Tommy pays Rp 251 billion debt to clove farmers

Tommy pays Rp 251 billion debt to clove farmers

By Johannes Simbolon

JAKARTA (JP): It could be considered the most flamboyant
odyssey of debt paying ever undertaken in this country.

Hutomo Mandala Putra, the youngest son of President Soeharto,
who is better known as Tommy, invited 50 people aboard his
aircraft to witness the payment of debts, amounting to Rp 251
billion (US$88.3 million), to tens of thousands of clove farmers
in Sulawesi and Maluku between Nov. 3 and Nov. 5.

Among his entourage were Minister of Cooperatives and Small
Enterprises Subiakto Tjakrawerdaya, legislators and dozens of
reporters who had fervently criticized his government-sanctioned
monopoly of the clove trade two years ago. The press was of the
opinion at the time that it could amount to a kind of
exploitation of the poor.

With this journey, Tommy seemingly intended to show to the
country that all of the criticism leveled against his
organization, the Clove Marketing and Buffer Stocking Agency
(BPPC), was out of line. It was his way of saying that the
pessimism of so many people that he could either never afford to
pay, or might not be willing to pay, the huge debt was totally
off the mark.

"We have waited a long time for this moment. Some farmers even
thought this moment would never come," Machmud Hamundu, chief of
the provincial association of Village Cooperatives of Southeast
Sulawesi, told Tommy in a moving speech in the provincial capital
of Kendari.

Similar remarks were made by the farmers' representative in
Ujungpandang, South Sulawesi; Palu, Central Sulawesi; Manado,
North Sulawesi, and Ambon, Maluku, where the Tommy and his
entourage made stops.

Minister Subiakto said that the Clove Marketing and Buffer
Stocking Agency's involvement in clove trade has proved
successful, and therefore it will continue to function.

"President Soeharto has said that BPPC will continue its
involvement in the clove trade," Subiakto told farmers who were
all wearing yellow Golkar jerseys.

Compulsory

What Tommy is now returning is the compulsory savings fund
collected by BPPC through cooperatives from clove farmers in
1992.

The agency was given rights by the government to monopolize
the clove trade in 1992, and to hold the savings fund in its
accounts.

The BPPC, in cooperation with the National Federation of
Village Cooperatives, is the central coordinator of all Village
Cooperatives nationwide. The cooperatives paid the government-set
price of Rp 7,900 per kilogram for standard cloves.

Standard cloves are those which have a 10 percent water
content and three percent content of external materials.

However, the BPPC then, as it does now, paid only Rp 4,000 at
the time of purchase. The reason for this policy is that the
agency has a limited cash flow capability and cannot pay the full
amount in cash at the time of purchase. The agency, therefore,
pays the remaining Rp 3,900 after it sells the cloves to
industrial users. Most of the stock goes to clove cigarette
(kretek) factories.

However, initially BPPC did not set a specific time when it
would return the savings to the clove farmers. The government
predicted the savings funds would be disbursed 1995 at the
earliest. This sparked criticism from many parties. Farmers were
awash in despair that they would never get their money back.

Tommy kept his promise earlier than predicted. What he just
paid was the farmers' compulsory savings of Rp 251 billion.

The farmers' equity capital in their cooperatives, totaling Rp
484 billion, had been paid earlier to the cooperatives and has
already used to procure clove yields this year, the chief of the
federation of cooperatives, Jeff Mustopha Atmaja, told The
Jakarta Post

Tommy said the funds were derived from his clove sales to big
cigarette factories.

Including the sum Tommy paid to the farmers of East Java a
week before, he has so far paid out Rp 84.5 billion. The rest is
scheduled to be paid in the following months.

Indirect

The question on everybody's lip now is, "will the money reach
the farmers?."

The answer is apparently "no", at least not right away.

In October, before Tommy started paying his debt, the Ministry
of Cooperatives and Small Enterprises issued two decrees on the
procedures for the disbursement of the savings to the farmers.

The decrees state that prior to the disbursement of funds, a
task force named the "Savings Controlling Body" will be set up in
each clove-producing province and regency with the assignment to
recheck the records at all cooperatives on which farmers are
qualified for getting payments.

"But we must now admit that records at the cooperatives are
still imperfect," Tommy said.

The decrees also state that in order to get their money back,
the farmers are required to have identification cards;
cooperative member cards; invoices issued by the cooperative on
the transaction day stating the cloves which it bought were the
standard ones; a special savings invoice, and a document to be
issued by the village chief verifying the size of the clove field
a farmer has as well as its harvesting capacity per year.

The requirements are made so that "only the ones who deserve
the money will get it," Tommy said.

The job the task force is now facing is not an easy one. Due
to the limited budget of the BPPC, the clove trade between the
farmers and cooperatives has assumed strange and unexpected
patterns.

Due to the wide gap between the available amount of
procurement funds and the amount of produce, for example, a
cooperative in the Kiawa village, Tomohon regency, North
Sulawesi, the prime clove producer province, could only afford to
purchase 25 kilograms from each of its farmer members during the
1992 harvest.

"I sold the rest of the (standard) cloves to traders at
between Rp 2,600 and Rp 2,800, which is much lower than the rate
at the cooperative," Kiawa clove farmer Wimpie Panambunan, 43,
told the Post.

Some of the traders then reportedly sold the cloves to
cooperatives in other areas where the clove production was less
than the local cooperatives could afford to buy. The question now
is, who deserves the "farmers' savings", the trader or the
farmer, who was not a member of the cooperative that purchased
his produce?

With a clove field ownership document being one requirement,
the traders cannot take the money. And because the "farmers
savings" are to be delivered through the cooperative where the
farmers hold membership, some farmers may get nothing.

In other areas where the cooperatives had abundant cash, it
also happened that some farmers sold more than their own harvest
yields to the cooperatives. The farmers, who also served as
traders, reportedly bought the excess from other farmers. The
question is, do the farmer-traders deserve the funds, which come
from the cloves they bought?

That's where the clove field ownership document, in which the
exact measure and yields of the field are specified, is required.

Joining the group of those who will not see the funds are the
farmers who sold substandard cloves.

The most unfortunate ones might be the farmers who, because of
pessimism over the prospect of the debt being paid, or because
they were unfamiliar with the scheme, did not keep their
invoices, or lost them. The number of people in this group might
be high.

Cooperative

The task force has yet to calculate the exact number of
farmers who might not get anything from the package Tommy has
brought them.

"Probably 40 percent of the accumulated savings will be
received by farmers, the rest may have no takers," Jeff Mustopha
Atmaja told reporters.

Both Tommy and Subiakto acknowledged that not all of the
savings will go to the farmers, but the refused to give specific
numbers.

However, the farmers who cannot make a claim on the funds for
one reason or another need not worry that their money is gone
with the wind. They can still benefit from the money because the
ministerial decrees required that the undisbursed funds be
considered assets of the cooperatives that must be used for the
benefit of members.

"As of Dec. 31, 1993, we (the agency and the cooperatives
federation) still have 203,896 tons in clove stock, enough to
supply cigarette factories for three years. And the stock tends
to increase every year. It is our responsibility to make the
supply equal to demand, which is around 70,000 tons per year.
Once the supply and demand balance, the farmers will get full
payment," Tommy said.