Indonesia
There must be an end to the dependence on imported soybeans. Farmers who make large areas of land available must be given incentives.
The strike by producers of tofu and soybean cakes known as tempe need not have happened if the government had recognized the importance of soybean cultivation to this nation. Tofu and tempe, as well as soy sauce, taoco (bean paste) and even oncom (a cake similar to tempe) are not staple food for the majority of Indonesian people, but we see them on almost every dining table in the country. It is difficult to imagine eating satay or other traditional foods without soy sauce. It is not surprising that consumption of soybean continues to rise.
Unfortunately the government seems to ignore the importance of this plant. Data clearly shows that there has been an extraordinary decline in production. Last year, Indonesia imported 2 million tons of soybean because domestic production was only 850,000 tons, despite demand of 2.8 million tons. This is in sharp contrast to the situation in 1990 when Indonesia produced 1.4 million tons and imported only 541,000 tons. Indonesia was even once a net exporter.
There are a number of reasons for the decline, but the main cause is unhealthy competition from soybean importers. The United States government grants low-interest export credits to these soybean exporters. As a result, imported soybeans are far cheaper than those grown locally. Farmers have abandoned soybean cultivation in droves. In 1992, there were 1.66 million hectares of soybeans, but by 2001 only 678,000 hectares remained and this figure is still the same today. The government has tried to increase production through various programs, including expanding the area under cultivation and improving productivity.
These efforts have failed. Farmers are reluctant to plant soybeans because the income from the crop is not attractive. The solutions the government has offered do not address the main problem: the imbalance in prices. Even when the price of soybeans rises, farmers still do not make a profit as is the case now. The United States, the main producer of soybeans, has experienced crop failures because of a long drought, and as a result supplies are limited and the price has risen by 22 percent over the last 15 months. Indonesia has not escaped the consequences.
This is clearly a difficult situation. Indonesia's dependence on soybean imports must be ended. In normal circumstances, this would not be a problem because producers of tempe, tofu and soy sauce would be happy. But this situation has resulted in the loss of increasingly large amounts of foreign currency. Last year, soybean imports totaled Rp5.9 trillion. And when there is an anomaly, as there is now, problems of supply and price appear. Therefore the best option is to increase domestic soybean production.
But the government must not simply offer the same solutions again. Expansion of cultivated land and productivity improvements must continue. According to the Agriculture Ministry, 500,000 hectares are needed to ensure self-sufficiency in soybeans. At present, there are 7.4 million hectares lying fallow. It should be possible to resolve this problem through coordination between ministries. Productivity could be enhanced using techniques such as transgenics. But all this will not be enough.
The government must have the courage to implement policies that will be unpopular with our trading partners by regulating the soybean trade. After all, tariffs of 5 percent have not diminished imports. This means the government needs to take smarter measures to reduce the flow of imports through policies that do not contradict World Trade Organization rules. The government must also provide incentives to farmers or domestic companies that are prepared to put large areas of land under cultivation in order to ensure large scale, economically viable production.
Tempo
No. 49/12, July 31, 2012
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