Producers vow to delay price rises<\/p>\n
JAKARTA (JP): Major producers, distributors and retailers have
\nagain pledged to freeze their prices of some basic food
\nessentials until the end of March.<\/p>\n
Minister of Industry and Trade Tunky Ariwibowo said yesterday
\nthat State Logistics Agency chief Beddu Amang and leaders of
\nassociations of food and beverage companies renewed a pledge
\nduring a Wednesday night meeting to keep the prices of basic food
\nstaples at their current level.<\/p>\n
The basic food commodities include rice, sugar, wheatflour and
\nsoybeans for the Indonesian soybean Curd and Soybean Cake
\nCooperative (Kopti).<\/p>\n
"However, there is no guarantee the prices of the staples
\nwould not increase by the time they are sold to consumers.<\/p>\n
"Our economy is driven by a market mechanism. The price for
\nconsumers depends on market forces," he said when asked to
\nexplain why prices of most food commodities in the market
\ncontinued to rise despite a similar pledge made earlier last
\nmonth.<\/p>\n
He said the government could only guarantee that the stocks of
\nbasic staples in the market were adequate to meet demand so that
\nretailers and consumers would not feel it necessary to stockpile
\ncertain commodities.<\/p>\n
Last month food producers, wholesalers and distributors
\npledged to freeze their prices at artificially low levels until a
\nweek after the Islamic Idul Fitri holiday.<\/p>\n
Idul Fitri ended last Saturday.<\/p>\n
Despite the commitment, prices continued to rise between 10
\npercent and over 50 percent.<\/p>\n
The government announced Wednesday that January's monthly
\ninflation rate hit a 25-year high of 6.88 percent.<\/p>\n
Retailers increased the prices of some food essentials such as
\nrice, cooking oil and milk by as much as 100 percent prior to the
\nIdul Fitri holiday, celebrated by about 90 percent of the nation.<\/p>\n
Tunky said the producers carried out their pledge not to raise
\nprices while some even increased their production levels to press
\ndown prices.<\/p>\n
"But the stocks of some commodities such as cooking oil, rice
\nand milk are still very low at many food markets and grocery
\nstores," he said.<\/p>\n
"It seemed that any increase in production was immediately
\nmatched by a similar rise in consumer demand. New stocks, however
\nlarge, were immediately snapped up by buyers," he said.<\/p>\n
But Tunky also blamed the scarcity on retailers who withheld
\ntheir stocks in a bid to gain "windfall profits" from the steep
\nprice rises they expected to occur within the next few weeks.<\/p>\n
Many retailers have indeed predicted that prices would surge
\nsharply again next week.<\/p>\n
"If we let this situation go uncorrected, it will hurt both
\nthe producers and the consumers over time and will cause
\ndisorder in our trading system," he said.<\/p>\n
"This is a market distortion, and our job is to find that
\ndistortion and eliminate it," he added.<\/p>\n
The minister also urged companies to operate their businesses
\nat what he called marginal costs by improving efficiency and
\ncharging only a fair margin.<\/p>\n
Tunky conceded it was still very difficult for producers to
\nproperly set their prices due to wild fluctuations of the rupiah
\nrate against the dollar.<\/p>\n
The country's currency has dropped in value by almost 80
\npercent since July.<\/p>\n
Most producers at the meeting Wednesday night acknowledged
\nextreme difficulty in determining their production costs and
\nselling prices because the rupiah continued to be volatile.<\/p>\n
Tunky also admitted that the uncertainty about prices and the
\nrupiah exchange rate had triggered speculation as many people
\nwere buying much more than they needed forcing retailers to build
\nup stocks much larger than their usual levels to gain profit from
\nthe situation.<\/p>\n
Eva Riyanti Hutapea, vice president of Salim Group's Indofood
\nSukses Makmur -- the largest producer of noodles and wheatflour-
\nbased biscuits and snacks -- said yesterday her company was
\nselling its products far below production costs.<\/p>\n
"We are selling a liter of Bimoli (cooking oil) at Rp 2,850
\n(30 U.S. cents), but the production cost has risen to about Rp
\n5,000," Eva said.<\/p>\n
Jakarta saw massive panic buying for two days early last month
\ndue to fears of severe scarcity in basic necessities after the
\nrupiah plunged to below 10,000 to the dollar. (das)<\/p>\n
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