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Price rises push U.S. soy beyond reach of poorSURABAYA, Indonesia (AP)--With the dollar a day he earns scrounging for scrap metal and paper, Jumadi can't buy his family beef or even chicken. But until now, the rail-thin scavenger could at least afford soy. His wife and two children snacked on slabs of fried fermented soy, known as tempeh, and tossed the cake-like staple into bland bowls of noodles and soup. The soy provided protein, and it was cheap. Not any more. The cost of tempeh and tofu has doubled to record highs, driven by the soaring price of soybeans imported from the United States. "What kind of life is this?" complained the 25-year-old, who like many Indonesians goes by only one name, as he stood outside his plywood shack that was buzzing with flies. "I just eat crackers now." The cost of soy is spreading hunger on the country's main island of Java, where millions of poor and working-class families depend on tofu and tempeh every day. It is also devastating an entire local industry based on soy products. Hundreds of factories have closed, thousands of people have taken to the streets to protest soy prices and at least one soy vendor killed himself after falling into debt. The lessons of the soy crunch, however, go far beyond Indonesia. Over the past decade, Indonesia went from growing more than half its soy to relying on the U.S. for 70 percent of it. Now the poor among this country's 220 million people are going hungry because of changes thousands of miles beyond their shores. It is the same story for dozens of countries that came to depend on richer nations for cheap food, only to find themselves squeezed when prices start rising last year. "There has been a drastic change in prices and these smaller countries have little to say. They basically have to take it," said Abdolreza Abbassian, a grain economist with the FAO. "They were exposed to the negative sides of globalization, rather than the positive." Soy has long been a staple in Indonesia. But in the 1990s, farmers complained that it was too expensive to grow because the government did not provide cheap seed or low-interest loans. At the same time, they could not compete with cheaper, better soy from countries like the United States, where farmers had advanced technology and government subsidies. Ruslan, who farms 7 1/2 acres of land in Ponorogo in East Java, planted soybean for two decades. But in the late 1990s, the 50-year-old farmer began growing melons, corn, onions and chili instead. "I got out of the soybean business because the cost of production was so high that I was not making any profit," he said. Because of farmers like Ruslan, Indonesia's soy production dropped over the past nine years from 1.4 million tons to around 700,000. The country stopped fixing prices for imported soy, and this year eliminated import tariffs on soybeans. At first the imports worked fine. Beans were big, prices were low and people were happy. But Indonesia was now dependent on the soy fields of the U.S. And it paid the price when the Mississippi River flooded in June, leaving thousands of acres of soybeans waterlogged. By July, soybean futures were up 82 percent over the past year, although they have come down since. Indonesia also felt the ripples from a new demand for alternative fuels. About 20 percent of soy now goes to make biodiesel in the U.S., up from almost nothing three years ago, the FAO said. And the demand for corn to make ethanol has prompted American farmers like 56-year-old Larry Gleason of central Illinois to turn away from soy. Until last spring, Gleason, his three brothers and his dad split 3,500 acres evenly between soy and corn. Now, 70 percent goes to corn. "It's like any other business: You try to find where you're going to make the most money," Gleason said. "It's a function of the market. That's what it was telling us to do, and that's what we did." What soybeans the Gleasons did plant got a late start by a couple of weeks, no thanks for spring rains and June flooding that pummeled much of Illinois and the rest of the upper Midwest. "I've been farming for 33 years, and this was probably one of hardest springs I've had putting a crop in," Gleason shrugged. "I never left a field this spring where I didn't have a bad feeling in my stomach because I just planted it wet and hoped Mother Nature would keep sending the rain to get it up. It did send the rain, but at times it sent too much." Because of the demand for ethanol, the U.S. expanded corn production by 23 percent in 2007, the World Bank found. At the same time, it reduced soybean fields by 16 percent. The U.S. Department of Agriculture said this year's U.S. soybean production should hit a healthy 2.97 billion bushels--what would be the nation's fourth-largest soybean crop in history. The USDA may update that figure when it issues its latest crop-production report this week. Fuel costs are making it more expensive not just to grow soy, but also to transport it to faraway places by truck, rail and ship. Prices have gone up further because of a shortage of containers from the booming demand from India and China, said Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition. The cost of shipping soy from the Midwest to ports in the Pacific Northwest and onward to Asia has increased from $32 a metric ton two years ago to $80, according to Mark Klein, a spokesman for Minnesota-based Cargill Inc., one of four companies that import soybeans to Indonesia. Few in Indonesia were prepared when soy prices started rising steadily in August 2007. Since then, soybean prices have jumped 50 percent to a record high--or about twice the rates in 2004. The price of kerosene and cooking oil rose at the same time. Almost 300 producers in Bandung shut their doors this year. "If the price keeps going up, maybe the tofu and tempeh industry will disappear," said H. Akil Dermawi, who heads Bandung's tempeh and tofu cooperative. There is now talk of giving the state the power to set the price for imported soybeans. That worries Ali Basry, the American Soybean Association's country representative, who said the rising prices are simply a reflection of market forces. "Suddenly, the government is trying to calm the situation by putting a subsidy on the bean price," he said. "I don't know." But tofu and tempeh producers want fixed prices and accuse importers of profiting from the volatility. They are convinced the problem remains the country's dependence on imports. "My customers get angry because the pieces of tofu are smaller," said Sukarndar, a 38-year-old vendor in Jakarta, who buys freshly baked brown tofu daily at a neighborhood factory and resells it for a few cents at a nearby market. "It is not our fault. I'm being oppressed because of prices in the United States." 9/15/08 Date: 9/10/08 Advertisement
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