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Small group holds power in shallots trade
Fair trade?: Shallots sellers mind their stalls at a traditional market in Brebes, Central Java
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span class="inline inline-center">Fair trade?: Shallots sellers mind their stalls at a traditional market in Brebes, Central Java. Shallots are sold for between Rp 27,000 and Rp 40,000 per kilogram at markets nationwide, while they are purchased from Brebes farmers at around Rp 20,000 per kg.(JP/ADT)
In Brebes, most residents know the name of Benny Santoso, the biggest shallots distributor and the grandee of the region.
Benny, Paulus Silalahi and Muhammad Nasir are the few that control almost all shallot trading out of the farming region, and all shipments leaving Brebes, a five-hour drive from Jakarta.
Around 180,000 to 216,000 tons of shallots are distributed every year by Benny, 33, through his company PT Cahaya Anugerah Abadi Sejahtera, to many regions of Indonesia. That compares with the total of 380,000 tons produced annually by the region, which supplies a third of Indonesian shallots.
“Who does not know Benny?” said Brebes local resident, Rasulullah, 36, during The Jakarta Post’s visit to the regency.
Many shallot farm workers, including Rochman, 29, confirmed that Benny was the “spearhead” responsible for the lives of thousands of farmers in Central Java.
The shallot business has been running in Benny’s family for generations. His great-grandfather and his grandfather were Brebes shallot farm workers.
Distributing shallots as a business was the idea of his father, Rudin Santoso, 65, who started the business in 1983. Benny then took over the family business in 2006 soon after obtaining a law degree from Pasundan University in Bandung, West Java.
His father started out with one pickup truck to load shallots onto, and now Benny has 15 trucks, with a capacity of 8 to 10 tons each, for carrying the shallot domestically, and several cooperation agreements with freight forwarders for overseas shipments.
Shallot distributors in Brebes abide by an unwritten rule that one should not expand into another’s market territory. Benny’s firm does not ship to West Java and DKI Jakarta as there are other players like Paulus and Nasir exporting to the region.
“Simply because I do not want to disrupt the supply system that has been happening in the city since before I was born,” Benny said.
Aside from shallots, the company also ships commodities like green beans and cabbage. Benny said shallots accounted for more than 70 percent of the firm’s total deliveries.
Benny, Paulus and Nasir buy shallots from farmers at Rp 20,000 per kilogram but then vendors at markets across the archipelago buy from them for at least Rp 25,000 per kg, already reflecting a 25 percent margin taken by the suppliers.
End consumers around the country buy the shallots at Rp 27,000 to Rp 40,000 per kg, while the government intends for the price to steady at Rp 25,000 per kg.
Food distributors like Benny, Paulus and Nasir, the bridge from farmers to markets, are considered by some to be the culprits behind high commodities prices, because of the high margins they take, especially during high-demand seasons such as Ramadhan and Idul Fitri.
Acknowledging the blame placed on him, Benny told the Post, “It is a mistake if people accuse me of being part of a ‘shallot mafia’ that always wants to profit.”
He argued that some of his profits went toward incentives for farmers, such as helping them procure seeds, pesticides and cover land rent.
However, Institute for Development of Economics and Finance (Indef) director Enny Sri Hartati believes there is no “kind gesture to farmers” behind stockpiling by distributors.
“It only takes little to [provide an incentive to] farmers. Distributors are only businessmen; they only aim to make a profit from withholding the supply,” Enny said, adding that the one responsible for providing incentives to farmers and supporting sustainability was the government.
Most distributors, or middlemen, take over immature shallots from farmers and hold them until they are ripe enough to be sold to buyers in the markets, a system locally known as ijon. Benny argued the ijon system was costly for distributors in the sense that there were certain standards to be maintained to keep the shallots fresh, requiring cold storage and routine check-ups.
However, while this method also provides a fixed income for farmers who do not have to deal with volatile market prices, it is deemed to provide a way for distributors to hoard stock and then profit more when demand increases.
Raniman, a casual farm worker in Brebes, agrees with Indef’s view, that such hoarding practices are aimed solely at increasing profit.
“There are incentives like shallot seeds and pennies, but only at certain times. As farm workers we are on the foolish side; we only know about selling shallots to middlemen,” he added. (adt)
