The Jakarta Post
President Susilo Bambang Yu-dhoyono said on Monday that the government would allow the State Logistics Agency (Bulog) to control the price of commodities other than rice.
“I have made my decision, Bulog will be revitalized. We will give it concrete functions so that it can carry out its duty as a price stabilizer,” Yudhoyono said after a limited Cabinet meeting at the Agriculture Ministry.
The President said there had not been a final decision yet on the list commodities that Bulog would control, but hinted that there the supplies of five commodities — rice, sugar, corn, meat and soy — should be secured.
Yudhoyono said the plan to “revitalize” Bulog, which had been in the pipeline for almost four years, started with the soaring crude oil and commodity prices in 2008. The recent spike in imported soybean prices had made the plan relevant again, he said.
Record soybean prices in the drought-stricken US, the largest supplier of soybeans to Indonesia, has significantly pushed up prices of the commodity in the local market, leading tempeh and tofu producers to threaten a halt in production.
Retail prices of imported soybeans hit Rp 8,000 (85 US cents) per kilogram, up 60 percent from regular prices that recently settled at around Rp 5,000 per kilogram. Food prices are among the main drivers of inflation in Southeast Asia’s largest economy. Consumer prices accelerated in July to 4.56 percent year-on-year, particularly on the back of surging food prices amid higher consumption at the beginning of the fasting month of Ramadhan.
Indonesia, the world’s third-largest rice consumer with annual rice consumption of 139 kilograms per capita, has been unable to maintain self-sufficiency and now relies on imports the staple food as stockpiles have fallen and harvests failed to meet targets.
Economists have said that the government must strengthen domestic food supply by boosting production in order to stabilize people’s purchasing power, and leave imports as the last alternative amid volatile international prices.
Apart from a broader mandate for Bulog, Yudhoyono said the government would ease major bottlenecks to improve food production. One of the key problems that should be overcome was the provision of land for agricultural expansion activities, Yudhoyono said.
The conversion of land from agricultural fields into residential areas or industrial sites remains a big issue in the world’s fourth-most populous nation where food consumption constantly surges, and occasionally outstrips its production capacity.
The President pointed out the need for stricter regulation of land conversion at the local administration level in order to set aside for agricultural output.
“I have talked to governors and agreed to issue a new rule to regulate land conversion as existing rules seem to be ineffective,” Yudhoyono said.
He cited the availability of 4.8 million hectares for land conversion, as shown by reports of the National Land Agency (BPN).
Yudhoyono also underlined the urgency to build and improve agriculture infrastructure, such as irrigation channels and reservoirs, to help boost production of food, particularly rice.
The government has targeted to generate a surplus of 10 million tons of rice in 2014 as part of the rice-self sufficiency program it launched several years ago.
“The 10 percent rice surplus cannot be achieved without development of new dams,” the President said.