How Was the Staple Food Supply Chain in Indonesia Affected by COVID-19?

Abstract

During the COVID-19 pandemic, there were significant restrictions on the transportation of food products in Indonesia. The research objective of this study was to investigate the extent to which these restrictions impacted changes in marketing margins at the provincial level in Indonesia. The approach taken was through the examination of trade and freight margin statistical data before the pandemic (2019) and after the pandemic (2020) across a number of different commodity markets: rice, shallots, red chilli pepper, beef, chicken meat and eggs, sugar, and cooking oil. The evidence indicates that the pandemic brought a rapid rise in Indonesian domestic prices as a result of purchasing panic at its start. But after the imposition of transportation restrictions, there were wide variations: some durable food options experienced increased marketing margins, whereas non-durables tended to experience decreased marketing margins in some regions, as fresh products such as red chillies and shallots were discarded as a result of declining consumer purchasing power. The conclusion for policymakers is that any future restrictions should take into account this likely difference in response, in order to minimise economic disruption by calibrating support along the supply chain.