Price Hikes Hit All Commodities, Not Just Food

The prices of a number of basic foodstuffs have risen despite the government’s assurance of sufficient supplies to meet demands. Tthe prices of fuel, animal feed and fertilizers have also started to increase.

KOMPAS/FERGANATA INDRA RIATMOKO

Residents queue to buy cooking oil at a distributor in Muntilan District, Magelang, Central Java, Monday (21/3/2022)..

JAKARTA, KOMPAS — The prices of food, energy, animal feed and fertilizers have all increased this year. Global factors are the main cause behind the price increase. However, the price increases affecting a number of the commodities could be also caused by a number of problems in the domestic market.

In the food sector, the increase in the global price of crude palm oil (CPO) has resulted in an increase in the domestic prices of cooking oils. People can no longer buy bulk cooking oil for prices between Rp 9,000 (63 US cents) and Rp 11,500 per liter. As of Friday, people must buy bulk cooking oil at prices ranging between Rp 17,000 and 20,000 per liter, far higher than the government’s price ceiling (HET) of Rp 14,000 per liter.

Similarly, the prices of basic and premium packaged cooking oil, which previously ranged between Rp 11,000 and Rp 18,000 per liter, respectively, have also increased to Rp 20,000 and Rp 26,000 per liter.

Also read:

> Reducing Individual Comfort

> Scarcity of Biodiesel Fuel Hampers Logistics Truck Operation

The prices of soybean, beef, wheat flour and sugar have also increased. Since the beginning of 2022, soybean prices have increased 9.6 percent to Rp 13,700 per kg in the retail market and Rp 12,300 per kg at the farm level.

Economist Fithra Faisal Hastiadi from the University of Indonesia said that the increase in the prices of a number of food commodities was inseparable from the impacts of the global increase in the prices of food and energy, which had also caused a price increase for imported food commodities, such as soybean, beef, sugar and wheat flour.

The same applies to the high price of cooking oil. Although cooking oil is not an imported commodity, cooking oil prices have also soared due to the global increase in the price of CPO. Many cooking oil producers that do not have CPO and olein factories still have to buy CPO according to the auction price, which is pegged to the international price.

“The government’s inconsistent policy in managing the supply and prices of cooking oil has caused market uncertainty. After imposing a retail price ceiling (HET), which was often [set] below the production cost, the government returned the commodity to the market mechanism. As the result, the prices have gone haywire,” he said.

KOMPAS/ABDULLAH FIKRI ASHRI

Indramayu Police Chief Adjunct Senior Commissioner Lukman Syarif (second from left) together with Acting Head of the Food and Agriculture Security Agency Ahmad Syadali (left) provide information to the media crew regarding the disclosure of alleged irregularities in subsidized fertilizers in Indramayu, West Java, Wednesday (16/2/ 2022)..

Animal Feed and fertilizer

In addition to food prices, the prices of energy, animal feed and fertilizers have also risen. The increased prices of the three commodities have in turn increased the prices of food and processed foods.

PT Pertamina Patra Niaga has twice raised the price of nonsubsidized liquefied petroleum gas (LPG) in recent months, namely in December 2021 and February 2022. The price of a 12-kilogram LPG canister was raised from Rp 162,000 to Rp 182,000.

The prices of raw materials for animal feed, such as cornmeal and soybean meal have also risen. The price of fertilizers such as urea has also increased because of a rise in raw material prices. According to World Bank data, the price of urea increased to $744.2 per ton in February 2022, from an average price of $483.2 per ton in 2021.

Also read:

> Transparency Urged in Use of Cooking Oil Subsidy

> Prices of Some Basic Commodities Soar

The increase in fertilizer prices in the world will also have an impact on prices of subsidized and nonsubsidized fertilizer in the country. During a meeting with Commission IV of the House of Representatives (DPR) on 22 March, the Agriculture Ministry forecast that fertilizer prices would increase in the second quarter of 2022, which could result in an increase in government spending on fertilizer subsidies.

Agriculture Minister Syahrul Yasin Limpo said the ministry needed additional funds of Rp 13 trillion to subsidize the price of fertilizer. The government can only subsidize 9.11 million tons of fertilizer at a total spending of Rp 25.27 trillion in this year’s state budget. According to the initial estimate, or the Definitive Plan for Group Needs (RDKK), the subsidized fertilizer demand for this year is expected to reach 24.3 million tons.

The causes behind the increase in the prices of food, energy, animal feed and fertilizer were not only impacts from the Covid-19 pandemic and weather anomalies in producing countries. The Russian-Ukrainian war also pushed prices even higher.

KOMPAS/RADITYA HELABUMI

Activities at the beef market at a meat stall at Pasar Senen, Jakarta, Thursday (17/3/2022). Approaching the month of Ramadan, the prices of a number of basic commodities are still relatively high, such as beef and cooking oil.

Ramadan-Idul Fitri

The increase in commodity prices has come long before the Ramadan fasting month and Idul Fitri. It is feared that food prices will increase even higher during the fasting month that begins next week and during Idul Fitri, which falls at the end of Ramadan.

The research and development studies deputy secretary-general at the Indonesian Market Traders Association (Ikappi), Putri Bilanova, called on the government to stabilize food supplies and prices, because an increase in prices would affect the people’s buying power, especially people from vulnerable groups, which had not fully recovered yet.

Last week, the Trade Ministry made assurances that the supplies of basic necessities would be sufficient, especially during Ramadan and Idul Fitri. Trade Minister Muhammad Lutfi expressed hope that sufficient supplies would make basic foods more affordable.

Also read:

> Rising Global Food Prices Affect Indonesia

Based on data on the supply of basic commodities among food distributors, or the wholesale market, the cooking oil supply is at an estimated 628,800 tons, while the monthly demand is around 422,000 tons per. The sugar supply is estimated at 525,421 tons for a per month demand of around 260,000 tons.

The estimated supply of other commodities, such as garlic, chicken eggs, chicken meat, beef/buffalo meat, wheat flour, rice, shallots, and chilies, currently exceeds the average monthly demand. Thus, the supplies of a number of basic commodities are considered sufficient.

Agriculture Minister Syahrul Yasin also made a similar guarantee during a meeting with House Commission IV on Tuesday (22/3). He ensured that the supply of 12 strategic foods, namely rice, corn, soybeans, shallots, garlic, red curly chilies, red chili peppers, beef, chicken, chicken eggs, refined sugar, and cooking oil, would be sufficient until May 2022, or even until the end of December 2022. (MKN)

This article was translated by Hendarsyah Tarmizi.