October 31, 2013

 

Indonesia to import soy from Brazil, US in November

 

 

The government of Indonesia has allowed the National Logistics Agency (Bulog) to import 22,000 tonnes of soy from Brazil and the US in November, in a bid to boost domestic supply and eventually lower prices.

 

The import comes after a government regulation issued on August 28, which stipulates that soy imports could only be conducted by Bulog, state-owned companies, cooperative and/or private entities that participate in the government-sponsored Soy Price Stabilisation Programme.

 

Rito Angky Pratomo, Bulog's director for business development and planning, said the agency’s swift action was made to meet high domestic demand.

 

"The Indonesian Tofu and Tempe Cooperative [KOPTI] has asked the government to stabilise the price by importing soy so that the tofu and tempe [soy cake] sellers and producers can survive," he said.

 

According to Agriculture Ministry's data, domestic soy consumption reached 2.5 million tonnes last year, while farmers could only produce 700,000 tonnes. Consequently, the country had to buy 1.8 million tonnes from overseas.

 

The low soy production, as well as high demand, had caused the price of the commodity to surge from IDR7,400 (US$0.67) to IDR10,000 (US$0.89) per kilogramme in September, the highest point in 2013, Rito said.

 

He said Bulog had a responsibility to import soy to stabilise the price anytime the price of the commodity exceeded the normal price of IDR7,400 (US$0.67) per kilogramme.

 

As soon as the soy arrive from Brazil and the US, the commodity would then be distributed directly to increase the supply in Bali, Jakarta, Medan, North Sumatera, Palembang, South Sumatra, Semarang, Central Java and Surabaya, East Java, Rito said.

 

He added that Bulog had also bought up to 125 tonnes of soy from local farmers as of October.

 

Contacted separately, the chairman of the Indonesian Tofu and Tempe Producers Association (Gakoptindo) Aip Syarifudin said that the price of soy in the market had been decreasing.

 

He said that as of October, the price of soy in Java has decreased to IDR8,200 (US$0.73), down from IDR10,000 (US$0.89) in the previous month. Meanwhile, the soy prices outside Java reached IDR9,400 (US$0.83), a decline from IDR10,300 (US$0.91) in September. Due to transportation costs, he added that the price of soy outside Java was still high.

 

Aip said that the strengthening rupiah from the US dollar had also impacted the decline of soy prices as most local producers were using imported soy to make tofu and tempe. After the soy import duty removal regulation was implemented, Aip estimated that the price of soy would decrease further and the implementation would then boost the volume of imports.

 

The association had to import soy from the US to make tofu and tempe because the domestic production was low. "I had been told by the Agriculture Ministry that the production of soy in Indonesia is increasing, however, whenever we check and visit the farmers in the field, the reality is different," he said.

 

One particular example, Aip mentioned two cases in soy-producing areas in West Nusa Tenggara and Madura, where the productions were far lower that what had been reported by the Agriculture Ministry.

 

The Ministry claimed that farmers in Madura, East Java, had seen big harvests in which they successfully produced 400 to 500 tonnes of soy. However, in reality, the tofu and tempe producers could only buy up to nine tonnes of soy, he said.

 

Aip added that the government should create an industrial area for soy farming like the US had done to improve the quality and quantity of soy production, as well as maintaining the price at the normal rate.