Newsletter February 2021 | Addressing a Nutritional Health and Poverty Crisis in Indonesia
Indonesia could be staring down the barrel of a nutritional health crisis. Recent data from the national Statistics Agency showed that 1.63 million Indonesians were pushed into poverty between September 2019 to March 2020. This is notable as the increase occurred before Indonesia went into lockdowns over the pandemic.
Poverty in Indonesia is calculated by the necessary expenditures to afford a decent life. It includes expenses for essentials, 75% of which are food. During the September 2019-March 2020 period, we recorded staple food price increases. Rice went up 1.8%, chicken meat by 5.53%, eggs by 11%, and sugar by 13.3%. This means that food prices were the main drivers of poverty when the pandemic began.
Now the pandemic has placed more people into poverty due to unemployment and economic downturn. Poverty recorded in September 2020 stands at 27.5 million people, compared to 24.8 million a year earlier.
Inevitably, the poor have to sacrifice their nutritional intake and face terrible consequences like the stunted growth of the children. CIPS conducted experiential studies involving women in Sumba in the eastern rural areas of Indonesia. It showed that poor consumers forego protein-rich options in favour of merely carbohydrates when prices rise.
Now we are also facing global food price rises. The FAO reported food prices reaching a 6-year high, with more inflation expected this year around the world. Indonesia will see its food supplies affected. Especially in soy, where global stocks are already precariously low. We import most of our soy and it provides a cheap protein source through tofu and tempeh commonly found on Indonesian plates.
What is the solution? Indonesia needs to find an appropriate balance between locally grown products and food imports.
Firstly, Indonesia is in desperate need of modernising its agriculture. Open markets must enable Indonesian agri-businesses and farmers to access technology, better farming inputs, and knowledge. Further stagnation is not an option as climate change affects the harvests and agriculture keeps harming the environment.
CIPS started a 3-year project that will develop several research papers with the support of the John Templeton Foundation. The project will culminate in a policy roadmap to modernise Indonesia’s agriculture and to ensure the sector’s resiliency against future crises.
Secondly, food imports need to be faster and cheaper. Indonesia needs an automatic import licensing mechanism so that importers can respond promptly to market signals. Indonesians can no longer afford to wait for prolonged ministerial deliberations. They put Indonesia at a disadvantage when it wants to purchase international food at lower prices.
Next week CIPS will release a new policy paper on the role of the government in Indonesia’s rice supply chain. The online launch will be held on 25 February. Sign up here if you’re interested to join.
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Don't forget to check out and download our policy papers here. Through these papers, we present evidence-based arguments to recommend policy changes that focus on building prosperity and better livelihoods for low-income Indonesians.
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