Indonesia's poor infrastructure blamed for price swings, spoilage

SUKABUMI, Indonesia - Poor infrastructure makes stable pricing difficult at the best of times in Indonesia, but the rural poor are increasingly pinning the blame for wild fluctuations in the price of staples on the policies and unmet promises of President Joko Widodo.

With Southeast Asia's biggest economy growing at its slowest pace in six years, and half its 250 million population living on less than $2 a day, price spikes on foods such as rice, sugar, beef and chillies can be devastating.

"Farming is like gambling, because we never know the price," said 32-year old Rahmat, who farms chillies on the foothills surrounding Mount Salak in West Java, about 115 km (70 miles) south of the capital, Jakarta.

Fresh red chillies are as common on Indonesian dinner tables as salt and pepper in some countries, but over the last 12 months, prices have fluctuated between around 20,000 and 80,000 rupiah ($1.48) per kg, though Rahmat says his production costs have remained at just 10,000 rupiah/kg.

Their journey to table explains much of the volatility. Rahmat's chillies are carried on rickety motorbikes across potholed dirt tracks, then loaded onto unrefrigerated flatbed trucks and bought and sold by up to six traders en route to Jakarta, where they can sit in the world's most congested traffic for hours.

Farmers use traders because of the loans and transport they offer, said Yudi Firmansyah, a chilli trader in Sukabumi who supplies vegetables to three regional markets on a rented truck.

About 15 per cent of chillies reach their destination spoilt or too dry for Indonesian tastes, said Dadi Sudiana, chairman of the Association of Indonesian Chilli Agribusiness.

Spoilage rises to almost 40 per cent of fresh fruit and vegetables, according to industry estimates.

President Widodo took office in October with promises to solve such problems with a massive infrastructure push, but so far his administration has failed to spend the $22 billion budgeted for such projects this year due to a lack of coordination among ministries.

Widodo, whose approval rating has slumped from 72 per cent to just 41 per cent in July, had promised to build more dams, modernise irrigation systems, increase planting areas for foods and provide easier access to credit for smallholder farmers.

To water Rahmat's plants, he relies on rain or fills buckets and small plastic bottles at a nearby stream. It can take up to a week of one worker's labour to water a hectare of crops.

He said he had yet to see any government help under Widodo.

"The government must boost irrigation infrastructure," said the association's Sudiana. "When the rainy season comes we plant chillies, but when the dry season comes we have no other option than to reduce our plants."

Agriculture Minister Amran Sulaiman said 2 trillion rupiah ($145 million) had been allocated this year for dam building in dry areas and the work was ongoing.


Indonesia was once self-sufficient in rice and sugar, but like many other food crops, output has fallen due to competition for farmland from either cash crops like palm oil or from industry and housing.

Since coming to power, Widodo has pursued ambitious self-sufficiency goals to protect domestic farmers.

This has included curbing or delaying imports of raw sugar, beef and cattle, corn and rice, which has resulted in shortages and price rises.

The government blames dry weather, food hoarding and speculators for the price swings, and has increasingly turned to state food buyer Bulog to limit price increases, buying from farmers and selling below market price.

"Bulog was involved to stabilise chilli prices temporarily during Ramadan and Lebaran," the agency's chief Djarot Kusumayakti said. "We're like a fire extinguisher."

Instead of ad hoc imports to help control food prices, Widodo has signed a decree letting government cap prices of staples.

Regional auctions and markets that aim to reduce traders' involvement are also being planned by the government, but that won't address supply constraints.

"Red chilli production is sufficient to cover household demand, which is 400,000 tonnes," Suryamin, head of Indonesia's statistics bureau, told reporters last month. "But there is demand from industries, such as for chilli sauces. So in total, we are still in deficit."

At Jakarta's big Kramat Jati market, chilli sellers said prices can change by the hour, and the produce easily spoils without cold storage.

"The chillies became very expensive after Hari Raya. Everything changed," said David Emma, a restaurant owner buying chillies at a market.

"My customers won't eat at my restaurant if I don't make the food spicy. No matter what the sellers tell me about price, I must buy because I don't have an option."