T

he government will soon arrange base buying prices, locally known as HPP, for soybeans in a bid to maintain the price stability of one of the key commodities in Indonesia, which is a major consumer of tempeh, tofu, soy sauce and soybean milk.

Deputy Trade Minister Bayu Krisnamurthi told reporters in Jakarta on Friday that the government would shortly publish two base buying prices, one for local soybean farmers and the other for small-scale local tempeh and tofu makers.

“We will set up the HPP for soybeans to protect both farmers and producers from the volatility of the soybean price,” he said.

For local farmers, soybean cultivation was not as profitable as corn and tobacco farming because local producers chose to buy imported soybeans, which usually sold at Rp 5,000 (52 US cents) per kilogram, less than locally produced soybeans, which sold for about Rp 9,000 per kilogram.

Earlier this year, however, the drought that struck the US, the largest supplier of soybeans to Indonesia, pushed up the price of imported soybeans on the local market to Rp 8,000 per kilogram, a 60 percent increase from regular prices.

This record price triggered a temporary strike by local tempeh and tofu makers in Indonesia, which imported around 70 percent of its total soybean consumption of 2.09 million tons last year, according to Central Statistics Agency data.

The government, therefore, is currently trying to increase domestic soybean production to curb its dependency on soybeans imported primarily from the US.

According to Bayu, under the new price scheme, should the soybean price at the level of the farmers go below its market price, the State Logistic Agency (Bulog), which is currently preparing to return to its initial function as a buffer-stock body, will buy soybeans from the farmers at the government’s base buying price.

Simultaneously, if the soybean price in the market soars, local tempeh and tofu producers may buy soybeans for their daily production from Bulog at the government’s base purchasing price.

Bayu, however, declined to give specific details on both the base buying prices for soybeans and the date of their implementation.

Separately, Deputy Agriculture Minister Rusman Heriawan told The Jakarta Post that the base buying price scheme would be “a perfect instrument” for Bulog in its buffer-stock role.

Rusman explained that a team comprising the Agriculture Ministry, Trade Ministry and the Office of the Coordinating Economic Minister, had concluded that the ideal base buying price for soybeans for the farmers would be approximately Rp 7,000 per kilogram.

In addition, he said, the government was unlikely to apply the new price scheme this year, citing that “since we must also consider the readiness of our budget for the plan, it is expected that the new policy will be implemented after the discussion of the revised 2013 state budget.”

The discussion referred to usually takes place in the first quarter of the year. (asa)