Indonesia will scrap its soybean import tax in the face of demonstrations by tofu and soybean cake producers protesting against spiraling soybean prices.
An incident stunned Nuraini on Wednesday last week. She was unprepared when a group of men, claiming to be members from the Indonesian Soybean Cake and Tofu Cooperative (Puskopti), arrived at her vegetable stall and immediately began seizing bags containing tofu which she had placed out for sale. "Why are you taking away food that I am selling?" said the vegetable-seller at the Rawamangun traditional market in East Jakarta.
Puskopti officers informed Nuraini that they were conducting 'sweeping' operations and simply enforcing an agreement between producers and traders to halt sales of all tofu and soybean products. Nuraini was charged with breaking the agreement. "We are deeply hurt by traders who break agreements," said Puskopti chief Suyanto.
Tofu and soybean cake as of early last week all but disappeared from the dining tables of Indonesian families. Indonesia is hurting from skyrocketing soybean prices. A drought in the United States, which is a major soybean exporter, has lowered yields and sent prices of soybeans soaring. Indonesia in turn, a major importer of soybeans, has been hit hard. Prices have risen up to 33 percent in the past three weeks, with soybeans now selling at Rp8,500 per kilogram from Rp6,800 in May. It now hovers around Rp8,300 per kilogram. Producers of tofu and soybean cake have since raised the price of tofu by 20 percent, despite it being chiefly food loved by lower- to middle-income households.
According to producers, soybean prices should reasonably not go beyond Rp7,000 a kilogram. At that price, they said, producers can still get a profit margin of Rp200,000 from sales of 700 tofu cakes processed from a quintal of soybeans. If prices were any higher, this would send many producers out of business.
Johanda Fadil, secretary-general of Indonesian tofu makers (Hipertindo), said a strike planned by producers would be an effective way to bring down spiraling soybean prices. Last June, producers halted production for three days, forcing down soybean prices from Rp7,000 to Rp6,500 a kilogram.
Soaring soybean prices have occurred following a persistent drought in major exporter nations like the US, Brazil and Argentina. In 2011, the three countries together produced 210 million tons of soybeans. Production in Brazil and Argentina has since 2012 fallen to 22 million tons, prompting negative sentiment on the Chicago soybean exchange.
Indonesia's soybean requirements currently are estimated at 2.2 million tons, but its soybean production has remained at only 800,000 tons. The shortfall is met mostly by imports from the United States and several other counties.
Currently soybean stocks with importers stand at 400,000-450,000 tons, purchased only recently at higher prices and unlikely to be released at a lower price. In an effort to stabilize prices, the government then decided to scrap the 5 percent soybean import tax. "At its latest meeting in June, the Fiscal Policy Board decided to re-evaluate the inflationary impact of the rising prices," said Maman Suherman, a director from the Agriculture Ministry. Tofu makers, impatient with the slow reaction of the government to the rising prices, threatened to halt production. The threat proved effective. This week a tariff team will deliberate on the planned suspension of soybean import duties and a ministerial regulation on it will be announced early in August.
A meeting last Thursday had decided that not only would the government eliminate its 5 percent soybean import tax beginning August 1 till December 2012, it would also provide tofu and tempe producers with assistance in importing soybean themselves. The government has acknowledged that third-party companies handling most of the country's soybean imports are a contributing factor to the spiraling price. Deputy Trade Minister Bayu Krisnamurthi said suspension of the import duties for four months would serve the problem. He said the government could simply provide import subsidies to producers. "But it is difficult to do immediately because of the long process it takes and the approval required from the House of Representatives." Besides, he added, the subsidies may not fall to the right recipients.
By Eka Utami Aprilia, Ananda Putri
No. 49/12, July 31, 2012
Raids on soybean products in North Grogol, Kebayoran Lama, Jakarta, July 25.