US Dollar Strength Fuels Garlic Price Hikes in Indonesia

Indonesia's Ministry of Trade has observed a rise in the national average price of shallot garlic during July, with a significant contributing factor identified as the strengthening US dollar relative to the Indonesian rupiah. This currency fluctuation impacts the cost of imported goods, including essential agricultural products.

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The indication of this increase is, among other things, the strengthening of the US dollar against the rupiah, or the weakening of the rupiah against the dollar.

Nawandaru Dwi Putra, Director of Domestic Market Development at the Ministry of Trade, explained that the stronger dollar increases the price of garlic in exporting nations, such as China. Furthermore, global trade dynamics, including recent tensions in the Strait of Hormuz, have escalated international shipping costs. This increase in logistics expenses, particularly for goods transported via Chinese-flagged vessels, directly affects the landed cost of garlic in Indonesia.

To counter these price increases, the Ministry is coordinating with the Directorate General of Foreign Trade. They are encouraging importers to direct their transport vessels to major ports in eastern Indonesia. The goal is to reduce logistical costs, which have disproportionately driven up garlic prices in regions like Papua and Maluku. While these are business-to-business (B2B) decisions, the Ministry hopes its recommendations will be heeded by importers.

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This is what triggers the increase in logistics costs or distribution from the producing country, China, to our country.

Data from the Ministry of Trade indicates that the national average price for shallot garlic reached Rp 38,096 per kilogram as of July 10, representing a 0.25% monthly increase and exceeding the government's reference price of Rp 38,000 per kilogram. In Maluku and Papua, prices surged by 62% to Rp 64,867 per kilogram, significantly above the Rp 40,000 reference price for those regions. A similar trend was observed for 'kating' garlic, with national average prices rising 4.56% to Rp 41,270 per kilogram, also surpassing the Rp 38,000 reference price. In Maluku and Papua, 'kating' garlic prices climbed 58.38% to approximately Rp 63,353 per kilogram.

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Although it is B2B in nature, we hope that our encouragement or appeal can be followed by the importing business actors who are currently still importing garlic commodities into the country.