Indonesia: Tobacco, Clove Prices Crash after Cigarette Price Hike Rumor: Associations

Source from:  The Jakarta Post 08/26/2016

Rumors about a rise in cigarette prices to Rp 50,000 (US$3.78) per pack has hit tobacco and clove prices and affected the lives of 6.5 million people, according to industry associations.

Indonesian Tobacco Farmers Association (APTI) chairman Soeseno Riban said tobacco growers in Madura had been bitterly affected as wholesalers exploited farmers' anxiety over the rumor by bidding for tobacco at a low price.

From the offering price of Rp 28,000 per kilogram, wholesalers purchased the commodity for Rp 18,000, a discount of nearly 40 percent. "If it the anxiety　is not stopped, the impact will be enormous," he said on Thursday in Jakarta.

Indonesian Clove Farmers Association (APCI) chairman Dahlan Said added that farmers used to sell cloves at Rp 100,000 to Rp 110,000 per kg. However, after the rumors began to circulate, they could get no more than Rp 90,000. "The issue has raised concerns that cigarette production will be cut by 50 percent, meaning that clove production will also be cut by 50 percent."

Dahlan further explained, 1 million clove farmers in the country produced 120,000 tons of cloves a year. Of this figure, 97 percent is utilized by the cigarette industry, while 7 percent goes to cosmetic and other industries.

A recent survey conducted by Hasbullah Thabrany, professor of public health at the University of Indonesia and chair of the university's Center for Health Economics and Policy Studies, sparked a national campaign calling for the drastic price hike to effectively force smokers to quit.

However, the government remained ambiguous on this issue, politically trapped between the need to boost revenue from the cigarette excise and desire to protect its citizens, particularly children, from the hazardous health impacts of nicotine. Enditem