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Indonesia: Commodity Prices to Be Controlled

(Aug. 13, 2012) On August 6, 2012, Indonesia's President, Susilo Bambang Yudhoyono, announced that the State Logistics Agency (Badan Urusan Logistik, or Bulog) will soon be able to control prices for food commodities in addition to rice. Although the commodities selected for price controls have not been formally named, Yudhoyono suggested that the supplies of sugar, corn, meat, and soy needed to be secured. (Linda Yulisman, Logistics Agency to Control More Commodities, THE JAKARTA POST (Aug. 7, 2012).)

In the past, Bulog had controlled prices of a number of products, but under reforms suggested by the International Monetary Fund, that control had been limited to rice prices. (Markus Junianto Sihaloho, Indonesian Goverment Urged to Curb Rising Food Prices, THE JAKARTA GLOBE (July 23, 2012).)

The proposal follows rising prices for food staples, including soybeans. Indonesia imports soybeans from the United States, where drought conditions have affected supply and driven up prices. There has been a 60% increase in the retail price of imported soybeans; food prices play a key role in inflation in Indonesia. (Yulisman, supra.) Lawmakers have called on the government to broaden the powers of Bulog in order to keep prices stable. (Sihaloho, supra.) Bulog's slogan, displayed on its webpage, is Andalan Ketahanan Pangan, or “Mainstay of Food Security.” (Bulog website (last visited Aug. 8, 2012).)

Indonesia is the third largest rice-consuming nation in the world. Food security for the country, according to economists, includes increasing domestic production. The government's goal is to attain self-sufficiency in rice, with a surplus of ten million tons of rice by 2014. According to Yudhoyono, the government will be easing barriers in order to improve the level of production of food commodities, by taking such steps as providing land to be devoted to agriculture to counter the current trend to turn agricultural land into plots for residential and industrial use and by enhancing irrigation channels and reservoirs. (Yulisman, supra.)