Pearl Farmers Say They’re Getting Shelled By Lack Of Pricing Standards
Local pearl farmers are calling for a national standard price for the precious stones, saying that a lack of transparency between buyers and sellers has caused the price local farmers could command for pearls to drop dramatically over the past few years, especially with foreign competitors entering the local market.
Is Sjafruddin, chairman of the Indonesian Cultured Pearl Association, or Asbumi, said on Monday that poor price transparency and standards between pearl farmers and traders led to the price of pearls falling from $20 a gram two years ago to between $5 and $8 a gram presently.
“There is no price transparency and no price standards in pearl trading in Indonesia, so a farmer in one area will not know how high the price for pearls is in another area,” Is said after a newsconference at the Ministry of Maritime Affairs and Fisheries in Jakarta.
As a result, he said, pearl farmers had little choice but trust traders, who often told them that farmers in another area were selling pearls at a lower price.
“Because of this situation, pearl farmers’ incomes are going down and this is forcing many farmers to leave the pearl business,” he said. Is could not say exactly how many farmers were leaving the trade.
All pearl farmers, but especially larger foreign companies involved in the trade, needed to be more open about the prices they commanded for pearls so that a national standard could be set, Is said.
The government, he continued, could also encourage transparency by setting guidelines for farmers on how to deal with pearl traders. Yet another option would be for government agents to buy pearls from local farmers at a set price, he said.
Made L. Nurdjana, director general of aquaculture at the Ministry of Fisheries and Maritime Affairs, acknowledged that there were no pricing guidelines for the pearl industry.
“Trust between farmers and buyers is a very important factor in determining pearl prices,” Made was quoted by state news agency Antara as saying last week.
“Aside from that, the price also depends on how skilled the buyer is in negotiating with farmers.”
Made also noted that most buyers believed the roughly 50 foreign pearl firms operating in Indonesia were producing higher quality pearls than smaller, local farmers. He said that about
80 percent of Indonesian pearl farming and trading was bankrolled by foreign investors, most from Australia and Japan.
He also said many local communities were displeased that foreign pearl companies in their areas were not involving them in pearl production, in spite of the government’s requirement that they do so.
“We already asked the companies to involve local residents in pearl production by, for example, buying spat, or baby oysters, from locals instead of cultivating them themselves,” Made said.
From 2002 to 2004, Indonesia exported 21.4 kilograms of pearls a year on average, according to ministry data.