Some Basic Food Prices Rise, IPB University Expert Explains the Triggers and How to Deal with Them

A number of national food prices, such as rice and chilli, are on the rise. Data from the Strategic Food Price Information Centre (PIHPS) shows that the prices of major food commodities in early 2024 have increased. These prices even exceed the retail prices set by the government.

IPB University Agricultural Economics and Agribusiness Policy expert Dr Feryanto also responded to this condition. Dr Feryanto, a lecturer at the Department of Agribusiness, Faculty of Economics and Management of IPB University, elaborated on the triggers for the increase in food prices.

He explained that the trend of rising food prices has started since the pandemic ended, around 2022. During the pandemic, there were restrictions that resulted in decreased public consumption. Once the pandemic is over, demand becomes high, while food availability is still limited.

This increase in food prices, he said, is not only happening in Indonesia, but also at the world level. This is due to the effects of global climate change and geopolitical conditions such as the Ukraine-Russia war, the Israel-Palestine war, and the China-United States trade war.

“One of the reasons why rice prices continue to rise is the decline in production by 2.05 per cent in 2023 due to El Nino. El Nino causes the planting season to retreat and automatically the harvest season will also retreat,” Dr Feryanto explained.

He added that not only rice, other foodstuffs such as chillies and shallots are also experiencing the same thing. In the case of shallots, market demand tends to be stable, but compared to the low supply, there will still be a shortage of goods.

“Certain commodities are seasonal, so we need the cooperation of the government and farmers to create a planting calendar, so that food availability is not abundant at one time and scarce at another,” he added.

According to Dr Feryanto, an interesting phenomenon in Indonesia is that demand increases during the Christmas and New Year holidays, Chinese New Year, and ahead of Ramadan and Lebaran. High demand for food has the potential to cause price increases, or even if it stabilises, the price position remains higher than before.

“The negative impact that occurs in the short term is a decrease in people’s purchasing power. Furthermore, in the long term the number of poor people in Indonesia increases, because this condition makes people spend more money to get the same goods,” he said.

To anticipate this, the government has introduced a number of social assistance programmes and policies to maintain people’s purchasing power.

Another negative impact, he said, is that inflation will be high so that it can erode the State Budget (APBN) and the purchasing power of the community as a whole. This is because the government must increase the subsidy budget, social assistance and other policies.

Dr Feryanto continued, in the face of such conditions it is necessary to encourage the community to diversify into local food products, such as tubers. People can utilise their yards to grow vegetable commodities. The role of industry is also needed in innovating and developing technology.

“Actually, the middle and upper classes have diversified their food. However, they generally switch to processed wheat products, while we know that wheat is an imported product,” he said.

“As academics, we must provide information and understanding to the public through writing and social media, so that people know to behave not only when food price increases occur, but also how to anticipate them,” Dr Feryanto concluded. (Fatin/Rz) (IAAS/RUM)