50 Tempe Producers Halt Production in Bogor as Soybean Price Hikes Take Toll

50 Tempe Producers Halt Production in Bogor as Soybean Price Hikes Take Toll

By Vento Saudale on 6:26 pm August 27, 2013.
A man slices bars of tempe in a kiosk selling fried tempe in Bandung in this May 20, 2013 file photo. Soaring soybean prices in Indonesia have forced at least 50 tempe and tofu factories in Bogor to cease production. (JG Photo/Rezza Estily)

Bogor, West Java. Soaring domestic prices have taken a toll on the local soybean industry, with at least 50 tempe and tofu factories in the West Java town of Bogor alone recently forced to put their businesses on hold. Kasmono, 45, a tempe producer from Kedungbadak village in Bogor, said soybean prices had increased from around Rp 7,000 (64 cents) per kilograms two weeks ago to Rp 9,100 per kilogram on Tuesday. “Demand for tempe in the market hasn’t changed, both in terms of quality and prices. But soybean prices have been continually up,” Kasmono said. “I’m confused [as to what to do].”Kasmono is part of a local, five-member tempe producer group that usually buys five tons of soybean to support its tempe and tofu production every week. Now, he said, the group has had to slow down, making sure their last five tons would be enough to last two weeks in anticipation of higher prices.

“I’m afraid if we use all of our stock, our group will have to purchase soybeans at higher prices while tempe prices in the market remain the same,” Kasmono said.

Members of Kasmono’s group are relatively fortunate to be able to keep running their business, as dozens of their fellow tempe producers in Bogor were forced to mothball production.

Muchtar Shatrie, the head of the Bogor chapter of the Indonesia Tofu and Tempe Primary Cooperative (Primkopti), said 50 out of 131 tempe and tofu factories in Bogor registered in the organization had shut their businesses in the past few weeks.

“Most of those who have closed their businesses are small producers who use less than three tons of soybeans per week,” Muchtar said.

He added the Bogor municipality operated under a quota of 340 tons of soybeans per month.

Muchtar said many local tempe producers were forced to do as Kasmono was doing, reducing their production volumes in order to stall purchasing more expensive soybeans.

Tempe sellers, meanwhile, have increased prices at local markets. In a traditional market in Bogor, a bar of tempe commonly sold at Rp 3,000 was changing hands at Rp 5,000 on Tuesday.

In addition to higher prices, consumers have also reported smaller-than-usual portions of tempe.

Bogor has been among the first to report tempe factories halting their production due to soaring soybean prices. In other regions, tempe producers say they are facing threat of having to suspend their businesses or planning a strike in protest against the price hikes.

On Tuesday, Reuters reported that Indonesia’s soybean inventories are now at multi-year lows, below 300,000 tons, enough to meet around two or three months of demand, with no large shipments expected until October.

The price hikes have been attributed to the threat of a poor harvest in the United States, and the declining value of the Indonesian rupiah against the US dollar. The rupiah is trading at four-year lows.

Indonesia’s Trade Minister Gita Wirjawan said the government was considering scrapping its import tariff for soybeans in an effort to tackle domestic price hikes.

Indonesia’s soybean imports are forecast to hit 1.8 million tons this year, around 70 percent of the country’s annual needs.