Govt looks to Bulog for soybean procurement

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The government is contemplating appointing state-owned logistics agency Bulog as a buffer body for soybeans, to manage supply in the domestic market.

The option could be taken as an alternative to maintain stability of soybean prices in the future, Trade Minister Gita Wirjawan said Friday.

“We support this idea and still need to discuss technicalities for implementation,” he said after a cabinet meeting on industry, trade and investment at the Industry Ministry’s office in Jakarta.

Bulog could be given authority to import soybeans to fulfill domestic demand, as seen in rice, another
Indonesian staple food, Gita added.

The government will soon meet related stakeholders, including soybean importers and tempeh (soybean cakes) and tofu makers, to identify their needs and find the best solutions for overcoming fluctuating soybean prices, Gita said.

Soybean products, including tempeh, tofu, soy sauce, cooking oil and soy milk, are widely consumed in the country, where soybean consumption is much higher than its national production.

Indonesia sourced 851,286 tons of soybean locally last year, or only around 29 percent of its total consumption of 2.09 million tons, meaning the bulk came from imports, according to the Central Statistics Agency (BPS).

Record soybean prices in the drought-stricken United States, the largest supplier of soybeans to Indonesia, has significantly pushed up prices of the commodity in the local market with tempeh and tofu producers now threatening to halt production.

Retail prices of imported soybeans hit Rp 8,000 per kilogram (85 US cents), up 60 percent from regular prices that recently settled at around Rp 5,000 per kilogram. However, this is still lower than locally produced soybeans, which sell at about Rp 9,000 per kilogram.

Earlier this week, the government scrapped a 5 percent import duty of the commodity to ensure its affordability for the local food industry. In addition, it has authorized tempeh and tofu makers’ cooperatives to import soybeans on their own, which was previously carried out by private firms.

The government is also seeking idle land, totaling 500,000 hectares, to boost soybean production nationwide, to add to the existing 600,000 hectares of soybean cultivation area. Bulog chief Sutarto Alimoeso welcomed the plan of returning his agency as a stock buffer for soybeans, saying that the supply of soybeans, which are categorized as a strategic food commodity, similar to rice, should be left under the government’s control.

In the past, Bulog handled the procurement of the nation’s nine staple foods, including rice, corn, salt, sugar and cooking oil. However, the function was halted in 1998 as part of the requirements instructed by the International Monetary Fund through its structural adjustment programs that favored privatization and other market mechanisms.

“We can implement the similar mechanism used in the procurement of rice,” he said, pointing out a combination of local purchases and importation. At present, Bulog intervenes in local rice supply management through on-farm activities, which includes direct purchases that ensure an appropriate price level taken by local farmers.

The agency also imports rice with lower prices that allow it to compensate smaller prices of local purchases.