Risti Permani, Global Food Studies, University of Adelaide
Shallot and garlic prices have significantly increased in many parts of Indonesia. The role of the Indonesian government in providing access to affordable food items is once again put to the test. Trying to reap the benefits from this price hike, illegal shallot and garlic imports smuggling attempts have been detected (Source: The Jakarta Post) . Many argue that the government itself has been very slow to respond to this condition.
The Head of the Indonesian Economic Committee Chairul Tanjung explained that the problem resulting from shallot and garlic shortage due to harvest failure escalated because ‘administrative problems’ in two ministries, Ministry of Agriculture and Ministry of Trade, which slowed down shallot and garlic importation (Source: Detiknews). He further explained that Indonesia does not have a ‘masterplan’ for food items which should have information about projected production and consumption especially to deal with price increase.
The lack of a ‘masterplan ‘ clearly demonstrates room for improvement for the government. In addition, a clear and practical guideline when Indonesia can import is non-existent. To do so, government must ensure that the core problem is with the production, not supply chains.
There seems to be regional variation in making decisions to import. For example, shallot and garlic prices in Batam have been relatively stable. The Indonesian Chamber of Commerce and Industry (Kadin) deputy chairman for small and medium enterprises, Syarifuddin Andi Bola, viewed that shallots imported from Malaysia and Singapore had kept the price of the commodity in Batam markets stable (Source: The Jakarta Post). If importation were effective in Batam, why other regions would not respond similarly?
Concerns about smallholders’ welfare are legitimate. Indeed, this price hike started because of harvest failure. Thus, government support is highly required to assist them recovering from financial hardships. However, this does not necessarily mean the government should be overly restrictive allowing imports coming into the country when domestic production clearly could not meet domestic demand. Reduction in shallot and garlic consumption may affect the price of their substitutes and complementaries.
Consumers also need to be aware of policy consequences. Mr Sudaryatmo of the Indonesian Consumers Institute Foundation (YLKI) argued that “stable food prices are consumers’ rights” (Source:Detiknews). Government intervention may be required when it affects staple food ie needed for survival and health such as rice, potato, etc. But do shallot and garlic belong to this category? Is it really important for the government to ‘subsidise’ consumers of these commodities? Yes, it is true that these commodities are widely used. But people can still have healthy life without them.
On the other hand, we have a budget constraint. When we expect government to intervene there is normally cost attached to it. Here we are talking about one source of money, taxpayers money and other revenues, that is used to finance from poverty reduction programs to infrastructure development.
This implies the government must clearly state its priority and consumers need to be more adaptive in terms of responding to price increase. Many people in other parts of the world are not consuming shallot and garlic on daily basis and they are still perfectly healthy.