Indonesia has undergone transformation of diets. The country observes declining importance of rice and other staples and growing importance of processed food products and high-value food products including meat, dairy, eggs, fish, fruits and vegetables. Two main causes may include growing income and urbanisation. Nicholas Minot of IFPRI presented his work on retail transformation to search for determinants of the use of modern retail in Indonesia.
Indonesia also experiences growth in modern food retail sector with 12 per cent annual growth in number of supermarkets and hypermarkets. There is even much faster growth among minimarts.
One effect of transformation on food security is on urban consumers they are provided with greater access to processed food with higher levels of sugar, salt and fat. This may potentially affect diet and obesity. Farmers are also affected. Supermarket chains establish structured supply chains. They require regular supplier (sometimes with contracts) demanding stable and high quality produce. This reflects opportunities as well as challenges for farmers.
An ACIAR-funded project called “Markets for high-value commodities in Indonesia: promoting competitiveness and inclusiveness” was to survey 1180 urban households in three cities, Surabaya, Bogor and Surakarta. The fieldwork was conducted between November 2010 and February 2011. The study finds that per capita expenditure is positively associated with the use of modern outlet but at a decreasing growth rate. The household size, education of head of household, and fridge ownership are positively associated with the use of modern and spending at modern outlet.
The project predicts that even though retail sectors continue to grow, in the next ten years urban food spending at modern retailers will not be more than a quarter of total spending.