The increase in import’s soybean price reveals the volatility in the food security of Indonesia. It lies in the facts that most of the soybean as the tempeh ingredient and tofu comes from overseas. When the price increases, the price of the derived product of soybean also increase. It can lead to the
The leading cause of the increase in soybean prices is the increase in imported soybeans’ price caused by the demand-pull for soybeans from China. In December 2020, Soybeans’ demand from China doubled from 15 million tons to 30 million tons, making the world supply switch to China. Importers outside China are choking their supply, including Indonesia.
Furthermore, Indonesia’s soybean imports are not small and increase from year to year. There is a tendency for Indonesia to enter the level of addiction to soybean imports. Data from BPS revealed that over the past decade, Indonesia’s soybean imports had increased 1.5-fold. In 2010, soybean imports were 1.74 million tons. The number continues reached 2.67 million tons in 2019. Meanwhile, as of October 2020, Indonesia’s soybean imports have got 2.11 million tons of soybeans.
The main reason soybean imports continue to increase can be seen from a supply and demand perspective. In terms of supply, soybean commodities become non-banning commodities which means they are free to enter Indonesia and at any volume. Simultaneously, the local production of soybeans cannot support the national needs caused by many things, especially the low incentive of soybean farmers to replant soybeans due to unfriendly prices. An example is the invalidity of the reference price of local soybean purchases at the farmer level pegged at Rp 8,500 per kilogram in 2020, which regulates in Permendag No. 7/2020.
The two things above will encourage large soybean traders to choose imports. The most rational reason is cheaper and more efficient. Importing soybean commodities means easy to get goods of the desired quality, competitive price, on-time, and continuous supply (unless there are extremes). Why is that? The answer is that soybean import agreements tied-up in business contracts.
The contradiction appears when the big soybean traders collect soybean imports. Sometimes unsustainable supply, total amounts of quotas and scattered soybean distribution increase the cost of containing soybeans or high commercial costs. Besides, when the vast trader chooses import, they are just waiting for some containers sent from abroad, then transported to the storage warehouse. Also, imported soybean includes the assurance-polis that provides certainty.
The problem on the supply side come together with the demand-side problem. Imported soybeans have a better taste for tempeh and tofu. Besides, soybeans import relatively have a large size rather than local soybeans. The demand and supply side issues form a vicious circle of imported soybean dependence challenging to break.
Food Fragility
Although not a staple food, tempeh and tofu’s volatility illustrate Indonesia’s food security’s fragility, it refers to the understanding of food security in Law No. 18 of 2012 on Food. The definition of Food Security in the law mentioned above is the conditions of food fulfilment for the state up to individuals, which is reflected in the availability of sufficient food, both the amount and quality, safe, diverse, nutritious, equitable, and affordable and not contrary to the religion, beliefs, and culture of the community, to be able to live healthy, active, and productive in a sustainable manner.
The phenomena of imported soybeans -which become the raw material of tempeh and tofu- resulted in food availability and nutrition aspects of people’s food bothered. The price of imported soybeans rose to Rp9,250/kg (previously in the range of Rp7,000/kg – Rp7,500/kg), leading to increasing tempeh prices. Even if it does not improve, the size of the tempeh is smaller than the usual size.
The increase in tempeh price will erode the purchasing power of the community towards the tempeh. For example, under normal conditions, consumers can get 300 grams for a unit of money, three thousand rupiahs. The price of raw materials rises and can only get 200 grams. This condition makes tempeh reduced affordability. On the other hand, food security requires food affordability as one of the main elements.
Furthermore, the increase in tempeh’s price or the shrinking size of tempeh or tofu will interfere with people’s nutritional consumption. We need to note that adequate dietary intake is one of the pillars of food security. Tempeh and tofu are the most accessible protein types in society, especially the middle class and below.
Nowadays, tempeh and tofu has been extensive and becomes part of Indonesian society’s culinary culture. It allows the prestigious restaurants in Kemang and warteg (warung Tegal -low budget restaurant) at the side of the Ciliwung provides the tempeh and tofu on their menu. Also, tempeh and tofu have a lower price than the other protein sources such as eggs and meat. The lower price leads the tempeh as the primary protein menu for most Indonesians, especially the lower middle class.
During the pandemic, protein intake is needed in the middle of a pandemic to fulfil nutritional dietary to maintain body immunity amid the covid-19 pandemic. One of the most readily available protein intakes in everyday life is tempeh and tofu. Also, animal proteins such as chicken meat or eggs, or freshwater fish, are inaccessible almost daily. They will access the protein for “free” when they gather on slametan and the other traditional ceremony.
There is some policy needed to be executed both in the short and long term. So, the vicious circle of soybean imports does not occur continuously. In a short time, the government encourages tempeh or tofu entrepreneurs not to raise the price of products but to resize it. Then, looking for alternative soy producing countries beyond traditional producer. Ensuring the long-term contract on imported soybean is also essential. At least there is a one-year trade contract to secure the soybean from the producer.
No less critical, the government, through the food task force (satgas pangan) must investigate whether the increase in soybean prices lies in the moral hazard practice or not. As we know, since mid-December 2020, the high demand from China for world soybean. This investigation is essential considering imported commodities, especially food and in contact with many people, attracting an influx of rente hunters.
In the long run, ensuring domestic soybean production is abundant to meet most domestic demand. The other thing is to produce local soybeans with the same quality and taste as the imported soybean. The local soybeans should have cheaper less on price. They could replace the Indonesian taste that accustomed to the imported soybeans.
Written by Rusli Abdulah.
The views and opinions expressed in this article are those of the author.
