Indonesia to Scrap Soya Import Duty to Ease High Prices

Indonesia will scrap its 5 percent import duty on soyabeans from August until the end of the year in a bid temper global prices which have hit record highs, an official at the industry ministry said on July 26, 2012. US soyabean futures have risen by as much as 28 percent in the last month as the worst drought in 56 years in the US Midwest threatens harvests.

Supplies of the oilseed have also been affected by a drought in Brazil and Argentina, which damaged crops there. The Indonesian government said in May it was considering scrapping the import duty to cushion against higher global prices. Last year, the government also suspended import duties for rice, soyabeans and wheat in a bid to fight inflation.

"This morning the government agreed to scrap the import duty temporarily until the end of the year ... It aims to ease price pressures," said Faiz Ahmad, director of the ministry's food and fisheries industry. The duty will be lifted from August 1, he added.

Indonesia imports most of its soyabean from the United States, the world's top exporter. Domestic supplies are grown in the main island of Java and also in parts of Sumatra. Indonesian producers of soyabean-based staple foods tofu and tempe had threatened to go on strike this week, the start of the Muslim fasting month of Ramadan, to pressure the government to lift the import duty in a bid to reduce prices.

The Tempe and Tofu Makers Co-operatives Federation told Reuters prices of the protein-rich foods have climbed about 50 percent this year to around 8,000 rupiah ($0.84) a kg in July. Food consumption usually increases in Ramadan. Indonesian soyabean consumption is forecast to rise by as much as 5 percent year-on-year to about 2.7 million tonnes this year, with imports accounting for 80-90 percent of that amount.

The Indonesian unit of global agribusiness Cargill said on July 26, 2012 it was planning to import between 240,000 and 250,000 tonnes of soyabeans in 2012, little changed from the previous year. Cargill Indonesia buys soyabeans for up to 20 wholesale buyers across the country, who then sell the oilseed to retailers or tofu and tempe manufacturers, Jean Louis Guillou, country representative at PT Cargill Indonesia told reporters. "Global production has been reduced quite substantially," said Guillou. "We're very concerned (along) with the Indonesian people ... we'd like the price to be affordable for everyone."