One of the lessons from the price increase problem is the need to strengthen food sovereignty and security as well as to improve governance from the upstream to the downstream.
By
KOMPAS EDITOR
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KOMPAS/RADITYA HELABUMI
Residents buy cheap food at the Pasar Jaya Senen outlet, Central Jakarta, Monday (7/2/2022). The subsidized cheap food is intended for residents of Jakarta Smart Card (KJP) holders to improve food access for residents and maintain food price stability in Jakarta.
The spike in food prices is a new menace haunting the global economy that, apart from energy prices, has the potential to become a source of instability.
The global food price index has surged to a record high in the last two months and it is predicted to remain high for some time to come.
The spike in food and energy prices, which has resulted in higher global inflation, has the potential to increase inflation in Indonesia, which is relatively under control at present, especially with the country’s high import dependence for certain food commodities.
A number of global observers have even warned of potential large-scale social unrest in some parts of the world if food commodity prices, which have reached a record high since 2011, continue to increase. The International Monetary Fund has projected that energy and food prices will remain high for a long time.
The threat of food inflation must be addressed as a serious concern and requires global concerted action because it threatens the world's poorest people, especially in Latin America and Africa.
For Indonesia, the issue of food cannot be taken lightly. High inflation will not only threaten macroeconomic stability, which has just emerged from the impacts of the pandemic, but can also further suppress purchasing power and hit the lower middle class. As around 60 percent of this group’s spending is on food, a spike in food prices could trigger a spike in poverty, which has been growing during the pandemic.
KOMPAS/AGUS SUSANTO (AGS)
Residents pay for cooking oil at a cheap market in Bidara Cina Village, Jatinegara, East Jakarta, Friday (7/1/2022). In January 2022, as many as 20 cheap markets were held at a number of locations in DKI Jakarta by Food Station as a Regional Government Owned Food Company for the DKI Jakarta Provincial Government to maintain stock and stabilize food prices.
The global food price index is expected to remain high for some time to come. In addition to high demand (in line with global recovery), the price increase is also due to a combination of factors such as supply chain disruption due to the pandemic, decline in production due to extreme weather, policy changes in producing countries, as well as competition in the food and energy sectors.
In addition, the geopolitical instability resulting from the Russia-Ukraine conflict that, if it becomes prolonged, will be a major disaster for the world and further push up basic food prices.
The spike in prices and the months-long shortage of a number of imported food commodities in Indonesia must also be acknowledged as consequences of weak mitigation and the government's policy response to the increasing trend in global food prices.
In the case of certain commodities, the policy of surrendering completely to the market mechanism has backfired. After cooking oil and soybeans, a price spike has also occurred for meat. Recently, the prices of several other basic commodities, such as chilies, rice, shallots, and eggs, have also increased.
Facing the pressure of food inflation that threatens the buying power of the lower class, it is important for the government, Bank Indonesia and other relevant agencies to work together to tackle the problem.
One of the lessons from the price increase problem is the need to strengthen food sovereignty and security as well as to improve governance from the upstream to the downstream, from production, stock, distribution, and to prices. The existence of the National Food Agency, with its very broad authority, is expected to help us avoid crises and extreme food turmoil in the future.
This article was translated by Hendarsyah Tarmizi.
