Friday, April 29, 2011


       Jakarta, April 29, 2011 (ANTARA) - President Susilo Bambang Yudhoyono has expressed concern about the current food price hikes and their impact on poor families.
       "Fluctuations in food and energy prices are still going on worldwide," the head of state said in Jakarta when kicking off the National Development Planning Congress in Jakarta, Thursday (April 28).
       The price hikes had a negative impact on the poor people, he said, citing the World Bank`s recent press statement revealing that tens of millions of people in the world are categorized as in the poverty line due to the worldwide food price increase.
       Driven in part by higher fuel costs connected to events in the Middle East and North Africa, global food prices are 36 percent above their levels a year ago and remain volatile, pushing people deeper into poverty, according to new World Bank Group numbers released in Washington DC, on April 14.
      The latest edition of the World Bank`s Food Price Watch revealed that a further 10 percent increase in global prices could drive an additional 10 million people below the $1.25 extreme poverty line. A 30 percent price hike could lead to 34 million more poor.
       This is in addition to the 44 million people who have been driven into poverty since last June as a result of the spikes. The World Bank estimates there are about 1.2 billion people living below the poverty line of US$1.25 a day.
      Food prices have soared due to severe weather events in key grain exporting countries, export restrictions, the increasing use for bio-fuel production, and low global stocks. The food price hike is also linked to surging fuel prices -- crude oil increased 21 percent in the first quarter of 2011 as a result of unrest in the Middle East and North Africa.
      In the World Bank`s March 2011 Indonesia Economic Quarterly entitled "2008 Again?", which was launched at the Paramadina Graduate School in Jakarta, last March 16, the bank reminded that despite a bright economic outlook, increases in commodity prices also bring risks for Indonesia.

Many global commodity prices are back at or above their 2008 peaks, according to the World Bank`s press statement available on the bank`s official website.

Shubham Chaudhuri, the World Bank`s Indonesia Lead Economist in the report launching explained that rising commodity prices may bring positive benefits for the country`s GDP as a whole because of Indonesia`s resource wealth.

"However, risks lie for poor households who may be greatly affected by sharp increases in living costs," he warned, adding that rising food price inflation can pose a risk to progress on poverty reduction in Indonesia.

To cope with the food price hike`s negative impacts, President Yudhoyono has instructed a movement to strengthen the food resilience, increase the food production and maintain food price stability.

In a meeting with Helen Clerk, the administrator of the United Nations Development Program (UNDP) and former prime minister of New Zealand, in Jakarta, Thursday (April 28), the head of state stressed the importance of establishing cooperation to overcome worldwide food price hike and energy crisis.

The problems could not be addressed by one country alone, but must be done by a group of countries, for instance in the ASEAN context, Yudhoyono`s special aide for international relations, Teuku Faizasyah, said following the meeting between Yudhoyono and Helen Clerk.

Therefore, the President stressed the importance of cooperation among all parties and institutional collaboration between the UN and countries in the region to overcome the problems.

The ongoing food and energy price turmoil has also caused concerns among G20 member countries.

Acting head of the Finance Ministry`s Public Relations Samsuar Said in his press statement on April 19, said that G20 considered the commodity price volatility as an important issue which could affect developing countries.

G20 is of the view that speculations on commodity market are also one of the causes for the emergence of price uncertainties. Therefore, the G20 assigns the International Organization of Security Commissions (IOSCO) to report to G20 on its studies in September 2011, Samsuar said.

The government has planned to set up an emergency funds to anticipate fluctuations in the global prices of food and energy.

The emergency funds expected to reach Rp16.8 trillion which could be obtained from economization in the 2011 budget use upon an agreement from the House of Representatives (DPR), Yudhoyono said early April, in a press conference after a limited cabinet meeting.

"We have conducted economization efforts and Rp16.8 trillion could be made based upon Instruction Number 7 of 2011, the use of which could later be discussed with the DPR," he said.

He instructed the government officials to save the budget by reducing spending for official trips, workshops and seminars, as well as for procurement of office cars, for instance.

President Yudhoyono hoped the DPR would share his view to allocate the funds for emergency in anticipation of fluctuations in the world price hikes of food and energy.

The government has also outlined nine solutions to keep the domestic food prices stable in the midst of rising world food prices.

"The solutions we are going to implement are approaches from first downstream and later to upstream," President Yudhoyono said at a cabinet meeting on food prices early this year.

The nine solutions are market operations to control the price of certain commodity; special fiscal policy for food trade including exports and imports; assurance of domestic supply to meet demand; assuring that the domestic stock is strong to prevent speculation; increasing food production and productivity; promoting local and family-based food resilience movement; preventing hoarding; assuring accurate calculation or food production; and making sure that a new policy or regulation is in place for the preservation of agricultural land.

The head of state expressed confidence that the country could overcome the current food price hike problem as it had had a successful experience when dealing with the threat on global food crisis in 2007 and 2008.

The Central Bureau of Statistics (BPS) data showed the poverty rate in Indonesia has continued to decline since 2006, although the number of nearly-poor people has remained high.

"If calculated with reference to the poverty line - the food poverty and non-food poverty lines - the number of poor people has decreased from 39.3 million to 31.02 million since 2006," Kecuk Suhariyanto, director of BPS`s Statistical Analytical and Development division, said at a seminar last February 2011.

However, he reminded that 29.39 million nearly poor people were prone to become completely poor due to price hike. "For instance at present if there is a price fluctuation they will fall into poverty," he said. ***4***

(T.F001/A/F001/A/H-YH) 29-04-2011 21:58:56

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