Food producers warned not to cut supply stocks
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)