Fuel price hike to affect food and beverages<\/p>\n
Zakki P. Hakim, The Jakarta Post\/Jakarta<\/p>\n
A 40 percent increase in fuel prices would have little direct
\nimpact on the production cost of food and beverages, but the
\nprices of several commodities could rise significantly due to
\nhigher transportation and packaging costs.<\/p>\n
Fuel only contributes between 3 percent and 9 percent of the
\ntotal manufacturing costs of food and beverages, such as snacks,
\ninstant noodles and canned and bottled drinks.<\/p>\n
\"The fuel prices hike thus might increase prices for most
\nfoodstuffs and beverages by only 1.2 percent to 3.6 percent,\"
\nIndonesian Food and Beverages Association (GAPMMI) executive
\ndirector Thomas Darmawan told reporters over the weekend.<\/p>\n
He went on to explain that the fuel price hike could have an
\nindirect impact on the prices of the commodities through
\ntransportation and packaging costs.<\/p>\n
But since there has not been any estimate yet for the increase
\nin transportation and packaging costs, he could not say what the
\nimpact would be on the prices of the commodities.<\/p>\n
According to Thomas, transportation accounts for 5 percent to
\n8 percent of the total cost of production in the food and
\nbeverage production sector.<\/p>\n
However, the commodity that would suffer the most from the
\nfuel price hike was ice blocks, which would see its customers
\npaying up to 28 percent more, he said.<\/p>\n
Thomas said that fuel prices contributed 70 percent of the
\ntotal costs of making ice blocks, which were used by fishermen to
\npreserve their catch.<\/p>\n
\"The government must not forget that the fuel price hike has a
\nvery significant impact on ice block prices, and eventually would
\nburden fishermen,\" he said.<\/p>\n
The government must anticipate the consequences as expensive
\nice blocks would make fishermen reluctant to go fishing, thus it
\ncould eventually reduce the national seafood output.<\/p>\n
Thomas continued that big corporations had anticipated
\npossible soaring fuel prices by building factories in main cities
\nacross the country, thus reducing transportation costs.<\/p>\n
\"It is the small enterprises that will suffer the most. For
\nexample vegetables, the prices of which are dominated by
\ntransportation costs. Although vegetables are very cheap in
\nvillages, their prices may increase several fold after reaching
\nthe cities,\" he said.<\/p>\n
Thomas welcomed suggestions that the government increase the
\nprices during harvest time, when it is considered the perfect
\ntime to minimize the effect on the country's inflation rate.<\/p>\n
However, he said the government should increase the prices
\ngradually, thus giving time for food producers and the private
\nsector, as well as consumers, to adjust themselves to the hike.<\/p>\n
\"And the government could remove illegal fees, which are
\nimposed on trucks carrying foods and beverages along main routes
\nacross the country,\" he said and added that without the illegal
\nfees, the effect of the rise in food prices could be suppressed.<\/p>\n
Last week, Vice President Jusuf Kalla said that the public
\nwould pay to 40 percent more for fuel by early next year, as the
\ngovernment insisted on raising the price of the commodity in
\norder to lower the fuel subsidy.<\/p>\n
\"(The price hike is) projected to be about 40 percent,\" Kalla
\nsaid last week, adding that the government could no longer afford
\nto shoulder greater subsidies for the commodity, the benefits of
\nwhich are largely enjoyed by car owners.<\/p>\n
The fuel subsidy is estimated to reach a whopping Rp 53.4
\ntrillion next year on the back of global oil prices, against an
\ninitial projection of Rp 19 trillion.<\/p>\n
In comparison, Rp 71.9 trillion has been budgeted for
\ndevelopment spending this year. Recent data from the finance
\nministry showed that the fuel subsidy has cost the government
\nmore than Rp 46 trillion this year as of Nov. 23, while the
\nestimated cost for the year was Rp 59.2 trillion.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/fuel-price-hike-to-affect-food-and-beverages-1447893297",
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"sponsor": "Okusi Associates",
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