The Covid-19 pandemic has led to a global food production and distribution being in a critical state. Indonesia could be affected.
INDONESIA has already suffered as a result of the Covid-19 pandemic. The government should not add to the problems by mismanaging food. After all, uncertainty during this time of pandemic means that it is difficult for everybody to calculate the impact on livelihoods and the economy. Preparedness and ensuring food supplies is the best option.
The Food and Agricultural Organization has warned that the corona pandemic has paralyzed a number of economic sectors and could trigger a food crisis in a number of nations from April to May. At that time, competition in world food markets will be increasingly tough. Therefore, the government must be shrewd in its management of the domestic supply and distribution of food.
The recent shortages of sugar were a bitter experience. In September 2019, the government predicted that sugar stocks would be low at the beginning of 2020 because the sugar harvest was late as a result of the long dry season. The government allowed imports of unrefined sugar totaling 521,000 tons. However, approval of these imports only came from the ministry of trade in the third week of March, when sugar prices had already soared by almost 50 percent.
Matters became worse because the supplies of sugar on the global market were increasingly short and there was a deficit. As a result, the price of sugar on the global markets rose by an average of 12 percent at the beginning of 2020, reaching the highest level in the last decade. Therefore, even if sugar is imported, there is no guarantee that the price will fall to the maximum retail price of Rp12,500 per kilogram.
This is the price that we have to pay as a result of the ministry of trade failing to monitor the price of sugar. The sugar trade issue should be a valuable lesson for the government to regulate the market price of other commodities, particularly rice. It is true that Indonesia is fortunate because there are adequate stocks of rice. There are abundant supplies at the beginning of April because a number of rice-producing areas had bumper harvests.
The government estimates that there will be additional production of around 19.8 million tons of rice until the end of August. It is considered that rice supplies are sufficient until the end of the year. However, the government must allow for the possibility of another long dry season. Rice production could be lower than that of last year’s total of 31.3 million tons. Indonesia’s rice production in 2019 was almost 8 percent lower than the previous year’s total.
With production of 31.3 million tons, the stock carried forward to 2020 was also lower, at only 1.7 million tons, 400,000 tons less then at the end of 2018. Unfortunately, stocks are low on the global rice market. Only 5 percent of global rice production is being traded on international markets. The United States Department of Agriculture has also revised its estimate for 2019-2020 global rice production from 499.1 million to 496.1 million tons.
Therefore, the government must be careful in calculating production and stock levels, including taking into consideration the harvest and weather cycle. There must be no mistakes of the kind that happened with sugar. Unfortunately, a shortage of food, especially sugar and rice, resulting from poor food management often leads to rent seekers taking advantage. They exploit the quota system to manipulate food supplies. For example, even though imports flood in, there are still domestic shortages and prices rise.
The same thing happened with the supply of chicken and beef at a time when there were abundant supplies. However, the test for the government is not only Covid-19, but also the Lebaran holiday. The price of these two commodities usually increases during Ramadan and Lebaran, as if there were no link with increased supplies. In the midst of the Covid-19 pandemic, the government should not give these rent seekers even the slightest opportunity.