INDONESIA
An official from the West Nusa Tenggara (NTB) administration has confirmed that it continues to monitor the purchasing process of Virginia tobacco leaves produced by local farmers despite a signed agreement that aims to protect them and their partner cigarette companies from suffering losses.
NTB Plantation Agency’s business development head, Retty Wimartini, said, “In price discussion meetings, we are invited by cigarette companies to act as an observer and this is mandatory because of the government’s roles as both regulator and mediator.”
According to NTB Plantation Agency data, 13 cigarette companies operating in Lombok have partnered with local farmers. Of that number, only six companies have set a base price for the purchasing of Virginia tobacco leaves in the region.
A price agreement between cigarette companies and their partner tobacco growers had been mandated in NTB Regional Regulation (Perda) No. 4/2006 on Virginia tobacco cultivation and business partnership. Later, the NTB administration later issued NTB Governor Regulation No. 2/2007 as an implementing regulation of Perda No.4.
“Based on an agreement, the base price of the best quality Virginia tobacco is Rp 9,000 [US$2.96] per kilogram. Several other companies have decided on lower prices ranging between Rp34,000 and Rp35,000, but based on our observations, those prices are not yet inflicting losses on the farmers,” said Retty. Data has revealed that in this year’s growing period local farmers have planted 15,000 hectares with Virginia tobacco, producing about 30,000 tons, or about two tons per hectare.