Fuel Price Hike vs Food Security Who Will Win?

Senin, 24 Juni 2013 | 10:02

The government's decision to increase the price of subsidized fuel ahead of fasting month (Ramadan) and Lebaran (Eid al-Fitr) is considered as a bold move because the price of basic necessities often increases when approaching such religious holiday, raising fears of skyrocketing prices. However, the increasing price of basic necessities could be reduced if market supply is sufficient. So the question now is how exactly is the current condition of basic commodities supply for public ahead of fasting month and Lebaran, especially after the increase of subsidized fuel price?

The basic commodities are rice, sugar, cooking oil, wheat flour, corn, soy, chicken and others. “For rice, its supply condition is very secure,” said Nellys Soekidi, Chairman of Indonesian Rice Millers Association for Jakarta region, Sunday (6/23/2013).

Nellys, who is also the coordinator for rice traders in Cipinang rice market, said rice supply from a number of production centers continued to flow into Cipinang rice market. As the result, the amount of rice stockpiles is more than sufficient, exceeding the daily needs. “The rice supply to Cipinang market usually reaches 3,000 tons a day. This is more than enough to fulfill daily needs of 2,400-2,600 tons.”

Many areas are currently facing rice harvest, leading to an increase in rice stock and supply within the rice market that becomes a barometer of rice price at the national level. “Some areas are still experiencing harvest period, such as Pacitan, Demak, and several other areas in Central Java. Long rainy season has a positive impact on the current productivity of rice,” he added.

With such sufficient supply and stockpiles, Nellys believed the fuel price hike that has been officially applied by the government over the weekend would not generate serious impacts toward rice price volatility in the market. “The fuel price hike will certainly influence the price of rice, but its effect is not too significant.”

Chairman of the Indonesian Cooking Oil Industry Association Adiwisoko Kasman said cooking oil stockpiles in the country are very sufficient to meet the public needs ahead of fasting month and Lebaran. “There is no shortage in cooking oil. The whole needs for this commodity could certainly be fulfilled.”

Begins to Increase

Meanwhile, the price of basic needs in Batam begins to increase two days after the enforcement of fuel price hike. This was discovered through a sudden inspection carried out by Batam Deputy Mayor Rudi in Aviari Market in Batu Aji, one of the busiest traditional markets in the region.

A number of relatively big traders in that market revealed some increase in commodities like egg, cooking oil, carrot, and cayenne pepper. However, the price of most other basic goods is still relatively stable, such as rice, meat, sugar, and flour.

The traders said the increase occurred after the announcement of fuel price hike. According to them, the stockpile and supply of these commodities are still normal but distributors raised the price.

After the sudden inspection, Batam Deputy Mayor Rudi admitted that there is an increase in several basic needs. However, he added, the increase is not large and is still in a minority of these essential items. “In general, the increase is still reasonable as some groceries rose and some remained at their current price.”

Batam City Government calculated the psychological limit of commodity price hike in the city is at 30%. If it happens, the government will conduct various efforts in accordance to its authority to reduce the increase like implementing market operations and increasing the supply of basic needs to the city beyond its normal amount. (aph)

by Hery Lazuardi, Arsyad Paripurna, Yoseph Pencawan
source http://en.bisnis.com