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Jakarta Post

Nontariff barriers disadvantage poor people: Think tank

  • Dzulfiqar Fathur Rahman

    The Jakarta Post

Jakarta   /   Mon, July 6, 2020   /   04:03 pm
Nontariff barriers disadvantage poor people: Think tank A worker arranges frozen meat at a supermarket in Jakarta on Wednesday. Monthly imports of consumer goods such as frozen meat, boneless bovine, apples, pears and running shoes rose by 24 percent in April as demand rose sharply ahead of Ramadan. (The Jakarta Post/Seto Wardhana)

Indonesia’s nontariff barriers on food imports may limit the accessibility and affordability of nutritious foods, which have become increasingly important for poor communities amid the COVID-19 pandemic, a think tank has said.

Indonesia has 433 nontariff measures related to food imports, which include quantitative restriction or quota, sanitary standards and inspection before shipment in the exporting country, according to data compiled by the Center for Indonesian Policy Studies (CIPS).

Beef imports, for example, need 11 administrative requirements and four technical requirements just to get a recommendation from the Agriculture Ministry, the first of six steps in a long process.

“With this, now our beef prices are significantly higher than international prices, which makes it harder for people, especially those with lower incomes, to afford beef,” CIPS head of research Felippa Amanta said in a virtual discussion on Thursday.

While the government aims to reduce food imports, the average price of beef in Indonesia stood above Rp 100,000 (US$6.93) per kilogram in October 2019, while the global average was slightly lower than Rp 80,000 per kg, according to data compiled by CIPS.

The COVID-19 pandemic has upended the country’s economy this year, with the government expecting full-year growth to reach only 1 percent under a baseline scenario or contract by 0.4 percent under a worst-case scenario. On top of an estimated 3 million job loss as of May, the government predicts up to 5.5 million workers could lose their jobs, while 4 million could fall below the poverty line.

With the possibility of worsening poverty this year due to the health crisis, eliminating nontariff barriers to minimize price hikes may help Indonesians maintain a sufficient food intake, especially for import-dependent commodities, CIPS stated.

Indonesia’s import dependency rate for staple foods is highest for wheat, which stands at 100 percent, followed by garlic at 93.7 percent, according to a report released in May by the World Food Program’s (WFP) Indonesia branch.

As it stands, 19.4 million Indonesians are unable to meet their dietary requirements, compounded by poverty and high food prices, according to WFP data. The price of rice in Indonesia is 50 to 70 percent higher than in neighboring countries.

Iqbal Wibisono, an associate researcher at CIPS, said on Thursday that eliminating nontariff barriers could lower prices and increase staple food consumption, especially among the poor.

For example, reversing nontariff barriers for rice might raise consumption by 1 percent for the poorest 20 percent of Indonesians.
“When the price of rice is high, the poor cannot afford it. They have to substitute rice with inferior or cheaper carbohydrates,” Iqbal said.

The government is planning to import 612,011 tons of sugar, 603,911 tons of garlic and 282,842 tons of beef to meet demand between May and December.

However, the pandemic has disrupted the logistics of food trade as some producing countries like India is under lockdown to contain the spread of the novel coronavirus.

With multiple layers of buyers and sellers, the logistical disruption has affected Indonesia’s food supply chain quite badly, said John McCarthy, an associate professor at the Australian National University in Canberra.

“When we have these shutdowns or logistics problems, a lot of people fall out of the systems,” McCarthy said. “This, of course, varies across different commodities.”