IPB Recommends 3 Policies To Anticipate Food Price Increases

ILLUSTRATION BETWEEN

BOGOR - The Board of Professors (DGB) in collaboration with the Expert Council of the Alumni Association (HA) of IPB University provided three policy recommendations in anticipating the rapid increase in food prices for three commodities, namely cooking oil, soybeans, and beef.

Head of DGB IPB University, Prof. Evy Damayanthi, said that the increase in cooking oil prices, the subsidy mechanism, could still be a solution with accurate calculations.

"For cooking oil, our recommendation urges the government to provide a quick response so that the community can reach the price of cooking oil," said the Chairperson of IPB University's DGB, Prof. Evy Damayanthi, as quoted by Antara, Wednesday, April 6.

According to him, the implementation of subsidies can be carried out directly by the government through the National Food Security Agency with operators from the Logistics Affairs Agency (Bulog). Basic data related to producers, production volumes, and distribution networks of cooking oil must be accurate to map the potential and distribution of cooking oil production nationally.

Then the second, he said, DGB IPB University assessed that the price increase that occurred in soybeans was caused by a decrease in domestic production. The decline in production in the last two decades has weighed on the volatility of the market.

“This causes the proportion of imports to increase to 80 percent of national needs. This shows that soybean prices in Indonesia are highly dependent on international market prices. Following the rules for transmitting food prices, price changes in the international market will be transmitted to the domestic market, although there will be a time lag of about two to three months," he explained.

Evy said that in the short term, the recommended policy would be to oblige importers to temporarily absorb a portion of domestically produced soybeans.

“The prerequisite for implementing this policy is the spatial accuracy of farmer data. The government must set a target ratio of imports to domestic soybean production which is then compiled in a flow map to achieve increased production and loosen imports by involving State-Owned Enterprises (BUMN) as government representatives as well as conducting bilateral and Business to Business cooperation to improve logistics efficiency, " he explained.

Meanwhile for the third point, Evy explained that in the case of beef, the critical situation stems from dependence on the dominant supplying country, namely Australia. Fluctuations in production and prices in supplying countries directly disrupt the domestic market.

Another influencing factor is the high logistics costs due to the long supply chain, plus the exchange rate also affects price formation. On the other hand, local cattle supply is still difficult to expect because farmers do business on a subsistence basis and are not responsive to market incentives and signals.

"The active role of the central and regional governments is very much needed to support logistics cost efficiency," he said.

DGB IPB University and the Expert Assembly of the IPB University Alumni Association also urged that the medium/long term policies need to be implemented more seriously and sustainably for the three commodities.