Efforts put in place to stem high food prices

Aditya Suharmoko , The Jakarta Post , Jakarta | Wed, 03/05/2008 2:14 AM | Headlines

A number of women clean red onions at one of the kiosks in the Kramat Jati market in East Jakarta on Tuesday. The rise in prices of the staple products during the past several days has fueled concerns over the possible surge in the inflation rates.

The high price of key commodities, including crude palm oil (CPO) and soybeans, is predicted to ease in April and dampen inflationary pressure, a ministry official said Tuesday.

The deputy minister of agriculture and fisheries at the office of the Coordinating Minister for the Economy, Bayu Krisnamurthi, said Tuesday the dry season would begin in April, traditionally reducing the world's demand for oil, which would in turn decrease key commodity prices.

"We expect the global oil prices between April and May to be lower than they are this time around," Bayu said.

"And they will eventually push down the price of such commodities as CPO and soybeans."

Currently, global oil prices have been above $100 per barrel.

Also, Bayu said, farmers in the country would start harvesting rice this month, which would reduce prices.

Besides rice, farmers are expected also to harvest soybeans in June, which will help balance soybean prices.

Currently, most soybeans in the country are imported. Soybean prices, both international and domestic, soared in January, forcing the government to eliminate import duty on soybeans.

The government has said it would also subsidize soybeans and cooking oil for poor households, just it has on rice.

Key commodities, including rice, soybeans and cooking oil, contribute significantly to the country's inflation rate.

In February, the Central Statistics Agency (BPS) reported consumer prices rose 0.65 percent, making a year-on-year inflation rate of 7.4 percent, far higher than the government's target of 6.5 percent this year.

But BPS predicted consumer prices would go down in the next few months, which would allow the government to achieve its inflation target.

Trade Ministry's director general of domestic trade Ardiansyah Parman said the government would begin subsidizing the price of cooking oil Rp 2,500 (about 27.5 U.S. cents) per liter this month.

It has allocated Rp 485 billion for a cooking oil subsidy, of which Rp 100 million is expected to be allocated this month, he said.

In a seminar on food security, a think thank said the high prices of foodstuffs was down to the government's failure to monitor and evaluate effectively the distribution of foodstuffs.

Umar Juoro of the Center for Information and Development Studies (CIDES), said without a good system for distribution of foodstuffs, the government would have a difficult time controlling inflation.

"The central government should work together with local administrations and private firms in monitoring and evaluating the distribution," Umar said, citing the Philippines, a country geographically similar to Indonesia, as an example.

"Efficient distribution in the archipelagic country was able to keep inflation down at 3.8 percent last year," Umar said.

He said good monitoring and evaluation would not only control prices, but would prevent hoarding. (lva)

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