Jakarta, Feb 12 (Antara) - Indonesia with its 240 million population is
a huge market for food commodities, thus offering a loophole for
'shrewd' businesses to develop and practice oligopoly.
The high rocketing of beef prices in the Indonesian market of late has
led many quarters to argue that cartels have controlled the food
business in Indonesia.
The Indonesian Chamber of Commerce (Kadin) even believes that cartels
have controlled prices in at least six food commodities.
It has predicted that the total benefits that the cartels could enjoy
from the importation of food stuff could reach Rp11.3 trillion per annum
from the total annual imports of foods worth Rp90 trillion.
Kadin Deputy Chairman for logistics affairs Natsir Mansyur said that
the cartels could reap Rp11.3 trillion if, for example, they took a
minimum profit of Rp1,000 per kg beef. It was reported beef importers
took profit between Rp1,000 and Rp5,000 per kg.
"We believe that cartels have the potential to take place in six food
commodity business, namely beef, chickens, sugar, soybean, maize and
rice. From the six commodities they could reap a profit of about Rp11
trillion," he said.
He predicted the profit that the cartels could enjoy could reach the
average range of 15 to 30 percent of the total imports.
Because of the disproportionate benefit the cartels could reap, Ina
Primiana, a researcher of the Research and Economic Development (LP3E)
of Kadin, urged the government to take immediate actions.
She suggested that the government should regulate monopolistic food
importers whose number so far was only a handful. "The way to resolve
this problem is to openly call the tender in the procurement of a
certain food commodity. And if there is a quota it should be opened
publicly," she said.
Based on the LP3E research, importers of, believed to have practiced
oligopolistic business, food commodities took a profit of between
Rp1,000 and Rp5,000 per kg. So, in a year, they could earn Rp11.3
trillion if profit from price increases are also taken into account.
The Kadin finding reinforced a report by the National Economic
Committee last month that there was a group of food importer firms which
practiced oligopoly. This situation could happen due to the lack of
supervision by the government.
After all, the government also issued import permits and quota only for
a handful of businessmen, thus creating a loophole for the cartels to
grow in the food business sector. "The profit can reach over 30
percent," Ina Primiana was quoted as saying by online media Merdeka.com
on Sunday.
She said that this was reflected in the price of beef in the country
which reached about Rp90,000 per kg, whereas in other countries such as
Malaysia, the same beef was only sold at a price of Rp45,000 per kg.
The World Bank recorded that the average beef price per kg in Indonesia
in December 2012 was US$9.76 while prices per kg in Malaysia was
US$4.3, in Thailand US$4.2, In Australia US$4.2, in Japan US$3.9, in
Germany US$4.3 and in India US$7.4.
"Seeing this price comparison it is easy to predict the presence of
cartels. It is illogical that all of our importers uniformly sell beef
at a high price," said Ina.
Based on the Kadin data it could be seen that six food sectors could
have been under the control of cartel business in the country.
In the meantime, Minister of State-owned Enterprises Dahlan Iskan said
he had seen indication of cartel business practices.
Therefore,
he asked state firms doing business in the food sector not to depend on
tenders offered the by Ministry of Agriculture.
Dahlan Iskan said he had asked state firms doing business on food not
to depend on tender projects at the Agriculture Ministry as he had seen
that food cartel practices had been taking place there.
"I made the instruction clearly last year. At that time I learned that
there had been cartel practices at the ministry," Minister Dahlan said
after attending the launch of a book on "The Letter of Dahlan," in
Jakarta on Sunday.
He said that when a tender was called he could see bad indications so
that he instructed food companies under his auspices not to depend on
the ministry of agriculture. However, he refused to elaborate on the
cartel practices which often took place at the ministry. "I don't know
in details because I have become a minister only one year," he added.
Meanwhile, Kadin Deputy Chairman for Food and Husbandry Industry Juan
Permata Adoe said there must be a blue print for the development of food
industry in the country.
"From the case of meat imports, we know that food and husbandry
industry is no longer small in scale," he said. The government must
adopt appropriate measures to increase the competitive edge of local
farmers so that they could increase food production, he said.
"There need to be a step that these (food) products must lay a basis
for the implementation of industrial development," he said.
With regard to the alleged cartels, Kadin said that the government
should crack down the food cartels which allegedly control food prices,
stocks and supplies in the country.
"There have been cartels but the government has not taken any measure
yet," Ina Primiana said adding that the cartels could multiply prices.
She said that the large sum of money that went to the cartels suggested
that the government paid less attention to the interests of the
community, farmers in particular, she said.
When food prices went up or food commodities disappeared from the
market the government appeared to have ignored the problem, she
noted. "Neither has there been a comprehensive plan to increase the
production and quality of food products," she said.
Meanwhile, the Indonesian Farmers Association (HKTI) also urged the
government to stabilize the soaring beef price soon without importing
the commodity.
"The soaring beef price which reaches Rp90 thousand a kg apparently a
result of shortage in beef supplies in the market. But this does not
mean that the government must import beef and leave beef trade to the
market mechanism," HKTI Secretary General Fadli Zon said.
In response to the call on government to crack down on the allege
cartels, Coordinating Minister for Economy Hatta Rajasa stated that the
government will take a stern measure against them.
"We will crack down on the cartels any time they come to the surface
because they will harm the interest of the people," Hatta said. The
minister said that he would coordinate with the related ministers in an
effort to control the beef price.
"I will hold a coordination
meeting and ask Agriculture Minister Suswono whether or not the beef
supply in the country is adequate," Rajasa said.***3***
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