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.
Budi Akmal Djafar’s opinion piece in The Jakarta Post (Sept. 20) entitled “It’s [not] the economy stupid!” intrigued me. I like and support his overall idea that we should not only focus on the size of the pie (or box using his illustration) but also how to share the pie.
But being a mother of a five-year-old boy (and a baby) who is expanding his vocabulary at a pace much faster than the Chinese economy’s growth rate, the word “stupid” is a big no-no in our household.
Sure, as an economist, I know where the term originated from but mentioning that term has a big implication on how we should perceive the existing problems that Indonesia is facing now, as suggested by Budi’s piece.
In early August 2012, President Susilo Bambang Yudhoyono decided to revitalize State Logistics Agency (BULOG) in order to stabilize and be self-sufficient in five food commodities including soybeans, corn, sugar and beef in addition to rice which had been controlled by BULOG in the past. The decision was following soybeans’ price hike earlier this year. Whilst this ‘welcoming back BULOG’ program might be seen to be a serious attempt by the Indonesian government to achieve food self-sufficiency, this program is argued to be costly and reflects the government’s confusion to distinguish the difference between food self-sufficiency and food security. To some extent, BULOG’s past reputation lowers our expectation on how effective and efficient this program will be.
Muslims around the globe including those living in Indonesia will soon be welcoming the fasting month, Ramadhan. Although the key lesson of fasting is to self-control by refraining from down to sunset from eating and drinking, food price’s increase has always been the norm in Indonesia at the beginning of Ramadhan. Increased demand for food are due to various reasons. Ramadhan is perceived to be the best time to give food to the poor. During this month, Muslims also tend to have gatherings with their family and relatives more often than they normally do. They also mark the month as well as the end of Ramadhan, Eid Fitr, as the festive season. They tend to consume and serve to their guests better quality food than they normally have. This gives pressure on food items, especially the ones considered to be special food such as beef, to have a price increase. This year is rather different. There is another factor contributing to beef price increases in Indonesia.
Every mid-year Indonesians always hear the same old story entitled ‘Education is expensive’. July is school admission time. The time where thousands of parents get confused and many are frustrated to find ‘good schools’ for their children. Good schools are scarce commodities. Given the variation in the quality of education in Indonesia, only few good schools exist and they are truely ‘price makers’ implying they normally charge high admission and tuition fees. The ‘victims’ of such condition are students from poor families. Good schools actually select students based on their academic merit. But without paying the fees, students from poor families especially those who are at the borderline might be ‘sacrificed’ for the purpose of allowing below-standard students from wealthy families to get in. What is the solution?
In the midst of a global financial crisis, Indonesia enjoyed an impressive 6.5 percent growth rate in 2011. Yet, there have been some concerns over the sustainability of this growth in the long term.
One factor is related to the government’s policy on resource management, particularly the fuel subsidy policy.
With global oil prices exceeding US$100 per barrel, the Indonesian government’s finances will be stretched. Between 1990 and 2010, world energy consumption increased by 45 percent.
The process of economic rebalancing from West to East will potentially create energy supply problems and there is a strong indication that energy prices will continue increasing for the foreseeable future.
Indonesia’s decision on fuel subsidies will have economy-wide implications on growth through inflation rates and budget allocations to other important sectors including education, infrastructure development and poverty reduction programs. Data suggests that in 2011 fuel subsidies topped Rp 165 trillion ($18 billion).
To date, the Indonesian government and House of Representatives are still mulling the best option to deal with the increased demand for fuel and increased fuel prices.
Being South East Asia’s biggest economy, Indonesia’s rising middle income populations are well-identified by exporters across the globe. The increased penetration of modern supermarkets, highly associated with the phenomenon, has contributed to increased inflows of fruits and vegetables imports to the economy. According to a 2007 World Bank study, the value of fresh fruits and vegetables (FFV) output doubled in Indonesia over 1994-2004, to become a 10 billion dollar industry, while imports of FFV nearly tripled over that decade, but by today are still very minor, accounting for about 3 percent of FFV consumption in Indonesia (the same as the developing country average). The increasing trend, however, seems to already raise concerns leading the Indonesian government to issue a ban on Port of Jakarta (Tanjung Priok sea port) fresh food imports planned to be enforced in March 2012. The ban is applied to imports of “Fresh Food Originating from Plant”, “Fresh Fruits And/Or Fruity Vegetables” and “Fresh Layered Tuber Vegetables” that will be restricted to four entry points, which do not include the country’s major sea port in Jakarta.
Why does the government plan to implement such a ban and what would be the likely effects?