Sri, a 32-year-old mother lives with her husband and two daughters in Malang, Indonesia. She lost her income as a waitress when her restaurant had to lay off staff. Customers stayed away fearing the spread of COVID-19 in Indonesia. Having to rely on the little wages of her husband, she had to adjust the diet of the family: less meat and more carbohydrates to fill the stomachs of her loved ones. Unfortunately, cutting nutrients and replacing them with carbs reflects a general trend among Indonesians. Indonesian dietary diversity and intake of micronutrients ranks low by international standards. Even before the pandemic hit, Sri was unable to give her family the protein and nutrients it needed. She shares this fate with 26 million Indonesians, who lack the income to buy adequate food.
Poor nutrition comes at the expense of Indonesia’s future. About a third of Indonesian children under five years old suffer from stunting, a condition of impaired growth and development stemming from poor nutrition. Stunted children are at risk of having low cognitive skills and show difficulties to learn, which put them at a disadvantage in the labor market. This leaves them behind their healthy and well-fed peers in richer households and widens the gap between the rich and the poor.
The inequality can be reduced if Indonesians were able to buy food at affordable prices. Take chicken as an example. Poultry supplies 65% of all animal protein to Indonesians. However, Indonesians had to pay about US$2.8/kg for broiler chicken meat in 2018, while customers in the EU only paid $2.25/kg. Eggs in Indonesia cost about $2/kg, a third more than in the EU. With prices like these and an income of just about $150/month, it becomes understandable that Sri had to substitute protein with carbs in her family’s diet.
Pork is no alternative for religious reasons and beef is also out of reach. With prices nearly twice as high as on international markets, annual beef consumption in Indonesia stands at about 2 kg per capita, far lower than in neighboring countries such as the Philippines (3.25 kg), Malaysia (4.8 kg), and Vietnam (7.31 kg). Indonesians also consume little fruits and vegetables. Only 4.5% of the population aged five or older reach their daily minimum consumption as suggested by the Indonesian Ministry of Health.
The Head of Research at the Center for Indonesian Policy Studies, Felippa Amanta, argues that import restrictions on food staples and horticultural products prevent necessary price reductions in Indonesia. “The trade restrictions imposed on nutritious food items like beef or fruits have consistently kept domestic prices higher than those on international markets. High food prices are harmful for low-income families who are unable to access quality food at affordable prices.”
Indonesia’s import processes are notoriously complex due to multi-layered requirements and a lack of transparency. Restrictions apply on most food imports, including such important staples as rice, corn, and soy. Corn import restrictions are among the main reasons for the expensive chicken in Indonesia as they have kept domestic corn prices far above international markets. Corn is the main component of poultry feed, and feed is in turn the major cost in Indonesian poultry production. Free access to international markets would bring down production costs, helping chicken prices to cool down.
A major reason for these import restrictions is the welfare of the Indonesian farmers. However, as Amanta explains, “farmers are not the beneficiaries of these trade policies. Despite high domestic consumer prices, they remain among the poorest households in Indonesia. Worse, since two thirds of them produce less than they consume, they are net consumers of food and personally affected by those consumer prices.”
Indonesia recently passed a law that relaxes import restrictions and foreign investment limits. However, it remains to be seen whether dozens of implementing regulations follow the spirit of the law. Initial discussions raised concerns that the government will focus on investments in priority government projects and less on opening the markets for consumer goods.
Much depends on the international environment. If global trade disputes continue and major economic powers close off their markets and fight others by imposing trade barriers, emerging markets like Indonesia will also dig deeper into their trenches. It was encouraging when in 2020, Indonesia was among the 15 nations signing the Regional Comprehensive Economic Partnership (RCEP). It sends a positive signal after the COVID-19 pandemic had initially led to trade restrictions and export bans that disrupted international supply chains.
All eyes will now be on the WTO. With Dr. Ngozi Okonjo-Iweala set to be the next WTO Director General, there is no better way to address questions about the organization’s relevance than by focusing on food trade issues that matter most for the poor. The WTO has launched its Trade Dialogues on Food, with the aim of encouraging a debate on the role of international trade in food security. It is important that the WTO continues this dialogue. Food security is not defined anymore by sufficient food supplies. What matters, instead, is the access to quality food at affordable prices that provide the nutrients consumers need and can absorb. International trade plays a key role in food security and the WTO should be at the forefront of spreading this message. The Dispute Settlement Mechanism also needs to be revitalized so that the WTO does not appear as an ineffective talk shop for which it was often criticized.
The chances of poor Indonesians to achieve food security can increase if domestic efforts in Indonesia go along with global discussions about international trade and food security. This will not just drive the economic recovery from the COVID-19 crisis, but also make sure Sri and millions of poor people around the world have nutritious food on their plates.