Food producers, retailers agree to ease prices

JAKARTA (JP): The producers and distributors of food and other essentials agreed yesterday not to raise prices anymore, at least until a week after the Idul Fitri holiday.

They made the commitment not to raise prices at a three-day meeting with Minister of Industry and Trade Tunky Ariwibowo.

"All parties, producers and distributors agreed to share the burden caused by the currency crisis we're facing," Tunky said after the meeting yesterday.

The minister said the agreement affected the price of cooking oil, powdered milk, sugar and detergent.

Tunky said the government could revoke the licenses of distributors if they increased their prices.

He said the ministry would also set up a center for market information which would give round-the-clock information to consumers, he said.

Association of Indonesian Retailers (Aprindo) chairman Steve Sondakh said prices of the essentials would be based on prices prior to when the panic buying hit food markets in major cities Thursday.

People rushed to supermarkets and stores to buy rice, sugar, milk, cooking oil and other important essentials for fear of a possible price increase following the plunge of the rupiah to below 10,000 to the U.S. dollar on Thursday.

The panic buying continued until Friday, but in most cities the situation has calmed down.

Retailers jacked up their prices by as much as 50 percent on soaring demand. Some had to close early because they could not cope with the panicked crowds.

Tunky assured that prices would remain the same and might even drop, at least until a week after Idul Fitri, which falls on Jan. 30 and Jan. 31, he said.

The minister said the associations agreed to operate with marginal costs during the distressed month, in order to supply local demand.

The companies would suffer losses from the increased production costs, but the government would help ease some of the burden, he said.

He said he would talk with Minister of Finance Mar'ie Muhammad to try to suspend import duties and other levies on raw materials for the food industry.

The minister said he would also talk to suppliers of raw materials and to related industries, such as plastic and paper companies, to also freeze their prices.

Indofood director Eva Riyanti Hutapea said her company was willing to take losses during the month.

Eva said the production costs of Indofood products had not increased, but somehow prices escalated by the time the products his store shelves.

"But no matter how much prices rose, consumers continued to buy," she said.

The minister held the meeting with Aprindo, the Milk- Processing Industry Association, the Bread, Biscuit and Noodle Industry Association, the Indonesian Distributors and Stores Association, the Food and Beverage Association, and the Bottled Water Industry Association. (das)