Fri, 11 Apr 2003

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.