Food producers warned not to cut supply stocks

JAKARTA (JP): Minister of Trade and Industry Tunky Ariwibowo warned food producers Saturday not to hoard stocks and cut supply to the local market.

The minister said that such an irresponsible act would not only worsen the already panicked market but could also destabilize the economy.

"This practice is irresponsible, I urged these companies to stop it and supply the domestic market immediately," he said after a meeting Saturday with food producers.

Tunky was referring to reports that some producers of food products and other essentials were withholding their products to benefit from the panic buying at stores and supermarkets.

But he did not give a concrete sanction to be imposed on those who were found intentionally building stocks to benefit from the price increases.

"We'll wait and see if they abide by this appeal. If not, we'll find a more effective measure," he said.

"But I urged these companies to disregard the short-term profits and instead, consider the long-term benefits."

The public rushed to supermarkets and other grocery stores to buy essentials such as rice, cooking oil and milk on fears of price increases following the sharp drop in the rupiah to Rp 10,000 against the U.S. dollar on Thursday afternoon. Several supermarkets had to close their stores early because they could not cope with the crowds of shoppers.

As panic buying continued Saturday in shopping centers in the country's major cities, Tunky called for the public to be calm because the government has taken steps to guarantee the supply of food.

"During a hardship like what we're facing now, we need togetherness and to share our burden," he added.

Tunky said food companies complained during the meeting that the turmoil had doubly burdened them.

He said the companies claimed they could not set the prices because of sharp fluctuations of the rupiah against the dollar.

The dollar's sharp appreciation on the rupiah by over 300 percent since early July has inflated the prices of imported materials.

At the same time, the flow of local materials had not been smooth because their suppliers faced the same problems, he said.

But if the companies continued to withhold their products, there would be a shortage in the supply, he said, adding that prices would surge drastically, making the products unaffordable for consumers.

In turn, the producers could suffer losses from lower sales, while they also had to bear high interest rates, he said.

Tunky said the producers had asked the government to help ease some of their burdens during the turmoil.

He said they asked that customs fees to be reduced, and to eliminate the luxury tax on some food products.

"It is a bit curious that food products are imposed with a luxury tax when food is an essential need of the people," he remarked.

He said the producers also asked the government to reevaluate other duties imposed on import activities.

Tunky said he would discuss the matter with Minister of Finance Mar'ie Muhammad.

He said he would also meet soon with the producers of food supporting industries of paper, plastic and cans.

Tunky said the food producers reported that their productions remain normal and that there had been no production cut.

"Factories are still operating three shifts. The only thing they were concern with was the price uncertainty," he said.

He said representatives of the producers and the ministry's senior staff had begun working Saturday on determining stable prices for their products. (das)