Well that and if the prices rise faster than the wages of the lower income class then there is obviously less demand and more food for the wealthy............
The World Bank (WB) predicts Indonesia will experience a shorter period of repercussions from the global food price crisis compared to other countries in Southeast Asia.
Country director Joachim von Amsberg said Tuesday Indonesia was relatively better suited to weather pressure from the crisis thanks to increases in domestic production and price stabilization measures.
"Many are understandably concerned about the negative impacts from high prices. For a resource rich country like Indonesia, high commodity prices represent a big opportunity to raise investment and reduce poverty," von Amsberg said in a seminar jointly held by WB and the Bogor Agriculture Institute (IPB) in Jakarta.
He said the government should therefore see the global food crisis not as a threat, but as an opportunity to boost its agricultural growth.
He praised the government's pricing policies and cash transfers for the poor, which he said had strengthened people's purchasing power against what he called "the silent tsunami".
The head of economics department of the IPB, Rina Oktaviani, said the acceleration of food prices in Indonesia had started early 2005 before reaching its peak in the second semester of 2007, which saw pressure from rising crude oil, CPO, wheat and gold.
"Until March 2008, the biggest contribution to inflation came from staple food groups and food products such as cooking foods," she said.
However, an agricultural boom, she said, should help boost farmers' wages as long as the government was able to develop infrastructure in rural areas.
Also speaking at the seminar, WB economist Enrique Aldaz-Caroll said the leveling of Indonesia's prices with global prices of foods including rice, maize, cooking oil, sugar, flour and soybeans would not be instantaneous and that regions able to adapt quickly would see less price volatility.
"The speed at which the domestic rice price adjusts to the world price depends on the province. In Jakarta, the adjustment only takes three months, while in West Kalimantan it takes up to two years," Aldaz-Caroll said.
Trade minister Mari Elka Pangestu said it was unlikely food prices would go down in the next two to five years, and that people had no other option than to adapt by working to improve purchasing power.
"Analysts said current commodity prices have already reached their peaks, but they will continue to go up," she said, adding that Indonesia could benefit from the situation by increasing exports.
Indonesia recorded a 41 percent increase in agricultural products exports to US$1.048 billion in the first quarter of 2008 from $740 million in the same period last year.
Agriculture Minister Anton Apriyantono said a longer rainy season brought by climate change had enabled farmers to increase production.
"Because of the climate change, some regions in Indonesia now enjoy three times harvests a year; in April, July and August," he said.
He said climate change would persist into next year, and that the government was increasing spending on fertilizer production to increase output in the sector.
"We need about Rp 17 trillion instead of the Rp 6.7 trillion already allocated," he said.(dia)
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