Soybean-Loving Indonesia Missing Out on Cheap Prices
Indonesia, the largest importer of soybeans in Southeast Asia, recently has a problem with cheap soybeans due to new quotas and price ceilings on imports. Because of the new policies, they want to stabilize prices of soybeans while keeping the import fee around 5 percent. Moreover, traders are still unwilling to sign new contracts for imports because they are unsure about the shipments that will lead them to lose profits. From these problems, this led the soybean prices in Jakarta to have increased 12 percent last week while global prices have decreased around 28 percent, hitting the lowest record since last year. However, the price is expected to decrease after U.S. soybeans are offered to be delivered at Indonesian ports at a price of IDR 6,600 per kilogram from mid-September. According to a new soybean program of the Indonesian government, the purpose of this program will increase local production and protect local consumers by setting a fixed ceiling price. Importers will not be allowed to sell soybeans to local manufacturers above the ceiling price and they also will be issued licenses and given quotas. The quotas will be based on the proportion of locally produced soybeans it purchases. However, before the program was started, the price of soybeans changed every month depending on the price of imports and exchange rates. Eventually, it will lead to an increase in price of other products.
This article is relevant to our course about quotas as one of the trade barriers that we will talk about in chapter 2. It relates to the quota of soybeans imported into Indonesia along with a ceiling price in order to keep prices stable.
August 26, 2013, 7:20 AM