FREE IMPORT DUTY NOT TO SOLVE SOYBEAN PROBLEM

By Andi Abdussalam

Jakarta, July 28 (ANTARA) - Fluctuating prices will either 'suffocate' consumers or debilitate farmers if the prices of commodities such as for soybean are not ideally balanced.          This price fluctuation has been witnessed lately with soybean, which is the raw material used for the production of tempe (soybean cake) and tofu, considered the two most popular Indonesian side dishes, especially amongst the poorer consumers of Indonesia.          In the last three days however, tempe and tofu have virtually disappeared from the traditional markets and eateries following steps taken by tempe and tofu producers to stop the production in protest of skyrocketing soybean prices.          In response to the problem, the government has decided to waive the import duty on soybean, since about 70 percent of the commodity is imported. Yet, another problem seems to have emerged from this redressal as critics claim that the move might adversely affect farmers at home.          Though the exemption of import duty will soon scale down the price of soybean in the country and help tempe and tofu producers resume their business, this move is expected to lower the price of soybean from about Rp8,000 per kg to Rp7,600 per kg.          According to Deputy Minister for Agricultural Affairs Rusman Heriawan, the price of soybean for tempe and tofu producers is currently as high as Rp8,000 per kg which is putting an undue burden on the lower class people.          "The estimate of a price decline to Rp7,600 per kg is still categorically high particularly in East Java because the average prices are usually between Rp5,000 and Rp6,000 per kg," he said during a soybean grand harvest in Pager Ngumbuk village at the Sidoarjo district of East Java on Saturday.          The deputy minister suggested that the people respond wisely to the government's initiative to waive soybean import duty from five percent to zero percent beginning next August.           "The government's decision to free the importation of soybean from import duty does not imply that the government is bowing to price pressure because the policy will be applicable only for a short term," explained Rusman.          Therefore, he said his side will continue to monitor the implementation of the policy to judge whether it has an effect to restore the price of tempe and tofu, he asserted. "On the other hand, we do not restrict the importation of soybean because the nation's soybean production is not high enough," he added.          Over the last five years, soybean production has increased by about 4.38 percent, while productivity has increased by 1.04 percent and land expansion by 3.1 percent respectively.          But the increase in the production over the past few years is still below the production of soybean seen in the early 90s.          Indonesia could only produce 851,286 tons, or about 29 percent of the demand during the same year. So, Indonesia has had to import 2,087,986 tons.          Data at the Central Bureau of Statistics (BPS) puts the country's need for soybean in 2012 at 2.2 million tons, of which 83.7 percent was for food, 14.7 percent for soy sauce and other industries, 1.2 percent for seed and 0.4 percent for animal feed.          However, the price of soybean has continued to increase of late because of the commodity¿s imports.          "The increase in the price of soybeans in the world market has significantly affected the price at home, since about 70 percent of the country's need for soybeans is imported," said Trade Minister Gita Wirjawan while speaking to the press.            The price of soybean in recent days has reached Rp8,000 per kg, rising from a previous high of Rp5,000 to Rp6,000 that has triggered a three-day strike among tempe and tofu producers, causing the disappearance of this popular staple from the nation¿s  dining tables within the last few days.          Therefore, the government is taking steps to deal with the soybean crisis that has led to a scarcity of tempe and tofu.           According to Coordinating Minister for People's Welfare Agung Laksono, the government had already waived import duty on soybean, which had led to an increase of the commodity's price by 11 percent. The state-owned logistics agency Perum Bulog will, however, resume its role as soybean distributor.          "We are also planning to let Kopti [Indonesian Tofu and Tempe Cooperative] and Primkopti [Premier Indonesian Tofu and Tempe Cooperative] import soybean directly," Agung said after visiting a tempe factory in Bogor.          Yet, the government's decision to exempt the import duty also drew criticism from certain parties, including former president Megawati Soekarnoputri. "The exemption of import duties will allow the importers to import the commodity at will," stated Megawati Soekarnoputri after breaking her fast on Friday.          She said that although the importers might bridge the domestic demand with big volumes of imported soybean, the country's goal of attaining self-sufficiency in soybean production might suffer a setback.          Food resilience, particularly with regards to soybean, can only be achieved if the country's own production machinery is able to meet its domestic demand. "If the government is serious, I think Indonesia can achieve its food resilience", the former president said.          The same opinion was also articulated by Munif Ghulamahdi MS, a researcher and lecturer of the Bogor-based Institute of Agriculture (IPB). He said that the government's plan to waive the import duty on soybean was not the best solution.          "This solution will harm the interest of farmers. Once the import duty is eliminated, imported soybean will flood Indonesian markets and trigger down the price of locally produced soybean," the IPB lecturer explained.          He said that though the current emergency situation demands the exemption of the import duty, this step should not be made for the long term because it could threaten the existence of local farmers.          Munif said that the present price level of Rp6,000 per kg had given the impetus and could revive the farmers¿ enthusiasm to produce soybean domestically.          "However, if the country is flooded with imported goods, it will automatically drag the price down. And in the next grand harvest, the farmers might suffer worse losses," he concluded. ***2*** (T.A014/INE/H-YH) 28-07-2012 19:09:4