* New food law causing confusion in soybean industry
* Keep to current structure, says major trader
* Indonesia currently battling garlic and onion shortage
JAKARTA, March 22 Indonesia aims to link
traders' imports of soybeans to the volume of the oilseed they
buy at home, an industry ministry official said on Friday, as
the country moves to protect domestic farmers and promote their
Indonesia is struggling to meet ambitious self-sufficiency
targets in many staple foods, while trying to balance the
interests of farmers and consumers, in a country where about
half the population lives on less than $2 per day.
Soybean shipments to Indonesia, which meet 70 percent of its
annual needs of the oilseed through imports, are likely to rise
3 percent to 1.8 million tonnes this year, say industry groups,
and major buyers include FKS Multiagro, Sungai Budi Group and
"We will link soybean import permits to the importers who
are obliged to buy local soybeans," Faiz Achmad, director of the
food and fisheries industry at the industry ministry, told
Reuters. "A company that wants to be able to import white
soybean has to buy local soybeans."
White soybeans are chiefly used by makers of soybean-based
staple foods tofu and tempe.
"There will be no limitation on the number of importers, nor
on import volume," he said. "Any company can import soybean as
long as it buys local soybeans."
Late last year, Indonesia put in place a new food law that
aims to hasten its self-sufficiency targets, but which critics
fear could lead instead to greater curbs on imports and exports
Soybean traders in Southeast Asia's largest economy were
confused over aspects of the new food law they saw as hazy, from
the timeframe to details left to be filled in later by various
government departments over the next three years.
If the government wanted to ensure the cheapest prices for
Indonesian soybean consumers, it should keep the current
structure and do away with the import tariff, said one
"The unintended consequence will be a cartel, less
transparency and higher prices than the international market,"
said the trader, who did not want to be identified because of
the sensitivity of the subject. "The government is hell-bent on
modifying the current structure."
Floor and ceiling prices for domestic soybeans will be set
by the Trade Ministry, Achmad said, adding that a government
team to monitor the soybean market would tackle any problems.
Industry groups say the ministry of trade should announce
the floor and ceiling prices by April 1.
Indonesia, home to around 240 million people, mostly imports
soybean from the United States, and imposes a 5 percent import
Consumption is about 2.5 million to 2.7 million tonnes of
soybeans each year, mostly as a protein-rich substitute for
costlier meat, with the main soybean harvest in late August.
Indonesia's policies on food and agriculture trade have been
criticised by trading partners, including the Organisation for
Economic Cooperation and Development.
As it fights rising global food prices, Indonesia has
extended the role of state procurement body Bulog beyond rice to
help build bigger food stockpiles.
Last month, government advisers urged that food import
tariffs replace import quotas, which they said encouraged bribes
and price spikes in Indonesia.
President Susilo Bambang Yudhoyono recently urged ministers
to do more to tackle inflation in staple foods.