Farmers demand high tariffs on strategic commodities

Farmers demand high tariffs on strategic commodities

Adianto P. Simamora, The Jakarta Post, Jakarta

Thousands of farmers from several provinces held on Thursday a
demonstration here demanding high import tariffs for key
agriculture commodities to protect them from cheaper imported
products.

The farmers also said high tariffs would lift the prices of
the commodities on the local market, and would therefore help
raise their income level.

Siswono Yudohusodo, the chairman of the Indonesian Farmers
Association (HKTI), which organized the rally, said that the
government had to impose a 25 percent import tariff on soybeans,
which was equivalent to about Rp 400 per kilogram.

"The high import tariff on soybeans would encourage more
domestic production," he said. There is currently no tariffs on
soybeans here.

The country imports 40 percent of its soybeans for consumption
mostly from the United States. Indonesia produced only 700,000
tons of soybeans in 2000, far lower than the 1.4 million tons in
1984.

Farmers said in a statement that the decline in output was
mainly due to the low price of the commodity on the local market
amid the massive inflow of cheaper imported soybeans, which had
forced farmers to shift to other crops.

The price of soybeans is now only about Rp 1,200 per kg, down
from Rp 1,874 last year.

Farmers also urged the government to hike import tariffs on
rice and sugar to Rp 900 per kg and Rp 1,200 per kg,
respectively, from the current tariffs of Rp 430 per kg, Rp 550
and Rp 700 per kg.

"The current tariffs are still very low. They will not improve
farmers' income," one farmer said.

"The farmers' income is now at a very critical level. It can't
offset the rising production costs," Siswono said.

The farmers first held their rally in front of the offices of
the Ministry of Finance and then later moved to the Ministry of
Industry and Trade. The farmers, however, were unable to meet the
ministers.

This is not their first protest as they have previously staged
similar rallies.

The government, however, is still undecided about whether to
yield to the farmers' demands.

The country's main international donors, however, have warned
the government not to take on this kind of protectionist trade
policy as it would make the prices of the commodities at home
higher, and would not automatically help improve the welfare of
farmers as most of them are actually not rice consumers.

Ministers who want to accommodate the farmers' demands are
also divided on what amount to put the tariffs at. For instance,
the Ministry of Agriculture has proposed the import tariff for
rice to be increased to about Rp 850 per kg, while the Ministry
of Industry and Trade has proposed a Rp 575 per kg tariff.

Elsewhere, Siswono complained of the rampant illegal import of
rice from Thailand, Vietnam and India entering the country from
the main ports of Tanjung Priok in Jakarta and Belawan Port in
Medan.

Rice is the main staple for more than 210 million people here.
The country's unhusked rice output is expected to reach 52
million tons, which is equal to 30 million tons of rice.

Indonesia is also one of the world's top sugar importers,
aiming to import some 1.6 millions this year to meet the domestic
demand of about 3.3 million tons. The country's sugar output was
about 1.7 million tons annually.

Aside from the above commodities, farmers also urged the
government to raise the import tariff on red onions by up to 50
percent from the current 5 percent, and to also remove the value-
added tax and income tax imposed on agriculture commodities.