'Two associations may lead futures exchange'

JAKARTA (JP): Analysts fear the coffee and edible oil associations could dominate the planned futures commodity exchange at the expense of farmers' cooperatives.

At yesterday's House of Representatives hearing with a special team the Golkar faction set up, lawyer Dimyati Hartono and trade consultant Rudy Lengkong said the commodity exchange bill had loopholes which could allow the bourse to be dominated.

Dimyati said House members should improve the bill's wording on information dissemination.

"The bill should clearly state that information should be disseminated fairly and not controlled by certain groups of business," Dimyati said.

Lengkong said article 11 of the bill should state who could be an exchange member and the roles of farmers and small producers' cooperatives.

He asked if the Indonesian Coffee Exporters Association and Indonesian Edible Oil Association Federation would let farmers and small producers' cooperatives be members.

"It is the fact that most associations have not yet satisfied the aspiration of small farmers and their policies often contradict farmers' wishes. Members of associations have become prosperous but farmers remain poor," he said.

Lengkong is a former Commodity Exchange Board chairman. The board is under the Ministry of Industry and Trade.

When presenting the bill to the House Minister of Industry and Trade Tunky Ariwibowo said although the bill was meant to protect farmers and small producers from price fluctuations and risk, it would be hard for them to have direct access to the futures market because their businesses were too small and their knowledge too limited.

He hoped Indonesia's futures market would one day be useful to farmers and their cooperatives, like those in the U.S and Japan.

"Updated information on prices provided by the futures market helps them decide when to produce and sell their products at a desired price," he said.

Commodity exchange board chairman Arifin Lumban Gaol said coffee, crude palm oil rubber and cocoa had potential to be traded on the exchange.

Indonesian Agriculture Economists Association chairman H.S. Dillon agreed farmers' businesses were too small to participate directly in the exchange.

He commended the government's initiative to present the bill to the House, saying the bill would be the legal basis to establish the exchange.

A futures commodity exchange would help create more transparent commodity pricing than the physical commodity market did, Dillon said.

In futures markets, offers were made openly while in the physical trading with future deliveries, only buyers and sellers knew the prices, he said.

Only the Indonesian Coffee Exporters Association and Indonesian Edible Oil Association Federation fully support the plan.

The exchange board manages the physical trading of coffee and natural rubber with deliveries of up to three months. (rid)