Cattle Ships are not the Solution

When the government tried to lower prices of local beef by providing ships to transport cattle, it showed a lack of knowledge on how markets function. The use of these ships may well reduce transportation costs, but this quick fix is not a long-term solution to the problem of high domestic beef prices.

The root cause of high meat prices is the combination of limited supply and high demand. This is a fundamental law of markets everywhere. Therefore, the Jokowi administration should be focusing on increasing the supply of beef in this country. This could be done by expanding domestic meat production by, for example, establishing large cattle raising centers in different regions. If this is seen as too time-consuming, opening the door to imports could be a temporary solution.

February 2, 2016