Indonesia: East Java Farmers Grapple with Falling Prices

Source from:  Khabar South Asia 12/10/2012

Drought and plunging tobacco prices have made it a tough season for tobacco farmers in East Java. Last year, the finest quality of tobacco in the region fetched Rp 35,000 ($3.63) per kilo. This year, farmers are getting just Rp. 15,000 ($1.55) per kilo for the same leaf.

"How can we not complain? The tobacco price is half of last year's prices," said Sumiati, a tobacco farmer in sub-district Karangjati, Madiun.

Prices -- set for the most part by huge cigarette factories -- began plunging in August, the height of the tobacco harvest.

"The tobacco price is usually set by the buyers. We farmers are without bargaining power," Sumiati complained to Khabar Southeast Asia.

Exacerbating farmers' woes, the region has been very dry for months, leading to fears the crop could be lost.

"If this continues, we will lose our jobs," Sumiati said.

A highly productive region

Tobacco prices have dropped due to an abundant harvest, a situation that is also happening in other parts of Indonesia, according to Suprihardi, the head of Development of Forestry and Plantation in Madiun.

"So far, we do not have a standard for tobacco prices in the local market. The price depends on the amount of production in the region; there is not a benchmark," Suprihardi explained.

"The amount of production has caused prices to fluctuate. This year, prices seem much lower due to the overproduction in the region. One hectare of land can produce 1.3 tonnes of chopped dried tobacco. This is highly productive," Suprihardi added.

He urged farmers not to panic, adding that the drought could end up helping them by decreasing the next harvest and bringing prices back to normal.

The government in Madiun is helping local farmers by seeking partnerships with larger tobacco companies at the national level – such as Gudang Garam and Penamas -- and helping mediate between farmers and buyers generally, he said.

"Some tobacco farmers in Madiun have worked together with the cigarette factory in Karangjati. Cooperation helped the tobacco sales price reach Rp 30,000 ($3.11) per kilo," Suprihardi added.

"I will continue to build a partnership for tobacco farmers with cigarette factories," he said.

Price controls?

Some local people are urging the government to get more involved in order to protect tobacco farmers during times of price fluctuations and drought.

Siswanto Utomo, an official with the local Forestry Department, said that the government must find an immediate solution to the farmer's plight.

Tobacco from Madiun and Magetan regencies is not inferior to other areas, so the government should protect local growers by mediating on their behalf with the massive buyers, Siswanto said. Mardiman Sumardi, a tobacco farmer, expressed mistrust of tobacco buyers.

"The price is down dramatically this year, I do not know the exact cause, but one of them is likely the game merchants are playing due to the bountiful harvest," he said.

"I would rather the government be involved in determining the price of tobacco in order to protect local farmers like us. Otherwise, we will continue struggling with a fluctuating price, which typically is to our detriment," Mardiman said. Enditem