TEMPO.CO, Jakarta - Given its yearly occurrence, the rising price of beef during Ramadan should have been long anticipated by the government. It's not really difficult to figure out that from the onset of the fasting month and on through Lebaran, the demand for beef is bound to increase. With unreliable sources of supply, this is sure to lead to soaring prices, a consequence of the basic law of supply and demand. What is difficult to understand is how the government has failed to see that happening when it had slowly but inevitably begun its upward trajectory as far back as August last year.
As of last week, midway through the fasting month, the price of beef stood at between Rp 115,000 and Rp 130,000 per kilogram. President Joko Widodo wanted the price to be lowered to Rp 80,000, pointing to the Rp 90,000 it cost in neighboring Malaysia and Singapore. In Indonesia, he insisted, it should not differ that much.
There is no doubt the higher price here is caused by a shortage of supply as a direct result of the government's policy of limiting beef imports, a policy going back to the Susilo Bambang Yudhoyono presidency. In August last year, the government allowed the importation of 50,000 head of cattle, or an equivalent of 9,000 tons of beef, despite the fact that demand tops 250,000 head of cattle every quarter. Not surprisingly, prices jumped to over Rp120,000 per kilogram.
Limiting imports, in the vain hope of encouraging beef self-sufficiency, has looked like a bad idea for some time now. Despite all the good intentions, domestic beef production has simply been unable to meet demand. So, once again, the import tap was turned wide open.
But the appointment of Perusahaan Perdagangan Indonesia (PPI), a state-owned trading company with a designated mandate to bring in 29,500 tons of beef, has prompted a string of questions. The agriculture ministry previously banned PPI from importing beef because it lacked the required veterinary controls. Another state-owned company was appointed in its place, but its main business was importing sugar and chemicals-not beef. Even if it had been involved at all, it was supplying imported meat to restaurants, rather than for broad public consumption.
Bringing PPI back led to suspicions that the company was being used as a vehicle to provide concessions to certain favored people. Such misgivings were not unfounded. Following the trail, we discovered the real importer was actually Indra Hasan, an old-time cattle trader who is known to be a close associate of Tommy Soeharto. Strangely, the appointment involved the State Intelligence Agency (BIN).
In addition to PPI, there are also importers linked to big names like tycoon Tomy Winata and House of Representatives (DPR) Deputy Speaker Oesman Sapta Oedang and to one company known to be close to prominent Hanura Party politicians. It is, after all, an extremely lucrative business. With beef prices retailing at Rp 70,000-85,000 per kilogram, importing 60,000 tons would bring a cool Rp 4.2 trillion to Rp 5.1 trillion. Strangely enough, however, this 'quota sharing' process is being done without the participation of a key organization: the agriculture ministry.
Besides figuring out how to lower prices, the government should explain how the quota system works. Involving importers who have little or no experience in the beef business could be risky. The goods could fail to arrive and prices could remain high. The practice of quota sharing-particularly when regulations are ignored-is akin to committing corruption. Lest we forget, senior officials of the Justice and Prosperity Party (PKS) went to jail because they accepted bribes from beef importers.
It is imperative that the government come up with a long-term policy to prevent beef prices from fluctuating repeatedly. It can begin by recalculating the annual supply and demand. This is important because data from the Central Statistics Agency (BPS) up to now has proven to be unreliable.
The official number of cattle in Indonesia, for example, has been put at about 15.5 million, equivalent to 2.7 million tons of beef-enough to meet national demand for the next four years. However, 98 percent of the cattle are owned by small-time breeders, who each raise two to four head of cattle in small backyard feedlots. Unlike cattle raised on larger and better regulated farms, they cannot be slaughtered at any one time. Consequently, they cannot be relied on as a collective national supplier of beef.
If we are to achieve food self-sufficiency, the government must create cattle-breeding enclaves in a number of regions, particularly East and West Java and East Nusa Tenggara (NTT). Most of the focus should be on NTT, the most reliable supplier, because diversification means the cost of transportation becomes so much higher.
It is time for the government to map out a solid plan to develop a large-scale cattle industry. Land should be made available for the purpose and incentives must be provided so the program gets a good start. Without a serious and comprehensive work plan, beef self-sufficiency will be hard to achieve. (*)
Read the full story in this week's edition of Tempo English Magazine
