May 23, 2012

Indonesia may discard soy import duties

As it seeks to fight higher global prices and boost domestic processing, Indonesia may scrap its 5% tariff on soy imports, an industry ministry official said on Tuesday (May 22).

Indonesia, home to around 240 million people, imports 70% of its annual soy requirements, mostly from the US, the world's top exporter. Soy is mainly grown in the main island of Java and also in parts of Sumatra.

The government of Southeast Asia's largest economy is being lobbied by producers of tofu and tempeh to lift soy duties temporarily, Faiz Ahmad, food and fisheries industry director at the industry ministry, told Reuters.

"The government may consider lifting the soy import duty temporarily to help tofu and tempeh producers coping with the current soy price hike situation," Ahmad added.

Chicago Board of Trade soy fell 0.1% to US$14.11-1/2 per bushel on Tuesday, after hitting a near four-year peak this month.

Last month, the Indonesia Soy Council asked the government to increase soy import duties to 27% from the current 5% and to make further investments in domestic soy farming, in a bid to boost yields.

Soy consumption in Indonesia rose 6% to around 2.4 million tonnes last year, and the country has set an ambitious target of self-sustainability by 2014.

Ahmad said Indonesian soy processing industries consume 1.2 million-1.4 million tonnes of soy annually, of which about 800,000 tonnes is imported. Only around 400,000 tonnes are supplied by local soy farmers.