Soybean Import ‘Cartel’ Under Fire as Policy Debate Rages

By webadmin on 04:05 pm Jul 28, 2012
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Arientha Primanita, Ezra Sihite, Ronna Nirmala & Faisal Maliki Baskoro

Indonesia is hurting from skyrocketing soybean prices, but few people are in agreement over what to do about it.

Politicians and industry figures voiced their opposition on Friday to the government’s plan to suspend the 5 percent import tax on soybeans for four months starting on Wednesday.

They also criticized the lack of a clear food policy or blamed commodity importers for the recent, sharp rise in prices. A drought in the United States, a major soybean exporter, has lowered yields there and sent prices soaring.

Indonesia, the world’s fourth-most populous country, has been hit particularly hard. Prices have climbed more than 33 percent in the past three weeks, with soybeans now selling for Rp 8,000 (85 cents) per kilogram.

Agriculture ministers past and present, industry representatives and President Susilo Bambang Yudhoyono all spoke out on Friday, a day after Trade Minister Gita Wirjawan voiced his opposition to the import duty plan. Hatta Rajasa, the chief economic minister, announced the plan on Wednesday.

Agriculture Minister Suswono criticized local soybean importers for setting their profit margins too high during a time of scarcity. He claimed they were partly responsible for making prices go up.

“They should have a feeling of empathy toward consumers,” Suswono told reporters before a cabinet meeting in Jakarta on Friday.

Siswono Yudohusodo, a former Agriculture Minister and now a lawmaker and member on House of Representatives Commission IV overseeing agriculture and forestry affairs, also said suspending the import duty was not a solution.

“The government should come up with a decent plan to boost soybean production in the domestic market,” Siswono said. “That way, it will help reduce our dependence on imports.”

Suyanto, the chairman of the Indonesian Tempeh and Tofu Cooperative (Kopti), pointed to what he called a monopoly in soybean importation.

“There are four big companies and they set the price,” Suyanto claimed, adding that he thought the companies manipulated prices unfairly, though he admitted it would be difficult to prove. He declined to name the companies, but he collectively termed them a “cartel.”

Cargill Indonesia, one of the main soybean importers in Indonesia, dismissed Suyanto’s accusations.

“Cargill does not go into price discussions nor agreements with other importers and traders,” Jean-Louis Guillou, Cargill’s country representative for Indonesia, told the Jakarta Globe in an e-mail.

“We fully abide by Indonesian law and this includes not artificially influencing import prices,” he added. “Cargill shares the concerns about increasing commodity prices impacting local Indonesian consumers.”

Suyanto, too, criticized the import duty plan. The government tried the same thing in 2008 — a 10 percent tariff was suspended — and it didn’t work then. “So history repeats itself,” he said.

Instead of purchasing soybeans from the United States, Suyanto said, Indonesia should buy from Thailand and Vietnam, claiming the quality was just as good.

Ratna Ningsih, the head of cooperatives at the Jakarta agency for small and medium enterprises, said that all tempeh and tofu producers in Jakarta had agreed to resume production following a three-day strike.

Clashes between makers and sellers of the soybean products broke out in several markets earlier this week as producers sought to enforce the strike. Yudhoyono also spoke out against the “sweeps.”

“I appreciate the confederation of tempeh and tofu, but there is no need to do this sweeping,” he said. “This is not a solution because the tempeh and tofu sellers are not the ones to be blamed.”

Kopti called on the government to intervene and put a stop to the escalating soy prices.

“The government has to step in,” Suyanto said.

Kopti members, he continued, wanted Bulog, the state procurement agency, to take over soybean importing from the private sector.

“That way there won’t be any price distortion,” Suyanto said. “The government can stabilize it.”