Indonesia - High food prices cause grief in Indonesia

First the price of soya beans soared. Then up went beef, garlic and onions. Now the price of sugar is not sweet any more.

In fact, the costs of some staple foods have shot up five times.

Critics blame Indonesia's import policies that aim to promote self-sufficiency. These have led to cartels, they say, with large players sometimes sitting on their stocks in an attempt to drive up prices and fatten profits.

Ahmad Junaidi, a spokesman for the Business Competition Supervisory Committee (KPPU), said: "In the case of garlic and onions, some approved importers park their goods in the warehouse and delay completing administration procedures while waiting for prices to soar."

In one instance, KPPU's investigations revealed that at least 109 containers of garlic with their permits in order remained parked in a warehouse at Surabaya's Tanjung Perak port early last week, while the importers dragged their feet on distributing them.

Meanwhile, the price of garlic shot up to 100,000 rupiah (US$10) per kg in areas like Malang, Central Java, from a low of 20,000 rupiah per kg last November. Last month, inflation rose to its highest level since June 2011. The consumer price index hit 5.3 per cent, led by escalating food prices.

Members of the Indonesian Traditional Market Traders Association questioned the government's lack of foresight. They argued the Agriculture Ministry should have been able to predict when stocks of such commodities would rise and fall, depending on harvests.

In a knee-jerk response, the Trade Ministry forced importers to deliver supplies stuck at the ports, a move that lowered the price of garlic and onions by 15 per cent. It told importers to sell the stock at 15,000 rupiah per kg.

But critics say this remains a short-term solution because the import system is riddled with complex processes that require permits to be approved by two ministries - agriculture and trade.

Agriculture Minister Suswono told reporters: "The approval process takes time... with sometimes over 3,000 documents (for one permit)... One company should just require one document."

Trade Minister Gita Wirjawan said there ought to be one window to approve the process, and advocated putting it online to ensure transparency. Yesterday, his director-general inspected a warehouse to ensure onions were being distributed, not withheld.

While some say a better distribution process will reduce price fluctuations, others like Hermanto Siregar of the National Economic Committee, which advises the President, said import quotas should be replaced with food tariffs to prevent abuse.

The import quotas encouraged bribes and price spikes in Indonesia. One high-profile politician has been charged with accepting bribes in return for preferential treatment for a beef importer.

The recent price hikes prompted an irate President Susilo Bambang Yudhoyono to tell the two ministries to sit down and stabilise prices. "What I heard was blame pointed out from one ministry to another. This is bad," he said last week. "(The Trade Ministry and Agriculture Ministry) should work night and day. People need certainty and solutions from these ministries."

Depok mayor Nur Mahmudi Ismail has taken matters into his own hands, urging 900 housewives in a family welfare movement to plant garlic and shallots. "(Home gardening) could become a solution in dealing with the increasing prices of shallots and garlic," he was quoted by The Jakarta Post as saying.

The Straits Times

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