September 23, 2013

Indonesia removes soy import quotas

In the government's latest moves to quell rising food inflation, Indonesia has made another attempt to free up soy imports and allow wider participation in the oilseed trade.

Indonesia, set to become Southeast Asia's biggest soy importer this year, buys in 70-80% of its soy needs, mainly from the US. Inbound volumes are expected to reach a record 2.1 million tonnes in 2013-14.

But a weak currency and high international prices have driven up domestic prices of soy in recent weeks, while multiple policy changes over the past six months - such as trying to force traders to buy locally and issuing price controls - have kept the market in turmoil.

"We have revised soy import regulations by scraping import permits, import quotas and registered importer rules so that anybody can import soy now," Arlinda Imbang, spokeswoman at the Trade Ministry told reporters, speaking about the latest efforts to relax rules governing the trade.

She said state food procurement agency Bulog will still buy domestic soy from farmers using a floor price, although the ceiling price for tempeh and tofu makers would be scrapped.

Soy is mainly used in the popular Indonesian food staples tempeh and tofu, made by small-scale food processors who went on strike this month to protest against rising prices. The government had already removed soy import quotas, but it had maintained the need for import permits, which traders say were issued too slowly to react to demand spikes, in a process that was at risk of corruption.

Earlier this week, Indonesia's chief economics minister temporarily scrapped the 5% soy import tariff, a measure previously backed by the trade ministry before being rejected by the government. Adding to uncertainty, Indonesia's anti-monopolies regulator has begun a three-month investigation into the country's soy trade because of the rising domestic prices and the strike by the tempeh and tofu makers.