Corn and Salt Imports: Playing Politics with Indonesia’s Food Security

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(illustration: IO/Rudraksha)

IO, Jakarta – At the beginning of the year, the Government announced its decision to import rice, the staple food of all Indonesians, claiming that domestic supply is insufficient, and thus market prices have artificially shot up. Further, the Government soon afterwards decided to import other foodstuffs, i.e. corn and salt. With such essential foods being subject to the vagaries and uncertainties of import markets, the dedication to ‘food sovereignty’ previously trumpeted by President Jokowi will remain yet another empty political promise.

Regulation of the Minister of Trade No. 21 of 2018 contains Provisions for Corn Imports. Corn may be imported to satisfy human dietary requirements, as livestock feed and as an industrial raw material. The agreement to import 171,660 tons of corn was signed on 17 January, and it will be in force until 17 April.  Not just corn and rice: the Ministry of Industry also recommends the gradual import of 3.7 million tons of industrial salt for domestic needs.

Food Politics
And just how urgent is it for us to import foodstuffs? According to Frans B. M. Dabuke, researcher and founder of the Food and Agribusiness Center, in view of the national production rate and price dynamics at the level of the farmer, corn imports are not so urgent, particularly since the import is planned for the Indonesian harvest time. ‘True, with the coming of the major harvest, imports will suppress prices and thereby benefit merchants. However, the Government should put farmers’ welfare as its main concern. Unless there is an emergency, such as extreme price fluctuations, or a sudden and unexpected hike in consumption, or in the event of a natural disaster that causes the harvest to fail. But the fact is that today we see nothing of such,’ Frans reported to the Independent Observer. ‘Imports are justified as depressing prices at the farmer’s level because of oversupply. Well, they have no other incentive: that’s the costliest economic consequence. It’s the farmer’s welfare which is at stake,’ he added.

Something similar was expressed by Abdul Halim, Executive Director of the Maritime Research Center for Humanity: 3.7 million tons of salt imports is a form of ‘food politics’ being played by Government functionaries. ‘Because food politics is the new medium for power. In such a situation, food becomes a source of new funding to cover political interests. How could it be otherwise – for the past 3 years, salt imports have steadily increased.  Even worse, the imported salt has seeped into domestic traditional markets. In other words, Joko Widodo’s government has failed to fulfill its campaign promise that the Republic will be able to maintain sovereignty by covering food needs, thereby raising the welfare of salt miners,’ Halim said.

According to data from the Maritime Research Center for Humanity, 80% of national salt needs have been supplied from imports over the period of 2010-2016. Halim explained that ‘Government Work Plans 2016’ set the target of national salt production at 3.2 million tons. It was initially set at 3.6 million tons before revisions in the Discussion of Financial Notes of the State’s Income and Expenditure Budgets (Anggaran Pemasukan dan Belanja Negara – ‘APBN’) 2016 by the Government and the People’s Representative Council (Dewan Perwakilan Rakyat – ‘DPR’). In practice, the national salt production target for 2016 was not achieved – only a mere 118,054 tons, equal to 3.7% of the 3.2-million-ton target.

Halim explained that there are 6 causes of low salt productivity of miners, i.e. (1) minimal structures and facilities for salt mines; (2) minimal technological intervention to boost productivity of public salt mines, both in terms of quantity and quality, such as the application of prism technology and geo-membrane filter corkscrew technology (teknologi ulir filter – ‘TUF’); (3) poor access to clean water and sanitation in salt mines; (4) the major manipulative role played by dealers in the salt distribution and marketing chain; (5) low salt prices; and (6) failure to distribute life and salt business insurance to salt miners. ‘And this is when the risk of lost or damaged salt production equipment, as well as work accidents with risk of injury or death, are frequently faced by salt miners. In other words, the main cause of the fall in national salt production in 2016 insufficient action of the Government in the welfare of 3 million Indonesian salt miners. This is not always about the weather, the effects of which can actually be anticipated if the Government really cares about the welfare of the nation’s salt miners,’ Halim said.

The salt business is still dominated by imports. However, it is a pity that the Government would decide to import corn at the start of the year, because in 2017 Indonesia actually showed a corn surplus, so imports are totally unnecessary. According to data from the Ministry of Agriculture, corn production in 2017 was 26,028,473 tons, matching demand of 21,081,362 tons. Several years ago, corn imports dropped dramatically. From January to October 2016, Indonesia imported only 130,677 tons. This was a significant drop from the 2015 figure of 3,267,694 tons. Further comparison: corn imports in 2014 stood at 3,253,616 tons, in 2013 3,191,045 tons, in 2012 1,797,876, and in 2011 3,207,657 tons were imported.

Of the total corn needs, 70% is for livestock feed and 30% for human consumption, whether directly or for the processed food industry.

Frans said that according to the data from the Ministry of Agriculture, for the 3 past years corn production did increase as a result of action such as expanded planting and assistance programs. Unfortunately, despite this robust increase, dependence on imports endures.

Governmental Support
With such import policies, we raise the question of ‘Who does the Government support? Farmers or importers?’

‘The obvious conclusion is that the Government fails to support farmers, because the ones who benefit most from this policy are importers. That shows you clearly where the support lies,’ Frans said. He then acknowledged and appreciated the vision behind President Jokowi’s promise, which is to guarantee food sovereignty. ‘” Sovereignty” means that the Government can make any decision on position, policy, or any action simply to optimize the people’s welfare. That is the essence of ‘sovereignty’. The Government must acknowledge that exports and imports are a logical consequence of this vision. No country is completely free of food imports. The question is, ‘Does the import do harm to farmers welfare?’ This is what the Government should make sure does not happen.  This is a contradiction – the vision is clear, but unfortunately the implementation does not follow. This is the first time that imports come in during major harvest – that is unfortunate. This import policy is too focused on short-term interests. This may therefore damage medium- and long-term interests,’ he warned.

Halim said that it is undeniable that the salt import policy would damage the welfare of salt miners. After all, salt will then have to be sold below Government regulation prices, i.e. at Rp 300 per kilogram, while the Government has set the standard price at Rp 550 per kilogram for second-class salt and Rp 750 per kilogram for first-class salt. ‘If we allow this situation to continue, imported salt will flood domestic traditional markets and supermarkets. What are the consequences? The Maritime Research Center for Humanity records that at least 32 small- and medium-scale salt producing and processing businesses along the Northern Coast of Java have gone under, forcing the layoff of 620 workers. That is just at one location – what about other salt production centers across the Archipelago?’ he asked bitterly.

Political Commodities
This is only the second month of 2018, but the Government has decided to import rice, corn, and salt. This gives rise to the speculation that import permits have been expedited because the Government needs money in this political year.

Frans said that food has always been a political commodity. Halim added that the opening of imports shows that what Gus Dur said remains relevant and the proof is now revealed: ‘For each 1 kilogram of salt imported, the importer gains a profit of USD 10.00.’

Halim said that there is a strong indication behind the issuance of salt import permits and quotas. The Maritime Research Center for Humanity records that at least 3 phases engender corrupt practices in the salt sector.

The first phase is the collection of national salt production data. As we all know, other than the Ministry of Marine and Fishery, the other ministries/state agencies involved and responsible in the management of the national salt are the Ministry of Industry, Ministry of Trade, and PT Garam (Persero). Data-collecting authority has recently been delegated to Statistics Indonesia. Bad coordination in policy level, data validity and program targeting among these stakeholders result in disconnection in annual national salt management.

In 2011-2016, the area of productive national salt mines continues to increase, from 13,639 hectares to 24,254 hectares, dispersed over 44 regencies/municipalities in Indonesia, including the Regency of Alor, Regency of Pangkep, and Regency of Selayar Islands. With the level of land productivity that can still be increased from an average rate of 32.94% (Ministry of Marine and Fishery, 2016), salt imports need not even be considered as an option.

The second phase is that the data gaps in national salt production are used by importers to apply for permits and quotas by pressing and closed lobbies to the Government. This is demonstrated by the fact that imports became easier after the issuance of the Regulation of the Minister of Trade of the Republic of Indonesia No. 125 in 2015, concerning the Provisions for Salt Imports, in effect from 29 December 2015. This regulation provides that no entry tariffs imports are imposed on industrial salt, meaning salt imports are inevitable.

The third phase is that when imported salt arrives, trade opportunities in local markets become wide open. By repacking imported salt as local brands, salt importers obtain large profits, especially since the use of imported salt is never monitored nor audited. The food politics show is now easily understandable.

Farmers Have the Capacity
Salt miners currently can apparently only satisfy a small part of domestic salt needs. In reality, national salt miners have the potential ability to satisfy national salt needs, whether for consumption or industry. However, the Government does not facilitate this optimally. In consequence, the tired phrase ‘The NaCl content of national salt is only 94%, while industries require a NaCl level of 97%’ has been recycled for the past 15 years, despite the multiple succession of ministers in many state institutions.

Is it so difficult to increase the NaCl content of the salt produced by national miners? In fact, it is very easy – as long as the Government truly endeavors to protect national salt miners and maintain their welfare. Halim said that since 2011-2016, the area of productive national salt mines has continued to increase. Therefore, it is very much a pity that the greater volume of salt imported by the Government of the Republic of Indonesia originates from India, Australia, and New Zealand, with a small portion from Germany and Denmark. ‘Can you imagine the difference of coastline length in Germany and Indonesia? That’s the irony – that’s how messed up the Government’s management of this country is,’ Halim said.

According to Halim, Indonesia can abstain from importing salt if the Government truly executes the mandate of the late President Soekarno: ‘If food production (salt included) is not strengthened and improved, starvation will occur. National security will gradually be eroded, and our productivity as a nation will fall, and this will cause the extinction of the nation.’

On the other hand, Frans hopes that the Government will place imports as the last option when formulating policies. ‘The vision must be reoriented, from merely increasing production volumes to prioritizing farmers’ welfare – in this case the income level of those affected. When farmers’ income increases, they will have a surplus. They can expand their businesses and increase their productivity. This will benefit everybody, because they will expand, they will invest. To increase farmers’ income, you must ensure their work is secured. Imports will undercut prices at farmers’ level because of oversupply, so there is no more incentive for them to continue; that’s the costliest economic impact. This is the farmers’ welfare at stake.  Increasing prices but maintaining domesticity does not damage the farmers in the short term or the nation in the long run, because imports are actually short-term profits with long-term negative impact. The Government must support farmers. This is the paradox: farmers are always praised, they are the most strategic movers, especially during election-time. But they are not considered at all between elections. They are actually severely marginalized,’ he said. (Dessy Aipipidely)