Effective Supply Management Key to Price Stability
Trade Minister Enggartiasto Lukita makes an impromptu inspection in Kramat Jati market, East Jakarta, Friday (12/5). The inspection was intended to check prices and stocks of basic commodities ahead of the Ramadhan fasting month and Idul Fitri festivity, especially about onions.
JAKARTA, KOMPAS – As usual, prices of basic commodities are rising ahead of the Ramadhan and Idul Fitri holidays. The government should, therefore, improve the food distribution system by raising the stocks of basic commodities in order to reduce price increases.
In the future, the government needs to increase food production and cut long distribution chains. In addition, the rise in prices as the result of market mechanisms should be addressed.
The chairman of the Association of Indonesian Traditional Market Traders (Ikappi) Abdullah Mansuri, said in Jakarta on Friday that, as usual, the prices of basic commodities especially of staple foods were higher ahead of the Muslim fasting month and Idul Fitri. However, the price increase is slower than during the same occasion in previous years.
The government has, in fact, intervened in the market in order to control the price hike by setting price caps on a number of commodities in the retail market such as sugar, frozen beef, and packaged and bulk cooking oil. However, the government has not yet taken any measures to stabilize prices at traditional markets.
"The retail price cap set by the government does not apply to traditional markets. Indeed, the rise in food prices is not so high because the consumption is relatively stable. However, if the price increase continues, its impact will be dangerous as well, "he said.
Abdullah pointed out that this week the price of bulk cooking oil in traditional markets rose slightly from Rp 12,800 per liter to Rp 12,900 per liter. The price of beef increased by around Rp 1,000 per kilogram, while the sugar price rose from Rp 14,000 per kg to Rp 14,200 per kg.
Abdullah estimates that rising food prices will peak three to seven days before Ramadhan, which will begin on May 27. To that end, the government needs to increase the supply of basic commodities whose prices have begun to increase in traditional markets.
This year, the government has sufficient food stock. According to the Trade Ministry, rice stock held by the State Logistics Agency (Bulog) reaches a total of 2.1 million tons, with cooking oil at 1.5 million liters, sugar at 460,000 tons and frozen buffalo meat at 91,000 tons.
The government has also tried to stabilize food prices by setting retail price caps for sugar, bulk and packaged cooking oil, and frozen beef. In addition, the government has also asked food distributors to register and report warehouses and food stocks to the government on a regular basis.
Previously, in 2015 and 2016, the government’s market intervention was not sufficient. The intervention was conducted only through market operations and brought no significant impact. The inaccuracy of food data, especially of rice production, led to delays in the government\'s plan to import of 1.5 million tons of rice.
Professor at the faculty of agriculture at the Bogor Institute of Agriculture (IPB), Dwi Andreas Santosa, said that the stability of food prices and stocks could be achieved if the government was able to control the supply of staple foods whose prices were highly variable.
Controlling the prices of staple foods is also important for stabilizing the prices in the market. So far, the reference price set by the government does not affect the market. Because, in determining the price, the government does not consider the prevailing price equilibrium.
"Production needs to be increased and supported by accurate data. The government also needs to maintain mutual cooperation with traders and avoid blaming each other," he said.
Garlic
The price of garlic has also begun to increase in Jakarta and other regions. At traditional markets in Jakarta, according to the Jakarta Strategic Food Price Information Center, the garlic price rose from Rp 41,837 per kg on April 11 to Rp 56,329 per kg on May 12. When compared to Jan. 1, the increase reached 70 percent, from an average of Rp 39.488 per kg. At Koja Baru market, North Jakarta, the price increase ahead of the fasting month this year is higher compared to the previous year.
According to the director of Agribusiness Development of National Commodity Center (Pukomnas) Soekam Parwadi, the increase in garlic price was triggered by the lack of supply. Under normal conditions, the demand for garlic in Jakarta reaches 53 tons per day, while Greater Jakarta (Jabodetabek) and Serang totals 88 tons per day.
In other regions, the price of garlic also soared. Agung, 40, a vegetable trader at Wonokromo market, Surabaya, East Java, said the price of garlic began to increase a month ago. On Friday, she sold garlic for Rp 60,000 per kg, rising from Rp 24,000 per kg previously.
At Mawar market, Pontianak, West Kalimantan, the price of garlic rose from Rp 28,000 per kg to Rp 45,000 per kg. According to some traders, the rise in garlic price has continued for the last two weeks largely due to the lack of supply.
The price of garlic in Ambon, Maluku, jumped from Rp 45,000 per kg last week to Rp 56,000 per kg on Friday. The supply is decreasing.
The increase in garlic prices has also occured in many other areas, such as Kupang, East Nusa Tenggara; Medan, North Sumatra; Bandung, West Java; Palembang, South Sumatra; and Semarang and Kendal, Central Java.
The head of the trade office of South Sumatra province, Agus Yudiantoro, said the increasing prices of some commodities was due to the increase in the demand in the market, while the commodity supply was limited. According to him, the price increase also occurred because distributors or merchants wanted to take advantage of the surging demand ahead of the fasting month and Idul Fitri.
Import from China
The director general of domestic trade at the Trade Ministry, Tjahya Widayanti, said the increase in garlic price was triggered by the decline in supply, mostly imported from China. "Garlic imported from China is arriving. Hopefully, the prices will decline soon,” he added.
Members of the Expert Working Group of Food Security Council, Khudori, said that about 95 percent of the national garlic demand was imported. Thus, supervision should be easier. Supply management becomes an important instrument to control prices.
Meanwhile, the director general of foreign trade at the Trade Ministry, Oke Nurwan, said the Trade Ministry and Agriculture Ministry were finalizing a garlic trade regulation. Imports of garlic, which are currently not regulated, would be restricted.
The director of Special Criminal Investigation of Central Java Police, commissioner Luke Akbar Abriari said, the Central Java food task force had started to monitor the movement of commodity prices of staple goods. The team consists of personnel from intelligence, detective, and the Mobile Brigade (Brimob) departments.
A person found to have stockpiled a staple will face a seven-year prison sentence. "The perpetrator will not immediately face criminal charges. It will be through the process of investigation," Lukas said.
(HEN/MKN/JOG/ESA/ETA/ADY/KOR/KRN/EGI/RAM/SEM/NSA/DKA/WER/NIT/FRN/VIO/BAY)
