Opening up food trade in Indonesia a win for former Think Tank Shark Tank winner

Indonesian food trade stock
Rainer Heufers

Rainer Heufers | Founder and Executive Director, Center for Indonesian Policy Studies and Senior Fellow, Atlas Network Think Tank MBA

The Center for Indonesian Policy Studies (CIPS) won Atlas Network’s Think Tank Shark Tank competition in 2016 for its pitch to create a massive open online course to engage university students as part of a wider plan to open up food trade in Indonesia – specifically to move the country away from its protection of the local rice industry. In a sign of growing traction of CIPS’ efforts, the Indonesian government recently decided to import 500 thousand tons of rice from Vietnam and Thailand by the end of the month of January.

CIPS is co-hosting Asia Liberty Forum with Atlas Network in Jakarta, Indonesia from February 10-11, 2018.

Indonesians earn less than their neighbors but domestic food prices are very high. The reason is a national food self-sufficiency policy that bans certain import items and heavily restricts the import of others. Yet, despite decades of import restrictions, a policy paper by the Center for Indonesian Policy Studies (CIPS) showed that farmers remain among the poorest citizens. Being net-consumers themselves, they pay a hefty price for food while being paid very little for their own products. With an ever-increasing gap between domestic and international food prices (see the chart for rice prices below), poor households are wasting up to 20 percent of their little income on the effects of import restrictions.

Source: Rice Policy Reform: Removing Restrictions on Rice Trade in Indonesia, CIPS policy paper, Jakarta 2017

When the price of medium-quality rice recently reached Rp 14,100 (USD $1.06) per kg, Indonesian President Widodo decided to allow for imports of 500,000 tons of rice. This move basically acknowledges that prices are artificially high and can be lowered through imports, and secondly, that government-set retail price ceilings do not work at all. These are positions that CIPS has advocated for an entire year.

During the last three months, CIPS’s positions on food price issues and food imports have been mentioned about 100 times in the local media. Half of them appeared in January alone, when the press was hotly discussing the issue of rice imports. The newspapers appear in general quite critical of the food imports but CIPS positions are being reported as valid counter-arguments.

The Indonesian president has probably not decided to allow for rice imports because of CIPS’ advocacy. He must have been driven by political reasons since skyrocketing prices can harm him in upcoming elections. He must have also been warned by the central bank, which regards rice prices as a key driver of consumer price inflation. Having said that, CIPS does have an excellent media presence, which matters in particular during election times. We have added weight to the momentum that made the president permit the import of rice. This is a great inspiration and motivates CIPS to continue and expand its advocacy work.

Since 2017, CIPS has published several policy papers in which we analyze the adverse effects of the food self-sufficiency policy and recommend policy changes. CIPS also publishes a monthly index that compares food prices to those in neighboring countries and estimates how much money an Indonesian family has wasted during the last month alone.

Graphic based on information found at: https://cips-indonesia.org/en/bu-rt-index/

Donations like the generous grant won in Atlas Network’s 2016 Think Tank Shark Tank competition allowed CIPS to develop a massive open online course (MOOC) on food trade in Indonesia. Almost 2,000 participants from more than 90 Indonesian cities have attended and many have reported a better understanding that the self-sufficiency policy undermines food security and that international food trade serves Indonesians best.

CIPS will now broaden its campaign for affordable food for the poor by involving several coalition partners. So far, the national consumer association, the national association of traditional market vendors, and a movement for more nutritious school meals have joined CIPS. Together, we promote cheaper, better and more nutritious food for Indonesians on a dedicated website.

With the support of our donors and together with our coalition partners, CIPS will continue its advocacy work. We were inspired by the recent decision of the president and we will keep up the pressure until after presidential elections in mid-2019.