Ricardo predicts significant rise in grocery prices

JAKARTA (JP): The prices of the nine basic commodities, such as rice and cooking oil, are likely to rise by between 10 percent and 15 percent next week, Ricardo Gelael, president of the Goro Batara Sakti wholesale company, said yesterday.

"The prices of several household items such as detergent and soap could jump by 70 to 75 percent... while the prices of imported products could soar by 300 percent," he said.

Ricardo made the remarks at City Hall after a meeting with city-owned market management company PD Pasar Jaya.

Prices will remain stable until the 10th day after Idul Fitri, in line with the government's appeal to all retailers and wholesalers in the city to maintain current prices, he said.

Big retailers such as Golden Truly, Hero, Gelael and wholesalers including Makro and Goro have been instructed to hold a kind of market operation in a bid to help stabilize the prices of merchandise, especially staple foodstuffs, he said.

"But actually this is really hard for us because the prices (we pay to producers) for goods have already soared... so we really are in a jam here."

Ricardo said that next Wednesday the prices of goods in large supermarkets would definitely jump and there was no way of preventing it.

He said some items, such as cooking oil, were becoming more difficult to find on the shelves.

"In Goro, for instance, every day we need some 1,000 boxes of cooking oil. But these days the distributor can provide only 100 boxes each day."

The problem seems to lie with the cooking oil distribution chain as stocks are available in the factories, he said.

When asked about the possibility of wholesale companies increasing the prices of goods and stockpiling, Ricardo said that it was impossible.

"We can't play with the prices because we have a corporate image to take into account. For me, maintaining Goro's good image is more important... besides, we face fierce competition in this kind of business. Every company wants to give the cheapest prices to customers.

"If there are some companies which do so, it's because this monetary condition forces them to," he said. "Imagine if, for example, you sell cooking oil at Rp 3,000 (30 U.S. cents) but on the next day the price leaps to Rp 5,000. You will have no money to reinvest."

Some retailers even deliberately hide their stock, he said, refusing to elaborate further.

Ricardo said that yesterday's meeting was intended to finalize a plan to run some 65 cooperative shops throughout the city in cooperation with PD Pasar Jaya.

"We will be in charge of its management and impose a management fee amounting to 1 percent from the whole turnover. This is actually a distribution expansion for Goro," he said.

The project is aimed at creating a new face for traditional markets and help boost performance so markets will not be defeated by the existence of supermarkets and other modern stores.

It is also meant to support labor intensive programs, in which the traders and workers will be trained in how to run the shops.

"Many cooperative shops are dying because most of the buyers take the goods and pay for them later, impeding the cash flow. We try to take a different approach now," Ricardo said.

"In this project we will give each shop a capital of Rp 50 million, in the form of goods. The plot will be provided by PD Pasar Jaya, and the design and brand name of Warung Goro will be provided by us."

The shops will accommodate staple food sellers under one big roof with one cashier. The first phase of the project is to start next April on a 5,000-square-meter plot of land at Cikini market in Central Jakarta. It will be a pilot project for fruit, flower and vegetable shops.

"It is estimated that each market will need to have a turnover of Rp 500,000 per 100 square meters per day for it to break even," he said.

When asked whether the monetary crisis will hinder his plan, Ricardo said that he felt optimistic.

"People need food. This is a food retail business... so I think it will work out just fine. This is also a step to anticipate free-market competition."

The head of PD Pasar Jaya, Albert Napitupulu, said yesterday that the cooperation between Goro Batara Sakti and PD Pasar Jaya had been approved by Governor Sutiyoso.

The head of City Council Commission C for financial affairs, Amarullah Asbah, said he hoped the cooperation would also improve the management of Pasar Jaya's operation.

Amarullah said people still regarded Pasar Jaya's management as poor and the company lacking in manpower to face future challenges.

"The cooperation is expected to provide alternatives for people who still love to buy things in traditional markets."

Amarullah said the cooperation should also involve cooperatives of market sellers to enable them to play a greater role in the project.

"The cooperatives are established by sellers. I hope that by involving the cooperatives, small sellers will not be reduced to 'spectators' but rather have a better bargaining position." (edt/ind)