Dion Bisara & ID/Bani Saksono
Thousands of tempeh and tofu producers in the Greater Jakarta area are threatening to halt production this week after the price of soybeans, the raw material for the products, skyrocketed in recent months.
Economists and businesses in Jakarta say the government needs to address the issue, and soon, before the expectations of higher prices accelerate inflation.
Ramadan started on Saturday and Indonesians typically indulge in large feasts after breaking the fast in the evening, driving up demand and causing food prices to rise, which in turn helps stoke economy-wide inflation.
Suharto, chairman of the Jakarta chapter of the Association of Indonesian Tempe and Tofu Cooperative (Kopti), said the price of soybeans had increased 35 percent this year, making it difficult for producers to stay afloat. He said tempeh and tofu producers could not just pass the higher prices on to consumers without losing a lot of business.
The price of soybeans has increased to Rp 7,900 (80 cents) a kilogram in Jakarta, a substantial increase from March, when it was Rp 5,500 a kilogram, and the Rp 6,700 at the end of June.
Suharto said tahu and tempeh producers in Semanan, in West Java, the center of commodity production, had stopped working. There are about 1,290 household industries in the area producing the foods.
And he said the threat to halt production would extend nationwide if the government could not address the problem. Suharto said there were 4,821 producers in Jakarta alone with a total need of 10,600 metric tons of soybeans per month. Nationwide, there are 83,545 producers who use a total of 132,350 tons of soybeans per month.
Sarman Simanjorang, an official at the Indonesian Young Entrepreneurs Association (Hipmi), said the government had so far failed to address the problem. Sarman said that if the prices of commodities like soybeans were allowed to rise during the fasting month, it would result in higher inflation for the country.
Soybeans account for 1.2 percent of the consumer price index, the basket of prices of foods and other commodities that the government uses to calculate inflation.
Bustanul Arifin, an agricultural economist at the Institute for Development of Economy and Finance, said on Monday the problem was out of government control.
“There is little the government can do in response to demands from tofu and tempeh producers for action,” he said. “The current spike is because of a drop in production in the US due to drought. The producers will have to soak it up.”
Drought in the United States has sent prices for wheat and soybeans soaring. Earlier-than-normal warm weather across many parts of the United Sates, particularly in the Midwest, hurt crops such as soybeans, sending prices for some commodities soaring.
US soybeans for September delivery have climbed 26 percent since the start of June to $16.72 a bushel. Last week saw a record high for the contract, according to Bloomberg data. The United States is a main supplier of soybeans — along with wheat — which Indonesian food companies use to make items such as tempeh and bread.
Bustanul said domestic soybean production had declined in recent years, and the government had failed to show the same commitment to boosting production as it did for rice. The budget allocated for soybean production is just a small fraction of that of rice, and there is little in the way of research and development for soybeans.
“That is one of the factors why tofu and tempeh producers prefer imported soybeans, which are superior to local soybeans in terms of quality,” Bustanul said.
According to data from the Central Statistics Agency (BPS), the country imported 17.6 million tons of seven main commodities — rice, corn, wheat, soybeans, sugar, milk and beef — last year, for a total value of $9.4 billion. It exported 250,000 tons of the commodities, valued at $150,000.
Suswono, the agriculture minister, said the country looked to be on target to produce about 779,000 tons of soybeans this year, way off the original target of 1.7 million tons.