Jakarta. Declining soybean prices have helped tempeh and tofu lovers evade the pressure of a strong dollar on their favorite snacks as government officials show a reluctance to prop up the rupiah against the greenback and help importers.
Kristiono, 22, a tempeh seller at Rawa Badak wet market in North Jakarta, said he now sells tempeh at a price 25 percent lower compared the end of last year.
“The price tends to decline,” Kristono said, noting that he did not see any spike in soybean price following the dollar strengthening this year. “We also make our own tempeh and buy soybean in bulk, so any bump in price would not be immediately apparent.”
Indonesia imports most of its soybean from the United States as its efforts to achieve soybean self-sufficiency have repeatedly failed, in part to due to loss of agricultural land to rapid urbanization and farmers choosing to produce other higher-yielding crops.
Soybean futures for delivery in next two months fell 3.9 percent so far this year, according to data from Bloomberg. That dampened the effect of the
weakening rupiah, which had declined 6.1 percent against the dollar during the period, trading at 13,191 against the greenback on Friday.
The price of imported soybeans declined to 0.6 percent so far this year to Rp 11,275 (85 cents) per kilogram in local markets, according to data provided by the Trade Ministry. The local variety saw 0.7 percent increase to Rp 11,040 a kilogram, the data showed.
Still, other sellers doubt the price will stay stable for much longer.
Yayan Sobian, 32, a fried tempeh and tofu snack seller in North Jakarta, said he now sells the snacks at Rp 1,000 a piece — 50 percent higher compared to last year, taking into account both the fuel price increase and the dollar exchange rate.
“If I did not follow suit, I could not make any profits for my wife and children,” Yayan said.
Economists noted the rupiah weakening as capital returns to the US to benefit from an expected higher yield at home, avoiding greater risks in emerging markets such as Indonesia. The US Federal Reserve is expected to increase its funds rate in the second quarter of this year, following a series of positive US economic data.
Still, the government has seized on the opportunity to reduce imports and boosts exports.
“Why should the rupiah be protected?” Coordinating Minister for Economy Affairs Sofyan Djalil told reporters on Friday. “We are improving our economic structure.”
The government plans to give exporters a tax allowance and impose a temporary anti-dumping import tax. It also plans to raise the ethanol content requirement in biodiesel to 15 percent, up from the current 10 percent, in order to reduce diesel fuel imports.