Salt Industry Needs Fixing

KOMPAS/ADITYA PUTRA PERDANA

Integrated salt was exhibited at the inauguration of Gudang Garam Nasional for six districts, namely North Aceh, Indramayu, Demak, Jepara, Pati and Pamekasan, in Pati, Central Java, on Thursday (30/1/2020).

The sharp fluctuation in the price of salt indicates that this important commodity must receive serious attention because of its economic potential.

The farm level price of salt today is Rp 250-Rp 350 per kilogram, while the production cost is Rp 450-Rp 550 per kg. The low price has lasted since 2019, in contrast to the highest price ever recorded of Rp 1,200.

The price slump in farmed sea salt has several causes, including the high quantity of imported salt. This year’s salt import quota was increased from 2.8 million tons to 2.9 million tons on a projected demand of 4.4 million tons. The projection breakdown is 3.74 million tons of for industries, 321,000 tons for households and 398,000 tons for other purposes. Meanwhile, instead of promoting domestic production, the government has revised salt production downward from 2.5 million tons to 1.5 million tons.

On the other hand, it should be admitted that the quality of farmed sea salt needs improving. Farmed salt contains less than 95 percent of sodium chloride (NaCl) on average, while industries need a grade of above 95 percent. Salt farms are generally small, so it is necessary to form farm clusters for greater productivity. The minimal road infrastructure in salt farming regions further raises transportation costs, cutting into salt farmers’ incomes.

The government is seeking to include sea salt in the category of staple and important commodities so it can set the selling price of salt in a bid to maintain the salt price for tens of thousands of farmers.

This way, farmers can be persuaded that they stand to gain from increasing productivity and quality of their salt.

However, many things must be done to maintain stable salt prices that will give farmers a reasonable amount of profit. Salt farmers should be provided with the appropriate technology to improve the quality of their salt, capital assistance, and guarantees on market and price certainty. This way, farmers can be persuaded that they stand to gain from increasing productivity and quality of their salt.

Ironically, the salt farming industry has recorded a production surplus this year. According to the Maritime Affairs and Fisheries Ministry, the industry produced 778,136 tons of farmed sea salt. Of this figure, 673,100 tons come from surplus production in 2019. In addition to this production yield, state-owned salt producer PT Garam (Persero) has contributed 38,789 tons.

Kompas/Bahana Patria Gupta

Workers transfer last year\'s salt from the warehouse onto trucks at the salt production center in Sedati District, Sidoarjo, East Java, on Wednesday (24/6/2020)

On the other hand, sea salt can increase in value added through industrial use, such as in the textile, pulp and paper, plastics, polyvinyl chloride, and oil and gas industries.

The time has arrived for the government to audit the salt farming industry. The audit must cover the farmland area and potential output, salt farmers, technological and capital management, cottage industries, salt imports, the direction of the downstream salt industry and the supervision of salt imports. An institutional audit is also necessary so that the management of the salt farming industry by the Industry Ministry and Trade Ministry, aside from the maritime affairs ministry, will not make for the ineffective and inefficient development of the salt industry.

The results of these data-driven audits are expected to serve as a reference for the government to formulate its strategy and policy on the integral development of sea salt as a commodity, including adjusting the volume of imported salt on a declining trajectory in keeping with a clear time frame.