owned by smallholders.

The ministry estimates tea plantation's total acreage in Indonesia is 158,000 hectares, including 45,000 hectares of smallholders' plantations, with an annual output of 158,000 tons in 1996.

The productivity rate of state-owned tea estates reached 2.3 tons a hectare, against smallholders' productivity rate of less than 0.5 tons a hectare.

Karama said in 1992 the government launched a project funded by the Asian Development Bank to enhance the productivity of 20,000 hectares of smallholders' tea plantations in Java by among others providing farmers with suitable technology.

About 90 percent of the program had been completed, he said. (jsk)