February 22, 2013

Indonesia to issue trade rules on soy price determination

As it intends to control soy price fluctuations, Indonesia's Ministry of Commerce (Kemdag) plans to issue three trade regulations (Permendag) which will be the basis for determining the purchase price and sales price (HPP) of soy.

Director General of Domestic Trade Kemdag Sri Agustina enumerates the three trade regulations: first, Permendag to stabilise prices, second, Permendag to determine the price received by farmers and craftsmen; and third, Permedag for price stabilization team. "HPP will be determined each month," said Sri, without specifying the amount.

Meanwhile, the team will assess the stabilisation of international price movements as one basis for determining the HPP. Teams members who are from the Minister of Economy, the Ministry of Industry and the Ministry of Cooperatives and SMEs, will be evaluated every month.

The new regulations would allow all private firms registered as registered importers (IT), including Bulog. However, to become a registered importer of soy, there are conditions that need to be met, such as the importer of soy should have experience over the past three years, or in five years, but not consecutively. In addition, companies should also follow the importer's scheme of soy purchases from local farmers.

Despite being in the final stage, the regulations on soy HPP are still awaiting for the presidential decree (Decree) associated with it. "Currently still waiting for regulation that is still in the final stages of design," said Trade Minister Gita Wirjawan.

With the publication of HPP Permendag soy, Gita promised that sudden change in soy prices will not happen again. In addition, the HPP is expected to stimulate the local soy farmers to increase productivity.

Although still reluctant to mention the amount of soy HPP, Gita said it can suppress the volume of imports in the near future. Gita also informed that out of the 2.4-2.6 million tonnes of national soy per year, domestic production can only contribute 700,000-800,000 tonnes per year.

Data of the Ministry of Commerce shows that currently the price of imported soy is in the range of US$9,299 per kilogramme (kg), slightly higher compared to the average price in January, which is US$9,285 per kg. Meanwhile, local soy prices are now in the range of US$9,285 per kg, down from an average of US$9,545 per kg in January.