Key Messages:

Covid-19 is disrupting Indonesia’s food system. Employment in agriculture is expected to contract by 4.87% and domestic agricultural supply by 6.20%. Imports will decrease by 17.11% while import prices are expected to rise by 1.20% in the short term and by 2.42% in 2022. With reductions in supplies and imports, food shortages and food price inflation must be expected.

Ministry of Trade regulations require importers to state the country of origin when applying for permits. Therefore, importers cannot flexibly find new supplies when export countries close their border during Covid-19. This exacerbates food security risks, causes shortages, and increases prices in Indonesia.

The Indonesian government should consider removing trade barriers on food and agriculture by eliminating tariffs and easing non-automatic import licensing (SPI) requirements for imported key food items like beef and sugar. If tariffs are eliminated, the import price of agriculture goods will still increase, but only by 0.65%.

Indonesia’s economic diplomacy should focus on ensuring continuous food supplies from exporting countries.

The Ministry of Agriculture must protect supply chain actors with additional health measures to ensure the flow of goods.