COVID-19 restrictions have pushed an extra 1.1 million Indonesians into poverty, according to the World Bank.
- Before the pandemic, economic and population growth led to increased food consumption in Indonesia
- Now 10 per cent of the population has been classed as poor
- ABARES says increased food imports could help reverse the trend
It says the pandemic has pushed poverty-reduction progress in Indonesia back three years and that 27.5 million Indonesians – 10 per cent of the population – are now classified as poor.
According to a new paper produced by the Australian Bureau of Agricultural and Resource Economics (ABARES), Indonesia’s trade policies, since 2012 in particular, have contributed to many Indonesians being poor and hungry.
“The historical focus on self-sufficiency has had a high economic and social cost, particularly through higher food prices,” it said.
Recently ABARES executive director Jared Greenville said growth prospects for Indonesia’s food market were enormous.
“We expect food demand to quadruple by 2050 based on rapid growth in the country’s demand for more diverse and higher-value foods such as meat, dairy, fruit and vegetables,” he said.
Foreign investment could make food cheaper
ABARES suggests that allowing more foreign investment could decrease Indonesian food prices and improve quality.
It also predicts that once Indonesia’s health crisis subsides, its growing and increasingly urbanised middle class will pressure policy makers to allow more imported food into the country.
Dr Greenville said those products could include cold-climate Australian fruit.
“Red meat is another one where there’s a large opportunity,” he said.
Middle class will demand more imports
ABARES said it was likely that about three quarters of the value of food-consumption growth in Indonesia would come from imported products by 2050.
Dr Greenville acknowledged many Australian farmers – particularly beef producers – may be frustrated by failed attempts to sell into the Indonesian market.
But he said persistence was the key.
“Australia does have a long relationship with Indonesia, being one of our closest neighbours … there have been frustrations in the trade and it’s a fairly complex regulatory environment in Indonesia to engage with,” he said.
“But I think the incremental and the long-term story really points to the value of persisting at closer market ties.