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Indonesia's new food agency: No fast food solutions

Fulcrum - April 28, 2022

Maria Monica Wihardja and Siwage Dharma Negara – Indonesia's food policy management has received a potential boost as it has set up a new National Food Agency (NFA), but vast challenges lie ahead as NFA's leader figures out how to feed the world's fourth most populous country in the face of growing external shocks to its food supplies.

Critics of Indonesia's food policy management have lamented its lack of coordination arising from incoherent policies and programmes, lack of quality data, and conflicts of interest among multiple stakeholders. Rising food prices and supply shortages in several parts of the country due to the COVID-19 pandemic and external shocks that have disrupted the global food supply chain have again put Indonesia's food policy management under the spotlight. The recent establishment of the National Food Agency (NFA), based on Presidential Regulation No. 66 (2021), might be a way to overcome the complex issues plaguing this sector.

On 21 February 2022, President Joko Widodo inaugurated Arief Prasetyo Adi as the head of the NFA. This agency will report directly to the president and its main mandate is to harmonise food policies and programmes across various ministries and agencies. The NFA will coordinate, formulate and implement policies on food availability, price stabilisation and stock management, nutrition security, diversification, and safety. However, the NFA faces complex challenges. In a recent online interview with the authors, Mr Adi said that maintaining Indonesia's food security should be possible, as long as conflicts of interest, such as 'people taking advantage of import gaps', could be managed.

There are at least three ways NFA plans to improve food policy coordination and manage conflicts of interest, but it is likely to face difficult challenges without strong political support from the president and the participation of other stakeholders.

First, the NFA intends to enhance the quality of data and transparency on Indonesia's food supplies. Mr Adi recognises that while prioritising domestic food production is important, Indonesia has 'to be honest about food deficits' and allow imports where needed. The NFA is responsible for updating the food supply database via the central government's Commodity Balance Sheet System (Sistem Nasional Neraca Komoditas). Besides basic goods like rice and sugar, the NFA has expanded the list to include other essential commodities such as soybeans, eggs and even chillies. This database expansion is conducted with the line ministries, the national statistical agency, and the private sector. NFA has also developed a food stock and price monitoring system in collaboration with local governments. This consolidated data will help the NFA fine-tune policy decisions regarding the import and export of food commodities.

Second, Mr Adi plans to professionalise the decision-making process and human resources in food management. Based on Presidential Regulation No. 22 (2021), staff in NFA will mostly come from personnel already employed in the food security unit of the Ministry of Agriculture. However, the NFA plans to increase employee capacity in each division to implement its tasks effectively and efficiently. Mr Adi might be just the man for the job. Coming from the private sector, he succeeded in reforming PT Food Station Tjipinang, a Jakarta government-owned enterprise, by professionalising its business processes and human resources. Before his appointment to lead NFA, he led ID Food Holding, a state-owned food holding company, which successfully brought seven of Indonesia's major state-owned food enterprises under one enterprise. With a more professional decision-making process and improved human resources, NFA can perhaps minimise conflicts of interest in the Indonesian food business. Challenges include how some high-level positions in some food agencies or ministries are filled with political appointees with vested interests, who create policies in their favour due to limited oversight and lack of transparency.

Third, the NFA will design a strategic plan ('Renstra' or rencana strategis) involving other stakeholders, including the private sector. Before designing this Renstra, the NFA will first harmonise existing roadmaps and the strategic objectives of the ministries and agencies working with and under NFA. These include the ministries of state-owned enterprises, agriculture, trade, ID Food Holding, Bulog (the National Logistics Agency), local government-owned enterprises, and associations and other communities. After this, NFA will draw up a Renstra that encompasses the whole food supply chain from upstream to downstream. For example, the government's programme on new large-scale agricultural plantations (focusing on production) overseen by the Ministry of Defence must be coordinated with the off-farm, post-harvest programmes, including post-harvest technologies, to minimise food waste and quality deterioration, and to standardise food products.

Also, the cooking oil crisis has shown that it is necessary to include the private sector in Indonesia's overall food management policy. As Mr Adi mentioned, the government alone 'will not be able to overcome food shortages, nor should the government manage food stocks independently.' Active participation and collaboration from all stakeholders are an important foundation for the Government of Indonesia 'to ensure a food system that is inclusive, resilient and sustainable.'

Besides the above three strategies, the NFA plans to increase the national food stock from only rice to eleven food commodities under its mandate. This requires effective policy and programme coordination with various stakeholders, including Bulog, which manages the national rice stock. Bulog will be operating under the NFA.

The NFA will need to adapt and update its strategies and policies iteratively. Given that the current external shocks to the global food supply chain might trigger protectionist policies elsewhere, the NFA should manage and prioritise food affordability and accessibility for Indonesians over self-sufficiency in the short and medium-term. A yet to be published World Bank study found that around one-quarter of 70 million Indonesian households faced food shortages in October 2021, slightly more than five percentage points higher than that of the pre-pandemic period, mostly due to food unaffordability. Addressing these issues will be NFA's critical task and it cannot afford to make a meal of it.

Source: https://fulcrum.sg/indonesias-new-food-agency-no-fast-food-solutions