IO – The Indonesian people’s complaints about the scarcity of cooking oil and high soybean prices have resurfaced as a contentious topic, ironically due to the impact of free-market policies. Indonesia must be able to overcome these two issues since they affect the demands of all households and millions of MSME players. This can be seen in the three-day tofu and tempeh manufacturing strike that took place in the Jakarta metropolitan area known as Jabodetabek (acronym of Jakarta-Bogor-Depok-Tangerang-Bekasi) from February 21 to February 23, 2022. What happened today can be described as long lines and a scramble to get only cooking oil.
Soybeans are the main source of vegetable protein for the majority of Indonesians, and they serve as the primary raw material for tofu, tempeh, soy sauce, tauco, and animal feed manufacturers. After fish, meat, and eggs, tofu and tempeh are the most popular protein sources among Indonesians. In addition to being delicious and high in nutritious protein, processed meals manufactured from soybeans are also inexpensive, making it a prima donna among housewives. However, Indonesia’s internal soybean storage, which can only cover about 10% to 20% of current domestic demand, has become a concern. Meanwhile, imports provide 80 percent of the country’s soybean needs.
Cooking oil is one of the nine fundamental commodities that Indonesians eat on a daily basis in both urban and rural settings. Cooking oil is made from purified plant or animal fats and is mainly used for frying as a liquid at room temperature. Because Indonesia is a Crude Palm Oil (CPO) producing country, Palm Cooking Oil (Refined Bleached Deodorised Olein/RDBO) is the most commonly used cooking oil. Indonesia is the world’s greatest producer and exporter of palm oil, indicating that the country is abundant in the oil.
Palm oil is the sole type of oil utilized in Indonesia, traditional and non-traditional markets only offer refined palm oil as food throughout the coastline and waters from Sabang to Merauke. Apart from food, palm oil is also used in Indonesia’s pharmaceutical and cosmetic sectors. Coconut oil, soybean oil, olive oil, and fish oil are not widely available in Indonesia, and even when they are, are only available in the form of pharmaceutical and cosmetic ingredients, despite the fact that both industries rely heavily on palm oil.
Food security in the face of political instability
Because these two consumables are linked to human requirements, they will become a severe concern in the future if they are not handled as soon as possible. Food, as a basic requirement and a human right, has a significant meaning and role in the life of a nation. Food availability that is insufficient to meet demand can lead to economic instability and a slew of social and political upheavals that jeopardize economic and national stability.
Various factors, according to the Economic Times, are fueling the present price hikes in some agricultural commodity markets, including the covid-19 pandemic, labor shortages, supply chain disruptions, political instability, natural disasters, energy crises, and so on. One of the key causes of rising costs is an ever-increasing demand that isn’t being satisfied by an equal supply. Agricultural commodities such as soybeans, corn, cotton, sugar, coffee, wheat, and palm oil are also affected by rising costs of public expenditures such as sea freight and energy, labor shortages, and raw material shortages.
The demand for food self-sufficiency is great, and the openness of the free trade system, unfortunately, forces Indonesia to sell and import its food. As a result, Indonesia is caught between local potential and threats. Food import dependency might jeopardize social, economic, and political stability. Indonesia will be impacted if international trade circumstances become difficult.
The current war between Russia and Ukraine indirectly contributes to Indonesians’ fears over wheat production battle-necks. Indonesia is still dealing with the national issue of gastrointestinal resilience with the Russia-Ukraine conflict escalation. In Indonesia, crude palm oil, soybeans, and wheat four are becoming increasingly essential. Wheat is a type of plant that yields wheat flour. Wheat four, on the other hand, is widely used in the snack, noodle and bread industries. Indonesia’s wheat requirements are satisfied by imports from other nations, particularly Ukraine, which supplies 30% of Indonesia’s wheat requirements. But, for the time being. Indonesia’s wheat stocks are shaken by the Russian-Ukraine conflict.
Market discrepancy in soybean, wheat, and palm oil due to the instability of the international situation is just a real example at this time which constructs a fear for the wider community, especially for Indonesian. Thus, alternatives and diplomacy between countries must be strengthened in order to restore market stability and food security.
When will Indonesia be able to start cultivating itself?
When we talk about food security, we’re talking about ensuring carbohydrate and protein reserves as a supply of muscle and brain ammunition. The availability of food reserves is determined not by the amount of money available to buy, but by the amount of food reserves that can be generated independently of other countries. Given that Indonesia is the world’s largest exporter of palm oil, many people are wondering how we ended up with a palm oil shortage. Similarly, with rising soybean costs, how can a fertile country like Indonesia not be able to grow its own soybeans, despite the fact that soybeans flourish and breed in Indonesia? Several countries in the world have learned from history to provide their own staple food, such as the USSR which produced wheat after the war, India which learned to cultivate wheat for national needs before eventually becoming the second supplier of wheat in the world, China which was always on alert for food security until the time of Covid-19 hit. Until now, Indonesia’s carbohydrate security is far behind other countries. The tropical climate does not guarantee the availability of the country’s own food. Yet, diplomacy and good relations with other countries cannot always be a guarantee for sufficient food. This also raises questions about the role of Indonesia’s minister of agriculture.
Indonesia, as a developing country in the third world, cannot avoid interdependence with other countries. In fact, food-related sustainable development strategies supported by the United Nations are unlikely to succeed in Indonesia. This is owing to the numerous factors that have an impact both domestically and internationally. This necessitates its own research explanation. The government’s efforts in handling this case, on the other hand, is their responsibility, and the Indonesian people are waiting for a response. The considerations listed below explain why Indonesia has been unable to manage foods such as soybeans, wheat, and palm oil.
The Origin and Root of Rarity
Despite the fact that Indonesia is an archipelagic country with a tropical climate, it is nonetheless a country that imports the majority of its food from other countries. Wheat and soybeans are the most commonly imported staple foods, followed by salt, corn, garlic, and meat. Until recently, cooking oil, soybeans, and wheat have been fundamental goods that have caused concern among moms and chefs, particularly as the month of Ramadan approaches, when it is normal for all basic necessities to see an increase in prices.
Although it is undeniable that Indonesia imports soybeans from other countries, the limited amount of soybeans produced in the country is the primary cause of the current scarcity.
Indonesia has been unable to grow its own soybeans despite having fertile soil, due to a lack of a strong seed industry, wide-scale and efficient farming equipment, and a huge area of special soybeans. Meanwhile, according to Felippa Ann Amanta, the Head of Research Center for Indonesian Policy Studies (CIPS), the low productivity of local soybeans is also influenced by Indonesia’s climate.
Argentina and Brazil, the two main soybean exporting countries, are expected to see a reduction in soybean production as a result of the dry weather that has affected both countries in the last two years, posing a significant risk of crop failure. As a result, demand will move to the United States, the world’s third-largest exporter. Unfortunately, the price of soybeans have increased dramatically, causing US inflation to spike to 7% in 2021 and then to 7.5 percent year on year in January 2022, causing agricultural prices to soar. Regarding this problem, the Indonesian government has begun diplomacy with the US embassy.
The El-Nina phenomena is affecting a number of countries throughout the world. Sea surface temperatures in the Pacific Ocean drop as a result of the El Nina phenomena. Agricultural crops, such as soybeans, are affected by lower sea surface temperatures. Because of the low yields of soybeans, the supply of soybeans on the market is similarly limited.
According to Indonesian Trade Minister Muhammad Lutf, China wholesales soybeans in the international market, where the Chinese government’s new policy on pig feed has spurred farmers to utilize soybeans as feed, prompting China to expand soybean purchases in the international market. The majority of the goods purchased by China are for this year’s harvest season.
Meanwhile, the cooking oil shortage has been exacerbated by the price increase in Crude Palm Oil (CPO), the world’s most popular oil, from 1100 USD to 1340 USD, prompting oil producers to sell cooking oil abroad rather than domestically. The government’s B30 initiative, on the other hand, is one of the reasons why palm oil must be degraded. The B30 program is a government initiative that mandates 70 percent diesel fuel to be mixed with 30 percent diesel fuel. To put it another way, the government is attempting to manufacture biodiesel.
The Covid 19 epidemic is on its third wave in several countries throughout the world. Consumers in other countries who normally consume other vegetable oils have switched to CPO, resulting in increased demand and exports. Although the Indonesian people consume CPO oil, there are only a few CPO producers in the country, and the distribution process takes place across the country. Container prices, as well as shipping costs, are currently higher than they were previously. As a result, the cost of cooking oil increases.
Furthermore, it is apparent that CPO cooking oil hoarding is still prevalent in several parts of Indonesia, with suppliers purchasing cooking oil in excess of capacity and stockpiling it in one location. When there is a shortage, any remaining oil will be sold at an extremely high price. Given that the holy month of Ramadan is just around the corner, and Indonesia has the world’s largest Muslim population, cooking oil will undoubtedly be in high demand, benefiting traders and oil suppliers.
Wheat flour is in short supply for the same reason as soybeans are. The restricted supply on the national level, as well as the war between Russia and Ukraine, is currently a major impediment to wheat imports into Indonesia. Ukraine, which is a major wheat importer to Indonesia, is currently embroiled in a conflict. Wheat is still not a major worry for the society or the government in the country as a whole. Wheat is a subtropical plant that might be difficult to cultivate in Indonesia’s tropical climate. However, wheat development and research in Indonesia has been going on since the early 2000s, and has produced yields for several periods. Several universities in Indonesia have conducted wheat experiments and developments, but unfortunately, the Indonesian government has not paid much attention to it. To this date, wheat fields in Indonesia have been limited to no more than 2000 hectares every year, even less.
Many people believe that food security challenges are still a long way off because global food production is still strong and prices in a number of nations are stable, but the present trend reveals the exact reverse. As previously said, Indonesia must be prepared to handle a food security catastrophe because human needs are intertwined with food security. Ironically, the government must improve this food diplomacy between farmers, producers, and interstate and domestic policy in order to avoid irony.