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How to escape from the soybean import trap

Jakarta Post - January 17, 2021

Kadir Ruslan, Jakarta – In Indonesia, tofu-tempeh is a story of folk food with a flavor of imports. For a few days after New Year, tempeh and tofu disappeared from the market as producers halted their business for three days in protest against the soaring price of soybean, the primary material of the popular food, which is mostly imported.

Reports said prices surged due to soaring demand from the world's biggest importer, China, and falling global supplies due to the La Nina weather phenomenon, especially from Brazil, the world's biggest supplier.

For many years, soybeans have been mostly imported, mainly from the United States. Statistics Indonesia (BPS) recorded that Indonesia imported around 2.11 million tons of soybean from January to October last year alone, of which about 90 percent (1.92 million tons) was shipped out from the US.

Surely, soybean self-sufficiency remains a dream we are unable to realize. At the outset of his first term in October 2014, President Joko "Jokowi" Widodo pledged to achieve soybean self-sufficiency within three years – and threatened to fire his agriculture minister if he could not deliver.

In fact, Indonesia has remained a net importer of soybean. Data from the Food and Agriculture Organization (FAO) show that Indonesian soybean consumption averaged 3.2 million tons per year in the last five years, of which 2.67 million tons came from imports. This heavy dependence on imports makes Indonesia vulnerable to supply disruption as occurred late last year due to a steep fall in imports from the US.

Following the soybean crisis, Agriculture Minister Syahrul Yasin Limpo initiated a 200-day program to boost local soybean production through, among other efforts, partnership with investors in production, marketing and absorbing local soybean.

The main causes of the country's soybean deficit are the small acreage of soybean crops and low yield. A BPS survey found that 60 percent of soybean crops were cultivated in paddy fields, meaning that soybean has to share the same farmland as such crops as shallots and red chili in year-round cultivation. In this regard, as the land decision-makers, farmers will prioritize the most profitable crop.

A BPS survey in 2017 also discovered that soybean cultivation was relatively less profitable than other crops, making it less attractive to farmers. The study showed that the profit from 1 hectare of soybean crops only reached 14 percent, compared to 37 percent from irrigated paddy fields, 41 percent from maize, 29 percent from shallots and 51 percent from chili.

Unsurprisingly, due to the small profit, more farmers have shifted to other crops. A BPS survey found that the number of soybean farmers fell 59 percent to 275,000 in 2018 from 672,000 in 2013.

The low profitability of soybean crops was caused by the low yield (production per hectare), which averaged only 1.5 tons in 2019, compared to 3 tons in the US. Moreover, lack of mechanization in cultivation has given rise to the labor cost of soybean that farmers cannot afford to pay.

Hence, programs to increase domestic soybean production require better yields, more efficient cultivation and adequate extension services to empower farmers.

Soybean cultivation relies on local variety with a yield of around 0.6 to 2 tons per hectare. The use of quality seeds makes up no more than 10 percent of the total area planted based on Agriculture Ministry data. The ministry's Research and Development Agency has released many quality soybean seeds but few of them were used by farmers. Imported soybean has been more popular also because its quality is better and its price is lower than local product.

The acreage of soybean crops has also remained rather stagnant. Soybean crops should total 2.5 million to 3.5 million ha to achieve self-sufficiency, but the harvested area even declined from 0.61 million ha in 2015 to 0.18 million ha in 2019, while the potential for crop expansion actually is quite huge, reaching 7.2 million ha.

Regions outside Java have significant potential for soybean cultivation. Surveys show that soybean yields in Bengkulu province in Sumatra could reach 2.2 tons per ha, West Sulawesi 3.1 tons and Papua 2.4 tons. Unfortunately, the three provinces accounted for only 6 percent of the total harvested area in 2019.

On top of that, when it comes to policy, the availability of quality data on soybean production is a pivotal issue to address. Unfortunately, official data produced from a sound methodology have remained unavailable. Since 2016, the BPS has stopped disseminating the official figures for soybean production due to questionable reliability of the methods used to gather the data.

[The writer is the deputy coordinator of the food crops statistics unit at Statistics Indonesia (BPS). The views expressed are his own.]

Source: https://www.thejakartapost.com/academia/2021/01/16/how-to-escape-from-the-soybean-import-trap.htm