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Food industry seeks more local inputs amid costly imports
A hike in production costs is to be expected in the near future, but firms are unlikely to raise their product prices anytime soon, thereby eating away at their margin in the process.
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A customer broses for groceries in a supermarket in Jakarta on July 2, 2021. (Antara/Rivan Awal Lingga)
T
he local food and beverage industry is seeking alternate sources of raw materials, as imports become more costly amid the continued weakening of the rupiah against the US dollar.
Indonesian Food and Beverage Producers Association (Gapmmi) chairman Adhi S. Lukman said on Tuesday that businesses had begun implementing several strategies to mitigate the rising input costs so that they would not translate to higher prices at the consumer level.
“The industry is anticipating this by improving our efficiency and seeking alternate inputs locally or through other countries,” Adhi said, as quoted from Bisnis.
Over 60 percent of the raw materials for the local food industry were sourced from imports, Adhi said, citing that this included wheat, refined sugar, corn and dairy.
This made their input costs prone to price changes, especially when the rupiah faltered against the greenback.
Read also: BI reassures markets on rupiah stability as Mideast conflict heats up
The rupiah traded lower against the US dollar throughout the course of this month. It hovered at Rp 16,374 on Friday, having weakened by 0.75 percent since the end of May, according to Bank Indonesia JISDOR, a reference rate that represents the spot FX rate of the US dollar against rupiah in the interbank FX market.
