February 4, 2008 / 8:16 AM / 10 years ago

Indonesian tempeh makers struggle as soybean prices rise

JAKARTA (Reuters) - Indonesia’s traditional soybean cake, known as tempeh, is a source of livelihood for millions of people, many of whom are now struggling to cope with spiraling soybean prices.

<p>A worker prepares soybean porridge to make tofu in a Jakarta home industry January 18, 2008. Indonesia's traditional soybean cake, known as tempeh, is a source of livelihood for millions of people, many of whom are now struggling to cope with spiralling soybean prices. REUTERS/Enny Nuraheni</p>

The price of imported soybeans has more than doubled to 7,600 rupiah a kg from a year ago, driven by concerns about dwindling U.S. stockpiles and fears that dry weather could reduce soybean output in Argentina, the world’s third-biggest soy producer.

In a bid to contain surging food prices, the Indonesian government on Friday announced that it would subsidize the price of soybean for six months, to the tune of 1,000 rupiah a kilogram.

In Indonesia, many tempeh producers run small family- or individually-owned stalls, and they have found it difficult to pass on the higher cost of ingredients to regular customers.

“Soybean prices are rising every day. I can’t get much money by selling tempeh now, just enough for daily meals,” said Sunaryo, a 55-year-old tempeh maker from Jakarta.

Sunaryo has been making fermented soybean cakes for over three decades in a small windowless room filled with smoke from fire on which he boils the beans.

He says his earnings have halved to 50,000 rupiah ($5.40) a day after the price of imported soybean nearly doubled this month from a year ago, forcing him to shut his workshop for three days and lay off his lone helper.

Sunaryo isn’t alone.

Soaring soybean prices have cut into the earnings of thousands of tempeh makers and vendors in Indonesia, sparking protests among producers and consumers already struggling to cope with surging prices for many basic food items such as cooking oil.

“Soybean is a staple. The government should control the price and ensure supplies. It can’t let go of the price like a horse without a leash,” said Sulchan Rumadi, chairman of Indonesia’s Tempeh and Tofu Cooperatives.

SURGING SOYBEAN IMPORTS

Made from fermented cooked soybean, the chunky-textured tempeh is part of Indonesians’ daily diet, served with rice or as a snack at simple streetside food stalls and upmarket restaurants.

More recently, it has also become increasingly popular among vegans in the west because it has a higher protein content and dietary fiber compared to tofu, which is also made from soybean.

Tempeh producers account for 60 percent of total soybean-based food producers in 92,400 small household workshops or factories, data from the Industry Ministry shows.

“The industry is important for the economy. It absorbs a huge part of the workforce and its consumers range from common people to the president,” said Fauzi Aziz, director general of small-medium scale enterprises at the industry ministry.

Although tempeh originated in Java, it relies on soybean imports and is easily affected by swings in global soybean prices.

The country imports 70 percent of its soybean demand of 2 million tonnes a year, mostly from the United States, the world’s top exporter of soybean.

Indonesia depended almost entirely on local soybeans until the late 1990s when imported beans first flooded the market as a result of International Monetary Fund-driven reforms, in which the state procurement agency lost its monopoly.

The influx of cheaper soybean imports, lack of incentives for farmers and poor farming practices reduced local soybean output to 608,230 tonnes in 2007, from a peak of 1.87 million tonnes in 1992.

“Local soybean is cheaper, but it can only meet about 20 percent of demand due to falling output. Besides, the quality of local soybean is not as good as imported one,” said Rumadi.

SPIRALLING STAPLES

With local production down and global soybean prices up, many Indonesians have been forced to do without tempeh, one of their favorite dishes.

Local media reported that a fried-snack vendor, Slamet, committed suicide as he could not cope with surging food prices, especially tempeh, one of the fried snacks he sold.

The government has tried to reduce the impact of surging prices by scrapping a 10 percent import duty on soybean.

However, analysts and producers said the policy would only benefit importers since they would be able to buy soybean at a cheaper price but would not necessarily pass on the benefit to food producers.

But while many Indonesian are learning to manage without their favorite tempeh, some say they have no alternative.

“Tempeh is expensive now, but we eat it every day because it is much cheaper than chicken,” said Rohimah, a mother of two who works as a house maid and only earns 400,000 rupiah a month.

“I don’t have much money, so I can only buy tempeh.”

($1 = 9,285 rupiah)

Additional reporting Yayat Supriatna, editing by Sugita Katyal and Megan Goldin

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